Title

Mactan Cebu International Airport Authority vs. Court of Appeals

Case Ponente Decision Date

G.R. No. 121506 - Resolution FRANCISCO, J Oct 30, 1996

A dispute arises between the Mactan Cebu International Airport

Authority and private landowners over the right to repurchase
properties sold for airport expansion, with the Supreme Court ruling in
favor of the landowners based on parol evidence and stating that the
Statute of Frauds does not apply.

Case Digest (G.R. No. 121506)

GPT-4o (v3)

Facts:

The case involves the Mactan Cebu International Airport Authority (MCIAA) as
the petitioner and the Court of Appeals (CA), Regional Trial Court (RTC) Branch
9, Cebu City, Melba Limbaco, Linda C. Logarta, and Ramon C. Logarta as
respondents. The dispute centers around the right to repurchase properties
sold for the expansion of Lahug Airport. In 1949, the National Airport
Corporation (NAC) informed landowners, including Inez Ouano, that their
properties would be purchased for airport expansion. The landowners were
persuaded to sell under the threat of expropriation and were assured that their
properties would be returned if no longer needed for airport use. Inez Ouano
initially resisted selling due to the low price and her desire to bequeath the
land to her grandchildren but eventually agreed under the same assurances.
Eufemio Vercide, another landowner, secured a rider in his sale agreement
con!rming the right to repurchase. Inez's deed of sale, however, did not
contain such a provision. Upon learning that other landowners had
repurchased their properties and that the airport was being transferred to
Mactan, Inez's heirs sought to repurchase the land. Their request was denied
by MCIAA, leading them to !le a case for reconveyance with the RTC, which
ruled in their favor. The CA a"rmed this decision, prompting MCIAA to seek a
reversal from the Supreme Court.
Issue:

1. Did the Court of Appeals err in ruling that there was an agreement
allowing Inez Ouano and her successors to repurchase the lots in question
despite the absence of a rider in the deed of sale?

2. Did the Court of Appeals err in ruling that the Statute of Frauds does not
apply in this case as the contract has been partially executed?

Ruling:

The Supreme Court denied the petition, a"rming the decisions of the RTC and
the CA.

Ratio:

The Supreme Court upheld the CA's !nding that there was an agreement
allowing the right of repurchase, established through parol evidence presented
by the private respondents. The Court rejected MCIAA's argument that the
absence of a rider in the deed of sale precluded the existence of such a right.
The parol evidence rule allows for the introduction of evidence to modify,
explain, or add to the terms of a written agreement if it fails to express the true
intent of the parties. In this case, the parol evidence demonstrated that the
right of repurchase was a moving cause of the sale agreement. Additionally,
the Court noted that MCIAA did not object to the introduction of this evidence,
e#ectively waiving any protest.

Regarding the Statute of Frauds, the Court agreed with the CA that it does not
apply to this case. The right to repurchase was part of the original contract of
sale, making the deed of sale and the verbal agreement an integral whole. The
Statute of Frauds requires certain contracts to be in writing to be enforceable,
but it applies only to executory contracts, not those partially or fully performed.
Since the sale was consummated, the Statute of Frauds was deemed
inapplicable. The Court emphasized that the Statute of Frauds is intended to
prevent fraud, not to be used as an instrument to perpetrate it.
 Title
Mactan Cebu International Airport Authority vs. Court of Appeals

Case Ponente Decision Date

G.R. No. 121506 - Resolution FRANCISCO, J Oct 30, 1996

A dispute arises between the Mactan Cebu International Airport

Authority and private landowners over the right to repurchase
properties sold for airport expansion, with the Supreme Court ruling in
favor of the landowners based on parol evidence and stating that the
Statute of Frauds does not apply.

THIRD DIVISION

G.R. No. 121506. October 30, 1996.

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. COURT OF

APPEALS, REGIONAL TRIAL COURT, BRANCH 9, CEBU CITY, MELBA LIMBACO,
LINDA C. LOGARTA and RAMON C. LOGARTA, respondents.

The Solicitor General for petitioner.

Sycip Salazar Hernandez & Gatmaitan for private respondents.

RESOLUTION

FRANCISCO, J p:

Petitioner Mactan Cebu International Airport Authority (MCIAA) 1 seeks a

reversal of the decision 2 of the Court of Appeals (CA) dated March 23, 1995 as well as
the resolution 3 dated August 7, 1995 denying petitioner's motion for reconsideration.
The facts, as stated in the assailed decision, and which we adopt, are as follows:

"Sometime in 1949, o!cers of the National Airport Corporation informed the

owners of the various lots surrounding the Lahug Airport that the government will
purchase their lands for the expansion of the airport. The landowners were convinced
to sell their properties, otherwise, the government will be forced to institute
expropriation proceedings in courts. They were also assured that their properties will
be returned to them when these are no longer being used by the airport (TSN-Daclan,
15 June 1992, pp. 5-7; TSN-Sanchez, 29 September 1992, p. 12; TSN-Daclan, 9 February
1993, pp. 7-9, 12).

"Initially, Inez Ouano did not want to sell her property because she does not
have enough to bequeath to her grandchildren and the price o"ered by the
government was very low. Nonetheless, she agreed to sell since the government was
going to expropriate the land anyway. She was also reassured by the promise that the
land will be returned to her when it is no longer in use (TSN-Daclan, 15 June 1992, pp.
5-6).

"Eufemio Vercide, one of the a"ected landowners testi#ed that in a meeting

called by the NAC, the landowners were given documents to sign, and he asked for a
rider or certi#cation which would indicate that the land will be returned to him should
it not be used by the airport. He testi#ed that it was only after the rider was given to
him that he signed the document of sale (TSN-Catin, 24 September 1992; Deposition of
Eufemio Vercide; Records pp. 146-155). The rider dated 8 November, 1949, signed by
Mariano Reyes for the NAC and Vercide reads, as follows:

"This RIDDER (sic), shall remain in full force up to whensoever and whatever
the Lahug Airport may happen in the future. All statements in anticipations herein
below stated, shall remain valid in favor of the landowners.

"That in the event that this Lahug Airport will be left dead and of no use, or be
transferred to another place or locality, then the parcels of land mentioned in the
attached Doc. No. 698, Page 8, Book No. XVII, Series of 1949 by Atty. Daniel Tumulak,
shall be returned to the same owner, EUFEMIO O. VERCIDE at the same selling price
without any interest (Exhibit "F-1"; Records, p. 92)."

"The sale of Inez' property was covered by a Deed of Sale signed by her and
Mariano Reyes representing the NAC. The deed indicates that the Lot 742 was sold for
P2,596.40; and Lot 953 for P1,125.20. The deed does not contain any provision
regarding Inez' right to repurchase the properties. Nor does she have any rider such as
the one given to Vercide.

"Nonetheless, during her lifetime, Inez used to remind her granddaughter

Melba Limbaco, who was living with her, about the assurance by the NAC o!cials that
the properties will be returned. Inez also made Melba understand that the latter can
recover the land herself should Inez die before the proper time arises.

...

"Upon learning that other landowners were able to recover their properties and
that the then Pres. Aquino had ordered that the airport be transferred to Mactan, the
appellees tried to repurchase the properties originally owned by their grandmother.
On 2 October 1991, they wrote to Capt. Antonio Oppus, the manager of appellant,
signifying their intention to repurchase the properties originally owned by their
grandmother (Exhibit "D", Records, pp. 82-83). Capt. Oppus replied through a letter
dated 17 October 1991 denying their request because the deed of sale covering the
properties does not contain any condition relating to the right to repurchase. These
properties, it was explained, had become the absolute properties of the NAC (Exhibit
"E" Records, p. 84). 4

Private respondents thereafter #led a case for reconveyance with the Regional
Trial Court (RTC) which ruled in their favor. On appeal to the CA, the same was
a!rmed in toto. Hence, this petition assigning the following errors:

"I. RESPONDENT COURT ERRED IN RULING THAT THERE WAS AN

AGREEMENT ALLOWING INEZ OUANO AND HER SUCCESSORS TO REPURCHASE
THE LOTS IN QUESTION ABSENT ANY "RIDER" IN THE DEED OF SALE SIMILAR TO
THE SALES OF ADJACENT LOTS WHICH CONTAINED RIDERS.

II. RESPONDENT COURT ERRED IN RULING THAT THE STATUTE OF FRAUDS

DOES NOT APPLY IN THE INSTANT CASE AS THE CONTRACT HAS BEEN PARTIALLY
EXECUTED. 5

Anent the #rst error, the CA's #nding that there was an agreement allowing the
right of repurchase, was established after admitting the parol evidence presented by
private respondents. We reject petitioner's argument that in the absence of any rider
providing for such right of repurchase, no evidence, whatsoever can be received to
establish that such a right indeed exists. Both the RTC and the CA correctly ruled that
the right of repurchase granted by the NAC to Inez Ouano can be su!ciently
established by parol evidence. The Court of Appeals, based on the parol evidence
presented by private respondents, thus stated:

"We see no reason, however, why Inez should be considered as not similarly
situated as the owners of these other lots. All these lots surround the Lahug Airport
and were acquired by the government for the proposed expansion of the airport. The
appellee has not presented any evidence to show that Inez' lots were acquired for a
di"erent purpose or under di"erent conditions. Why then should the sale of such lots
be singled out as not subject to the right to repurchase when a good number of the lots
around them were already repurchased by their original owners? 6

Under the parol evidence rule, when the terms of an agreement have been
reduced into writing, it is considered as containing all the terms agreed upon, and
there can be, between the parties and their successors-in-interest, no evidence of such
terms other than the contents of the written agreement. However, a party may present
evidence to modify, explain or add to the terms of the written agreement if he puts in
issue in his pleading, the failure of the written agreement to express the true intent of
the parties thereto. 7 In the case at bench, the fact which private respondents seek to
establish by parol evidence consists of the agreement or representation made by the
NAC that induced Inez Ouano to execute the deed of sale; that the vendors and their
heirs are given the right of repurchase should the government no longer need the
property. Where a parol contemporaneous agreement was the moving cause of the
written contract, or where the parol agreement forms part of the consideration of the
written contract, and it appears that the written contract was executed on the faith of
the parol contract or representation, such evidence is admissible. 8 It is recognized
that proof is admissible of any collateral parol agreement that is not inconsistent with
the terms of the written contract though it may relate to the same subject matter. The
rule excluding parol evidence to vary or contradict a writing does not extend so far as
to preclude the admission of existing evidence to show prior or contemporaneous
collateral parol agreements between the parties, but such evidence may be received,
regardless of whether or not the written agreement contains any reference to such
collateral agreement, and whether the action is at law or in equity. 9

More importantly, no objection was made by petitioner when private

respondents introduced evidence to show the right of repurchase granted by the NAC
to Inez Ouano. It has been repeatedly laid down as a rule of evidence that a protest or
objection against the admission of any evidence must be made at the proper time, and
if not so made, it will be understood to have been waived. 10

As regards the second assigned error, the CA correctly held that the Statute of
Frauds does not apply to the case at bench. In support thereof, the CA declared:

"It will be stressed that the right to repurchase is part of the contract of sale,
albeit not incorporated in the deed of sale. It is not an independent agreement or
contract. It is, therefore, correct for the trial court to hold that the contract has been
partially executed by the sale of the properties to the appellant." 11

Under Art. 1403 of the Civil Code, a contract for the sale of real property shall be
unenforceable unless the same or some note or memorandum thereof be in writing
and subscribed by the party charged or his agent. Evidence of the agreement cannot
be received without the writing, or a secondary evidence of its contents. In the case at
bench, the deed of sale and the verbal agreement allowing the right of repurchase
should be considered as an integral whole. The deed of sale relied upon by petitioner
is in itself the note or memorandum evidencing the contract. Thus, the requirement of
the Statute of Frauds has been su!ciently complied with. Moreover, the principle of
the Statute of Frauds only applies to executory contracts and not to contracts either
partially or totally performed, 12 as in this case, where the sale has been
consummated; hence, the same is taken out of the scope of the Statute of Frauds. As
the deed of sale has been consummated, by virtue of which, petitioner accepted some
bene#ts thereunder, it cannot now deny the existence of the agreement. 13 The Statute
of Frauds was enacted for the purpose of preventing fraud. It should not be made the
instrument to further them. 14

ACCORDINGLY, the petition is hereby DENIED.

SO ORDERED.

Narvasa, C .J ., Davide, Jr., Melo, and Panganiban, JJ ., concur.

 Title
Paterno vs. Yan

Case Ponente Decision Date

G.R. No. L-12218 REYES, J.B.L., J Feb 28, 1961

A dispute over a lease agreement between plainti!s and defendant

leads to a ruling in favor of the defendant, as the Supreme Court deems
oral evidence admissible to prove the existence of a contract if there
has been partial execution, resulting in a new trial being ordered.

Case Digest (G.R. No. L-12218)

GPT-4o (v3)

Facts:

In the case of "Paterno v. Yan," the plainti!s-appellees, represented by Maria

Paterno and others, entered into a notarized lease agreement with the
defendant-appellant, Jao Yan, on June 3, 1948. The leased property was a
parcel of land located at the corner of Escolta Street and Plaza Moraga in
Manila, covered by Transfer Certi"cate of Title No. 7768. The lease was set for a
period of seven years starting from July 15, 1948. Under the terms of the lease,
Jao Yan was required to construct a building made of strong wooden materials
on the leased premises, which would become the property of the lessors at the
end of the lease. Additionally, he was to pay a monthly rental of PHP 5,500 and
cover all taxes, charges, and assessments on the building.

On May 20, 1955, the lessors "led a complaint, later amended on September 20,
1955, to recover unpaid rentals amounting to PHP 23,250 for the months of
March to June 1955 and the "rst days of July 1955, PHP 7,680 for real estate
taxes and penalties for the years 1953 to 1955, PHP 2,500 in attorney's fees, and
to reclaim the building constructed on the leased land. In response, Jao Yan
claimed that the original lease had been orally extended from seven to ten
years in exchange for his construction of a semi-concrete building, which he
had completed at a cost of PHP 13,000, higher than the cost of the originally
planned wooden structure. He argued that the rentals were withheld due to the
plainti!s' refusal to acknowledge the modi"ed contract and sought judgment
to compel the plainti!s to recognize the modi"ed lease and pay him damages.

During the trial, Jao Yan presented testimonial evidence and documents "led
with the City Engineer's o#ce to support his claim of an oral modi"cation to
the lease agreement. However, the Court of First Instance of Manila excluded
this evidence, citing the Statute of Frauds, and ruled in favor of the lessors. Jao
Yan then appealed the decision.

Issue:

1. Was the oral modi"cation of the lease agreement enforceable despite the
Statute of Frauds?

2. Should the oral evidence presented by the defendant to prove the

modi"cation of the lease agreement have been admitted?

Ruling:

1. The Supreme Court ruled that the oral modi"cation of the lease agreement
was enforceable despite the Statute of Frauds.

2. The Supreme Court held that the oral evidence presented by the defendant
to prove the modi"cation of the lease agreement should have been
admitted.

Ratio:

The Supreme Court found that the lower court committed a reversible error by
excluding the oral evidence presented by the defendant. The Court emphasized
that partial performance takes an oral contract out of the scope of the Statute of
Frauds. In this case, the defendant had partially performed the oral agreement
by constructing a semi-concrete building, which was a signi"cant modi"cation
from the original written contract that called for a wooden structure. The Court
cited established doctrine and previous rulings, such as Hernandez vs. Andal
and Almirol and Cario vs. Monserrat, which support the admissibility of oral
testimony to prove the existence of a contract when there has been partial
performance.

The Court also referenced the case of Read Drug & Chemical Co. vs. Nattans,
where a parol agreement to extend a lease was deemed enforceable despite the
Statute of Frauds because the tenant had fully performed his part of the
agreement by making extensive repairs. Similarly, in the present case, the
construction of the semi-concrete building at a higher cost was seen as partial
performance that took the oral agreement out of the Statute of Frauds'
prohibition.

Furthermore, the Court noted that the appellate court has the discretion to
consider an unassigned error closely related to an assigned error. In this case,
the issue of the oral modi"cation's enforceability under the Statute of Frauds
inherently included the question of the admissibility of oral evidence.
Therefore, the interest of justice warranted a new trial to properly consider the
evidence.

The Supreme Court reversed the decision of the lower court and ordered a new
trial, with costs against the appellees.
 Title
Paterno vs. Yan

Case Ponente Decision Date

G.R. No. L-12218 REYES, J.B.L., J Feb 28, 1961

A dispute over a lease agreement between plainti!s and defendant

leads to a ruling in favor of the defendant, as the Supreme Court deems
oral evidence admissible to prove the existence of a contract if there
has been partial execution, resulting in a new trial being ordered.

EN BANC

G.R. No. L-12218. February 28, 1961.

MARIA PATERNO, ET AL., plainti!s-appellees, vs. JAO YAN, defendant-appellant.

SYLLABUS

1. STATUTE OF FRAUDS; PARTIAL PERFORMANCE OF ORAL CONTRACTS;

ADMISSIBILITY OF ORAL TESTIMONY TO PROVE EXISTENCE OF LEASE. Partial
performance takes an oral contract out of the scope of the Statutes of Frauds (27 C.J.
206; Hernandez vs. Andal, 78 Phil., 196). With particular reference to contracts over
real property, where an oral contract of sale has been partially executed by payment of
the price, oral testimony is admissible to evidence the existence of the contract
(Admiral and Cario vs. Monseratt, 48 Phil., 67). This rule is entirely applicable to
contracts of lease.

2. ID., ID., ID., CASE AR BAR. In Read Drug & Chemical Co. vs. Nattans, 129 Md.
67, 98 Atl. 158, it was held that a parol agreement of a landlord to extend a lease for a
speci"ed term of years and at speci"ed rental provided the tenant made certain
extensive repairs to the property, was enforceable notwithstanding the Statute of
Frauds, where the tenant fully performed his part of the agreement. In the case at bar,
the written contract of lease called for the erection, by the tenant, of a building of
strong wooden materials, yet it is not contested that what he actually did construct on
the leased lot was a semi-concrete edi"ce, at much higher cost. Since this modi"cation
is plainly referable to the oral agreement as claimed and the same can not be
explained on the record except as executed in reliance on the verbal modi"cation of
the original lease, and in the performance thereof, the court below should have
accepted and taken into account the o!ered testimony on the extension and
modi"cation of the original terms of the lease, instead declaring the same
unenforceable under the Statute of Frauds.

3. APPEALS; CONSIDERATION OF UNASSIGNED ERROR CLOSELY RELATED

TO AN ASSIGNED ERROR; DISCRETION OF COURT. It is within the discretion of the
appellate court to consider an unassigned error that is closely related to an error
properly assigned (Hernandez vs Andal, 78 Phil., 196, 209-210).

DECISION

REYES, J.B.L., J p:

Involved in this direct appeal from a decision of the Court of First Instance of
Manila is the applicability of the Statute of Frauds to the lease agreement relied upon
by the appellant.

By a notarized contract under date 3 June 1948, the appellees, represented by

their attorney-in-fact, Martina Paterno, leased to the appellant Jao Yan a parcel of land
situated at a corner of Escolta Street and Plaza Moraga, of the City of Manila, covered
by Transfer Certi"cate of Title No. 7768. The lease was to be for a period of seven (7)
years, commencing on the 15th day of July, 1948. The lessee bound himself to
construct a building "to be made of strong wooden materials" on the leased premises,
which would become property of the lessors at the termination of the lease; to pay
P5,500.00 monthly rental, and all taxes, charges, and assessments on the building.

By complaint dated 20 May 1955, subsequently amended on 20 September 1955,

the lessors "led action to recover from the lessee rentals in the sum of P23,250.00 due
for the months of March to June, 1955 and the "rst days of July, 1955; P7,680.00 for
real estate taxes and penalties due on the building for the years 1953 to 1955; P2,500.00
attorney's fees; and for the recovery of the building constructed on the leased land.

Defendant lessee averred, in his answer, that the original written contract had
been orally extended from seven (7) to ten (10) years, in consideration of his
constructing a semi-concrete building (instead of the wooden one originally
contemplated), as he actually had done, at a costs of P13,000.00, higher than the
original wooden structure would have cost; that the rentals due had been retained by
him because of plainti!'s refusal to recognize the modi"ed contract; that plainti!'s
maliciously garnished the rents due from his sublessees; and prayed for judgment
compelling plainti!'s to recognize the modi"ed contract and to pay him damages,
material and moral.

At the trial, defendant o!ered testimonial evidence to support claim that the
original written contract had been subsequently modi"ed by oral agreement between
the parties in the manner alleged in the answer; he also submitted documents "led
with the City Engineer's o#ce, regarding the semi-concrete building, conformably to
the modi"catory oral agreement. The Court below sustained the plainti!'s objections
to such evidence and excluded it on the ground that the acceptance was barred by the
Statute of Frauds (Rule 123, sec. 21 (a) and (c), Rules of Court), and rendered judgment
for the lessors as prayed for in the amended complaint. Defendant duly appealed.

We are of the opinion that the lower Court committed reversible error in
excluding appellant's oral evidence.

