Guison v. Terry
REITERATIONFacts
The Antecedents: Angeles Vargas executed a Deed of Absolute Sale over a 1.3894-hectare lot in favor of Loreño Terry for P5,557.60. Terry subsequently sold portions to third parties. Vargas and Terry then executed a Revocation Agreement, stating the original sale was erroneous and intended only to convey 3,000 square meters without monetary consideration, with the actual location to be determined later. Vargas died without this determination. Later, the Heirs of Vargas, represented by petitioner Agnes Guison, and Terry executed a Partition Agreement, segregating 3,000 square meters for Terry, which included portions already sold to third parties. Terry continued selling portions, leaving him with only 17 square meters. The Heirs of Vargas executed an Extrajudicial Settlement of Estate, allotting the remaining Lot 10628-pt to petitioner. Procedural History: Petitioner filed a complaint for annulment of contracts, accion publiciana, and damages against Terry and subsequent buyers, arguing the original sale and revocation agreement were void for lack of consideration, rendering the partition agreement invalid. The RTC ruled in favor of petitioner, declaring the Deed of Absolute Sale, Revocation Agreement, and Partition Agreement invalid for absence of consideration and failure to meet the elements of a sale. The RTC also found the subsequent buyers not in good faith. The CA reversed the RTC, upholding the validity of the Revocation Agreement and Partition Agreement, and ruling that petitioner's claims were barred by laches and estoppel. The Petition: Petitioner assails the CA's decision, arguing the Revocation Agreement and Partition Agreement are invalid due to lack of consideration and failure to execute a document for segregation. She contends her claim is not barred by estoppel or laches. Respondents maintain petitioner is estopped by her representations in the Partition Agreement and claim they are buyers in good faith. They also assert Terry paid P5,557.60 and P3,000 for the lot.
Issue(s)
Whether or not the CA erred when it refused to annul the Revocation Agreement and the Partition Agreement subject of this case, specifically concerning the validity of the agreements. Whether or not the CA erred when it ruled that petitioner's claims were barred by estoppel and laches, specifically concerning the sales to respondents Sarmiento and Alberto.
Ruling
The Petition for Review is PARTLY GRANTED. The Court of Appeals Decision dated 19 March 2009 and its Resolution dated 29 March 2010 are AFFIRMED insofar as the rights of Fe M. Alberto and Elisa B. Sarmiento are concerned. However, in respect of the Heirs of Loreño Terry, the Decision and the Resolution are MODIFIED as follows: 1. The Revocation Agreement dated 22 January 1996 and the Partition Agreement dated 3 May 2000 are hereby declared NULL and VOID. 2. The Heirs of Loreño Terry are ORDERED to vacate the property and surrender the peaceful possession thereof to Agnes Guison. 3. The Heirs of Loreño Terry are likewise ORDERED to remit to Agnes Guison the payments received by their predecessor-in-interest from Fe M. Alberto and Elisa B. Sarmiento in the amounts of P2,000 and P10,000, respectively.
Ratio Decidendi
On the validity of the Revocation Agreement and the Partition Agreement: The Court found that the Revocation Agreement and the Partition Agreement should be read as part of a single contract of sale. A contract of sale requires the meeting of the minds of the parties on a determinate object and a price certain in money or its equivalent. In this case, both the Revocation Agreement and the Partition Agreement were silent on the matter of consideration or purchase price. The Court noted conflicting allegations regarding payment, with Terry's claim of payment being unsubstantiated and inconsistent with his own Answer, where he emphasized the rectification of registration error rather than sale. Petitioner's claim of agreement on prevailing market price was also unsupported. The absence of a "price certain" prevented the perfection of the sale, rendering the Revocation Agreement and Partition Agreement null and void, thus invalidating the conveyance to Terry. The Court agreed with the RTC that there was no meeting of the minds as to the price. On the applicability of estoppel and laches concerning the sales to respondents Sarmiento and Alberto: The Court disagreed with the CA's application of laches, stating that a six-year delay does not automatically constitute laches, especially when the petitioner did not exhibit conduct showing abandonment of her rights and Terry's assurances of payment explained the delay. However, the Court found sufficient basis to apply the doctrine of estoppel in pais against petitioner concerning the sales to respondents Sarmiento and Alberto. By signing the Partition Agreement, petitioner clearly recognized Terry's ownership of the portion assigned to him without reservation, despite her doubts about the sale's validity and Terry's non-payment. Respondents Sarmiento and Alberto, lacking knowledge of the true state of the transaction, reasonably relied on petitioner's representations in the Partition Agreement. Allowing petitioner to now assert a contrary position would cause undue injury and prejudice to these respondents, thus, she is estopped from recovering the property from them. The CA's ruling on estoppel in favor of Sarmiento and Alberto was affirmed.
Main Doctrine
A contract of sale is void for lack of a "price certain" as consideration, which is an essential element for the perfection of the contract. However, a party may be estopped from assailing subsequent sale transactions if they made representations in a partition agreement that induced others to rely on such representations in good faith.