G.R. No. 191914, August 09, 2017
Topics: contract of sale; perfection
Summary: A parcel of land was conveyed to the respondent, without consideration. Said sale was revoked to correct the error since the whole lot was conveyed instead of a portion.
Doctrines:
The elements of a perfected contract of sale are the following: (1) the meeting of the minds of the parties or their consent to a transfer of ownership in exchange for a price; (2) the determinate object or subject matter of the contract; and (3) the price certain in money or its equivalent as consideration for the sale. The absence of any of these elements renders a contract void.
Facts:
On 14 March 1995, a Deed of Absolute Sale was executed in favor of respondent Terry by Angeles Vargas, the father of petitioner. The subject of the sale was a parcel of agricultural land located in Moonwalk, Danicop, Catanduanes.
Between September and December 1995, Terry sold certain parts of the lot to third parties, namely, Jose U. Alberto III (583 square meters), Alona M. Guerrero (400 square meters) and respondent Lino Gianan (200 square meters). Gianan is a respondent in this case.
On 22 January 1996, Vargas and Terry executed an Agreement of Revocation of Sale (Revocation Agreement) relating to the same parcel of land. The instrument stated that Vargas had erroneously sold the entire area of Lot 10628-pt to Terry. The parties, however, averred that their true intention was only to convey a 3,000-square-meter portion of the land to Terry, considering that there was no monetary consideration for the transaction.
Consequently, they agreed to revoke the earlier Deed of Absolute Sale to the extent of 1.0894 hectares, while affirming the validity of the conveyance to Terry of a 3,000-square-meter potion, whose actual location would later be determined by both parties in a separate document.
The agreement states:
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WHEREAS, a Deed of Absolute Sale of Real Property was executed by Angeles S. Vargas on March 14, 1995, in Manila, whereby a 1.3894 has. of land in Moonwalk & Danicop, Virac, Catanduanes was erroneously sold to Loreño Terry;
WHEREAS, the intention of both parties was the transfer of only Three Thousand (3,000) square meters portion thereof, considering that there was not even any monetary consideration in the sale;
NOW, THEREFORE, for and in consideration of the foregoing premises, the parties hereto hereby REVOKE the sale said parties executed on March 14, 1995 to the extent of 1.0894 has. while retaining as valid the transfer to Loreño Terry the area of Three Thousand (3,000) square meter
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On 3 May 2000, a Partition Agreement was entered into by the Heirs of Angeles Vargas, represented by petitioner, and respondent Terry. The instrument, which was executed for the purpose of physically segregating the 3,000-square-meter portion allotted to Terry.
Thereafter, Terry sold other portions of the property to third parties, specifically, Alex Laynes (500 square meters), Elisa Sarmiento (400 square meters), Fe Alberto (400 square meters),16 Medin Francisco (200 square meters), Eddie Alcantara (100 square meters), and Oswaldo de Leon (200 square meters). All the foregoing transactions left Terry with ownership of only 17 square meters of the lot.
On 8 May 2000, the heirs of Vargas executed an Extrajudicial Settlement of Estate Among Heirs. In that instrument, Lot 10628-pt was allotted to the petitioner as part of her share of the estate.
On 16 November 2006, petitioner filed a Complaint for annulment of contracts, accion publiciana, and damages against Terry and all those who had allegedly purchased portions of Lot 10628-pt from him, i.e. Jose U. Alberto III, Spouses Medin M. Francisco and Francia M. Francisco, Eddie Alcantara, Fe M. Alberto, Elisa B. Sarmiento, Lino S. Gianan, Alex Laynes, Alona Guerrero and Oswaldo de Leon.
The instruments sought to be annulled were the following: (a) the original Deed of Absolute Sale executed by Vargas in favor of Terry; (b) the Agreement of Revocation of Sale signed by Vargas and Terry; (c) the Partition Agreement entered into by petitioner and Terry; and (d) the Deeds of Absolute Sale executed by Terry in favor of third parties.
Petitioner argued that the original Deed of Absolute Sale and the Agreement of Revocation of Sale should be considered void for lack of consideration. She then contended that the nullity of those earlier instruments led to the invalidity of the Partition Agreement, because it was signed in the mistaken belief that Terry had a right to the property.
On 11 January 2007, Terry filed his Answer before the RTC. Refuting the assertions in the Complaint, he insisted that the 3,000-square-meter lot was conveyed to him by Vargas. Terry explained that the property was in fact originally owned by his grandfather, but incorrectly registered in the name of Fernando Vargas, who was petitioner’s predecessor-in-interest. The original Deed of Absolute Sale was purportedly executed to rectify the error in registration and restore the property to its rightful owner. Terry further alleged that he had only signed the Agreement of Revocation of Sale in consideration of his closeness to the Vargas family and in order to avoid litigation. He pointed out that the petitioner herself confirmed the validity of the instruments of sale by executing the Partition Agreement after the death of Vargas.