It is established doctrine in this jurisdiction that partial performance takes an

oral contract out of the scope of the Statute of Frauds (27 C. J. 206; Hernandez vs.
Andal, 78 Phil., 196). With particular reference to contracts over real property, this
Court has decided that where an oral contract of sale has been partially executed by
payment of the price, oral testimony is admissible to evidence the existence of the
contract (Almirol and Cario vs. Monserrat, 48 Phil., 67). The rule is entirely applicable
to contracts of lease, and the weight of authority supports the doctrine that

"The taking of possession by the lessee and the making of valuable

improvements, and the like, on the faith of the oral agreement, may operate to take the
case out of the prohibition of the statue, for it would be a gross fraud to permit the
lessor in such a case to avoid the lease." (49 Am. Jur. p. 809, sec. 106, and cases cited. 1

Its likewise the rule that

"The expenditure of money by a tenant in making improvements on the

premises on the faith of an oral agreements for a lease for a further term, may be
viewed not only as constituting in itself an act of part performance but as furnishing
strong if not conclusive evidence that possession is continued under the oral contract
and not as a tenant holding over under the original lease." (49 Am. Jur. 810; 33 A.L.R.
1489, 1501).

Accordingly, in Read Drug & Chemical Co. vs Nattans 129 Md. 67, 98 Atl. 158, it
was held that a parol agreement of a landlord to extend a lease for a speci"ed term of
years and at a speci"ed rental, provided the tenant made certain extensive repairs to
the property, was enforceable notwithstanding the Statute of Frauds, where the tenant
fully performed his part of the agreement. This is precisely the case before us. The
written contract of lease called for the erection, by the tenant, of a building of strong
wooden materials, yet it is not contested that what he actually did construct on the
leased lot was a semi-concrete edi"ce, at a much higher cost. Since this modi"cation is
plainly referable to the oral agreement as claimed, and the same can not be explained
on the record except as executed in reliance on the verbal modi"cation of the original
lease, and in performance thereof, as contested by the appellant, we are of the opinion
that the Court below should have accepted and taken into account the o!ered
testimony on the extension and modi"cation of the original terms of the lease, instead
of declaring the same unenforceable under the Statute of Frauds. Of course, the
lessors are entitled to controvert the evidence of the lessee with proof of their own;
but we are not here concerned with questions of weight of evidence, but of
admissibility. Indeed, the Court below made no pronouncements on the credibility of
the pro!ered evidence, obviously because it was deemed useless since the testimony
was rejected.

As to the argument of appellees that the non-admission of the oral evidence can
not be considered because it was not speci"ed as an error, it is enough to note that the
appellant has assigned as error the lower court's holding that the oral modi"cation of
the lease was unenforceable under the Statute of Frauds. Since, under the new Civil
Code (Art. 1403, par. 2), this unenforceability result from the inadmissibility of oral
evidence to prove the agreement unless a written memorandum thereof is produced,
the assignment of error made includes the issue of admissibility of testimonial
evidence. At any rate, it is within the discretion of the appellate court to consider an
unassigned error that is closely related to an error properly assigned (Hernandez vs.
Andal, 78 Phil., 196, 209-210).

Under the circumstances, we are of the opinion that the interest of justice
would be best served by a new trial.

WHEREFORE, the decision appealed from is hereby reversed and set aside, and
the records are ordered returned to the Court of origin, with instructions to proceed to
a new trial in conformity with this decision. Costs against appellees in this instance. So
ordered.

Padilla, Bautista Angelo, Concepcion, Barrera, Paredes, and Dizon, JJ., concur.
 Title
Engel vs. Mariano Velasco and Co.

Case Ponente Decision Date

G.R. No. 21651-25153 STREET, J Dec 29, 1924

In a case involving export brokers and a store owner, the court rules
that telegraphic correspondence can establish a valid contract if
con!rmed by letters, and that the delay in shipment of goods is excused
due to the purchaser's inability to provide credit, while deviations from
the contract terms do not release the purchaser from their obligation to
accept and pay for the goods.

Case Digest (G.R. No. 21651-25153)

GPT-3.5 (v1)

Facts:

The case of Engel v. Mariano Velasco & Co. involves a dispute between export
brokers, Lothar F. Engel, Carl J. Upmann, and Max Kummer, and store owner,
Mariano Velasco & Co., over the failure of the defendant to accept and pay for
various consignments of merchandise ordered from the plainti"s. The
plainti"s !led three separate actions in the Court of First Instance Manila to
recover the sums owed to them. The defendant denied the allegations and
raised various defenses and counterclaims.

Issue:

The main issues raised in the case are:

1. Whether telegraphic correspondence can establish a valid contract if

con!rmed by letters.

2. Whether the delay in shipment of goods is excused due to the purchaser's

inability to provide credit.

3. Whether deviations from the contract terms release the purchaser from
their obligation to accept and pay for the goods.
Ruling:

The court ruled in favor of the plainti"s and held that:

1. Telegraphic correspondence can serve as a basis of obligation between

contracting parties if con!rmed by letters.

2. The delay in shipment of goods is excused when it is requested by the

purchaser and rendered necessary by their inability to provide credit.

3. Deviations from the contract terms do not release the purchaser from their
obligation to accept and pay for the goods, especially when the purchaser
acquiesces in such deviations after due notice.

Ratio:

The court's decision is based on the second paragraph of article 51 of the Code
of Commerce, which allows telegraphic correspondence to be admissible as
part of the correspondence between parties if con!rmed by letters. The court
also considered the circumstances of the case, such as the defendant's inability
to provide credit and the plainti"s' role as agents for the defendant in placing
orders. The court found that the defendant's refusal to accept and pay for the
goods was unjusti!ed and ordered them to pay the plainti"s the sum of
P152,217.74, with interest at six percent.

In relation to the conversion of the plainti"s' claim from dollars to pesos, the
court ruled that the judgment should be expressed in Philippine currency at
the prevailing rate of exchange at the time of the judgment. This is in
accordance with the rule that payments of debts of money should be made in
the specie stipulated in the contract, unless otherwise provided. The court
rejected the defendant's argument that the judgment should be expressed in
American currency or at the current rate of two pesos for one dollar, as it
would result in the plainti"s receiving a larger sum of American money than if
the contract had been ful!lled.

This case involves a dispute over the conversion rate of currency in a breach of
contract case. The plainti"s, who are the respondents in this case, !led a
complaint against the defendant for damages arising from the defendant's
default in paying for merchandise. The plainti"s claimed that at the time of the
defendant's default, American currency commanded a premium of thirteen
and one-half percent above parity in relation to Philippine pesos. The plainti"s
converted their claims for damages into Philippine currency based on this
premium.

The defendant argued that the judgment should be expressed either in

American currency or in Philippine currency at the current rate of two pesos
for one dollar. The court acknowledged that the judgment should be expressed
in Philippine currency, as it is the lawful currency of the Philippines. The court
also noted that the issue at hand is not a question of exchange, but rather a
question of monetary equivalence.

The court ruled that the conversion of the plainti"s' claim from dollars to pesos
should be based on the value prevailing at the time of the defendant's breach,
rather than the value at the time of the judgment. The court cited several cases
from other jurisdictions that support this approach. The court explained that
the plainti"s are entitled to recover a sum of money that will constitute
indemnity for the damage caused by the defendant's breach of contract.
Therefore, the conversion should be based on the value at the time of the
breach to ensure that the plainti"s receive the exact amount to which they are
entitled in the proper currency.

The court modi!ed its previous decision to eliminate the premium charged
against the defendant in the plainti"s' liquidation of the claims. The court
instructed the lower court to enter a judgment eliminating the premium, but
a#rmed the judgment in all other respects.

One justice concurred with the majority opinion but expressed a di"erent
viewpoint regarding the defendant's liability for exchange. This justice argued
that the court should not vary the terms of the contract, which called for
payment in United States dollars. They cited relevant provisions of the
Administrative Code and the Civil Code to support their argument.

Another justice concurred and dissented with the majority opinion. They
agreed with the majority on most points but believed that the defendant should
be entitled to a recovery on their cross-complaint. They argued that the
plainti"s breached their contract by shipping goods that did not correspond to
the sample provided by the defendant. They disagreed with the majority's
interpretation of the defendant's request to have the goods marked "Extra
Madapolan" as a novation of the original contract.

Two justices dissented from the majority opinion. They argued that the
conversion of the plainti"s' claim should be based on the value prevailing at
the time of the judgment, rather than the value at the time of the defendant's
breach. They cited English cases that support this approach and disagreed
with the majority's reasoning. They also criticized the majority for attempting
to relieve the defendant from the e"ects of an adverse $uctuation in Philippine
currency. They argued that courts should not attempt to relieve debtors from
rises in the value of currency.
 Title
Engel vs. Mariano Velasco and Co.

Case Ponente Decision Date

G.R. No. 21651-25153 STREET, J Dec 29, 1924

In a case involving export brokers and a store owner, the court rules
that telegraphic correspondence can establish a valid contract if
con!rmed by letters, and that the delay in shipment of goods is excused
due to the purchaser's inability to provide credit, while deviations from
the contract terms do not release the purchaser from their obligation to
accept and pay for the goods.

SECOND DIVISION

[G.R. Nos. 21651-25153. December 29, 1924.]

LOTHAR F. ENGEL, ET AL., plainti"s-appellees, vs. MARIANO VELASCO & CO.,

defendant-appellant.

Cross!eld & O'Brien and Fisher, DeWitt, Perkins & Brady for appellant.

Gibbs & McDonough for appellees.

SYLLABUS

1. CONTRACTS; TELEGRAPHIC MESSAGE AS MEDIUM OF COMMUNICATION;

CONFIRMATORY LETTER. Under the second paragraph of article 51 of the Code of
Commerce, as the same stood prior to its repeal by Act No. 3089, telegraphic
correspondence could not serve as a basis of obligation between contracting parties
who had not admitted this medium in a written contract, nevertheless, where
telegraphic communications are followed by letters expressly referring to the
telegrams and con!rming the same, such telegrams become admissible as part of the
correspondence between the parties.
 2. ID.; ID.; ID.; RATIFICATION. There is nothing in the provision cited which
prohibits the parties to a contract from ratifying agreements e"ected by telegram; and
subsequent rati!cation or incorporation if the telegraphic message in a letter of the
same or late date has all the e"ect of a previous written agreement under said
provision.

3. ID.; DELAY IN SHIPMENT OF GOODS. Delay on the part of the seller in

dispatching goods is su#ciently excused where it appears not only that the delay was
requested by the purchaser but also was further rendered necessary by the inability of
the purchaser to comply with an agreement to supply the credit necessary to transport
the goods.

4. ID.; DEVIATION FROM TERMS OF CONTRACT; ACQUIESCENCE OF

PURCHASER. The purchaser of merchandise will not be released from his obligation
to accept and pay for the goods by deviations on the part of the seller from the exact
terms of the contract, if the purchaser acquiesces in such deviations after due notice
thereof.

5. ID.; ID.; ID.; CASE AT THE BAR. various minor deviations from the exact
terms of the defendant's orders are considered by the court and held to be justi!ed
under the circumstances involved in the case, and especially by the circumstance that
the plainti"s acted as agents for the defendant in placing orders and possessed a
certain discretion in the !lling of orders which was recognized as necessary by the
defendant.

DECISION

STREET, J p:

The three consolidated actions now before us were instituted in the Court of
First Instance Manila by Lothar F. Engel, Carl J. Upmann and Max Kummer, of New
York City, copartners under the !rm name of Engel, Upmann & Co., a general
partnership engaged in mercantile business in the City of Manila, for the purpose of
recovering various sums of money, with interest, for the alleged failure of the
defendant to accept and pay for various consignments of merchandise ordered from
the plainti"s by the defendant. the defendant interposed answers in the three cases
denying generally the allegations of the complaints and setting forth various special
defenses, with counterclaims and an a#rmative cross action. Upon hearing the proof
the trial judge absolved the plainti"s from the defendants counterclaims and cross
complaint and gave judgment for the plainti"s to recover to the defendant the sum of
P152,217.74, with interest at six per centum, to be calculated upon di"erent portions of
the total from speci!ed dates. From this judgment the defendant appealed.

In reality this appeal involves twenty di"erent cause of action, sixteen of which
are set out in the plainti"s three complaint, and four in the defendant's counterclaims
and cross complaint. These various cause of action are set forth fully in the pleadings,
and an analysis of each is found in the appealed decision. The record is necessarily
voluminous beyond the ordinary, but the labor of handling so great a mass of matter is
in some degree lessened by the circumstance that all of the di"erent causes of action
present features in common.

At the time of the transactions with which we are here concerned the plainti"s
were export brokers, or jobbers, of textile merchandise in the City of New York, while
the defendant was the owner, as it still is, of a large store in Manila where general
merchandise is sold both at wholesale and retail. In connection with this business the
defendant from time to time has occasion to import textile fabrics on a large scale. In
the beginning of the year 1920 commercial relations were established between the
plainti"s and the defendant, and in the succeeding three months the defendant, and in
the succeeding three months the defendant sent to the plainti"s numerous orders for
merchandise. The general course of business between the two parties appears to have
been this: The defendant would !rst obtain from the plainti"s by cable information as
to the prices of the goods desired, and would there upon send a cablegram to the
plainti"s, instructing them to buy and hold speci!ed qualities of goods in the amount
and at the prices stated. Contemporaneously with the sending of the cablegram the
defendant would dispatch by mail more extended instructions, con!rming the
cablegram and giving such other advice as was desirable. The cablegram were written
in cipher and were necessarily brief, while the letters of con!rmation and vice were
more extended, containing speci!cations as to pattern in the case of suitings and the
stampings in the case of fabrics commonly called coco blanco. Upon receipt of the
cabled order, the plainti"s cabled their acceptance in reply, indicating the approximate
time of delivery or, if the goods could not be obtained, so advised. At or about the same
time the plainti"s placed an order for the same goods with the manufacturer, subject
to subsequent speci!cations as to patterns and stampings.

Upon receiving the defendant's written order by mail the plainti"s transmitted
the transmitted the instructions contained therein to the manufacturer for the
execution and at the same time prepared and forwarded to the defendant a formal
written sales note, conforming in the main to the terms speci!ed in the previous
communications between the plainti"s and the defendant. As a result of this
procedure the plainti"s came directly obligated to the manufacturer who produced the
goods, while the defendant became obligated to the plainti"s, assuming that all
conditions essential to the creation of liability had been ful!lled.

It is said that as many as thirty-seven orders were given by the defendant to the
plainti"s beginning in the month of January, 1920. A number of these orders were
duly honored by the defendant upon the receipt of the goods and the price paid in due
course. The causes of action stated in the three complaints have their origin in sixteen
or seventeen orders nearly all of which were sent to the plainti"s between February 5
and April 2, 1920, inclusive. These orders appear to have been promptly placed with
the manufacturers by the plainti"s, but delay occurred in the matter of shipment; and
when delivery was !nally tendered in Manila of the goods covered by the orders
included in actions 19917 and 201637 of the lower court, acceptance was refused.
These goods were there upon sold by the plainti"s in Manila and claim made upon the
defendant for the di"erence between the amount realized and the contract price. The
goods involved in the orders covered by case No. 20321 were never shipped from New
York to Manila. and after it was found that said goods would not be here accepted, the
plainti"s caused the same to be sold in New York City.

The plainti"s proceed upon the idea of breach of contract on the part of the
defendant in its failure to accept and to pay for the goods covered by the orders above
referred to. On the part of the defense a preliminary question is made with reference
to the admissibility of so much of the correspondence as was conducted by cable, and
for the rest it is claimed that the plainti"s have not complied with the terms of the
various orders and that the refusal of the defendant to accept and pay for the goods in
question was justi!ed.

To dispose !rst of the controversy regarding the admissibility of the

cablegrams, reference must be made to paragraph 2 of article 51 of the Code of
Commerce, as it stood prior to the enactment of Act No. 3098 of the Philippine
Legislature by which said paragraph was repealed. The provision referred to is as
follows:

"Telegraphic correspondence shall only be the basis of an obligation between

contracting parties who have previously admitted this medium in a written contract,
and provided the telegram ful!ll the conventional conditions or conventional signs
which may have been previously !xed and agreed to by the contracting parties."

This provision was in force at the time all of the orders involved in this
litigation were given, and it is therefore insisted that the messages transmitted by
cable are inadmissible against the defendant. In this agreement is in evidence by
which the parties expressly admitted telegraphic correspondence with the plainti"s
had been supplied by the latter.

We are unable to concede to this provision the e"ect claimed for it by the
defendant, namely, of eliminating entirely from the case so much of the
correspondence as was conducted by cable. Upon examining the documentary proof,
it will be found that upon sending its orders by cable, the defendant followed with
letters of con!rmation by mail, in which the various cables were referred to and in
e"ect incorporated in the written correspondence. By reason of this circumstance it is
proper to refer to the cablegrams in relation with the letters. There is nothing in the
provision quoted from article 51 which prohibits parties to a contract from ratifying
agreements e"ected by telegraphic communications; and subsequent rati!cation, or
incorporation of the telegraphic communications in written letters of the same or later
date, must be conceded to have all the e"ect of a previous written agreement under
the provision quoted. Furthermore, it is apparent that even under the statute
telegraphic communication conveying noti!cation of acts done could not be ignored,
where the basis of a contract has already been established, and the same must be true
of telegraphic directions communicated by one contracting party to another in relation
with the performance of the contract. In this connection we note that the attorneys for
the defendant, while vigorously insisting upon the elimination of the telegraphic
correspondence in general, have not hesitated to rely upon more than one cablegram
passing between the parties.

The failure of the defendant to accept and pay for all the goods ordered and
shipped to Manila was undoubtedly due, as will hereafter more fully appear, to the
inability of the defendant to command the funds necessary to meet the obligation, but
when confronted with the necessity of dishonoring the orders, the responsible o#cers
of the defendant put forth various pretexts to justify its position. Several of this
excuses are manifestly of trivial import, but inasmuch as they have been called upon
to do service in the defendant's answer and cross complaint, they will be examined by
us in due time.

The principal defense, and the one which requires most attentive
consideration, is that which has relation to the belated dates of shipment of the goods
from New York City, in the case of these goods which were actually dispatched, and
the failure of the plainti"s to dispatch in the stipulated time such of the goods as never
left New York. In this connection we note that the dates for delivery, or shipment,
speci!ed in the di"erent sales notes relating to the goods which were in fact sent to
Manila, run through the months of May, June, July, August, September and December,
while the actual dates of departure of said goods from New York City were in
September, October and December, 1920, and there was one shipment which, for
reasons to be explained, occurred as late as May, 1921.

Upon giving its orders the defendant in each case speci!ed the time when
delivery was desired, adding in nearly every instance, the words "sooner, if possible".
In conformity with the suggestion contained in these words the plainti"s, in
specifying the time do delivery and their sales notes, nearly always added the same
word, "sooner if possible." It resulted that the plainti"s were at liberty to ship all of the
ordered goods at an earlier date than that speci!ed, if practicable; and except for the
circumstances presently to be mentioned, they were obligated to make deliveries at
least as soon as the dates speci!ed for delivery or shipment of each order.
 Upon the delays that actually occurred in shipment, as above indicated, the
defense claims that delivery was not made within the time speci!ed in the contract
and that as a consequence the defendant should be absolved from all liability. The
answer to this question requires an exposition of events that occurred between the
time when the goods were shipped, and of the manner in which the relations of the
parties to this contract were a"ected by said occurrences as revealed in their
correspondences by cable and by letters.

It will remembered that the early months of the year 1920 constituted a period
of unparalleled activity in industrial and mercantile circles. The prices of textile
fabrics, in common with other commodities, had reached very high levels in said
period. and it seemed to many merchants that the extraordinarily prosperous
conditions through which the world of industry was then passing would continue for a
considerable time. Now, all of the defendant's orders with which we are here
concerned were given while prices were rising and before the peak was reached in
May, 1920. The defendant company appears to have had a large business, and in
connection with its own requirements as a dealer in merchandise, both at wholesale
and retail, it had adopted a practice of giving orders in its own name for the shipment
of goods to other merchants, its customer in the Philippine Islands, who did not have a
high mercantile rating and who could not command the credit facilities necessary to
enable them to import goods upon their own account. the o#cers in charge of the
defendant company appear at about the same time to have conceived the ambition of
gaining complete control of the textile market in the Philippine Islands, and this
circumstance possibly accounts in part for the large orders which were transmitted by
the defendant to the plainti"s.

A touch of reaction was felt by the trade in Manila in the month of May, owing
to the fact that the banks about that time were becoming somewhat wary, and credit
facilities were not so easily commanded by importers as before. The situations in this
respect became more delicate as weeks passed, and the textile market soon began to
decline. In September and October the real crash came, enormous declines in values
being registered in all lines. The last three orders here in litigation were given by the
defendant in the !rst half of the month of May, 1920, and in the two months that
followed the o#cers of the defendant company apparently began to feel that they had
overdone the matter of giving orders. Thus, on July 7, 1921, the defendant cabled the
plainti"s to delay as much as possible the shipments of its orders of coco blanco
(Amsinck red), and in a letter of the same date, explanatory of this cablegram, the
defendant said: "During the last two months business is absolutely dead in textiles as
well as in other lines and we don't think there will be a change for the better in the
next few months. There is no ready money available here and the banks refuse to open
credit, claiming that they have no gold on hand." And in a postscript to the same letter
the defendant added: "P.S. in view of the bad situation of the market we beg you to
retard the shipment of coco blanco and coco encarnado as much as possible."

