Negotiations between Torres and Sagan break down
The two sides were seen as close to signing a multi-year deal with an annual 800 million-yen ($7.2-million) pay, but they couldn't agree over money, said the 'Sports Hochi' newspaper without citing sources.
The report reflected a dramatic turn of events, after the same newspaper on Friday cited multiple unnamed sources as saying the two sides reached a broad agreement and that Torres's transfer to Japan was "nearly certain".
The Japanese club could not be reached for immediate comment.
Former Liverpool striker Torres has left his boyhood club Atletico Madrid and has also been linked with a move to the Major League Soccer's Chicago Fire and Beijing Renhe.
Japanese football fans have looked to Torres's possible transfer as giving a further boost to energise the domestic league, after Barcelona legend Andres Iniesta signed with Vissel Kobe.
Hopes were heightened after J-League officials erroneously announced a month ago on their official website that Torres had completed a transfer to Sagan Tosu.
The club are languishing second from bottom of the J-League first division and have emerged as a candidate to sign Torres as they look to ease their relegation fears.