The Supreme Court ruled that a real estate sale is void if there’s no clear agreement on the price between the buyer and seller. Even if a property is transferred and a document is signed, the sale isn’t valid without a “price certain.” This means both parties must agree on a specific amount, ensuring a true meeting of the minds. This decision highlights the importance of clearly defining all essential terms in a contract, especially the price, to avoid future disputes and ensure the transaction’s enforceability.

When a Handshake Deal Turns Sour: The Case of the Undefined Price

The case of Guison v. Heirs of Terry revolves around a parcel of land in Catanduanes. Angeles Vargas initially sold a portion of his land to Loreño Terry, but the original sale lacked clear monetary consideration. Later, they signed an Agreement of Revocation of Sale, intending to formalize the transfer of a 3,000-square-meter portion, but again, without specifying the price. After Vargas’s death, his heirs, including Agnes Guison, entered into a Partition Agreement with Terry to segregate the land. Terry subsequently sold portions of the property to various third parties. Guison then filed a complaint to annul these contracts, arguing a lack of consideration in the initial agreements. The central legal question is whether the absence of a defined price in the initial agreements invalidated the subsequent transactions, and what recourse, if any, the third-party buyers had.

The Regional Trial Court (RTC) initially sided with Guison, declaring the agreements invalid due to the absence of a specified price. However, the Court of Appeals (CA) reversed this decision, finding that the intent to transfer the land was clear, regardless of monetary consideration, and invoked the principles of laches and estoppel against Guison. Laches refers to the unreasonable delay in asserting a right, while estoppel prevents someone from denying a previous representation if another party has relied on it. The Supreme Court (SC), upon review, partially reversed the CA’s ruling, holding that the lack of a definite price invalidated the original sale, but estoppel barred Guison from reclaiming the land from some of the third-party buyers.

At the heart of the SC’s decision is the understanding of a contract of sale, which, according to Article 1458 of the Civil Code, requires the transfer of ownership of a determinate thing in exchange for a price certain in money or its equivalent. The Court emphasized that the absence of any of these essential elements renders the contract void. The critical element missing in the Guison case was the “price certain.” The Revocation Agreement and the Partition Agreement were silent on the purchase price, and the conflicting claims from both parties failed to establish a clear agreement on this crucial aspect. The Court elucidated that a “price certain” is not merely an intention to agree on a price later but a definitive agreement on a specific amount. The absence of this agreement negates the very essence of consent, which is indispensable for a valid contract of sale.

“The price must be certain, otherwise there is no true consent between the parties. There can be no sale without a price. In the instant case, however, what is dramatically clear from the evidence is that there was no meeting of mind as to the price, expressly or impliedly, directly or indirectly.” (Villanueva v. Court of Appeals, 334 Phil. 750, 760-761 (1997))

Building on this principle, the Court scrutinized Terry’s claim of payment. Despite his insistence on having paid for the property, he failed to provide concrete evidence. His initial defense didn’t even mention payment, further weakening his position. Guison’s allegation of an agreement on the prevailing market price also fell short due to a lack of supporting evidence. This deficiency in evidence underscored the failure of the parties to reach a consensus on the price, a prerequisite for a valid sale.

However, the Supreme Court recognized an exception based on the equitable principle of estoppel in pais. This doctrine prevents a person from denying or asserting anything contrary to that which has been established as the truth by his own deed, acts, or representations. The Court noted that Guison, by signing the Partition Agreement, had represented that Terry was the absolute owner of the portion of the property assigned to him. This representation influenced subsequent buyers, specifically Sarmiento and Alberto, who relied on Guison’s declaration when purchasing their portions of the land. The Court held that Guison was estopped from questioning the title of Sarmiento and Alberto, as they had acted in good faith based on her representations.

“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.” (GE Money Bank, Inc. v. Spouses Dizon, GR. No. 184301, 23 March 2015, 754 SCRA 74)

To balance the equities, the Court ordered the Heirs of Terry to remit to Guison the payments received from Sarmiento and Alberto. This ruling was grounded in the principle of unjust enrichment, which dictates that no one should unjustly benefit at the expense of another. Since Terry had not validly acquired the property, his heirs were not entitled to retain the proceeds from its sale. This adjustment aimed to restore fairness and prevent the unjust enrichment of Terry’s heirs at Guison’s expense. While Guison could not recover the land from Sarmiento and Alberto due to estoppel, she was entitled to the monetary value they had paid for it, ensuring a just outcome for all parties involved.

FAQs

What was the key issue in this case?	The key issue was whether the absence of a defined price in the agreements between Vargas and Terry invalidated the subsequent sale of the land and the agreements that followed.
What is a “price certain” in a contract of sale?	A “price certain” refers to a specific, agreed-upon amount of money or its equivalent for which a property or item is sold. This price must be definite and mutually understood by both the buyer and the seller.
What is estoppel in pais?	Estoppel in pais is a legal principle that prevents a person from denying or asserting anything contrary to that which has been established as the truth by their own actions or representations, especially if another party has relied on those actions to their detriment.
Who were Sarmiento and Alberto in this case?	Sarmiento and Alberto were third parties who purchased portions of the land from Terry, relying on the Partition Agreement signed by Guison.
Why couldn’t Guison recover the land from Sarmiento and Alberto?	Guison was estopped from recovering the land from Sarmiento and Alberto because she had signed the Partition Agreement, which represented that Terry was the rightful owner of the land. Sarmiento and Alberto relied on this representation when they purchased the property.
What did the Heirs of Terry have to do in this case?	The Heirs of Terry were ordered to remit to Guison the payments they had received from Sarmiento and Alberto for the sale of the land.
What is unjust enrichment?	Unjust enrichment occurs when one person unjustly benefits at the expense of another. It is a legal principle that prevents individuals from retaining money or property that rightfully belongs to someone else.
What was the effect of declaring the sale void?	Declaring the sale void meant that, in the eyes of the law, the transfer of ownership from Vargas to Terry never validly occurred, impacting all subsequent transactions stemming from that initial sale.

In conclusion, the Supreme Court’s decision in Guison v. Heirs of Terry underscores the critical importance of clearly defining the price in any contract of sale, particularly in real estate transactions. It also illustrates how the equitable principle of estoppel can protect innocent third parties who rely on the representations of others. While the initial sale was deemed void due to the lack of a “price certain,” the Court balanced the equities by applying estoppel to protect the rights of those who had relied on the representations made by one of the parties. This case serves as a reminder of the need for clarity and good faith in all contractual dealings.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: AGNES V. GUISON v. HEIRS OF LOREÑO TERRY, G.R. No. 191914, August 09, 2017