It will be noted that part of the goods mentioned in these communications were
goods that had been ordered by the defendant for direct shipment upon the
defendant's account to Chua Soco, one of the large customers of the defendant in
Manila. Others of the goods referred to were goods that were intended for the
defendant 's own store. In a latter cablegram, of July 19, the defendant, referring
speci!cally to the Chua Soco orders, directed that shipment should not be made earlier
than September; and in a letter explanatory of this cablegram, the defendant said:

"Referring to our cablegram regarding Chua Soco please note, that present
hauling (sic?) conditions are in such a state, that it is impossible for us or any one else
to open up a credit in gold anywhere.

"This has nothing to do at all with the standing of a commercial house, but the
banks here claim, that they have no gold at present and a change of the present
situation cannot be expected before a month from now.

"In view of the present situation, Mr. Chua Soco begs that the shipment of his
orders covered by the two credits in question be postponed until September, which
month means the end of the rainy season here and in October, November, when these
goods would arrive, business is picking up as usual at that time of the year."

At an early stage of the correspondence between the plainti"s and the

defendant the latter had agreed to supply through banking agencies in New York
con!rmed letters of credit to cover the price of such goods as the defendant should
order to be sent upon its account directly to defendant's customers, like Chua Soco, in
Manila. As for the goods which were to be shipped directly to the defendant, no
express undertaking to supply con!rmed letters of credit appears to have been made,
but the !rst letter written by the defendant to the plainti"s (Exhibit A) contained the
following paragraph concerning the discounting of the drafts to be drawn on the
defendant for the goods to be ordered by it:

"Should there be any di#culty in discounting your drafts on us then please

cable and we shall arranged this matter by wire."

This communication is important; for as will be seen, the solution of the cases
before us depends mainly upon the failure of the defendant to supply the draft
discounting facilities promised in this paragraph. Certainly, it was not contemplated
that the plainti"s should handle the vast amount of merchandise involved in these
transactions on its own unassisted credit; and the credit of the defendant was so
highly esteemed in banking circles that no trouble was expected in the matter of the
necessary banking arrangements. An indication of the plainti"s' position was
conveyed in its letter of April 16 to the defendant, as follows:

"Whereas we had the good fortune of being able to make a favorable

arrangement with our own bank for a fairly large drafts credit when our business was
in its infancy, it was our plan to make use of this credit partially for your business but
!nd this impossible for our business in Central and South America which has grown
very large of late.

"It is with regret therefore that we have to ask you to take the necessary steps to
open credits in our favor against orders in excess of $40,000 to $50,000, which we
believe will be easy at your end."

In May, 1920, the plainti"s ascertained from the bank which had been handling
the defendant's paper in New York City that it would not discount drafts thereafter
drawn by the plainti"s upon the defendant for amounts in excess of $50,000, in the
absence of con!rmed letters of credit from Manila. The plainti"s thereupon cabled
this information to the defendant and asked it to make necessary arrangements. On
June 18 the plainti"s advised that the same bank (American Foreign Banking
Corporation) would take no further drafts without security and asked the defendant if
it had opened credit. To this the defendant replied that it had sent forward credit for
P50,000 through the Philippine National Bank.

On September 14, 1920, the defendant cabled the plainti"s as follows:

"Quite impossible at present obtained credit. Can you ship draw at sixty days
sight payable in exchange for documents?"

On the same date the defendant wrote the plainti"s a letter in which it said:

"We beg to con!rm our telegrams of even date translation of which !nd
attached.

"We have tried our best to obtain credits from the banks but without success so
far and we don't know when condition will change. Unless a !rm does also export
business it is impossible to get credits in gold.

"We hope, that you will be able to ship our orders as we are sure that within
three to !ve months from now there will be a shortage of goods in this market."

In reply to the cablegram of September 20, the plainti"s, in September 25,

cabled the defendant as follows:

"Not able to make arrangements draft credit. Please arrange by wire a credit for
us as soon as possible $100,000. Goods now ready for shipment $50,000."

On September 29, 1920, in reply to plainti"s' cablegram of September 25, the

defendant cabled as follows:

"Upon no consideration whatever bank give credit for the present on account of
imports. No one knows how long it will take conditions to alter. Will telegraph
immediately there is any change."

On October 6, plainti"s in reply to defendant's above quoted cable of September

29 cabled:

"Cannot hold goods long time. We cannot discount drafts. We must pay prompt.
Do the best possible. Please arrange by wire a credit for us."

On October 27, plainti"s further wired defendant as follows:

"We are informed credit can be arranged apply to China Banking Corporation.
Are much in need of $75,000."

On October 30, defendant in reply to the foregoing cable, wrote a letter in

which, among other things, it said:

"We beg to acknowledge receipt of your cablegram as per translation enclosed.

As already mentioned in our former letters, it is impossible to get a credit, also not
from the Chinese Banking Corporation. We have tried every thing possible to get
credit, but it is an impossibility for us as well as for our competitors. The market is at
standstill and no business transactions are made at all."

Meanwhile the goods to supply the defendant's orders were coming in upon the
plainti"s from the factories, and it was necessary for the plainti"s to meet its
obligations. Confronted with the breakdown of the defendant's credit, the plainti"s
had no other recourse than to act upon defendant's cable of September 14 and ship the
goods out with drafts at sixty days on the defendant. In making these shipments the
plainti"s were not able to discount the drafts in full, but were able to obtain advances
for a certain percentage. Necessarily, when the drafts were dishonored, the plainti"s
were compelled to take them up and refund the amount advanced upon them. All of
the goods involved in case 19917 and 20637 of the lower court appear to have been
dispatched in this manner upon dates and in amounts as follows:

"Goods to the value of $20, 510.02, loaded Sept. 25, 1920; $17,740.74 on Bolton
Castle, which sailed Oct. 14; and $2,769.28 on S.S. Telemachus, which sailed Sept. 25.

"Goods to the value of $29,632.82, loaded in early part of November on S.S.

Satsuma, which sailed Dec. 4.

"Goods to the value of $15,539.04, loaded end of November or early part of

December on S.S. Duquesne, which sailed on Dec. 9.
 "Goods to the value of $12,352.68, loaded on S.S. Haleric, which sailed on May 8,
1921."

On November 6 the plainti"s informed the defendant by cable of the !rst

shipment above noted, against sixty-day sight drafts. In reply to this advice the
defendant, on November 9, cabled the plainti"s as follows:

"Cease all shipments. We cannot meet drafts, due to money scarcity."

On the following day the defendant wrote to the plainti"s to the following e"ect:

"We beg to con!rm our cablegram of even date translation of which please !nd
enchosed. Business at present is at a stand still and there is no hope, as far as we can
see, that business will get better within the !rst two months.

"At present we are not selling one-twentieth part of that what we sell in regular
times and as business has been like this for the last three months you will be able to
!gure out what this means for us.

"There is absolutely no money obtained her in the Philippines; also the banks
have no money and will not give credit or extend drafts.

"We are very sorry indeed, as this is the !rst time that we ever had to stop our
orders; but if our orders are coming forward, we shall not be able to take up the drafts
for the want of money or credit. Of course everybody else is in the same !x."

Upon receipt of defendant's cable of November 9 plainti"s answered:

"We expect payment of all drafts. $30,000 is all on board steamer. We shall
draw on you at sixty days sight. We cannot hold goods longer. We have much need of
money because pending orders must be paid by us."

In reply to the foregoing cable of the plainti"s, defendant again cabled as

follows:

"It is now impossible pay drafts. Quite a panic in the market. Bank cancel loan,
refuse credit."

In a letter of December 13 the plainti"s, in explanation of the course pursued by

them, made this statement:

"In view of your cable of September 14, in which you authorized is to draw sixty
days sight drafts, we made our arrangements accordingly. In order to meet your
wishes we delayed our shipments as long as we were able to; however, we could not
hold them back for any further length of time and were compelled to get the goods
under way."

The shipment aboard the Duquesne, of December 9, appears to have been

made, notwithstanding the defendant's cablegram of November 9, because the
plainti"s had already been compelled to take delivery and pay for the goods thus
shipped and because the only reason given in the cable of November 9, because the
plainti"s that Mr. Kummer, who was then on his way to Manila, would be able by
extensions of time to arrange for payment by defendant.

The last shipment in the Haleric, made on May 8, 1921, was of coco encarnado
under order No. 707. The material included in this order was specially stamped under
instructions from defendant for the Manila trade with Tagalog stamping and could not
be advantageously disposed of in any other market. Said goods had been retained in
New York pending e"orts of Mr. Kummer to arrange matters with defendant, and upon
his ascertaining that he could not do so, were shipped to Manila for sale here.

The goods which are the subject of action in case No. 20321 of the lower court
are said to have been held in New York in account of the plainti"s' inability to get
further advances from the banks, the factories meanwhile having the plainti"s'
negotiations with the defendant in Manila had proved fruitless, it was decided that
these goods could be disposed of more advantageously in the New York market, and
they were accordingly sold there for the account of the defendant.

From the correspondence exhibited above it is plain that the defendant is not in
a position successfully to invoke delay in the making of shipments as ground for its
release from the obligation to pay for the merchandise. When the defendant found
itself caught with these large orders in a paralyzed market, the only hope that
presented itself to the defendant's o#cers was that the shipments might be delayed for
a few months until business should improve, as was expected would be the case in the
autumn. The requests for delay contained in the cables and letters if July 7 and
September 14 were accordingly dispatched, and the plainti"s were kept well informed
as to the situation in which the defendant was placed. The requests for delay, as well
as the proven inability of the defendant to comply with its promise to supply the credit
necessary to move the goods, considered as a ground for the dissolution of the
defendant's obligations. It should be noted that the cable and the letter of September 14
were dispatched at a date subsequent to the times originally stipulated for shipments
of most of the goods, indicating that the defendant waived the delay in delivery. Upon
referring to the plainti"s' acceptances it will be noted that one small shipment of
moderate amount was to be shipped in December, while only three others were
scheduled for date as late as September. All the other shipments had been intended for
dates then already past, namely, in May, June, July and August.

The attorneys for the defendant submit the surmise that the plainti"s were
really not in a position to have shipped the goods anyway, owing to the previous
urgent demand in all markets for textile goods, a demand which abated only when the
reaction came in the autumn. How much truth there may be in this suggestion it is
unnecessary to inquire. the defendant could have tested the matter by standing strictly
on its contract, without further compromising itself by requests for delayed
shipments. We may observe in passing that it is not necessary to hold that the original
contracts were abrogated and a new agreement substituted by mutual agreement of
the parties as a consequence of the communications above mentioned; and all
discussion of the question whether the minds of the parties ever met in a complete
new agreement, with the condition that the plainti"s should ship against sixty-day
sight drafts, is super$uous. It is enough to say that delay in the shipment of the goods
was favorable to the defendant and was in e"ect requested by it.

Other contentions advanced for the defendant as justi!cation of the

nonacceptance of the goods are based upon minor deviations in the consignments
from the literal terms of the defendant's orders. In this connection we note: (1) That
the length of some of the pieces of merchandise shipped by the plainti"s were not
exactly !fty yards as speci!ed in the written order by deviated there from in some
instances to the extent of several of several yards; (2) that some of the orders of the
defendant were delivered in single shipments whereas partial shipments had been
speci!ed in the orders. and vice versa; (3) that the plainti"s had shipped some of the
goods in question after they had received the cablegram of November 9 instructing
them to cease shipments; (4) and, !nally, that the date of contemplated delivery
speci!ed in the sales notes did not conform in all respects to the exact terms of the
written orders.

As to the deviation in the lengths of pieces, it appears that manufactures of

fabrics of the kind here in question do not put up the goods in pieces of exactly !fty
yards length, the practice being to make the pieces of about the speci!ed lengths. In
conformity with this usage, the private code of the plainti"s, which was being used by
the defendant, was so constructed that the code words referring to particular qualities
of goods indicated pieces of length of about !fty yards; and the defendant's
cablegrams therefore called for pieces of this length. In preparing the written orders,
however, corresponding to some of these cablegrams, the individual in charge of
defendant's correspondence department by mistake indicated lengths of !fty without
quali!cation, instead of about !fty yards, in some of these orders. The plainti"s sales
notes corresponded with the cabled order, with the result that some deviation from
the stated length was discovered in these lots, the pieces being longer than had been
called for. As the goods were to be paid for by the yard, the resulting price was
somewhat greater than it otherwise would have been.

With reference to the irregular deliveries, namely, delivery by partial shipments

where delivery of the whole was called for, or of the whole where partial shipments
were called for, we note that in one or more instances the defendant's written orders
speci!ed the manner of delivery, and that these instructions were not in all case
observed by the plainti"s. The explanation given of this is that in view of the delays
that had occurred the plainti"s considered that the advice to ship part of an order on
one boat and part on the following boat had lapsed. Furthermore, in view of the
confessed inability of the defendant to !nance the shipments, the plainti"s say that
they shipped as much as they could on their own credit but were not able to ship all;
and; therefore, in the exercise of a fair discretion, and with a view to relieving the
defendant as much as possible they thought best to distribute their shipments over
several classes of goods rather than to ship one or more larger orders entire.

In regard to the plainti"s' shipment of goods after the receipt of the cablegram
of November 9 from the defendant instructing the plainti"s to cease shipment, the
plainti"s suggest that said cablegram was not interpreted as a $at repudiation of the
contract but was taken rather as a temporary cry of distress, owing to the inability of
the defendant to meet its !nancial arrangements; and it was believed that the
plainti"s' representative, Mr. Kummer, could adjust the matter by making
arrangement for long extensions in Manila. Some of the goods were therefore
forwarded that might have been stopped; but others had already been embarked and
the shipment could not be recalled though the sailing of the vessel occurred after the
cablegram was received.

None of the contentions above referred to, nor others of less moment,
constitutes in our opinion any su#cient ground of absolving the defendant from
liability. None of these contentions came to light in the defendant's correspondence;
and even while negotiations were being conducted in the early months of 1921
between Kummer, the plainti"s' representative, and the defendant, no word of
complaint from the defendant was heard upon any of these points. Even the question
about the undue delay in the shipment of the goods was never raise by the defendant
until the drafts covering the goods shipped in the autumn began to arrive in Manila
and were presented by the bank to the defendant. Then !nding itself without funds
and unable to confront the situation, the defendant put forth the claim that the
shipment of the goods had been out of time. That this was a mere pretext, and felt to be
such, appears clearly from the testimony of the individual who had charge of the
correspondence in the defendant's import department. We may add that when Mr.
Kummer was engaged in negotiations with the defendant in Manila, its manager made
no complaint or recrimination against the plainti"s on any score, except as to the
quality of the goods covered by one order; and its refusal to accept the goods was
placed exclusively on the ground of money scarcity and the drop in prices. when
Kummer, by way of compromise, o"ered to extend the drafts from six to nine months
the defendant's manager refused, with the observation that if the matter were left to
the course of law, the litigation could be protracted probably for three years, thereby
assuring the defendant cheap money or words to that e"ect.

There is another feature of the case which is pertinent to all of the contentions
now advanced by the defendant as a justi!cation of its denial liability. It will be
remembered that the plainti"s were brokers, and the proof shows that the defendant
considered them in the light of agents. The cabled orders themselves show that the
defendant treated the plainti"s as agents for making these purchases. "Buy and hold"
was the formula uniformly used in these instructions. The defendant's o#cers were
well aware that under the conditions then existing, buyers could not be dictators and
that the merchant who undertook to stand on precise details on every point would
probably not get any goods. The contract relation between plainti"s and defendant
was technically that of seller and buyer, but in considering the acts of the parties in the
course of performance and the interpretation to be placed on the contracts, it is not
improper to bear in mind that the plainti"s were acting as agents of the defendant in
the placing of orders. In this capacity the plainti"s undoubtedly possessed a certain
discretion, which was recognized as necessary by the defendant acquiesced in such
deviations on the part of the plainti"s from written orders as have been made the
subject of criticism.

A situation requiring a few words of comment is revealed in the contention

contained in the third cause of action in case No. 20637 of the lower court, which
relates to an alleged excessive shipment of Turkish red. In this connection it appears
that in February, 1920, the defendant had dispatched a letter to the plainti"s,
requesting prices and samples for twenty-!ve inches wide and twenty-four yards per
pieces. In response to this the plainti"s, quoted on two thousand pieces. Later the
defendant cabled an order, followed by a letter, directing the shipment of one
thousand pieces. Upon this order the plainti"s purchase and held for the defendant
enough of the un!nished material to make one thousand pieces of !fty yards each,
explaining in their letter of May 14 that all prints are usually sold in pieces of !fty yards
lengths.

It appears that the plainti"s intended to inclose the sales note relating to this
transaction in this letter, but apparently the sales note was not inclosed, as the same
document, produced in evidence by the defendant, bears date of May 25, having
probably been forwarded by later mail. In the natural course of events the letter of the
plainti"s of May 14, 1920, explaining what had been done, must have reached the
defendant at least by the !rst days of July; and it was on July 7, 1920, that the
defendant cabled to the plainti"s to delay as much as possible the shipment of coco
blanco and Turkish red. Instructions to the same e"ect were contained in a letter of
the same date con!rming said cablegram. Neither in this letter nor in any subsequent
communication did the defendant make any complaint as to the excessive quantity of
the Turkish red which had been bought for it by the plainti"s. On the contrary, as we
have already seen, in its letter of September 14 the defendant expressed the earnest
hope that the plainti"s would be able to ship the orders ("our orders") upon drafts at
sixty-day sight. Upon the facts stated the trial judge held that the defendant was
estopped from rejecting the surplus or any part of the order. His conclusion on this
point appears to us to be correct. If not satis!ed with what had been done by the
plainti"s, it was the duty of the defendant to have indicated its dissent, and under the
circumstances it is estopped from now making a question as to excess in the
shipment.

What has been thus far said is su#cient, we believe, to dispose of the main
contentions advanced in justi!cation of the defendant's refusal to accept the goods;
and other less important contentions advanced in its behalf must necessarily be
determined upon similar considerations. Moreover, the same consideration that are
fatal to the defense in the controversies presented in the plainti"s' three original
complaints are also decisive against the contentions advanced by the defendant in its
counterclaims and cross complaint, with a single exception now to be discussed.

The goods involved in the controversy now to be considered were intended for
Chua Soco and were paid for upon arrival in Manila from a letter of credit that had
been supplied by the defendant. As there was no default in the matter of payment for
these goods, they are not involved in any of the plainti"s' actions. The controversy was
therefore presented by the defendant itself in its independent cross complaint (!rst of
action).

It appears that the !nishers of textile goods are accustomed to use a certain
unbleached cloth, or grey sheeting, as a basis for two di"erent !nished goods, namely,
the cambrid !nish and the madapolan !nish. the only di"erence between the two is
that the cambric !nish is smooth while the madapolan !nish is somewhat coarse and
sti". The cost of the di"erent !nishes appears from the testimony of Mr. Kummer to be
the same. The defendant's order called for quality No. 5119, which indicates a cambric
!nish. This order was not accompanied by stamping instructions, this matter being
left to future direction. Upon receiving the order for quality No. 5119, the plainti"s
bought grey sheetings in su#cient quality to supply the order, supposing that the
goods were to be given a cambric !nish. Later, the stamping instructions were
received, accompanied by a model of the label to be placed on goods. This label bore
the words "Extra Madapolan."

Upon receiving this model, seeing that the brand indicated madapolan !nish,
the plainti"s naturally concluded that the defendant intended a modi!cation of its
order upon this point. This conclusion was the more reasonable as the distinction
between cambric !nish and madapolan !nish is well known to the trade, and it would
be a misrepresentation for any seller of textile goods to put upon the market cambric
goods under the madapolan brand. The plainti"s accordingly gave the goods the
madapolan !nish and stamped it with a label conforming to the model supplied by the
defendant.

When thirteen cases of these goods reached Manila they were rejected by Chua
Soco, for whom they had been ordered, and were thrown back on the defendant's
hands and sold by it at a loss. There can be no question that Chua Soco had a right to
reject the goods because he had ordered cambric !nish from the defendant, and the
goods were di"erent from what he had ordered. But it is quite evident that the
defendant has no cause of complaint against the plainti"s, upon either legal or moral
grounds. When the defendants manager sent the stamping instructions, he was
perhaps inadvertent to the distinction between cambric !nish and madapolan !nish;
but the error was his, and the loss resulting from the failure of Chua Soco to accept the
goods cannot be shifted upon the plainti"s, who appear to have acted in good faith. We
need only add that the claim put forth by the defendant to the e"ect that, apart from
the !nish, the goods comprised in this consignment were materially inferior in quality
to the kind contracted for is not established by a preponderance of the evidence. We
note that there were really twenty cases of goods involve in the order which is now
under discussion, and only thirteen case were actually shipped to Manila. The other
seven were never shipped, and no damages were claimed by the plainti"s with respect
to these. This circumstance materially reduces the excess contained in the plainti"s'
acceptance over the amount which the defendant had actually ordered, though not
otherwise a"ecting the legal aspects of the case. In view of the course that events took,
the failure of the plainti"s to ship the seven cases was bene!cial to the defendant and
cannot now be made the subject of complaint.

The foregoing discussion su#ces to dispose of the grounds upon which the
appellant seeks to justify its refusal to accept the goods, though we are aware that a
number of points have been vigorously pressed in the voluminous briefs of the
appellant which have not been touched upon in this opinion. the general discussion,
however, indicates what the solution of those matters would necessarily be if analyzed
in accordance with the ideas her accepted. For the rest we are content to refer to the
lengthier exposition contained in the opinion of the trial court with which, barring one
or two points, we fully agree. We accordingly proceed to consider these features of the
case that are connected with the consequences of the defendant's breach of contract.

