Agnes V. Guison vs. Heirs of Loreño Terry, Jose U. Alberto III, Spouses Medin M. Francisco and Francia M. Francisco, Fe M. Alberto and Elisa B. Sarmiento

A contract of sale is void where the parties fail to reach a meeting of the minds on a price certain, even if the instruments acknowledge the transfer of a determinate object. A party who, in a written partition agreement, unconditionally acknowledges another’s absolute ownership over a parcel of land, knowing that the document may influence third parties, is estopped in pais from later reclaiming the property against buyers who relied in good faith on that representation.

Angeles Vargas owned a 1.3894-hectare agricultural lot in Virac, Catanduanes. In March 1995 he executed a Deed of Absolute Sale over the entire property in favor of Loreño Terry. The following January, Vargas and Terry revoked the sale to the extent of 1.0894 hectares, affirming only a 3,000-square-meter conveyance to Terry; no monetary consideration was recited, and the actual location was left for future determination. Vargas died in 1998 without executing the required location document. In May 2000, petitioner Agnes Guison, representing Vargas’s heirs, and Terry executed a Partition Agreement that physically segregated the 3,000-square-meter portion and declared Terry its absolute owner. Terry thereafter sold portions to various third parties. More than six years later, petitioner filed a complaint to annul all instruments, alleging lack of consideration. The Regional Trial Court voided the contracts; the Court of Appeals reversed, upholding the transfer and applying laches and estoppel. Petitioner elevated the matter to the Supreme Court.

• Original Deed of Absolute Sale and Revocation: On 14 March 1995, Angeles Vargas (petitioner’s father) executed a Deed of Absolute Sale conveying a 1.3894-hectare agricultural parcel (Lot No. 10628-pt, covered by TCT No. 12244) to respondent Loreño Terry for ₱5,557.60. Between September and December 1995, Terry sold portions of the lot to third parties. On 22 January 1996, Vargas and Terry executed an Agreement of Revocation of Sale, reciting that the entire lot had been erroneously sold, that their true intention was to transfer only 3,000 square meters, and that there was no monetary consideration. They revoked the sale to the extent of 1.0894 hectares while retaining the 3,000-square-meter conveyance to Terry, with the actual location to be determined later in a separate document. No such separate document was ever executed.

• Death of Vargas and the Partition Agreement: Vargas died on 10 June 1998. On 3 May 2000, petitioner Agnes V. Guison, acting for the heirs of Vargas, and Terry entered into a Partition Agreement to physically segregate the 3,000-square-meter portion. The agreement assigned to Terry the southwestern portion (2,600 sq m) and the western portion (400 sq m) of Lot No. 10628-pt, declared that this area already included prior sales to third persons, and stated that the parties “respect and recognize each other’s rights as absolute owners of the portion respectively adjudicated to them.”

• Terry’s Subsequent Sales: After execution of the Partition Agreement, Terry sold several portions to other parties, including respondent Elisa B. Sarmiento (400 sq m, 22 May 2000) and respondent Fe M. Alberto (400 sq m, 12 May 2000). All sales left Terry with only 17 square meters.

• Petitioner’s Complaint: On 16 November 2006, petitioner filed a complaint to annul the original Deed of Absolute Sale, the Revocation Agreement, the Partition Agreement, and all derivative deeds. She alleged that the instruments were void for lack of consideration and that she signed the Partition Agreement under the mistaken belief that Terry had a right to the property. Terry claimed that the lot was originally owned by his grandfather and that the Deed of Sale was meant to restore it to him; he asserted he agreed to the revocation only because of closeness to the Vargas family and to avoid litigation. The other respondents primarily argued that they were buyers in good faith who relied on the Partition Agreement and on petitioner’s representations.

• Lack of Consideration: Petitioner maintained that the Revocation Agreement and the Partition Agreement were void ab initio because no monetary consideration was ever paid or fixed. She argued that the parties never reached an agreement on the purchase price, and that the failure to execute the required document specifying the lot’s location confirmed the absence of a perfected sale.

• No Estoppel or Laches: Petitioner contended that the six-year interval before filing suit was not unreasonable and was attributable to Terry’s repeated assurances that he would pay the prevailing market price. She further argued that respondents could not invoke estoppel because they had been equally negligent in relying on documents of doubtful validity without verifying Terry’s title.

• Validity of the Conveyance: Respondents insisted that Terry acquired the 3,000-square-meter lot from Vargas, either as the heir of the true owner or through the impugned agreements. They alleged that consideration was actually paid — ₱5,557.60 upon the original Deed of Absolute Sale and ₱3,000 upon execution of the Revocation Agreement.

• Estoppel and Good Faith: Respondents emphasized that petitioner was estopped by the unequivocal recognition of Terry’s absolute ownership in the Partition Agreement, which she had voluntarily executed. The third-party buyers maintained that they were purchasers in good faith who relied precisely on that written representation and should not be made to suffer the consequences of the original parties’ defective transaction.

• Validity of the Revocation and Partition Agreements: Whether the Revocation Agreement and the Partition Agreement are void for lack of a price certain, thereby preventing the perfection of the contract of sale.

• Estoppel and Laches: Whether petitioner’s claims are barred by laches because of the six-year delay, or by estoppel in pais given her representations in the Partition Agreement.