For their part, respondents Laynes, Spouses Francisco, Alcantara, Gianan, De Leon, Sarmiento and Fe Alberto all claimed to be buyers in good faith. In their respective Answers before the RTC, they insisted that they had merely relied upon the Partition Agreement; in particular, the statements made by petitioner acknowledging Terry’s entitlement to the property. These declarations, it was argued, estopped petitioner from now seeking recovery of the portions of the property sold to third persons.
The RTC rendered a Decision in favor of petitioner. Citing the absence of certain elements of a sale, the trial court declared that the Deed of Absolute Sale, Revocation Agreement, and Partition Agreement were invalid contracts
On appeal, the CA reversed the ruling of the RTC. While recognizing the nullity of the Deed of Absolute Sale given the parties’ admission that there was no consideration for the transaction, the appellate court found no reason to invalidate the Revocation Agreement. It ruled that this independent document proved the true intent of the parties to transfer 3,000 square meters of the disputed property to Terry, even without consideration. The CA also declared that the claims of petitioner were barred by laches, considering that she had allowed more than six years to elapse before asserting her rights against respondents.
Issue:
- Whether there was a valid contract of sale, as to make the Revocation Agreement valid.
- Whether CA erred when it ruled that petitioner’s claims were barred by estoppel and laches.
Ruling:
The Petition for Review is PARTLY GRANTED.
We reverse the ruling of the CA insofar as it upheld Terry’s right to the property. We find sufficient basis to declare the Revocation Agreement and the Partition Agreement null and void because of the absence of the required meeting of the minds regarding the consideration for the sale. Consequently, we are compelled to conclude that the property was never validly conveyed to Terry.
- NO. Based on the provisions of the Revocation Agreement and the Partition Agreement, we conclude that the two instruments must be read as part of a single contract of sale. In the Revocation Agreement, the parties recognized the transfer of a 3,000-square meter portion of Lot No. 10628-pt to Terry.
However, instead of identifying the specific segment of the property allegedly conveyed, they stipulated that “the actual location of the said 3,000 square meters shall be determined by both parties in a separate document consonant with this agreement, but forming a part hereof.” That separate document was the Partition Agreement subsequently executed by the parties to physically segregate the portion of the property sold to Terry.
It is therefore evident that the two instruments in question are not separate contracts, but are mere components of the same sales transaction.
The elements of a perfected contract of sale are the following: (1) the meeting of the minds of the parties or their consent to a transfer of ownership in exchange for a price; (2) the determinate object or subject matter of the contract; and (3) the price certain in money or its equivalent as consideration for the sale. The absence of any of these elements renders a contract void.
In this case, the Revocation Agreement and the Partition Agreement are silent on the matter of consideration. Neither instrument mentions the purchase price for the sale of the lot.
After carefully studying the records, we conclude that not all the elements of a perfected contract of sale were present. In particular, we find no sufficient evidence that the parties ever agreed on a specific purchase price for the property.
This Court considers Terry’s claim of payment untenable, considering his failure to present any evidence of his assertion other than his bare testimony.
Further, Terry did not mention any form of consideration in connection with the Revocation Agreement. In fact, he admitted in his Answer that no consideration was given to him in exchange for his consent to the revocation of the earlier contract.
This lack of consensus as to the price prevented the perfection of the sale. As there was no sufficient evidence of a meeting of the minds between the parties with regard to the consideration for the sale, we are compelled to declare the transaction null and void.
- Laches: NO, Estoppel: YES. Appellee waited more than six (6) years from the time she executed said Partition Agreement before asserting her supposed claim. Thus, even assuming, for argument, that appellee has a valid claim against appellant Terry, laches has ineluctably set in.
The doctrine of laches or of “stale demands” is based upon grounds of public policy which requires, for the peace of society, the discouragement of stale claims and, unlike the statute of limitations, is not merely a question of time but is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted.
Here, petitioner did not exhibit any conduct that would warrant the presumption that she had abandoned or declined to assert her right over the property. It was her initial belief that the lot was truly sold by her father to Terry, albeit pending the determination of the consideration and the specific location of the subject portion. Moreover, the latter’s repeated assurances that he would pay for the lot explained the delay in the institution of the case. For this reason, this Court does not find the delay unreasonable.
However, we do find sufficient basis to utilize the doctrine of estoppel in pais to bar the claims of petitioner against respondents Sarmiento and Alberto.
The essential elements of estoppel in pais, in relation to the party sought to be estopped, are:
1) a clear conduct amounting to false representation or concealment of material facts or, at least, calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert;
2) an intent or, at least, an expectation, that this conduct shall influence, or be acted upon by, the other party; and
3) the knowledge, actual or constructive, by him of the real facts.
Regarding the party claiming the estoppel, the conditions he must satisfy are:
1) lack of knowledge or of the means of knowledge of the truth as to the facts in question;
2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and
3) action or inaction based thereon of such character as to change his position or status calculated to cause him injury or prejudice.
It has not been shown that respondent intended to conceal the facts concerning the property; more importantly, petitioner has been shown not to be totally unaware of the real ownership of the subject property.
All the foregoing requisites have been fulfilled in this case.