When the plainti"s' e"orts to induce the defendant to accept and pay for the
goods !nally proved fruitless, they elected to treat the contract as broken and to sue
for damages, and at the same time, in order to limit the loss, they proceeded to sell the
goods in Manila and New York for the best prices obtainable, after noti!cation of the
defendant.

The right of the seller to treat the contract as abrogated in case of

nonacceptance by the buyer and to sue for damages for the breach, without the
formality of judicial rescission, is not called in this case by the attorneys for the
defendant; and the matter needs no comment her further than to say that this practice
has of late years been sanctioned by this court in more than one case involving the
breach of a mercantile contract.

While the defendant has not called in question the diligence of the plainti"s
with respect to obtaining the best prices procurable for the goods at the time sold,
criticism is made with respect to the time at which the sales took place; and it is
insisted that the sales were made so long after defendant's default that the prices
received a"ord no just basis for estimating the market prices of the goods at the time
of default. It is true that considerable time elapsed between default and the dates of the
sales; but it does not appear that it would have been practicable to have made the sales
sooner, and the proofs shows that the market price of textiles at the time the sales
were e"ected were at least equal to the market price at the date of defendant's default,
while the two lots which were sold latest sold for a higher price. the defendant was
therefore not prejudiced by this delay.

With respect to the goods which were actually dispatched to Manila the trial
court allowed interest at the rate of six per centum per annum upon the total amount
due, estimated from the respective dates when the goods were embarked from New
York City. In the case of the goods which were retained in New York City interest at the
legal rate was allowed from the time when the manufacturers delivered the goods to
the plainti"s. This was the time when the plainti"s had to pay for the goods, and the
time when they were prepared to ship, as they would have been sooner , but for the
course pursued by the defendant. We see no error in the action of the court upon this
point. By the terms of the contract the price was to be due when the goods were placed
on board the vessels for shipment; and except for default of the defendant in failing to
make and timely arrangement for payment, all of the goods which were dispatched
would have been at its disposal from the date of embarkation. By article 341 of the
Code of Commerce delay in the payment of the price of merchandise obligate the
purchaser to pay the legal rate of interest on the amount due to the seller.

The last point necessary to be discussed in this opinion has relation to a

question which is treated in the briefs under the topic "Exchange," but which is really
rather a problem in the conversion of the plainti"s' claim for damages, as estimated in
American currency, into Philippine currency. This matter is not discussed in the
appealed decision, as no question was raised in the lower court as to the propriety of
the method of computation used by the plainti"s in their complaint and the
accompanying bill of particulars.

The facts necessary to make this question intelligible are as follows: The prices
charged by the plainti"s for the goods covered by the orders which gave rise to this
litigation were expressed in American currency, and it was agreed that on the
shipment of the goods the plainti"s should draw in the defendant in Manila for the
amount due. As we have already seen the defendant in Manila for the amount to
arrange the necessary credit, through proper banking channels, to enable the plainti"s
to negotiate the drafts, and it was the duty of the defendant to accept and pay said
drafts in Manila. The goods covered by the orders which are the subject of action in
case No. 20321 were never shipped to Manila, and in the complaint in said case the
plainti"s did not ask to be allowed "Exchange". As a consequences the court did not
there allow this item, and the question which we are now to consider is not in any
wise involved in that case. In case No. 19917 and 20637 the goods were shipped and
drafts drawn on the defendant in Manila for the value thereof. All of the drafts so
drawn were expressed in dollars, United States currency, and some were stamped as
"Payable at the bank's selling rate for sight drafts on New York." In accordance with
banking practice it would have been necessary of course for the defendant, in case it
had accepted the drafts, to have satis!ed the same by paying an amount of Philippine
currency equivalent to the value to the drafts expressed in dollars, as of the date of
payment.

It well known fact in our economic history that during the period when these
transactions occurred, Philippine currency had become depressed, owing to the
depletion of our gold-standard fund; and it was proved by the plainti"s at the hearing
of this cause, and not questioned by the defendant, that at the time when the
defendant's default occurred American currency commanded a premium of thirteen
and one-half per centum above parity in relation to Philippine pesos. In the liquidation
submitted by the plainti"s, in connection with its complaints in the two causes above
mentioned, the plainti"s' claims for damages in dollars, as of the date of the
defendant's defaults, are converted into Philippine currency upon the basis of the
premium then commanded by American currency.

It further appears that when the drafts drawn by the plainti"s' representative,
Mr. Kummer, took up at the banks in Manila some of these drafts. amounting to twenty
thousand dollars ($20,000), for which he paid in Philippine currency at the rate of
premium for dollars as above indicated. The depression in Philippine currency is now
past, and the court takes judicial notice of the fact that Philippine pesos have again
returned to parity with American gold, which means that the Philippine peso is now
worth !fty cents gold in Manila.

Upon the foregoing facts the defendant-appellant contends that there is error in
the judgment of the court below, in that, in the liquidation of the account, as submitted
by the plainti"s and adopted by the lower court, the defendant is charge, in the
conversion of American currency into Philippine currency, with a premium at the rate
of thirteen and one-half centum; and it is insisted for the defendant that the plainti"s
can only be allowed a judgment which should either be expressed in American
currency or which should be expressed in Philippine currency at the rate now current
of two pesos for one dollar.

Thus question thus presented has certain perplexing aspects, but two
propositions seem to be clear beyond the possibility of dispute. The !rst is that the
judgment of this court should be expressed in Philippine currency, which is the lawful
currency of these Islands and the only currency in universal use. The circumstance
that gold coins of the United States are by law made a legal tender in these Islands for
all debts, public and private, at the rate of one dollar for two pesos (Admin. Code 1612)
does not e"ect the proposition that the judgments of the courts here should be
expressed in our own currency. When the sheri" is dispatched with execution in hand
to make money in satisfaction of a judgment, he is commanded to collect the debt or
make the money in Philippine currency and not in dollars or in the money of any other
country.

The second obvious thing is that the questions now before us is not a question
of exchange, or reexchange, in the sense merely of a charge for the transmission of
money between manila and New York. The question is chie$y one of monetary
equivalence, and although this equivalence would be commonly determined by the
rate of exchange for drafts, nevertheless, it is not the cost of transmitting this money
from Manila to New York which the plainti"s is primarily entitled to recover, by the
equivalent of the plainti"s' claim stated in Philippine currency. This conducts us to the
real point which is to be decided, which is whether, in converting the plainti"s' claim
from dollars to pesos, we shall take the value prevailing at the time of defendant's
breach or that prevailing supposedly at the date of this judgment.
 It should be explained here that on September 26, 1924, this court promulgated
an opinion , written by this ponente, in which the decision of the lower court in the
cases now before us was in all respects a#rmed, but a petition for a reconsideration
was !led by the appellant and the court was so far impressed with the merit of the
petition that it caused the cases to be set for reargument upon this point only; and the
majority of the Justices participating in the decision of those cases are now of the
opinion that the plainti"s' claim for damages will be properly satis!ed of the exchange
allowed by the lower court be eliminated from the judgment. Our former decision will
therefore be modi!ed to this extent and the exchange disallowed. The author of the
opinion is compelled to record his dissent for the judgment of the court on this point,
upon which he is in accord with the view expressed in the dissenting opinion of Mr.
Justice Johns.

The ground upon which the court rules against the allowance of exchange may
be brie$y expressed as follows: As The actions before us are actions for the recovery of
damages the plainti"s are entitled to recover a sum of money which, with the interest
allowed . will constitute indemnity for the damage occasioned by the defendant's
breach of contract. the obligation assumed by the defendant was to pay to the plainti"s
a sum of money expressed in American currency; and the indemnity to be allowed
should be expressed in Philippine currency at the present rate of exchange rather than
at the rate prevailing on the date if the defendant's breach. Otherwise the plainti"s
upon collecting the judgment would be able to convert the amount received into a
larger sum of American money than would have been received by them if the contract
had been in all respects ful!lled by the defendant.

Authority to the e"ect that in cases of this kind the conversion is to be e"ected
at the rate prevailing at the time of judgment is found in the following cases: Hawes vs.
Woolcock (26 Wis., 629); Lee vs. Wilcocks (5 Serg. & R. Pa., 48); Marburg (26 Md., 8;90
Am., Dec., 84); The Saigon Maru (267 Fed., 881); The Hurona (268 Fed., 910); Liberty
National Bank of New York vs. Burr (270 Fed., 251); Kirsch & Co. vs. Allen, H. & Co.
(1920, 89 L.J.K.B.N.S., 265).

In Hawes vs. Woolcock (26 Wis., 629, 635), the court said:
 "Perhaps a strict application of logical reasoning to the question would lead to
the result that the premium should be estimated at the rate when the note fell due.
That was when the money should have been paid, and when the default in performing
the contract occurred. This conclusion would be supported by the analogy derived
from the rule of damages on contracts to deliver speci!c articles, !xing the market
price at the time when they ought to have been delivered as the criterion. This rule
might sometimes be to the advantage of the holder of the note, as in the present case.
In other cases where the premium was less at the time the note became due than at
the time of trial, it would be to his detriment. And in view of these uncertainties and
$uctuations in the rate, upon grounds of policy as well as for its tendency to do as
complete justice between the parties as is possible, we have come to the conclusion
that the true rule in such cases is to give judgment for such an amount as will, at the
time of the judgment, purchase in which it is payable. To accomplish this, of course,
the premium should be estimated at the rate prevailing at the time of trial. By this rule
the holder would neither gain nor lose by the $uctuations in the rate, but when ever he
obtained a judgment would obtain it for a sum which would then procure him the
exact amount to which he was entitled in the proper currency. This does complete
justice between the parties and seems, therefore, to indicate the true extent to which
the di"erence of exchange in such cases should a"ect the amount of recovery."

The reasoning contained in the passage above quoted not only approves itself
to the sense of justice but appears to be more in harmony with the rule expressed in
article 1170 of the Civil Code than the contrary doctrine.

The cause will therefore be returned to the lower court with instructions to
enter a judgment eliminating the premium of thirteen and one-half per centum
charged against the defendant in the plainti"s liquidation of the claims contained in
actions Nos. 19917 and 20637. In all other respects the judgment is a#rmed.

Avancea and Villamor, JJ, concur.

Individual Opinions

MALCOLM, J., concurring:

 I concur but wish to explain my viewpoint with reference to defendant's
liability for exchange at the rate of thirteen and one-half per cent.

The contract of the parties called for payment in United States dollars. The
mechanizes was to be delivered by plainti"s to defendant at New York. The court is
powerless to vary the terms of the contract in the slightest.

Section 1612 of the Administrative Code makes United States currency legal
tender for all debts. Section 1613 of the same Code makes Philippine currency legal
tender for all debts "unless otherwise specially provided by contract". Article 1170 of
the Civil Code provides that payments of debts of money shall be made in the specie
stipulated. The court is powerless to vary the terms of the law in the slightest.

The decision in Clemon vs. Nolting (1922, 42 Phil., 702), is in point. It was there
held: "When the dollar sign ($) is used in a written contract made in the United States,
it signi!es dollars in the money of the United States, and the contract can be
discharged only by the payment of the required amount in United States money or in
Philippine pesos of an equivalent commercial value, unless otherwise speci!cally
provided in the contract. It would be ruinous to the commercial interests of the
Philippine Islands to declare that the payment of debts of money could be made in
other specie than that stipulated in the contract." (Syllabus.) The court should not
depart from the doctrines announced in the Clemons vs. Nolting case.

It would be remarkable condition of a"airs if under the American $ag, parties

may not pay their debts, as stipulated in the contract, in American currency. United
States currency cannot be classi!ed as foreign in the Philippines. United States cannot
be treated as a commodity in the Philippines. The Philippine Islands is not a foreign
country but is an integral part of the United States.

When the court enforces the contract as made by the parties and when the
court enforces the law as made by the legislature, it merely performs a simple duty
which does exact justice to the litigants.

OSTRAND, J., with whom concurs ROMUALDEZ, J., concurring and dissenting:
 In the main I agree with the majority of the court, but I think the defendant has
fully established its !rst cause of action in the cross-complaint and is entitled to a
recovery thereon.

There is very little dispute as to the facts of the transaction which forms the
subject-matter of this cause of action. On February 12, 1920, the defendant ordered by
sample from the plainti" for the account of one Chua Soco, 20 cases of coco blanco to
be shipped as soon as possible. The same was designated "Quality No. 5119" and called
for "cambric !nish". On April 1, 1920, the plainti" accepted the order and agreed to
deliver the merchandise to Chua Soco in June, 1920, or sooner as possible. On August
7, 1920, the plainti"s shipped 13 of the 20 cases ordered. Upon the arrival of the
shipment in Manila it was found that the cloth was of "Madapolan" instead of cambric
!nish and Chua Soco refused to accept the goods. The defendant was compelled to pay
the draft accompanying the bill of lading to a total amount of P20,154.36 and there
upon wrote the plainti" letter Exhibit 203 in which ut stated:

"Referring to our Order No. 566 for 20 cases Coco Blanco quality No. 5119, 36,
which arrived here per s/s Jason, please note that our Customer, Mr. Chua Soco,
refused acceptance of the 20 (13) case, claiming, that the Coco is not up to sample.

"There is no doubt in our mind, that there is a great di"erence between the
original sample and the goods furnished; the original sample is very !ne and smooth
in !nish whereas the merchandise delivered is very starchy, giving the Coco a cheap
appearance.

"We are doing our best to get Chua Soco to accept the 20 (13) cases but we doubt
that we will succeed without giving a decided reduction in price."

In answer to this letter the plainti"s referred the defendant to Mr. Kummer who
was them on his way to Manila. No settlement was reached with Mr. Kummer and the
goods received were sold at the best price then obtainable, P6,933.20, or P13,221.16 less
than the amount of the draft paid by the defendant.

The rule is well known that unless goods ordered by sample correspond to the
sample they may be rejected by the buyer. Though it is argued that the merchandise
shipped was of equal quality and value with that shown in the sample, it is admitted
that they were of di"erent !nish and appearance, the cambric being a glazed and the
madapolan a rough !nish. There is also some evidence to the e"ect that the cambric
!nish is more saleable in this country and commands a slightly higher price.

The plainti"s explain that they were led to give the cloth a madapolan !nish by
the circumstance that the defendant sent them a design of a label to be placed on the
outside of the bolts of cloth, which design bore the words "Extra Madapolan" in large
letters and that they therefore concluded that the defendant desired a madapolan
!nish. The majority of the court accepts this explanation and regards it as su#cient
justi!cation for the substitution of madapolan for cambric !nish. It is upon this point
that I feel constrained to dissent.

In e"ect, the court holds that, under the circumstances, the plainti" had a right
to assume that there was a novation of the original contract. Novations are not favored
by the law and it is an old and wholesome rule that they are never presumed. It would
therefore seem that the plainti"s should have been cautious in accepting the
circumstances mentioned as a manifestation of an intention on the part of the
defendant to change the very de!nite original agreement. The order was a large one
and laid down in Manila the goods ordered would have cost the buyer some P30,000.
In these circumstances, it would not be unreasonable to require or expect the plainti"s
before acting upon their, to my mind, rather far-fetched conclusions, should have
cabled the defendant and de!nitely ascertained the latter's intentions. They had plenty
of time to do so and expense and trouble would have been comparatively tri$ing. They
could also, with perfect safety, have adhered to the original agreement and shipped
goods with cambric !nish. I cannot for a moment imagine that we would have
entertained with patience a refusal on the defendant's part to accept the goods on the
ground that its action in asking that they be marked "Extra Madapolan" constituted a
change in the contract of purchase. incidentally, I may say that it is a poor rule that
does not work both ways.

It is suggested in the majority opinion that it would be a misrepresentation for

any seller of textiles to put on the market cambric goods under a madapolan brand and
that the plainti"s could not suppose that the defendant intended to practice deception
of that sort upon the public. Inasmuch as the cambric !nish appears to be in nowise
inferior to the madapolan !nish and the sheeting was of the same quality, such a
deception, if any, would be harmless and could hardly be due t a desire to mislead.
Just what may have been the reason for the purchaser's desire to have the cloth
marked "Madapolan" does not appear in the record, but madapolan being a Spanish
term, there may be localities in these Islands where textiles of that grade, irrespective
of !nish, are known by that name. Spanish names for textiles are still extensively used
in this country and the nave have been more suitable for Chua Soco's trade than would
the English mark "Cambric".

But that is neither here nor there. It was the plainti"'s duty to abide by the
express contract and execute the order according to instructions. If they had any
objections to so doing they should have advised the defendant. It is a wholesale
purchaser's privilege to determine what marks are to be put on the goods and there is
nothing illegal about it as long as the use of the mark does not constitute unfair
competition or an infringement of trade-marks. In this case it does not appear that
anyone would have been prejudiced by having the goods marked "Madapolan" and
there was not necessarily any moral obliquity involved in so using that mark.

It is also intimated that Chua Soco might have rejected the goods on the ground
that they were stamped "Madapolan", and that, therefore, as far as the defendant was
concerned the result or loss would have been the same whether a cambric or a
madapolan !nish had been given the cloth. But how do we know that the design in
question originated with the defendant? It is not more reasonable to suppose that
Chua Soco, the purchaser suggested the design?

But assuming for the sake of argument that the defendant had designed the
label without consulting Chua Soco, it is to be observed that the label was placed on
the outside of each bolt and that if Chua Soco, upon the receipt of the goods should
have objected to the label it would have been an easy matter to meet the objection by
removing the stamped portion of each piece of cloth and relabeling the bolts. The
reduction in the length of the pieces through this process would have been
insigni!cant and would not, under the rule laid down elsewhere in this case., have
constituted a valid ground for the rejection of the shipment.
 The decision of the court tends to establish an embarrassing precedent.
Merchants ordering goods from other countries have a right to demand that care be
exercised in executing their orders. The distance and expense of shipment renders it
di#cult to correct errors after the goods have reached their destination. Sellers or
shippers should under these circumstances be held strictly to their contracts and the
courts should not encourage carelessness on their part by unwarranted leniency in
applying the law.

In the present case the plainti"s, through their carelessness and unwarranted
assumptions, shipped goods which admittedly were not in accordance with samples,
thereby breaching their contract with the defendant and furnishing the latter's
customer a valid excuse for rejecting the goods. The defendant not only lost its
commission on the sale but is in addition mulcted to the extent of over thirteen
thousand pesos. I apprehend that the court will experience considerable di#culty in
!nding a precedent for its judgment upon the cause of action here discussed.

JOHNS, J., with whom concurs STREET, J., dissenting:

The undersigned was not present when this cause was !rst submitted and took
part only in the determination of the motion for reconsideration. The present opinion
is therefore con!ned to a single point, namely, whether upon converting the plainti"'s
claim into Philippine currency, the plainti"s are entitled to recover exchange
computed as of the date of default or whether the conversion must be e"ected at the
rate now prevailing.

All of the legal learning that is of much value on the subject is collected in the
annotation found in 11 A.L.R., 363, appended to the case of Di Fernando vs. Simon
Smits & Co. (89 L.J.K.B.N.S., 1039). This case comes from the English Court of Appeals
and is very instructive, having been decided in the light of numerous decisions
dealing with the extraordinary $uctuations of the currency of di"erent countries in the
last few years.

The position sustained in said decision is that in an action brought in England

for breach of contract to be performed abroad, the measure of damages is the loss in
English currency to the plainti"s at the time and place where the contract ought to
have been performed. Where, therefore, the plainti", a merchant in Italy, obtained
judgment against the defendants in London, for damages for nondelivery and
conversion of goods entrusted to them for carriage to the plainti" at Milan, it was
declared that the damages ought to be assessed in such a sum in sterling as would give
the plainti" the proper compensation in Italian lire, at the rate of exchange prevailing
at the date of when the goods ought to have been delivered to the plainti", and not at
the rate prevailing at the date of the judgment. In conformity with this doctrine are the
decisions in Barry vs. Van Den Hurk (1920], 2 K.B., 709; 89 L.J.K.B.N.S., 899), and
Lebeaupin vs. Crispin (1920, 2 K.B., 714; 89 L.J.K.B.N.S., 1024). In this connection it
should be noted that the earlier case of Kirsch & Co. vs. Allen, H. & Co., (1920, 89 L.J.K.
B.N.S., 265,) which adopted the view now sustained by this court, was in e"ect
overruled in Di Fernando vs. Simon Smits & Co., supra.

