Title
Supreme Court
Villanueva vs. Court of Appeals
Case
G.R. No. 107624
Decision Date
Jan 28, 1997
Tenants claimed a prior agreement to purchase property, but the Supreme Court ruled no perfected contract existed, affirming no valid sale occurred.

Case Summary (G.R. No. 107624)

Factual Background

Petitioner Gamaliel Villanueva had been a tenant of an apartment unit on the disputed land, which is a 403-square-meter parcel in Quezon City owned by respondents Dela Cruz. In February 1986, Jose Dela Cruz expressed willingness to sell the property. Petitioners expressed interest, and as part of the negotiations, petitioner Irene was given authority to inspect the property. Because the property had unpaid realty taxes, Irene Villanueva advanced a total of P10,000 (in two payments of P5,000) to cover these arrears, which was orally agreed to be part of the total sale price of P550,000. Subsequently, Jose Dela Cruz sought approval for a tenant, Ben Sabio, to buy half of the property, to which petitioners consented, thus intending to purchase the other half for P265,000 after deducting the P10,000 paid.

In March 1987, respondents Dela Cruz executed a Deed of Assignment of the half portion of the property to spouses Guido and Felicitas Pili in satisfaction of a debt. This resulted in the issuance of a new title in favor of the Pili spouses. Petitioners protested, claiming that there was an agreement for the sale to them, which prompted this legal action.

Disposition of Lower Courts

The RTC ruled in favor of private respondents Dela Cruz and dismissed petitioners' action for specific performance, ordering only the refund of P10,000 to Irene Villanueva. The Court of Appeals affirmed this decision, finding no perfected contract of sale between the parties.

Issues Presented

The petitioners raised four principal issues:

  1. Whether a contract of sale was perfected between petitioners and respondents Dela Cruz.
  2. Whether the Statute of Frauds was erroneously applied given the purported partial execution of the contract.
  3. Whether the court erred in failing to find bad faith on the part of respondents Pili in the double sale context, given petitioners’ prior possession.
  4. Whether the trial court judgment should be reversed in favor of petitioners.

These are consolidated into one principal question: Was there a perfected contract of sale under the facts?

Petitioners' Contentions

Petitioners argued that the trial and appellate courts contradicted their own factual findings by concluding there was no price agreement. They asserted the P10,000 advanced for taxes was part of the purchase price, referencing Article 1482 of the Civil Code, which provides that earnest money constitutes part of the price and proof of contract perfection. Petitioners also relied on testimony alleging that respondents’ counsel admitted the P10,000 was an advance payment, implying an agreement on price existed. They further argued that due to possession in good faith, they should be considered the lawful owners, invoking Article 1544 on double sale.

Respondents' Position and Court of Appeals Findings

The Court of Appeals held that the P10,000 paid was primarily to cover realty taxes and was not intended as part of the purchase price unless the entire transaction was consummated. It found there was no definitive agreement as to the sale price or terms of payment, supported by Jose Dela Cruz's testimony that he had not signed the deed of sale and that negotiations regarding price were ongoing when he was compelled to assign the property to the Pili spouses due to a debt.

Legal Analysis: Perfection of Contract of Sale

The Court examined the essential requisites for the perfection of a contract of sale under the Civil Code, emphasizing the necessity of a definite and certain price. The contract of sale, being consensual, requires mutual consent on the object and price. Here, the absence of agreement on the purchase price meant no meeting of the minds occurred, thus no perfected contract.

The Court scrutinized the absence of a signed deed of sale, noting that the mere preparation of a draft deed is insufficient to establish contract perfection, especially when the draft was not presented in evidence. Petitioners’ failure to procure the document by subpoena or other discovery methods diminished its probative value. The existence of possession and willingness to pay was irrelevant without an existing perfected contract.

The Court reaffirmed that uncertainty of price voids consent and that a contract cannot be enforced unless the price is ascertainable with certainty or by reference to objective standards or existing criteria. In this case, neither the exact amount nor the manner of computation was fixed or agreed upon.

Statute of Frauds and Double Sale Doctrine

The petitioners' claim that the Statute of Frauds did not apply because the cont

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