• Validity of the Revocation and Partition Agreements: The two instruments, read together as components of a single contract of sale, were declared null and void. Although the documents recognized a transfer of 3,000 square meters, neither stated a purchase price. Respondent Terry’s assertion that he paid consideration was unsupported by any evidence and contradicted his own Answer, which admitted that no consideration had been given and that the revocation was executed merely to avoid litigation. Petitioner’s claim that a sale at the prevailing market price was agreed upon was likewise unsubstantiated. Because Article 1458 of the Civil Code requires a price certain for a perfected sale, and the parties failed to reach any definite agreement on the amount of consideration, no meeting of the minds occurred and the sale was void from the beginning.

• Estoppel and Laches: Laches did not bar the suit. The six-year lapse of time was not, by itself, unreasonable; petitioner initially believed the sale was valid, pending determination of the consideration and the specific location, and Terry’s repeated promises to pay accounted for the delay. Estoppel in pais, however, operated to prevent petitioner from recovering the portions sold to respondents Fe M. Alberto and Elisa B. Sarmiento. Petitioner’s unconditional acknowledgment of Terry’s absolute title in the Partition Agreement, coupled with her knowledge of the document’s potential to influence third parties and of the fact that Terry had not yet paid, constituted a false representation. Both Alberto and Sarmiento had no actual or constructive knowledge of the true state of the transaction, relied in good faith on petitioner’s representations, and altered their position by purchasing the land. To allow petitioner to reclaim those parcels would cause them undue prejudice; consequently, she was estopped.

• Elements of a Valid Contract of Sale — A contract of sale under Article 1458 requires (1) consent or meeting of the minds on the transfer of ownership in exchange for a price, (2) a determinate subject matter, and (3) a price certain in money or its equivalent. The absence of any element renders the contract void. The Court applied this doctrine to nullify the Revocation Agreement and Partition Agreement, holding that no definite price had ever been agreed upon, thus no valid sale was perfected.

• Estoppel in Pais — Estoppel in pais arises when a party, by acts, representations, or culpable silence, induces another to believe certain facts exist, and the other rightfully relies and acts to his or her prejudice. The elements with respect to the party to be estopped are: (a) conduct amounting to false representation or concealment of material facts; (b) intent or expectation that the conduct will influence the other party; and (c) actual or constructive knowledge of the real facts. For the party claiming estoppel: (a) lack of knowledge or means of knowledge of the truth; (b) good-faith reliance upon the conduct or statements; and (c) action or inaction resulting in a change of position to his or her injury. All elements were satisfied in this case: petitioner’s express declaration of Terry’s absolute ownership, her awareness that the Partition Agreement could be used to induce purchases, and her knowledge of the unpaid consideration; and respondents Alberto and Sarmiento’s good-faith reliance without any opportunity to discover the defect.

• “The price must be certain, otherwise there is no true consent between the parties. There can be no sale without a price.” — This passage from Villanueva v. Court of Appeals was adopted by the Court to underscore that the lack of a definite purchase price prevented the perfection of the sale, rendering the agreements void.

• “Given that both the Revocation Agreement and the Partition Agreement are silent on the issue of consideration, and further considering the conflicting accounts of the parties themselves as to the exact amount of the purchase price, this Court agrees with the finding of the RTC that the parties did not reach any agreement as to the amount of monetary consideration for the property. This lack of consensus as to the price prevented the perfection of the sale.” — The paragraph encapsulates the factual basis for the ruling on nullity, tying the silence of the instruments to the legal requirement of a price certain.

• “Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts.” — Quoted from GE Money Bank, Inc. v. Spouses Dizon, this definition anchored the Court’s application of estoppel, justifying the protection of the two innocent purchasers despite the voidness of the underlying sale.

• Villanueva v. Court of Appeals, 334 Phil. 750 (1997) — Followed for the principle that a sale is not perfected, and the contract is void, where there is no meeting of the minds on a price certain.

• GE Money Bank, Inc. v. Spouses Dizon, G.R. No. 184301, 23 March 2015, 754 SCRA 74 — Relied upon for the definition and essential elements of estoppel in pais.

• Shopper’s Paradise Realty & Development Corp. v. Roque, 464 Phil. 116 (2004) — Cited for the complete enumeration of the requisites of estoppel in pais, both as against the party to be estopped and the party claiming estoppel.

• Heirs of Nieto v. Municipality of Meycauayan, 564 Phil. 674 (2007) — Cited for the definition of laches as failure or neglect for an unreasonable length of time, warranting a presumption of abandonment.

• Swedish Match, AB v. Court of Appeals, 483 Phil. 735 (2004) — Referred to for the requirement that a contract of sale must contain a price certain.

• Riosa v. Tabaco La Suerte Corp., 720 Phil. 586 (2013) — Referred to for the three essential elements of a perfected contract of sale.

• Article 1458, Civil Code — Defines a contract of sale as a transaction where one party obligates to transfer ownership and deliver a determinate thing, and the other to pay a price certain in money or its equivalent. The absence of a definite price in the instruments meant this essential element was missing; thus, no valid sale was perfected.

• Article 1431, Civil Code — Recognizes estoppel in pais as a principle of equity and natural justice. The Court invoked this provision to prevent petitioner from contradicting her earlier representations after third parties had relied on them.

• Rule 131, Section 2(a), Rules of Court — Enumerates conclusive presumptions, including estoppel. The Court referred to this rule in articulating the conclusive character of the estoppel against petitioner.

Leonardo-De Castro, Del Castillo, Perlas-Bernabe, and Caguioa, JJ., concurred.