The reasoning contained in these English cases appears to me to be not only

sound but in harmony with all legal analogies; and the exchange should in my opinion
be computed as of the date of the defendant's breach. As was said by the English court
in Lebeaupin vs. Crispin, supra:

"To hold otherwise would produce extraordinary results. The damages payable
would depend partly on the date when the plainti" issued his writ, partly on the length
of the interlocutory proceedings, partly on the illness or good health of the parties as
the trial approached, partly on the number of prior cases which occupied the time of
the court, and partly on whether the judge reserved his decision or not. They might
depend also on whether judgment was entered for the plainti" by the judge of First
Instance, or by the court of appeal, or the House of Lords. Such a state of things would,
I think, be most unsatisfactory. It would encourage a plainti" to hasten or postpone the
trial according to his view of the money market, and he might gamble on the rate of
exchange. If the damages are !xed as at the date of breach where the contract is
wholly to be performed in England, such also, I think, I should be the result where the
breach is out of England. There should not be varying rules in such a case. If the
damages are once crystallized at the date of breach, then a de!nite date is given for the
ascertainment of exchange, and the amount found payable at the hearing is awarded
without regard to the $uctuations of the possible date of trial."
 It can be admitted that if a contract were made in this country for the payment
of a sum certain in particular kind of currency, as, e.g., American gold coin, the
creditor, if he should so elect, would be entitled to have the value of the stipulated coin
computed in the lawful currency of this country at the rate prevailing at the time of
judgment. But the cases now before us are damage suits, in which the plainti"s seek to
recover damages by reason of the defendant's default in failing to accept and pay for
merchandise. Where the action takes this form the idea of giving speci!c performance
in American currency, which seems to underlie the decision of the court is
inappropriate. The obligation of the defendant should be considered !xed at the time
of the breach and the equivalent of the two currencies should be computed as of that
date.

The mistake of the court upon the point which is the subject of criticism
appears to be due to a desire to relieve the defendant from the e"ect of an adverse
$uctuation in Philippine currency between the date of the default and the date of the
judgment, a $uctuation resulting from a rise in the fundamental value of the peso. But
courts have never consciously attempted to relieve debtors from rises in the value of
currency any more than they have attempted to relieve creditors from the e"ects of
depreciation; and a little re$ection will, I think, show that the idea is fallacious.
Certainly, if the case were one of a domestic creditor suing a local debtor upon an
obligation created while pesos were depreciated, it would never occur to anybody that
the debt could now be scaled in order to relieve the debtor from the e"ects of the rise
in the value of our money. But because the creditor in this case is a resident of a
country whose currency has remained on a gold basis, and the $uctuation of pesos is
thus made visible by reference to the external standard, the damages must, according
to the present decision, be reduced. In my opinion this is erroneous. The original
judgment, a#rming the appealed decision was, upon this point, correct.
 Title
Estate of Bueno vs. Estate of Peralta

Case Ponente Decision Date

G.R. No. 205810 ZALAMEDA, J Sep 9, 2020

A dispute over the ownership of a property in Manila leads to a legal

battle between the Estate of Bueno and the Estate of Peralta, with the
court ultimately ruling in favor of the Peralta Estate based on the
existence of an oral contract and rati!cation of the agreement.

Case Digest (G.R. No. 205810)

GPT-4o (v3)

Facts:

The case "Estate of Bueno v. Estate of Peralta" revolves around a dispute

concerning the ownership of a property located at No. 3450 Magistrado
Villamor Street, Lourdes Subdivision, Sta. Mesa, Manila. The petitioners in this
case are the Estate of Valeriano C. Bueno and Genoveva I. Bueno, represented
by Valeriano I. Bueno, Jr. and Susan I. Bueno. The respondents are the Estate of
Atty. Eduardo M. Peralta, Sr. and Luz B. Peralta, represented by Dr. Edgardo B.
Peralta. In 1957, Valeriano Bueno, Sr. and his wife Genoveva engaged Atty.
Eduardo M. Peralta, Sr. to manage their personal and business legal matters. In
1960, the Spouses Bueno transferred the subject property to Atty. Peralta as
partial payment for his legal services. Atty. Peralta and his family began
occupying the property in January 1962 and made signi!cant improvements to
it. Following Atty. Peralta's death in 1983, his heirs requested the execution of a
deed of conveyance, which the Spouses Bueno refused. This refusal led to a
legal battle, with the Estate of Peralta !ling a complaint for speci!c
performance. The Regional Trial Court (RTC) dismissed the complaint, ruling
in favor of the Estate of Bueno. However, the Court of Appeals (CA) reversed
this decision, ordering the Estate of Bueno to execute a deed of conveyance in
favor of the Estate of Peralta. Consequently, the Estate of Bueno !led a petition
for review on certiorari before the Supreme Court.
Issue:

1. Did the Court of Appeals commit a reversible error and grave abuse of
discretion in reversing the RTC's decision and ordering the Estate of
Bueno to execute a deed of conveyance over the property in favor of the
Estate of Peralta?

2. Is the oral agreement between Bueno and Atty. Peralta enforceable despite
the Statute of Frauds?

Ruling:

The Supreme Court denied the petition and a"rmed the decision of the Court
of Appeals. The Court ruled that the oral agreement between Bueno and Atty.
Peralta was enforceable and that the Estate of Bueno must execute a deed of
conveyance over the property in favor of the Estate of Peralta.

Ratio:

The Supreme Court held that the Statute of Frauds, as found in Article 1403 (2)
of the Civil Code, requires certain contracts to be in writing to be enforceable.
However, the Court noted that the lack of writing does not make the agreement
void or inexistent; it merely bars suit for performance or breach. Such a defect
can be cured by acknowledgment or rati!cation. The Court found that the oral
agreement between Bueno and Atty. Peralta was rati!ed through the failure to
object to the presentation of oral evidence and by the acceptance of bene!ts
under the contract. The Court also noted that the agreement was partially
performed, as evidenced by Atty. Peralta's continued legal services and the
substantial improvements made to the property. The Court further held that
the action had not prescribed, as the right to demand the execution of the deed
of conveyance only arose upon Atty. Peralta's retirement. The Court
emphasized that the principle of equity should not allow the Statute of Frauds
to be used as an instrument of fraud, and that the valuable legal services
rendered by Atty. Peralta should be properly compensated.
 Title
Estate of Bueno vs. Estate of Peralta

Case Ponente Decision Date

G.R. No. 205810 ZALAMEDA, J Sep 9, 2020

A dispute over the ownership of a property in Manila leads to a legal

battle between the Estate of Bueno and the Estate of Peralta, with the
court ultimately ruling in favor of the Peralta Estate based on the
existence of an oral contract and rati!cation of the agreement.

THIRD DIVISION

G.R. No. 205810. September 9, 2020.

ESTATE OF VALERIANO C. BUENO and GENOVEVA I. BUENO, represented by VALERI

ANNO I. BUENO, JR. and SUSAN I. BUENO, petitioners, vs. ESTATE OF ATTY.
EDUARDO M. PERALTA, SR. and LUZ B. PERALTA, represented by DR. EDCARDO B.
PERALTA, respondents.

DECISION

ZALAMEDA, J p:

This is a petition for review on certiorari assailing the 31 August 2012 Decision
and 08 February 2013 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 86410.
The Court of Appeals set aside the 11 October 2005 Decision of Branch 37 of the
Regional Trial Court (RTC) Manila in Civil Case No. 96-76696. The CA ordered
Valeriano Bueno, Sr. and the Heirs of Genoveva Bueno (collectively, Estate of Bueno) to
execute a Deed of Conveyance over the Transfer Certi!cate of Title (TCT) No. 47603,
which is located at No. 3450 Magistrado Villamor Street, Lourdes Subdivision, Sta.
Mesa, Manila (subject property), in favor of the Estate of Atty. Eduardo M. Peralta, Sr.
and Luz B. Peralta (Estate of Peralta), represented by one (1) of their children, Dr.
Edgardo B. Peralta (Dr. Peralta). aScITE
 Antecedents

A lawyer and a businessman entered into a supposed mutually bene!cial

arrangement. The businessman gave the lawyer real estate in exchange for the
rendition of valuable legal services. With the knowledge and acquiescence of the
businessman and his family, the lawyer established his family home, introduced
several substantial improvements on the property, and paid its real property taxes.
This arrangement went on for several decades and survived the lawyer's death. The
heirs of the lawyer now ask for the execution of the proper deed of conveyance from
the heirs of the businessman.

In 1957, Valeriano Bueno, Sr. (Bueno) and his wife Genoveva (collectively,
Spouses Bueno) engaged Atty. Eduardo M. Peralta, Sr. (Atty. Peralta) to take care of
their personal and business legal matters. Atty. Peralta was legal counsel of and held
several executive positions (President, Executive Vice-President, Secretary, Treasurer,
or Director) in the Spouses Bueno's various companies for almost 26 years.

In 1960, the Spouses Bueno gave Atty. Peralta the subject property as partial
consideration for professional services rendered. Atty. Peralta, together with his wife
and children, occupied the property beginning in January 1962. Atty. Peralta requested
for execution of a deed of conveyance, but because the subject property was
encumbered, Bueno merely provided him a photostatic copy of the title for his
reference and Bueno prevailed upon him to pay the real property taxes. Relying on
Bueno's express and implied representations, Atty. Peralta and his family introduced
several substantial improvements to the subject property over the years.

Atty. Peralta passed away on 27 December 1983. In 1990, Dr. Peralta wrote
Spouses Bueno to ask for the proper deed of conveyance of the subject property.
Instead of granting the request, Spouses Bueno demanded the surrender of the
physical possession of the subject property. Subsequent demands were made on
Spouses Bueno to execute the proper deed of conveyance, but they were repeatedly
refused. Later, Bueno and his daughter-in-law intruded into the property. Bueno
himself attacked Edmundo Peralta (Edmundo), one of Atty. Peralta's children. This led
to the !ling of a criminal complaint against Bueno.
 Dr. Peralta, representing the Estate of Peralta, !led a complaint for speci!c
performance and prayed for execution of the appropriate deed of conveyance of the
subject property.

In their Answer, Spouses Bueno maintained that the Estate of Peralta's claim
was unenforceable under the Statute of Frauds. They alleged that Atty. Peralta never
demanded that Spouses Bueno sell the subject property to him after he and his family
were allowed to make use of the same. Moreover, speci!c performance is impossible
as the subject property is encumbered with !nancial institutions. Thus, Bueno cannot
do what the Estate of Peralta asks for unless the property is redeemed or the
obligations were paid.

The complaint was later amended to implead the heirs of Genoveva Bueno,
who passed away before trial began. Bueno himself passed away on 18 October 2000.
Trial proceeded with the two (2) estates as contending parties.

After the Estate of Peralta !led its formal o"er of evidence, the Estate of Bueno
!led a Demurrer to Evidence and claimed that the former failed to prove that Bueno
Spouses conveyed the property to Atty. Peralta back in 1960. The RTC denied the
demurrer in its 31 May 2002 Order. The RTC rejected the Estate of Bueno's argument
that the agreement between Bueno and Atty. Peralta was covered by the Statute of
Frauds because the agreement was not an executory contract. The RTC also ruled that
the Estate of Peralta's claim was not barred by prescription, since the action is
essentially an action to quiet title. Such action is imprescriptible, especially since
delivery of possession of the property is already consummated.

Ruling of the RTC

In its 11 October 2005 Decision, the RTC dismissed the Estate of Peralta's
complaint for lack of merit. The RTC declared Spouses Bueno and their heirs as
rightful owners of the subject property.

The RTC found that Bueno su#ciently established that there was no perfected
contract between Atty. Peralta and Spouses Bueno with respect to the transfer of the
subject property. But, according to the RTC, it was undisputed that Spouses Bueno
committed to award the subject property to Atty. Peralta if he serves them until
retirement. Atty. Peralta, however, failed to ful!ll the condition, as evidenced by his
hand-written resignation letter dated 15 March 1975. This, the RTC said, gave Spouses
Bueno the right to rescind the contract.

On the other hand, the RTC changed its view about the nature of the case. While
it earlier construed the case as one for quieting of title, it now held that it was an action
for the enforcement of an oral contract. Under Article 1145 of the Civil Code, such an
action prescribed in six (6) years. Since the right to commence action was acquired in
1960, the same had already prescribed when the Estate of Peralta !led its complaint in
1996. aDSIHc

The Estate of Peralta !led a motion for reconsideration, which the RTC denied
its 19 December 2005 Order.

Ruling of the CA

In its 31 August 2012 Decision, the CA granted the Estate of Peralta's appeal and
set aside the RTC's decision.

According to the CA, the contract between Bueno and Atty. Peralta is an
innominate contract in the nature of a facio ut des (I do and you give) agreement. The
parties agreed for Atty. Peralta to render legal services to Bueno and his companies
(the facio or the "I do"). Then, upon his retirement, for Atty. Peralta to receive the
property from Bueno (the des or "you give"). The CA cited the 1903 case of Perez v.
Pomar where the Supreme Court upheld the verbal facio ut des contract because one
party had already rendered the service.

The CA also invoked the unjust enrichment rule in Article 22 of the Civil Code
and decreed that Atty. Peralta's services were not gratuitously rendered and should be
property remunerated. The CA noted that the Estate of Bueno did not present evidence
on Atty. Peralta's salaries or other forms of compensation from Bueno and his
companies. According to Atty. Moises Nio (Atty. Nio), Atty. Peralta's law partner, the
latter did not have a de!nite salary from Bueno. Thus, the CA ruled that Atty. Peralta's
occupation of the property was in the concept of an owner, as the property was given
by Bueno with Atty. Peralta's services as a valuable consideration.

Moreover, the CA also observed that Bueno's relinquishment of possession of

the subject property and Atty. Peralta's continued rendition of services to Bueno were
vital pieces of evidence of the agreement and perfection of the facio ut des contract.
The partial performance by both parties removed the facio ut des contract from the
ambit of the Statute of Frauds under Article 1403 of the Civil Code because that
provision applies only to executory, and not to executed, contracts.

The CA also gave credence to the Estate of Peralta's evidence that, despite
submitting his resignation, Atty. Peralta continued to render his services as Bueno's
counsel by !ling pleadings and replying to queries. To the appellate court, apart from
bare denials, the Estate of Bueno did not present any other evidence to prove that Atty.
Peralta had stopped rendering his legal services by 1975. The Estate of Bueno even
admitted that Atty. Peralta still represented them in cases as late as 1981, or just two
years prior to Atty. Peralta's death. The CA declared:

We therefore arrive at the conclusion that at the retirable age of 60 in August

1980, Atty. Peralta was still working as a lawyer for Bueno and his companies. Relating
this to the controversy at hand, We !nd Atty. Peralta to have ful!lled the condition for
him to work with Bueno and his companies, We !nd Atty. Peralta to have ful!lled the
condition for him to work for Bueno and his companies until his retirement. From the
moment he was entitled to his retirement on his birthday on 19 May 1980, he had also
ful!lled the facio his obligation to render service and became entitled to the subject
property.

Thus, Bueno became obligated to perform his des his obligation to give the
subject property to Atty. Peralta as this had become demandable. Bueno, however, had
already partially performed this obligation when he delivered the subject property to
Atty. Peralta when the latter !rst took possession of the subject property with him and
his family's continued occupation of the same up to his 60th birth anniversary.

The CA further ruled that the action had not prescribed. The six (6)-year period
did not commence in 1960 because Atty. Peralta had not wholly perfected his right to
demand the execution of the documents to transfer the title to the subject property to
him as he still had to serve Bueno until his retirement. It was only upon Atty. Peralta's
retirement that the ownership automatically vested upon him. The CA subscribed to
the Estate of Peralta's view that the case is imprescriptible as it is an action for quieting
of title. Similarly, the CA did not !nd the Estate of Peralta guilty of laches.

The CA concluded, thus:

In arriving at Our decision, We have tried not to lose sight of the gist of this
dispute. It is essentially about the agreement of two men who agreed that one should
work for or the other until his retirement in return for which a house and land of the
other would be given to the him [sic]. This much has been admitted by appellees and
found by the trial court. The evidence has also shown that Atty. Peralta practically
worked his whole professional life at the service of Bueno and his companies. In
adjudging the property to the heirs of Atty. Peralta, this Court is merely respecting a
fundamental rule of fairness: no man must unjustly bene!t and enrich himself at the
expense of another.

WHEREFORE, the instant Appeal is GRANTED and the Decision of the Regional
Trial Court is SET ASIDE. The Estate of Bueno is ordered to EXECUTE a Deed of
Conveyance over the Transfer Certi!cate of Title of Lot No. 3450 Magistrado Villamor
St., Lourdes Subdivision, Sta. Mesa, Manila in favor of the estates of Eduardo M.
Peralta, Sr. and Luz B. Peralta.

Should the Estate of Bueno fail or refuse to do execute [sic] the aforementioned
Deed of Conveyance within thirty (30) days from !nality of this Decision, Branch 37 of
the RTC of Manila shall ISSUE and Order divesting the Estate of Bueno's title to the
property and vest it in favor of the [estates of Eduardo M. Peralta, Sr. and Luz B.
Peralta] which shall have the force and e"ect of a conveyance executed in due form of
law.

SO ORDERED.

The Estate of Bueno's motion for reconsideration for lack of merit was denied by the
CA in its 08 February 2013 Resolution. Consequently, the Estate of Bueno !led the
present petition for review. ETHIDa
 Issues

The Estate of Bueno raises a lone assignment of error in this Petition: The Court
of Appeals committed a reversible error of law and grave abuse of discretion
amounting to lack or excess of jurisdiction in reversing the decision of the trial court
dismissing the complaint for speci!c performance !led by the Estate of Peralta against
the Estate of Bueno, and ordering the Estate of Bueno to execute a deed of conveyance
over the transfer certi!cate of title of lot number 3450 Magistrado Villamor Street,
Lourdes Subdivision, Sta. Mesa, Manila in favor of the Estate of Eduardo Peralta, Sr.
and Luz B. Peralta.

During the course of deliberations in this case, the discussions focused on the
applicability of the Statute of Frauds on the agreement between Bueno and Atty.
Peralta. The majority maintains that there was rati!cation of the agreement despite the
applicability of the Statute of Frauds. The dissent, on the other hand, argues that the
terms and conditions of the oral contract were not su#ciently proved so the
agreement is covered by the Statute of Frauds.

Ruling of the Court

The Statute of Frauds

The Statute of Frauds, as found in Article 1403 (2) of the Civil Code, reads:

Article 1403. The following contracts are unenforceable, unless then are
rati!ed:

...

(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum thereof, be in writing, and subscribed
by the party charged, or by his agent; evidence, therefore, of the agreement cannot be
received without the writing, or a secondary evidence of its contents:

(a) An agreement that by its terms is not to be performed within a year from the
making thereof;

(b) A special promise to answer for the debt, default, or miscarriage of another;

(c) An agreement made in consideration of marriage, other than a mutual promise to

marry;

(d) An agreement for the sale of goods, chattels or things in action, at a price not less
than !ve hundred pesos, unless the buyer accept and receive part of such goods and
chattels, or the evidences, or some of them, of such things in action, or pay at the time
some part of the purchase money; but when a sale is made by auction and entry is
made by the auctioneer in his sales book, at the time of the sale, of the amount and
kind of property sold, terms of sale, price, names of the purchasers and person on
whose account the sale is made, it is a su#cient memorandum;

(e) An agreement for the leasing for a longer period than one year, or for the sale of
real property or of an interest therein;

(f) A representation to the credit of a third person.

....

Note that Art. 1403 (2) speaks of a general rule, but recognizes rati!cation as an
exception.

Our laws recognize four kinds of defective contracts. Among these is the
unenforceable contract, or one that, for lack of authority, or of writing, or for
incompetence of both parties, cannot be given e"ect unless properly rati!ed. But note
that the lack of writing does not make the agreement void or inexistent. It merely bars
suit for performance or breach. Such a defect can be cured by acknowledgment or
rati!cation.

Quite recently, We had the opportunity to discuss the parameters of the Statute
of Frauds in Heirs of Alido vs. Campano, which reiterated that an unenforceable
contract under Article 1403 (2) is not necessarily void since it can be rati!ed by failure
to object to the presentation of oral evidence to prove the contract itself, or by the
acceptance of bene!ts. The contract can be established by the express or implied
conduct of the parties. The Court explained, thus:

Article 1403 (2) of the Civil Code, or otherwise known as the Statute of Frauds,
requires that covered transactions must be reduced in writing, otherwise the same
would be unenforceable by action. In other words, sale of real property must be
evidenced by a written document as an oral sale of immovable property is
unenforceable.

Nevertheless, it is erroneous to conclude that contracts of sale of real property

without its term being reduced in writing are void or invalid. In The Estate of Pedro C.
Gonzales v. The Heirs of Marcos Perez, the Court explained that failure to observe the
prescribed form of contracts do not invalidate the transaction, to wit: cSEDTC

Nonetheless, it is a settled rule that the failure to observe the proper form prescribed
by Article 1358 does not render the acts or contracts enumerated therein invalid. It has
been uniformly held that the form required under the said Article is not essential to
the validity or enforceability of the transaction, but merely for convenience. The Court
agrees with the CA in holding that a sale of real property, though not consigned in a
public instrument or formal writing, is, nevertheless, valid and binding among the
parties, for the time-honored rule is that even a verbal contract of sale of real estate
produces legal e"ects between the parties. Stated di"erently, although a conveyance of
land is not made in a public document, it does not a"ect the validity of such
conveyance. Article 1358 does not require the accomplishment of the acts or contracts
in a public instrument in order to validate the act or contract but only to insure its
e#cacy.

Further, the Statute of Frauds applies only to executory contracts and not to
those which have been executed either fully or partially. In Swedish Match, AB v. Court
of Appeals, the Court expounded on the purpose behind the requirement that certain
contracts be reduced in writing, viz.:

The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil Code
requires certain contracts enumerated therein to be evidenced by some note or
memorandum in order to be enforceable. The term "Statute of Frauds" is descriptive of
statutes which require certain classes of contracts to be in writing. The Statute does
not deprive the parties of the right to contract with respect to the matters therein
involved, but merely regulates the formalities of the contract necessary to render it
enforceable. Evidence of the agreement cannot be received without the writing or a
secondary evidence of its contents.

