**Facts:**
– In 1985, Gamaliel Villanueva became a tenant in a 3-door apartment owned by spouses Jose and Leonila Dela Cruz in Quezon City.
– In February 1986, the Dela Cruzes offered the property for sale to the Villanuevas who showed interest.
– Jose Dela Cruz authorized Irene Villanueva to inspect the property, pending clearance of its realty taxes.
– Irene provided P10,000 to cover tax arrears, under the understanding this amount would count toward the purchase price of P550,000.
– The property was subdivided after agreeing to sell half to another tenant, Ben Sabio. The Villanuevas would buy the other half for P265,000, deducting the P10,000 advanced.
– On March 6, 1987, the Dela Cruzes assigned their half to Spouses Pile as settlement of a debt, transferring TCT No. 356040 to them.
– The Villanuevas were uninformed about this transaction until after its completion, leading to their legal complaint for specific performance which was dismissed by the RTC and the decision was affirmed by the CA.
**Issues:**
1. Whether a contract of sale was perfected between the parties.
2. The applicability of the Statute of Frauds.
3. The relevance of the Civil Code on double sale in regards to good faith possession by the buyers.
**Court’s Decision:**
– The Supreme Court found that no perfected contract of sale existed. Key facts include a lack of agreed price and incomplete execution of a sale deed.
– The Court clarified that the P10,000 paid by Villanueva was intended to be part of the purchase price only if the sale transaction was consummated, and since there was no clear agreement on the total sale price, no contract was perfected.
– The Court ruled against the applicability of the Statute of Frauds and the Civil Code provision on double sales, citing the absence of a perfected sale contract.
**Doctrine:**
– A contract of sale is consensual and requires a meeting of minds on the price, which must be certain. Without a definite price agreement, there is no perfected contract of sale. The disposition of earnest money alone does not constitute the perfection of a contract if key contract terms remain undetermined.
**Class Notes:**
– Key Elements of a Perfected Contract of Sale: Consent of parties, certain object, and a definite price.
– Article 1482 of the Civil Code on earnest money as part of the price and proof of contract perfection was cited but found inapplicable due to the lack of a perfected sale contract.
– Statute of Frauds applies only to executory contracts and requires a written note or memorandum for enforcement.
– Civil Code on Double Sale (Article 1544) was examined but not applied due to the absence of a valid sale.
**Historical Background:**
This case illustrates the complexities of contract formation in property transactions, emphasizing the absolute necessity of clear, unambiguous agreements regarding price and terms. It demonstrates the judiciary’s role in adjudicating property disputes arising from unclear informal agreements that lead to litigation, reinforcing principles of contract law and the importance of diligence and formal documentation in property transactions.
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