G.R. No. 158149 - Bank of Commerce vs. Manalo

Xavierville Estate, Inc. (XEI) owned 42 hectares in Quezon City, subdivided into residential lots. In 1967, XEI sold some lots (including Lots 1 & 2, Block 2) to The Overseas Bank of Manila (OBM) subject to Board approval and real estate mortgages to Philippine National Bank and Central Bank.
Despite the sale, XEI continued acting as OBM’s selling agent for unsold subdivision lots.

In early 1972, Engr. Carlos Manalo, Jr. drilled a pump at the home of XEI President Emerito Ramos Jr. for P34,887.66. Manalo offered this amount as part of the downpayment for two lots in Xavierville.
February 8, 1972 letter (Exh. “A”): Ramos invited Manalo to select lots so that “price and terms of payment” could be fixed in a “conditional sale.”
August 22, 1972 letter (Exh. “B”): XEI confirmed reservation of Lots 1 & 2, Block 2 (1,740.3 sq m) at P200/sq m (total P348,060), with 20% downpayment (P69,612) less the P34,887.66 owed, payable on or before December 31, 1972—or within five days after XEI’s resumption of selling operations—and provided that a corresponding Contract of Conditional Sale would be signed upon payment. Manalos were allowed interim improvements.

September 2, 1972: Manalos took possession, built a house, and fenced the lots. Many buyers deferred payments awaiting Torrens titles.
Upon resumption of XEI’s selling operations, the Manalos did not pay the balance of the downpayment or sign a contract—XEI failed to prepare one. Repeated statements of account (August 1973; January 1974) showed unpaid balances and interests, but the Manalos insisted no contract was delivered and refused payment.
From 1976 to 1986, XEI and its successors (OBM, then Commercial Bank of Manila/CBM, later Boston Bank of the Philippines) demanded removal of unauthorized improvements, documents evidencing the sale, and payment. Titles were issued to OBM in 1979 and the lien later canceled.

1987: CBM filed an unlawful detainer case against the Manalos but subsequently withdrew it.
October 31, 1989: The Manalos filed a complaint for specific performance and damages in the RTC, alleging readiness to pay P313,172.34 (balance of purchase price), tender of payment, and entitlement to a Deed of Absolute Sale free of liens. They also claimed moral/exemplary damages and attorney’s fees.
Evidence adduced: February 8 and August 22, 1972 letters; three exemplar “Contracts of Conditional Sale” between XEI and other buyers.
July 2, 1994 RTC Decision: Ordered Boston Bank to execute a Deed of Absolute Sale upon payment of P942,978.70, awarded P150,000 moral damages and P50,000 attorney’s fees.
September 30, 2002 CA Decision: Affirmed with modifications—downpayment fixed at P313,172.34 plus 12% interest from September 1, 1972; deleted moral/exemplary damages and attorney’s fees. Boston Bank’s motion for reconsideration denied.
Petition for review on certiorari filed by Boston Bank before the Supreme Court.

Whether XEI/OBM and the Manalos forged a perfected contract to sell, including agreement on the manner and schedule of payment of the remaining 80% purchase price.
Whether the CA correctly applied the payment terms from other buyers’ contracts by implication.

Whether Boston Bank is estopped from denying the contract’s validity and whether laches or a rescission demand (letter or ejectment complaint) suffice to cancel the agreement.
Whether the Manalos have a valid cause of action for specific performance under Republic Act No. 6552 in the absence of a perfected contract.