The Statute, however, simply provides the method by which the contracts
enumerated therein may be proved but does not declare them invalid because they are
not reduced to writing. By law, contracts are obligatory in whatever form they may
have been entered into, provided all the essential requisites for their validity are
present. However, when the law requires that a contract be in some form in order that
it may be valid or enforceable, or that a contract be proved in a certain way, that
requirement is absolute and indispensable. Consequently, the e"ect of non-
compliance with the requirement of the Statute is simply that no action can be
enforced unless the requirement is complied with. Clearly, the form required is for
evidentiary purposes only. Hence, if the parties permit a contract to be proved, without
any objection, it is then just as binding as if the Statute has been complied with.

The purpose of the Statute is to prevent fraud and perjury in the enforcement of
obligations depending for their evidence on the unassisted memory of witnesses, by
requiring certain enumerated contracts and transactions to be evidenced by a writing
signed by the party to be charged.

While the Statute of Frauds aim [sic] to safeguard the parties to a contract from
fraud or perjury, its non-observance does not adversely a"ect the intrinsic validity of
their agreement. The form prescribed by law is for evidentiary purposes, non-
compliance of which does not make the contract void or voidable, but only renders the
contract unenforceable by any action. In fact, contracts which do not comply with the
Statute of Frauds are rati!ed by the failure of the parties to object to the presentation
of oral evidence to prove the same, or by an acceptance of bene!ts under them.

Further, the Statute of Frauds is limited to executory contracts where there is a

wide !eld for fraud as there is no palpable evidence of the intention of the contracting
parties. It has no application to executed contracts because the exclusion of parol
evidence would promote fraud or bad faith as it would allow parties to keep the
bene!ts derived from the transaction and at the same time evade the obligations
imposed therefrom.

The RTC errs in summarily dismissing respondent's claim of ownership simply

because the sale between her and Alido was not supported by a written deed. As
above-mentioned, an oral sale of real property is not void and even enforceable and
binding between the parties if it had been totally or partially executed.

The Court agrees with the observations of the CA that the Statute of Frauds is
inapplicable in the present case as the verbal sale between respondent and Alido had
been executed. From the time of the purported sale in 1978, respondent peacefully
possessed the property and had in her custody OCT No. F-16558. Further, she had been
the one paying the real property taxes and not Alido. Possession of the property,
making improvements therein and paying its real property taxes may serve as
indicators that an oral sale of a piece of land had been performed or executed.

In addition, while tax declarations are not conclusive proof of ownership, they
may serve as indicia that the person paying the realty taxes possesses the property in
concept of an owner. In Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago the
Court, thus, explained:

In the instant case, it was established that Lot 2344 is a private property of the
Santiago clan since time immemorial, and that they have declared the same for
taxation. Although tax declarations or realty tax payment of property are not
conclusive evidence of ownership, nevertheless, they are good indicia of possession in
the concept of owner, for no one in his right mind would be paying taxes for a property
that is not in his actual or constructive possession. They constitute at least proof that
the holder has a claim of title over the property. The voluntary declaration of a piece of
property for taxation purposes manifests not only one's sincere and honest desire to
obtain title to the property and announces his adverse claim against the State and all
other interested parties, but also the intention to contribute needed revenues to the
Government. Such an act strengthens one's bona !de claim of acquisition of
ownership.
 From 1978 until her death, Alido never questioned respondent's continued
possession of the property, as well as of OCT No. F-16558. Neither did she stop
respondent from paying realty taxes under the latter's name. Alido allowed respondent
to exercise all the rights and responsibilities of an owner over the subject parcel of
land. Even after her death, neither her heirs disturbed respondent's possession of the
property nor started paying for the real property taxes on the said lot. Further, it is
noteworthy that petitioners do not assail that respondent had acquired the property
fraudulently or illegally as they merely rely on the fact that there was no deed of sale to
support the said transaction. However, as manifested by the actions or inactions of
Alido and respondent, it can be reasonably concluded that Alido had sold the property
to respondent and that the said transaction had been consummated. SDAaTC

With what transpired between the parties, the oral contract between Bueno and
Atty. Peralta should be excluded from the application of the Statute of Frauds. The
application of the exception in the !rst sentence of Article 1403, in relation to Article
1405 of the Civil Code should apply instead. Rati!cation as an exception to
unenforceable contracts is addressed in the !rst sentence of Article 1403, while the
modes of rati!cation are described in Article 1405.

Art. 1403. The following contracts are unenforceable, unless they are rati!ed x x
x.

Art. 1405. Contracts infringing on the Statute of Frauds, referred to in No. 2 of

Article 1403, are rati!ed by the failure to object to the presentation of oral evidence to
prove the same, or by the acceptance of bene!ts under them. (Emphasis supplied)

Article 1405 is further bolstered by Articles 1392 and 1393 of the Civil Code:

Art. 1392. Rati!cation extinguishes the action to annul a voidable contract.

Art. 1393. Rati!cation may be e"ected expressly or tacitly. It is understood that

there is a tacit rati!cation if, with knowledge of the reason which renders the contract
voidable and such reason having ceased, the person who has a right to invoke it
should execute an act which necessarily implies an intention to waive his right.
 Rati!cation is, in essence, consent belatedly given through express or implied
acts that are deemed a con!rmation of the agreement or a waiver of the right to
impugn the unauthorized act.

Both the trial court and the CA found that there was a contract to transfer the
property from Bueno to Atty. Peralta. The trial court held:

The undisputed fact is that the subject property was a subject of the
commitment between the Buenos and Atty. Peralta whereby the latter shall be
awarded of the same property if he could serve as counsel for the Buenos and the
group of companies they owned until the time of his retirement.

The trial court glaringly omitted Bueno's acts of rati!cation of the oral contract
from 1960, or how the Estate of Bueno rati!ed the contract during trial. It limited its
discussion to the "lack of personal knowledge of the alleged verbal transaction."

The CA, on the other hand, viewed Bueno's acts of rati!cation through the lens
of partial performance of the contract and placed signi!cant value on Atty. Peralta's
legal services. In awarding the property to the Estate of Peralta, the CA recognized that
"Atty. Peralta practically worked his whole professional life at the service of Bueno and
his companies." The CA stated:

The agreement and perfection of this contract by Bueno and Atty. Peralta are
evident by the subsequent acts of the both parties: Bueno's relinquishing possession of
the property to Atty. Peralta and Atty. Peralta's continued rendition of services to
Bueno and his companies.

E"ects of judicial admissions

It is a matter of record, too, borne by the Estate of Bueno's own recital of facts in
the present petition, that Atty. Peralta, having been friends with Bueno since their
younger years, was engaged to render legal services for the Bueno family's
corporations beginning in 1960.

This matter was further clari!ed during pre-trial when the Estate of Bueno
admitted Atty. Peralta's physical possession of the subject property from January, 1962
up to the present. Likewise admitted was Atty. Peralta's rendition of legal services to
the Spouses Bueno and their companies from 1957 to 1975.

The Estate of Bueno argues against the existence of the condition for the
transfer of the subject property to Atty. Peralta because it was never raised as an issue
in the Answer. However, it is plain to Us, based on the allegations in the petition and
the Reply, that the Estate of Bueno reiterated a con!rmation of Bueno's commitment to
transfer the property to Atty. Peralta. Such repeated and consistent representation
from the Estate of Bueno and their counsel demonstrate the existence of the contract
between Bueno and the Atty. Peralta, which the Court considers as judicial
admissions. acEHCD

On the aspect of reiteration of a factual statement, there is the acknowledged

postulate on adoptive admission as a component of the concept on judicial admissions
under Section 4, Rule 129 of the Revised Rules on Evidence. This concession of a
disputed fact by the adverse party was also applied by this Court in Republic v. Kenrick
Development Corporation:

A party may, by his words or conduct, voluntarily adopt or ratify another's

statement. Where it appears that a party clearly and unambiguously assented to or
adopted the statements of another, evidence of those statements is admissible against
him. This is the essence of the principle of adoptive admission.

An adoptive admission is a party's reaction to a statement or action by another

person when it is reasonable to treat the party's reaction as an admission of something
stated or implied by the other person. By adoptive admission, a third person's
statement becomes the admission of the party embracing or espousing it. Adoptive
admission may occur when a party:

(a) expressly agrees to or concurs in an oral statement made by another;

(b) hears a statement and later on essentially repeats it;

(c) utters an acceptance or builds upon the assertion of another;

(d) replies by way of rebuttal to some speci!c points raised by another but
ignores further points which he or she has heard the other make; or

(e) reads and signs a written statement made by another.

Here, respondent accepted the pronouncements of Atty. Garlitos and built its
case on them. At no instance did it ever deny or contradict its former counsel's
statements. It went to great lengths to explain Atty. Garlitos' testimony as well as its
implications, as follows:

1. While Atty. Garlitos denied signing the answer, the fact was that the answer was
signed. Hence, the pleading could not be considered invalid for being an unsigned
pleading. The fact that the person who signed it was neither known to Atty. Garlitos
nor speci!cally authorized by him was immaterial. The important thing was that the
answer bore a signature.

2. While the Rules of Court requires that a pleading must be signed by the party or his
counsel, it does not prohibit a counsel from giving a general authority for any person
to sign the answer for him which was what Atty. Garlitos did. The person who actually
signed the pleading was of no moment as long as counsel knew that it would be signed
by another. This was similar to addressing an authorization letter "to whom it may
concern" such that any person could act on it even if he or she was not known
beforehand.

3. Atty. Garlitos testi!ed that he prepared the answer; he never disowned its contents
and he resumed acting as counsel for respondent subsequent to its !ling. These
circumstances show that Atty. Garlitos conformed to or rati!ed the signing of the
answer by another.

Respondent repeated these statements of Atty. Garlitos in its motion for

reconsideration of the trial court's February 19, 1999 resolution. And again in the
petition it !led in the Court of Appeals as well as in the comment and memorandum it
submitted to this Court.

Evidently, respondent completely adopted Atty. Garlitos' statements as its own.

Respondent's adoptive admission constituted a judicial admission which was
conclusive on it.

In addition, We note explicit remarks from the Estate of Bueno during the
various stages of the suit that can be deemed as negative pregnant statements, or that
form of denial which is at the same time an a#rmative assertion favorable to the
opposing party. It is said to be a denial pregnant with an admission of the substantial
facts in the pleading responded to. It is in e"ect an admission of the averment to
which it is directed.

These statements call into e"ect the principle of estoppel under Article 1431 of
the New Civil Code. Any other evidence to prove the agreement is unnecessary in light
of the Estate of Bueno's conduct over the years, from time the agreement was made, to
the moment Atty. Peralta and his family took possession of the subject property in
1962, and through the years that they occupied the same.

Consequently, the Court may disregard all evidence submitted by the Estate of
Bueno contrary to, or inconsistent with, their judicial admissions.

Rati!cation by failure to object

to the presentation of oral evidence

To reiterate, the !rst mode of rati!cation under Article 1405 is failure to object
to the presentation of oral evidence. The record is replete with such oral evidence that
the Estate of Bueno failed to refute.

Noteworthy is the deposition of Atty. Nio, taken in the presence of both parties'
counsels. His testimony was o"ered by the Estate of Peralta for the following purposes:

1. To prove that the witness knew personally Atty. Eduardo Peralta, Sr., and Mrs.
Luz Peralta, both are now deceased and he likewise knew the defendant spouses
Valeriano C. Bueno and the late Genoveva Bueno.

...

3. That sometime in 1966 at the house and lot subject of this case, defendants
unconditionally transferred and conveyed full ownership of the subject property in
favor of the plainti"s and that he was present during such incident.

...

5. That the property subject of this case was given to the plainti" as partial
consideration for the legal services rendered by the late Atty. Eduardo Peralta, Sr.

....

Atty. Nio likewise testi!ed in open court and made the following statements
under direct examination, without any objection from the counsel of the Estate of
Bueno, to wit: HSAcaE

Q Pa ero, let me call your attention to paragraph 4 of this a#davit which state
and I quote:

"In fact I remember one incident sometime in 1966 at the residence of Atty. Peralta
during which occasion, Mr. Valeriano Bueno reiterated his generosity to Atty. Peralta
for the legal services rendered thus far in my presence and in the presence of other
persons who were similarly invited for the occasion such as Mr. Jose Padilla to who I
was also introduced by the late Atty. Peralta."

When you speak of the residence of Atty. Peralta, are you referring to the property
subject of this case which is located at 3450 Majistrada [sic] Villamor St., Lourdes
Subdivision, Sta. Mesa, Manila which is the property subject of this case?

A Yes Sir.

Q Could you tell us now what do you remember of that incident sometime in
1966?

A I remember that was in the house of Atty. Eduardo Peralta, Sr. when there
was an occasion, I think that was a birthday party. I am [sic] invited, Mr. Bueno, his
wife, attorney-to-be Padilla, myself. That is in the evening, May 19 I think.

Q What transpired there, Mr. Witness?

 A We took food and drink there, that is what transpired there. Mr. Bueno, if he
followed only all the promises of Mr. Bueno, all the employees should have one lot
each especially those lots acquired at Antipolo, Rizal. In this particular case, Atty.
Peralta do [sic] not have any de!nite amount of salary. He only promised to give that
house and lot to him and this Mr. Peralta told me about that and when there was a
birthday we talked with each other that I witnessed personally that Mr. Bueno was
really in his kindness, gave the house and lot to Mr. Peralta. It cannot be transferred
yet because it is still indebted to Mitsubishi with the promise that when the obligation
will be paid, he will legally transfer the property but the truth is verbally, the property
was already given to Mr. Peralta on that date. What did Atty. Peralta do afterwards, he
made renovations of the property. I think he spent more than P200,000.00 on the
renovation.

Q And at that time he made that declaration or pronouncement, could you tell
us if Mrs. Genoveva Bueno was present on that occasion?

A Yes sir. Mrs. Bueno is in conformity with the giving of that property because
whether she like [sic] or not, if Mr. Peralta would be paid, even three times the value of
the property should be paid.

Q Would you a#rm before this Honorable Court that from the time Defendant
Sps. Bueno gave that property as partial consideration for his legal services, the
plainti" more particularly Atty. Peralta had occupied that property continuously,
uninterruptedly and in the concept of an owner?

A Atty. Peralta occupied the building and lot continuously up to his death. After
his death, his heirs were the ones who lived there, sir.

On cross examination, Atty. Nio further testi!ed on Bueno's conveyance of the

property:

Q And that Valeriano Bueno was already represented by another lawyer other
than Atty. Peralta during that time, you don't know?

A You know Pa ero, the issue here is whether or not Mr. Bueno had given the
house and lot to Atty. Peralta and Mrs. Peralta. At the time when he gave that, Mrs.
Bueno is also present and at the same in one occasion in 1966, Mr. Bueno with his wife
there on the occasion reiterated that he had already given that house and lot and that
is the reason why Atty. Peralta and Mrs. Peralta have made renovations of the building
which I think he had even spent more than P300,000.00 for the renovation. That is
only the issue that I know but with respect to other issues, I do not know. Suppose we
deal on that issue here.

Q So, you do not know that Mr. Bueno imposed certain conditions to Atty.
Peralta to own that house and lot already?

A What the condition was, any moment that he will be able to pay the obligation
being answer [sic] to the house and lot, he will immediately issue, he will immediately
execute a deed of sale sir.

Q And you do not know that Mr. Bueno imposed upon Atty. Peralta that he has
to be his lawyer up to the time of his retirement from the practice of law, you don't
know?

Atty. Pacheco

It was already answered. In fact, the witness stated that there is only one condition set
by Mr. Bueno. That the moment the loan had been paid then the deed of sale will be
executed.

Court

Already answered.

...

Q In Exh. "C", you said Mr. Valeriano Bueno reiterated that he is going to give
Atty. Peralta the house and lot. Was it reduced into writing?

A Personally, we have to believe Bueno. In the !rst place, he is a millionaire at

that time he is [sic] a billionaire. In the second place, I did not know yet that he is lying
but I know that he is sincere in giving that. He gave that because of the services of
Peralta. That is what I know sir. AcICHD

Q So, it is now clear that there was no written document on that what you said
that Mr. Bueno gave the house and lot to Atty. Peralta, there was no document?

A As far as I'm concerned, I don't know if after that occasion, he gave a

document or not but what I know, he really gave that personally sir.

On re-direct, Atty. Nio expounded on the circumstances surrounding

conveyance of the property from Bueno to Atty. Peralta. Again, there was no objection
from the counsel of the Estate of Bueno, thus:

Q Mr. Witness, Atty. Nio, you were stating a while ago that sometime in 1966 in
one of the occasions held at the residence of Atty. Peralta, Mr. Bueno reiterated that he
already gave that property to Atty. Peralta, is that correct?

A Yes sir.

Q So, you mean to tell us that it was as early as 1960 that Mr. Bueno gave that
property to Atty. Peralta who physically took possession of that property in the concept
of an owner?

A Because he was advised by Mr. Bueno and Mrs. Bueno to transfer to that
house at [sic] Villamor St. and that will be their property sir.

Q And after that, after 1960, when Atty. Peralta and his family took physical
possession of that property, he introduced improvements in the concept of an owner
again?

A Yes sir.

Q During the lifetime of Atty. Peralta, you are not aware of any acts committed
or made by Mr. Bueno inconsistent with that agreement he had with Atty. Peralta
regarding the giving or transfer of ownership over that property in favor of Atty.
Peralta?
 A I am not aware, sir. What I know is continuously, until now, he still in the
house from 1960.

On the other hand, Edmundo also testi!ed on the agreement between his father
and Bueno. The RTC described his testimony in the following manner:

Next witness for the plainti" is Edmundo Peralta who testi!ed to the fact that
there was no condition imposed by Valeriano Bueno to his father, Eduardo Peralta, Sr.,
regarding the grant of the subject property to the latter. According to him, there was
no negotiation whatsoever between Mr. Bueno, his son Jun Bueno and himself
regarding the return of the property by way of three (3) million pesos although there
was a previous proposal to sell the property to Mr. Bueno for that amount. He testi!ed
that Mr. Bueno admitted that the property is really owned by the Peralta's for which
reason he is willing to buy the property for three (3) million. His father has been in
continuous legal service for the Buenos up to the time of his death in December of
1983. He knows the fact because of some documents that he has and also the calendar
of cases shows that he has been exclusively working on cases shows that he has been
exclusively working on cases of Buenos [sic] up to the time of his death.

An examination of the transcript reveals that the sole objection to Edmundo's

testimony was that it was hearsay. But since the statement of Bueno was uttered in the
presence of Atty. Nio, the latter had personal knowledge of such admission. There is
no prohibition against a witness testifying to what he heard. The following explanation
by a respected Justice is enlightening:

Admissions are original evidence and no foundation is necessary for their

introduction in evidence.

Oral admissions. If the admission was made orally, it may be proved by any
competent witness who heard them or by the declarant himself. citing 31 C.J.S. 1153 It
is not necessary that the witness should be able to !x accurately the date of the
conversation in which the admission was made. citing 31 C.J.S. 1154. It is not a
condition that the exact words of the statement be repeated; the law does not require
impossibilities. If the witness states the substance of the conversation or declaration,
the admission of his testimony is not erroneous."
 To be sure, the counsel for the Estate of Bueno did object during the testimony
of Dr. Peralta, arguing against the introduction of parol evidence of the contract
between Bueno and Atty. Peralta:

As its last witness, plainti" presented Dr. Edgardo Peralta who testi!ed that he
is residing in [sic] 3451 M. Villamor Street, Sta. Mesa, Manila since the year of 1962. He
knows that the [sic] Mr. Bueno is the previous owner of the address 3450 M. Villamor
Street, Sta. Mesa, Manila which is just across his present address. He said that at
present they are the owner of the property because the same has been verbally given
to his parents by Mr. Bueno. (In this regard, the defense entered its continuing
objection to the question profounded [sic] citing Articles 1403 and 1358 of the Civil
Code). He said that the title of the property was not given to his father because this was
made a part of the collateral to a mortgage by Mr. Bueno. Thus, they made
representation to the bank through a letter dated January 1, 1996 (Exhibit "G") sent by
registered mail for the bank to honor the verbal agreement made by and between Mr.
Bueno and his late father to which they received no reply.

However, such objection was e"ectively waived by the Estate of Bueno, when it
introduced the testimony of Valeriano Bueno, Jr. (Valeriano Jr.), which tended to prove
the oral contract between his father and Atty. Peralta:

As the last witness for the defendants, VALERIANO BUENO, JR., who was
presented to the Court on September 29, 2003 who [sic] is the legitimate son of
Spouses Bueno. He testi!ed that he knew both the plainti" Spouse Bueno and that
Atty. Peralta worked for several years as legal counsel of his father and for the
company of his father. Relative to paragraph six (6) of the Amended Complaint, he
testi!ed that he has no knowledge of the fact of that but from what he recalled, his
father was willing to give Atty. Peralta the ownership of the subject property still in the
name of his father if Atty. Peralta can render legal services to the witness' father until
Atty. Peralta's retirement but Atty. Peralta resigned in 1974. He also recognized the
document presented by the plainti" concerning the !nancial arrangement with
Edmundo B. Peralta, but nothing happened to it. After the witness con!rmed the
unfriendly encounters between his father and Edmundo Peralta, he also identi!ed the
reconstituted title and the suit he caused to be !led against Edgardo Peralta and
Edmundo Peralta. TAIaHE

On cross-examination he testi!ed that he was only aware of the fact that his
father was willing to give the property to Atty. Peralta on the condition that Atty.
Peralta will serve his father until his retirement, and that during the lifetime of his
father, his father did not !le any ejectment case nor an action to recover possession
against Atty. Peralta and Luz B. Peralta even after the two passed away. He also
acknowledged that arrangement between him and Edmundo Peralta on the !nancial
assistance, the improvements introduced by and at the expense of the plainti" and
their children like additional buildings on the subject property for which his father did
not interpose any objection.

Accordingly, the oral contract between Bueno and Atty. Peralta is removed from
the application of the Statute of Frauds with failure of the Estate of Bueno's counsel to
object to parol evidence of the contract, and Valeriano Jr.'s testimony con!rming its
existence, thus:

On Direct Examination

Q: Now, in paragraph 6 of the amended complaint, the estate of Atty. Eduardo

M. Peralta, Sr. and Luz B. Peralta claims that the property, including the improvements
located at 3450 Magistrado Villamor Street, Lourdes Subdivision had been given to the
former as partial consideration of the services rendered by Atty. Eduardo M. Peralta,
Sr.

Now, my question is, what can you say about this allegation in paragraph 6 of the
amended complaint?

A: I have no knowledge to that e"ect, Your Honor. From what I can recall, my
father was willing to give him the ownership to the property they are occupying if Atty.
Peralta would render his services to my father until his retirement.

On Cross Examination

Q: And now, you said that you learned that your father was willing to give the
property as long as Atty. Peralta will serve until his retirement, is that correct?
 A: Yes, sir.

Q: So, there is in fact an agreement that this property will be transferred to Atty.
Peralta, subject to that condition?

Court: Subject to that condition.

Q: When he was alive, your father, he did not !le any ejectment case against
Atty. Peralta?

A: No, sir.

Q: Your father did not even !le any case for recovery of possession in the
Regional Trial Court, is it not correct?

A: Yes, sir.

Personal knowledge of a judicial

admission is not required and
competence of a witness to testify is
determined at the time of testimony

The importance of single words in oral discourse is comparatively much less

than in writings, and memory does not retain precise words, except of simple
utterances and for a short time. If the witness states the substance of the conversation
or declaration, it is not error for the court to admit his testimony. Thus, in examining
the statements of the witnesses, the Court is not looking for verbal precision, only that
said utterances amount to an unequivocal admission of the contract.

It is clear from Valeriano Jr.'s testimony that he was, in fact, aware of the
transaction over the subject realty and he acknowledged that his father was willing to
part ownership over the property in favor of Atty. Peralta. To repeat, such statement is
in the nature of an "adoptive admission" and, therefore, does not require that he has
!rst-hand knowledge of the contract from its inception in 1960.

In addition to rati!cation by failure to object during the hearing, the Estate of

Bueno's Answer amounted to a rati!cation of the oral contract when it stated that the
only reason for Bueno's failure to convey the property to Atty. Peralta was the
encumbrance on the property: "Speci!c performance as prayed for by the plainti" is
very improbable if not impossible as the subject property of this case is encumbered
with !nancial institutions that unless redeemed or obligations paid defendants
spouses cannot act as prayed for." The Estate of Bueno, likewise, failed to allege that
Atty. Peralta's service until retirement was a condition of the contract.

As early as 1910, in Conlu v. Araneta (Conlu), this Court had ruled that a
contract of sale of real property that does not comply with the form required for its
execution is not automatically invalidated by such defect. If the parties to the action
fail to object to the admissibility of oral evidence to the contract of sale of real property
during trial, then the contract will be just as binding upon the parties as if it had been
reduced to writing. cDHAES

In Abrenica v. Gonda (Abrenica), the Court explained the rule on the waiver of
the bene!t of the parol evidence rule, or the rati!cation by failure to object:

Now then, it has been repeatedly laid down as a rule of evidence that a protest
or objection against the admission of any evidence must be made at the proper time,
and that if not so made it will be understood to have been waived. The proper time to
make a protest or objection is when, from the question addressed to the witness, or
from the answer thereto, or from the presentation of the proof, the inadmissibility of
the evidence is, or may be, inferred.

A motion to strike out parol or documentary evidence from the record is

useless and ine"ective if made without timely protest, objection, or opposition on the
part of the party against whom it was presented.

Objection to the introduction of evidence should be made before the question is

answered. When no such objection is made, a motion to strike out the answer
ordinarily comes too late. (De Dios Chua Soco vs. Veloso, 2 Phil. Rep., 658).

In the case of Conlu vs. Araneta and Guanko (15 Phil. Rep., 387) in which one of
the points discussed was the inadmissibility of parol evidence to prove contracts
involving real property, in accordance with the provisions of section 335 of the Code of
Civil Procedure, no objection having been made to such evidence, this court said:

A failure to except to the evidence because it does not conform with the statute,
is a waiver of the provisions of the law.

An objection to a question put to a witness must be made at the time question is

asked. (Kreigh vs. Sherman, 105 III., 49; 46 Am. Dig., Century Ed., 932.)

Objections to evidence and the reason therefor must be stated in apt time.
(Kidder vs. Macilhenny, 81 N.C., 123; 46 Am. Dig., Century Ed., 933.)

It is held in general that by failing to object to the proof of an oral contract a

party waives the bene!t of the statute and cannot afterward claim it. (20 Cycl., 320,
where several decisions on the subject are cited.)

Many rulings have been made in regard to this matter by the courts of the
United States, and among them we cite a few found in volume 46 of the American
Digest, page 933:

Where plainti" without objection proved by parol evidence that certain land
belonged to him, defendant cannot afterwards object that the deed should have been
produced. (Clay vs. Boyer, 10 Ill. 5 Gilman, 506.)

After a question has been repeatedly asked and answered without objection, it
is too late to object to its repetition on the ground that the answer is in itself
inadmissible. (Mckee vs. Nelson, 4 Cow., 355; 15 Am. Dec., 384.)

An objection to the admission of evidence on the ground of incompetency,

taken after the testimony has been given, is too late. (In re Morgan, 104 N.Y., 74; 9 N.E.,
861.)

Plainti" having testi!ed to conversation between defendant's son and himself

until the direct examination extended through about 12 folios, defendant could not sit
by and then object to the foregoing testimony. (Goehme vs. Michael, 5 N.Y. St. Rep.,
492.)
 The !rst witness to testify at the trial was the plainti" himself. From the !rst
question put to him, it clearly appeared, as may be seen in folios 5, 6, and 7 of the
stenographic notes, that the contract of pledge or mortgage of the lands, as the plainti"
himself improperly calls it, or the sale of said lands with right of repurchase, between
him and the defendant Gonda, was verbal one and for the period of seven years, made
in the course of a conversation between the plainti" and said defendant in the house
of Domingo Tamayo. The defendants' counsel, however, did not endeavor immediately
to obtain from the witness a statement as to whether that contract was set forth in any
instrument; he did not object to the witness continuing to testify in regard to the
contract, nor did he in any way object to the questions they continued to ask the
witness concerning the matter, though he did object to one question as leading and to
another one as irrelevant, thus indicating that he had no other objection to make to
those questions. Only after witness, the plainti", had !nished answering all the
questions put to him on the subject of the contract, did counsel for the defendants
move that all of his testimony and statements be stricken out. It is obvious that the
court should not have granted that motion; but we must also bear in mind that the
court did not grant other similar and subsequent motions made during the
examination of the other witnesses; he merely said that he would take them under
advisement. The fact that the defendants' counsel asked various cross-questions, both
of the plainti" and of the other witnesses, in connection with the answers given by
them in their direct examination, with respect to particulars concerning the contract,
implies a waiver on his part to have the evidence stricken out. ASEcHI

It is true that, before cross-examining the plainti" and one of the witnesses, this
same counsel requested the permission of the court, and stipulated that his clients'
rights should not be prejudiced by the answers of those witnesses in view of the
motion presented to strike out their testimony; but this stipulation of the defendants'
counsel has no value or importance whatever, because, if the answers of those
witnesses were stricken out, the cross-examination could have no object whatsoever,
and if the questions were put to the witnesses and answered by them, they could only
be taken into account by connecting them with the answers given by those witnesses
on direct examination.

As no timely objection or protest was made to the admission of the testimony of

the plainti" with respect to the contract; and as the motion to strike out said evidence
came too late; and, furthermore, as the defendants themselves, by the cross-questions
put by their counsel to the witnesses in respect to said contract, tacitly waived their
right to have it stricken out, that evidence, therefore, cannot be considered either
inadmissible or illegal, and the court, far from having erred in taking it into
consideration and basing his judgment thereon, notwithstanding the fact that it was
ordered to be stricken out during the trial, merely corrected the error he committed in
ordering it to be so stricken out and complied with the rules of procedures
hereinbefore cited.

The Abrenica rule has been consistently applied by the Court through the years.
One case that has been frequently cited in recent years is that of Limketkai Sons
Milling, Inc. v. Court of Appeals, (Limketkai) where we reiterated that cross-
examination is a waiver of the defense of the Statute of Frauds, to wit:

In the instant case, counsel for respondents cross-examined petitioner's

witnesses at length on the contract itself, the purchase price, the tender of cash
payment, the authority of Aromin and Revilla, and other details of the litigated
contract. Under the Abrenica rule (reiterated in a number of cases, among them
Talosig vs. Vda. de Nieba, 43 SCRA 472 1972), even assuming that parol evidence was
initially inadmissible, the same became competent and admissible because of the
cross-examination, which elicited evidence proving the evidence of a perfected
contract. The cross-examination on the contract is deemed a waiver of the defense of
the Statute of Frauds (Vitug, Compendium of Civil Law and Jurisprudence, 1993
Revised Edition, supra, p. 563).

The reason for the rule is that as pointed out in Abrenica "if the answers of
those witnesses were stricken out, the cross-examination could have no object
whatsoever and if the questions were put to the witnesses and answered by them, they
could only be taken into account by connecting them with the answers given by those
witnesses on direct examination" (pp. 747-748).

We see no reason to abandon the Abrenica rule now, especially as the rule is,
like the Statute of Frauds, still found in our substantive law.
Rati!cation by acceptance of
bene!ts

Based on the admissions on record, it is readily apparent that, even way back in
1962, Bueno and Atty. Peralta have been mutually bene!ting from the oral contract: in
exchange for his legal services, Atty. Peralta received from Bueno the house and lot at
3450 Magistrado Villamor in Sta. Mesa.

The existence of a perfected contract of sale can be based on the conduct of the
parties. In Maharlika Publishing Corporation vs. Tagle, the Court held:

x x x In other words, appropriate conduct by the parties may be su#cient to

establish are agreement, and there may be instances where interchanged
correspondence does not disclose the exact point at which the deal was closed, but the
actions of the parties may indicate that a binding obligation has been undertaken.

As to the alleged resignation of Atty. Peralta, the records bear out that the same
was ine"ectual, or can be deemed as not a true resignation because he continued to
render legal services to Bueno and his companies despite said resignation. Even
assuming that Atty. Peralta did resign, he can be considered to have resumed his
position and engaged as counsel until he reached the mandatory retirement age and
even beyond. Thus, he can be considered to have complied with the condition.

Bueno should not be allowed to repudiate his own acts and representations to
the prejudice of Atty. Peralta and his family who relied upon them. It does not matter
that neither the receipt for the consideration nor the sale itself was in writing. In any
event, by invoking the unenforceability of the arrangement under the Statute of
Frauds, Bueno and subsequently, his heirs, acknowledged the existence of a contract
between him and Atty. Peralta.

Previous, simultaneous, and subsequent acts of the parties are properly

cognizable indicia of their true intention. The courts may consider the relations
existing between the parties and the purpose of the contract, particularly when it was
made in good faith between mutual friends, as acknowledged in the petition itself.
 Bueno's acts allowing Atty. Peralta and his family to stay on the property,
introduce substantial improvements, and pay the real property tax thereon, coupled
with the absence of any action to recover the subject property show the intention of
Bueno to cede ownership over the same in favor of Atty. Peralta. The Court likewise
notes the testimony of Gaudencio Juan, initially a company forester and personnel
manager but retired as Special Assistant to the President, that Bueno had the
propensity to promise real property to his employees. ITAaHc

The agreement between Bueno and Atty. Peralta arose not only to mutually
bene!t each other legal services in exchange of real property but was likewise borne
out of kindness and generosity. This was made public by Bueno himself as testi!ed to
by witness Atty. Nio. This Court must not countenance the acts of Bueno and those of
his heirs as they, by their silence, delay, and inaction, knowingly induced Atty. Peralta
and his family to spend time, e"ort, and expense in paying real property tax and
making improvements since 1962 only to spring an ambush and deny the claim of title
when the relationship between the parties has turned sour.

Conclusion

It is human nature on the part of the Atty. Peralta's family to assert their right
before a court of justice when such is threatened. It is also human nature on the part of
Bueno and his family to delay the !ling of any claim of possession because of the clear
absence of merit in their own claim. However, the oral contract between Bueno and
Atty. Peralta is rati!ed by both parties and thus must be enforced and upheld. This is in
harmony with the principle that courts of equity will not allow the Statute of Frauds to
be used as an instrument of fraud. This is also in recognition of the valuable legal
services already rendered by Atty. Peralta and from which Bueno and his family
bene!ted.

WHEREFORE, the Petition is hereby DENIED. The 31 August 2012 Decision and
the 18 February 2013 Resolution of the Court of Appeals in CA-G.R. CV No. 86410 are
AFFIRMED.

SO ORDERED.
 Gesmundo, Inting * and Gaerlan, JJ., concur.

Leonen, J., see separate dissenting opinion.

Individual Opinions

LEONEN, J., dissenting:

The majority !nds that an alleged oral contract to transfer interest in a real
property was rati!ed through the failure to object to oral evidence, thus removing it
from the ambit of the Statute of Frauds.

I disagree.

Before the partial execution of a contract of sale may remove an oral contract
from coverage of the Statute of Frauds, the terms of the contract must be clearly
established to su#ciently deem the action alleged as partial performance as having
been done solely pursuant to the alleged oral contract.

This case arose from a Complaint for speci!c performance !led by the Estate of
Atty. Eduardo M. Peralta, Sr. (Peralta) and Luz B. Peralta, represented by Dr. Edgardo B.
Peralta, against Spouses Valeriano (Bueno) and Genoveva Bueno (Genoveva).

The Peralta Estate alleged that Peralta handled numerous legal cases for the
Bueno Spouses, and that as partial payment for his services, the Bueno Spouses gave
him their real property at No. 3450 Magistrado Villamor St., Lourdes Subdivision, Sta.
Mesa, Manila.

In 1962, Peralta, his wife, and their legitimate heirs, except for Eduardo, Jr.,
moved to the property and introduced numerous improvements on it. The Bueno
Spouses gave Peralta a photocopy of the title over the property for reference, and had
him pay the realty taxes for the property, which his heirs continued to pay after
Peralta's death in 1983.

After Peralta died, one of his sons, upon Bueno's request, turned over the
records of the cases handled by Peralta.
 In a letter dated September 15, 1990, Dr. Edgardo B. Peralta, replying to a letter
from Bueno's other lawyer, asserted Peralta's full ownership over the property and
demanded that the Bueno Spouses execute documents conveying the real property to
the Peralta's. In response, the Bueno Spouses demanded that the Peralta's surrender
possession of the property.

Several demands were made to execute the conveyance documents over the
property, which the Bueno Spouses refused to do. Instead, they and their daughter-in-
law intruded on the property and, one time, Bueno even went to the property and
physically attacked Edmundo B. Peralta, one of Peralta's successors-in-interest.

Thus, Peralta's heirs were constrained to !le the Complaint, praying that the
Bueno Spouses be ordered to execute a deed of conveyance over the property.

In their Answer with A#rmative Defenses and Counterclaim, the Bueno

Spouses denied the allegations in the Complaint for being hearsay, baseless, and
products of imagination. They argued, among others, that the Peralta Estate's claim
was unenforceable under the Statute of Frauds. They maintained that Peralta and his
family were merely allowed by the Bueno Spouses to reside on the property, and
Peralta himself never demanded that Bueno give or sell the property to him. Moreover,
they asserted that it would be impossible to convey the property to the Estate as it was
encumbered with !nancial institutions, which had not yet been paid.

The Peralta Estate later !led an amended Complaint, impleading the heirs of
Genoveva, who had died before the trial started. The heirs moved to dismiss the
Complaint, insisting among others that the action was barred by the Statute of
Limitations.

In a July 29, 1998 Order, the Regional Trial Court denied the Motion to Dismiss.
It noted that the grounds alleged were not included in the Answer, which had not been
amended after the Complaint had been amended. This Order was assailed through a
petition for certiorari before the Court of Appeals, which dismissed it for being
prematurely !led, and for failure to move for reconsideration before !ling the petition.
CHTAIc
 On October 18, 2000, Bueno died.

Meanwhile, trial on the merits ensued. After the Peralta Estate had formally
o"ered its evidence, the defendants sought leave to !le a demurrer to evidence. In
their Demurrer to Evidence, they claimed that the Peralta Estate failed to prove that
the Bueno Spouses gave the property to Peralta in 1960.

The Regional Trial Court denied the Demurrer to Evidence. Hypothetically

admitting the allegations in the Complaint, it rejected the argument that the verbal
contract was covered by the Statute of Frauds, which it said applied only to executory
contracts, not the verbal contract between Peralta and Bueno. It also noted that the
case was not barred by prescription, as it was essentially an action to quiet title, which
is imprescriptible when delivery of possession of the property has been made.

After trial, the Regional Trial Court dismissed the Peralta Estate's Complaint in
an October 11, 2005 Decision. It summarized the evidence presented as follows:

Evidence for the Plainti"

The plainti"s presented three witnesses namely: Atty. Moises Nio, Edmundo B.
Peralta, and Dr. Edgardo D. Peralta.

During the deposition taking of witness for the plainti", Atty. Moises Nio, which
was conducted in the Municipal Trial Court of San Antonio, Nueva Ecija, he testi!ed,
inter alia, to the following facts:

In the early days of his legal profession he established his own law o#ce at
Escolat, Marisol Building until he joined Atty. Eduardo Peralta, Sr. who was having an
o#ce at the Mercedes Building in Quiapo sometime between the year 1958 to 1959. He
was prodded by the late Atty. Peralta to associate with the law !rm headed by Atty.
Peralta as Vice-President and Chief Legal Counsel to assist in the handling of cases of
Valeriano Bueno and his several companies. He identi!ed his sworn statement to the
e"ect that he recalled an incident in 1966 at the residence of Atty. Peralta wherein he
publicly reiterated his generosity to Atty. Peralta for the services the latter has
rendered. During the said occasion Atty. Peralta told him that he was not receiving any
de!nite salary from Mr. Valeriano Bueno but the latter made a promise to give him the
subject property. The subject property could not be transferred immediately because
of [sic] the same is encumbered. Valeriano Bueno verbally promised that upon the
payment of the obligation, the said property shall be transferred to Atty. Peralta.

Next witness for the plainti" is Edmundo Peralta who testi!ed to the fact that
there was no condition imposed by Valeriano Bueno to his father, Eduardo Peralta Sr.,
regarding the grant of the subject property to the latter. According to him, there was
no negotiation whatsoever between Mr. Bueno, his son Jun Bueno and himself
regarding the return of the property by way of payment of three (3) million pesos
although there was previous proposal to sell the property to Mr. Bueno for that
amount. He testi!ed that Mr. Bueno admitted that the property is really owned by the
Peralta's for which reason he is willing to buy the property for three (3) million. His
father has been in continuous legal service for the Buenos up to the time of his death
in December of 1983. He knows the fact because of some documents that he has and
also the calendar of cases shows that he has been exclusively working on cases of
Buenos up to the time of his death. (TSN February 2, 2004, pp. 4-16)

On Cross-Examination, the witness was asked if he has any documents which

would show that his father has served as counsel for Buenos on 1983 and he was able
to present only documents of earlier dates of 1979 and 1976. His father never !led any
case for the transfer of the property in his favor. Likewise, he has no knowledge of the
existence of any documents executed in favor of Peralta's to show ownership of the
property. Neither did her mother ever send any demand letter for the transfer of the
property in Peraltas' favor even up to the time of his death in 1990. He con!rmed that
there is no document to show that they are the owners of the property. After the death
of his father they never executed any deed of partition as the same has been privately
arranged among them as heirs and they agreed to adjudicate the same to their
youngest brother Eduardo Peralta, Jr. Further, he testi!ed that they !led several
criminal charges against Buenos for harassing and scandalous acts they have
committed in trying to evict them from the premises. (TSN, July 12, 2004, pp. 10-24)

As its last witness, plainti" presented Dr. Edgardo Peralta who testi!ed he is
residing in 3451 M. Villamor Street, Sta. Mesa, Manila since the year of 1962. He knows
that the Mr. Bueno is the previous owner of the address 3450 M. Villamor Street, Sta.
Mesa, Manila which is just across his present address. He said that at present they are
the owners of the property because the same has been verbally given to his parents by
Mr. Bueno. (In this regard, the defense entered its continuing objection to the question
propounded citing Articles 1403 and 1358 of the Civil Code). He said that the title of the
property was not given to his father because this was made a part of the collateral to a
mortgage by Mr. Bueno. Thus, they made representations to the bank through a letter
dated January 1, 1996 (Exhibit "G") sent by registered mail for the bank to honor the
verbal agreement made by and between Mr. Bueno and his late father to which they
received no reply.

Evidence for the Defense

The defense presented GAUDENCIO JUAN Y PAGADOR, 82 years old and

residing at 8-A St. (sic) Mary St., Proj. 8, Quezon City who testi!ed, among others, that
he knows Spouses Valeriano Bueno and Genoveva Ignacio because he worked with
their company for 38 years. He likewise knows Atty. Eduard Peralta, Sr. because he
was working with the company of Spouses-defendants where he was working. Atty.
Peralta started working in the company in the year 1957, as a retained counsel of
Bueno group of companies, mostly of six (6) logging companies Bueno Industrial &
Development Corp., Butuan Lumber and Manufacturing Co., Inc., Mahogany Products,
Inc., Palanan Logging Enterprise, Looc Bay Lumber Co., on a case to case basis. He
recalled that initially he worked in the company as company forester and personnel
manager at the same time and after he retired in 1985 he was still retained by the
company as Special Assistant to the President. He testi!ed that he knows that Spouses-
Defendants Bueno are the owners of the subject property covered by Transfer
Certi!cate Title No. 47603 (RT-192) the same property actually occupied by the
Peralta's, more particularly the children of late Peralta Sr., namely: Edmundo, Edgardo
and Eduardo all surnamed Peralta. Before the Peralta's occupied the property, the
same was occupied by Juanti Merin, the Forester of Bueno Realty and group of
companies. After Merin's resignation, the property was assigned to the Peralta's
sometime in 1960 as additional bene!ts being granted to a lawyer of the company. He
testi!ed that Atty. Eduardo Peralta, Sr. resigned or severed his employment with the
company of Bueno sometime in 1975 as evidenced by his letter-resignation dated May
19, 1975 (Exhibit "1"). EATCcI

On Cross-examination he testi!ed that Atty. Peralta was retained as counsel by

the Bueno group of companies in 1957 and the witness was hired as a company
forester of the Bueno group of companies in 1964 up to the time he retired in 1985.
Thereafter, and even after Valeriano Bueno Sr. died, he continued to act as consultant
of Valeriano Bueno, Sr.'s son and the group of companies of the Buenos. During his
cross-examination, he acknowledged that Mr. Bueno, Sr. also promised him that he
will own a lot in one of the pieces of property of the Buenos at Antipolo, Rizal but it did
not materialize. He said that he could not remember if Atty. Eduardo Peralta has
rendered legal services in favor of Buenos after his resignation.

For his part, DOMINGO LALAQUIT y GONZALES, testi!ed as the second

witness for the defendants as follows:

He was hired by the company lawyer of Bueno sometime in 1973 and is

presently connected with the same company as lawyer and stockholder of United
Realty and Development Corp., Rich Golden School in Antipolo Rizal. He con!rmed
what had transpired during the pre-trial conference. The plainti"'s possession of the
subject property and his lack of knowledge regarding the transfer of the subject
property, his employment as counsel for the defendants in 1973 and his role in the
cases referred to him by Bueno thereafter.

As the last witness for the defendants, VALERIANO BUENO, JR., was presented
to the Court on September 29, 2003 who is the legitimate son of Spouses. He testi!ed
that he knew both the plainti" Spouse Bueno and that Atty. Peralta worked for several
years as legal counsel of his father and for the company of his father. Relative to
paragraph six (6) of the Amended Complaint, he testi!ed that he has no knowledge of
that but from what he recalled, his father was willing to give Atty. Peralta the
ownership of the subject property still in the name of his father if Atty. Peralta can
render legal services to the witness' father until Atty. Peralta's retirement but Atty.
Peralta resigned in 1974. He also recognized the document presented by the plainti"
concerning the !nancial arrangement with Edmundo B. Peralta, but nothing happened
to it. After the witness con!rmed the unfriendly encounters between his father and
Edmundo Peralta, he also identi!ed the reconstituted title and the suit he caused to be
!led against Edgardo Peralta and Edmundo Peralta.

On cross-examination he testi!ed that he was only ware of the fact that his
father was willing to give the property to Atty. Peralta on the condition that Atty.
Peralta will serve his father until his retirement, and that during the lifetime of his
father, his father did not !le any ejectment case nor an action to recover possession
against Atty. Peralta and Luz B. Peralta even after the two passed away. He also
acknowledged the arrangement between him and Edmundo Peralta on the !nancial
assistance, the improvements introduced by and at the expense of the plainti" and
their children like additional buildings on the subject property for which his father did
not interpose any objection. (Emphasis in the original)

Based on the evidence, the Regional Trial Court found that the Bueno Spouses
and Peralta reached an agreement where Peralta would be awarded the property in
exchange for his services as counsel for the Buenos and their companies until his
retirement. However, Peralta failed to ful!ll this condition because he resigned in 1975,
as shown in his handwritten resignation letter. Together with the other pieces of
evidence, this letter established that Peralta resigned eight years before his death in
1983, and thus, did not render services until his retirement. Consequently, the Bueno
Spouses had the right to rescind the contract.

The Regional Trial Court also observed that Peralta never attempted to assert
any rights or ownership over the property after it had allegedly been given to him. The
trial court took this to mean that the Bueno Spouses had never unconditionally
promised to convey the property, and Peralta was aware that he had not acquired any
right of ownership over it. The trial court reasoned that Peralta must have realized that
after his resignation, he and his family were being allowed to occupy the property out
of the Bueno Spouses' goodwill and generosity.

The Regional Trial Court further ruled that the cause of action had already
prescribed. Although it had previously rejected the argument of prescription when it
denied the Demurrer to Evidence, this rejection was based on the assumption that the
Complaint was an action to quiet title, which is imprescriptible. After evidence had
been presented, however, it found that the Complaint was not an action to quiet title,
but one anchored on a right to enforce an oral contract, which prescribes in six years.
The right of action was allegedly acquired in 1960, and thus, had already prescribed
when the Peralta Estate !led the Complaint in 1996. DHITCc

The dispositive portion of the Regional Trial Court Decision reads:

WHEREFORE, premises considered, the complaint is hereby ordered

DISMISSED for lack of merit. The defendants SPOUSES VALERIANO and GENOVEVA
BUENO and their heirs are declared as rightful owner of the subject property.

SO ORDERED.

The Peralta Estate moved for reconsideration, but the Motion was denied in the
Regional Trial Court's December 19, 2005 Order. Thus, the Peralta Estate appealed
before the Court of Appeals.

The Court of Appeals granted the Peralta Estate's appeal in an August 31, 2012
Decision. It found that Peralta and the Bueno Spouses entered into an oral conditional
contract with a suspensive condition of Peralta's retirement. Thus, the Bueno Spouses
were obligated to convey the property to Peralta upon his retirement.

The Court of Appeals reasoned that the oral agreement was enforceable as a
verbal facio ut des contract. It cited Perez v. Pomar, where this Court invoked the
unjust enrichment rule and enforced an oral facio ut des contract because it was
established that a party had already rendered services pursuant to the agreement.

The Court of Appeals further appreciated that the Peralta Estate's witness, Atty.
Moises Nio (Atty. Nio), said that Peralta did not have a de!nite salary. It noted that the
Bueno Estate did not present any evidence on Peralta's salary or any compensation,
and that Peralta's possession of the property was the result of Bueno's generosity.
Thus, the Court of Appeals concluded that the property formed the compensation for
Peralta's services, and that his possession of the property was for a valuable
consideration. It found it unlikely that Peralta would have accepted free rent of the
property as part of his compensation.
 The Court of Appeals further held that this oral agreement was not covered by
the Statute of Frauds. It reasoned that the contract must have been perfected, because
Bueno relinquished possession of the property while Peralta rendered his legal
services.

Further, the Court of Appeals found that Peralta served Bueno until retirement.
It pegged Peralta's retirement to be when he reached the age of 60, reasoning that the
Ministry of Labor and Employment prescribed 60 years as the age of retirement. It
reversed the Regional Trial Court's !nding that Peralta had completely resigned in
1975, as the evidence preponderantly showed that he continued to work for the Buenos
even after the supposed resignation.

To support this !nding, the Court of Appeals noted how after 1975, Peralta
continued to work on various engagements for the Buenos. Among others, it noted
that in 1980, when Peralta was at the retirement age of 60, he was still the counsel on
record for the Buenos in the Supreme Court case, Bueno Industrial v. R.C. Aquino
Timber.

The Court of Appeals also found that the action had not prescribed. It reasoned
that, contrary to the Regional Trial Court's !nding, the Complaint was not an action to
enforce an oral contract, because both parties had already performed their obligations
under the contract. It deemed the contract as an action to quiet title, and was therefore
imprescriptible since the Peralta Estate was in possession of the property. It also
rejected the argument of laches, being "merely a form of equitable relief."

This led to the Petition before this Court.

I maintain that the Petition is meritorious.

The Statute of Frauds was written into Article 1403 (2) of the Civil Code so that
courts would not rely on the unassisted memories of witnesses in proving the terms
of a contract, to prevent fraud in the enforcement of obligations. However, as correctly
pointed out by my colleagues, the Statute of Frauds is not applicable to partially
performed contracts.
 In Asia Production Company, Inc. v. Pa o, this Court explained that both the
Statute of Frauds and the exceptions to its application are intended to prevent the
perpetration of fraud:

The purpose of the statute is to prevent fraud and perjury in the enforcement of
obligations depending for their evidence on the unassisted memory of witnesses by
requiring certain enumerated contracts and transactions to be evidenced by a writing
signed by the party to be charged. It was not designed to further or perpetuate fraud.
Accordingly, its application is limited. It makes only ine"ective actions for speci!c
performance of the contracts covered by it; it does not declare them absolutely void
and of no e"ect. As explicitly provided for in the above-quoted paragraph (2), Article
1403 of the Civil Code, the contracts concerned are simply "unenforceable" and the
requirement that they or some note or memorandum thereof be in writing refers only
to the manner they are to be proved. It goes without saying then, as held in the early
case of Almirol, et al. vs. Monserrat, that the statute will apply only to executory rather
than executed contracts. Partial execution is even enough to bar the application of the
statute. In Carbonnel vs. Poncio, et al., this Court held: cEaSHC

". . . It is well-settled in this jurisdiction that the Statute of Frauds is applicable

only to executory contracts, not to contracts that are totally or partially performed.

'Subject to a rule to the contrary followed in a few jurisdictions, it is the

accepted view that part performance of a parol contract for the sale of real estate has
the e"ect, subject to certain conditions concerning the nature and extent of the acts
constituting performance and the right to equitable relief generally, of taking such
contract from the operation of the statute of frauds, so that chancery may decree its
speci!c performance or grant other equitable relief. It is well settled in Great Britain
and in this country, with the exception of a few states, that a su#cient part
performance by the purchaser under a parol contract for the sale of real estate
removes the contract from the operation of the statute of frauds.'

In the words of former Chief Justice Moran: 'The reason is simple. In executory
contracts there is a wide !eld for fraud because unless they be in writing there is no
palpable evidence of the intention of the contracting parties. The statute has precisely
been enacted to prevent fraud.' However, if a contract has been totally or partially
performed, the exclusion of parol evidence would promote fraud or bad faith, for it
would enable the defendant to keep the bene!ts already derived by him from the
transaction in litigation, and, at the same time, evade the obligations, responsibilities
or liabilities assumed or contracted by him thereby." (Citations omitted)

Considering that there was an allegation of performance of an oral contract, I

agree that it was proper to consider the possibility that the Statute of Frauds may not
cover the agreement between Peralta and the Bueno Spouses. However, when there is
no clear evidence from the contracting parties themselves that would signify their
speci!c intentions when entering into the verbal agreement, courts must be careful in
determining that a contract has been partially performed.

Before partial performance may remove an agreement for the sale of real
property from the Statute of Frauds, the terms of the agreement must !rst be clear. In
Babao v. Perez, this Court emphasized:

Assuming arguendo that the agreement in question falls also under paragraph
(a) of Article 1403 of the new Civil Code, i.e., it is a contract or agreement for the sale of
real property or of an interest therein, it cannot also be contended that that provision
does not apply to the present case for the reason that there was part performance on
the part of one of the parties. In this connection, it must be noted that this statute is
one based on equity. It is based on equitable estoppel or estoppel by conduct. It
operates only under certain speci!ed conditions and when adequate relief at law is
unavailable. And one of the requisites that need be present is that the agreement relied
on must be certain, de!nite, clear, unambiguous and unequivocal in its terms before
the statute may operate. Thus, the rule on this matter is as follows:

"The contract must be fully made and completed in every respect except for the
writing required by the statute, in order to be enforceable on the ground of part
performance. The parol agreement relied on must be certain, de!nite, clear,
unambiguous, and unequivocal in its terms, particularly where the agreement is
between parent and child, and be clearly established by the evidence. The requisite of
clearness and de!niteness extends to both the terms and the subject matter of the
contract. Also, the oral contract must be fair, reasonable, and just in its provisions for
equity to enforce it on the ground of part performance. If it would be inequitable to
enforce the oral agreement, or if its speci!c enforcement would be harsh or
oppressive upon the defendant, equity will withhold its aid. Clearly, the doctrine of
part performance taking an oral contract out of the statute of frauds does not apply so
as to support a suit for speci!c performance where both the equities and the statute
support the defendant's case."

...

"Obviously, there can be no part performance until there is a de!nite and

complete agreement between the parties. In order to warrant the speci!c enforcement
of a parol contract for the sale of land, on the ground of part performance, all the
essential terms of the contract must be established by competent proof, and shown to
be de!nite, certain, clear, and unambiguous.

"And this clearness and de!niteness must extend to both the terms and the
subject-matter of the contract.

"The rule that a court will not speci!cally enforce a contract for the sale of land
unless its terms have been de!nitely understood and agreed upon by the parties, and
established by the evidence, is especially applicable to oral contracts sought to be
enforce on the ground of part performance. An oral contract, to be enforced on this
ground, must at least have that degree of certainty which is required of written
contracts sought to be speci!cally enforced."

"The parol contract must be su#ciently clear and de!nite to render the precise
acts which are to be performed thereunder clearly ascertainable. Its terms must be so
clear and complete as to allow no reasonable doubt respecting its enforcement
according to the understanding of the parties."

"In this jurisdiction, as in the United States, the existence of an oral agreement
or understanding such as that alleged in the complaint in the case at bar cannot be
maintained on vague, uncertain, and inde!nite testimony, against the reasonable
presumption that prudent men who enter into such contracts will execute them in
writing, and comply with the formalities prescribed by law for the creation of a valid
mortgage. But where the evidence as to the existence of such an understanding or
agreement is clear, convincing, and satisfactory, the same broad principles of equity
operate in this jurisdiction as in the United States to compel the parties to live up to the
terms of their contract.'' (Citations omitted)

The terms of an oral contract must have the degree of certainty required of a
written contract before the courts may order its enforcement. This is a sound policy.
Before the action may be deemed as performance of an obligation under an oral
contract, its terms must be clear, because it must !rst be evident that the action was
performed pursuant solely to the alleged oral contract, and nothing else. In other
words, before an act may be considered partial performance, the evidence must
convincingly show that the action was performed because of the alleged oral contract,
to the exclusion of any other agreement. CTIEac

Courts should be particularly cautious in cases such as this, where the person
whose actions were deemed as partial performance pursuant to an oral contract had
never once in his lifetime palpably asserted any rights pursuant to the contract. Closer
scrutiny is appropriate, since partial performance is an exception to a statutory
safeguard to prevent fraud in evidence.

Here, the records do not show any evidence that convincingly attribute Peralta's
legal services to Bueno as done pursuant to an agreement that he would serve until his
retirement in exchange for the property.

The majority also held that the alleged contract was removed from the ambit of
the Statute of Frauds because it was rati!ed under Article 1403, in relation to Article
1405, of the Civil Code.To the majority, petitioners' failure to object to the presentation
of oral evidence to prove the oral contract, and the acceptance of Peralta's legal
services under the oral contract, rati!ed the contract.

The majority maintains that the record is replete with oral evidence that the
Bueno Estate did not refute. It points out that Atty. Nio's testimony was o"ered to
prove, among others, that the Bueno Spouses gave the real property to Peralta as
partial consideration for his legal services; that they "unconditionally transferred and
conveyed full ownership" over the real property to Peralta; and that Atty. Nio was
present at that incident. It cites the following excerpts from Atty. Nio's testimony as
oral evidence presented to prove the oral contract:

A We took food and drink there, that is what transpired there. Mr. Bueno, if he
followed only all the promises of Mr. Bueno, all the employees should have one lot
each especially those lots acquired at Antipolo, Rizal. In this particular case, Atty.
Peralta do [sic] not have any de!nite amount of salary. He only promised to give that
house and lot to him and this Mr. Peralta told me about that and when there was a
birthday we talked with each other that I witnessed personally that Mr. Bueno was
really in his kindness, gave the house and lot to Mr. Peralta. It cannot be transferred
yet because it is still indebted to Mitsubishi with the promise that when the obligation
will be paid, he will legally transfer the property but the truth is verbally, the property
was already given to Mr. Peralta on that date. What did Atty. Peralta do afterwards, he
made renovations of the property. I think he spent more than P200,000.00 on the
renovation.

Q And at that time he made that declaration or pronouncement, could you tell
us if Mrs. Genoveva Bueno was present on that occasion?

A Yes sir. Mrs. Bueno is in conformity with the giving of that property because
whether she liked it or not, if Mr. Peralta would be paid, even three times the value of
the property should be paid.

Q Would you a#rm before this Honorable Court that from the time Defendant
Sps. Bueno gave that property as partial consideration for his legal services, the
plainti" more particularly Atty. Peralta had occupied that property continuously,
uninterruptedly and in the concept of an owner?

A Atty. Peralta occupied the building and lot continuously up to his death. After
his death, his heirs were the ones who lived there sir.

...

Q And that Valeriano Bueno was already represented by another lawyer other
than Atty. Peralta during that time, you don't know?

A You know Pa ero, the issue here is whether or not Mr. Bueno had given the
house and lot to Atty. Peralta and Mrs. Peralta. At the time when he gave that, Mrs.
Bueno is also present and at the same in one occasion in 1966, Mr. Bueno with his wife
there on the occasion reiterated that he had already given that house and lot and that
is the reason why Atty. Peralta and Mrs. Peralta have made renovations of the building
which I think he had even spent more than P300,000.00 for the renovation. That is
the only issue that I know but with respect to other issues, I do not know. Supposed we
deal on that issue here. SaCIDT

Q So, you do not know that Mr. Bueno imposed certain conditions to Atty.
Peralta to own that house and lot already?

A What the condition was, any moment that he will be able to pay the obligation
being answer [sic] to the house and lot, he will immediately issue, he will immediately
execute a deed of sale sir.

Q And you do not know that Mr. Bueno imposed upon Atty. Peralta that he has
to be his lawyer up to the time of his retirement from the practice of law, you don't
know?

Atty. Pacheco

It was already answered. In fact, the witness stated that there is only one condition set
by Mr. Bueno. That the moment the loan had been paid then the deed of sale will be
executed.

Court

Already answered.

...

Q In Exh. "C", you said Mr. Valeriano Bueno reiterated that he is going to give
Atty. Peralta the house and lot. Was it reduced into writing?
 A Personally, we have to believe Bueno. In the !rst place, he is a millionaire at
that time he is [sic] a billionaire. In the second place, I did not know yet that he is lying
but I know that he is sincere in giving that. He gave that because of the services of
Peralta. That is what I know sir.

Q So, it is now clear that there was no written document on that what you said
that Mr. Bueno gave the house and lot to Atty. Peralta, there was no document?

A As far as I'm concerned, I don't know if after that occasion, he gave a

document or not but what I know, he really gave that personally sir.

...

Q Mr. Witness, Atty. Nio, you were stating a while ago that sometime in 1966 in
one of the occasions held at the residence of Atty. Peralta, Mr. Bueno reiterated that he
already gave that property to Atty. Peralta, is that correct?

A Yes Sir.

Q So, you mean to tell us that it was as early as 1960 that Mr. Bueno gave that
property to Atty. Peralta who physically took possession of that property in the concept
of an owner?

A Because he was advised by Mr. Bueno and Mrs. Bueno to transfer to that
house at [sic] Villamor St. and that will be their property sir.

Q And after that, after 1960, when Atty. Peralta and his family took physical
possession of that property, he introduced improvements in the concept of an owner
again?

A Yes Sir.

Q During the lifetime of Atty. Peralta, you are not aware of any acts committed
or made by Mr. Bueno inconsistent with that agreement he had with Atty. Peralta
regarding the giving or transfer of ownership over that property in favor of Atty.
Peralta?
 A I am not aware, sir. What I know is continuously, until now, he still in (sic) the
house from 1960. (Emphasis supplied)

From this, the majority concludes that the oral contract was rati!ed due to
petitioner's failure to object to the presentation of Atty. Nio's testimony.

One must take a closer look at what Atty. Nio testi!ed to, and what contract he
claimed to have personally witnessed, if any. He testi!ed that in 1966, he personally
witnessed that Bueno, "in his kindness, gave the house and lot to Mr. Peralta"; that
"verbally, the property was already given to Mr. Peralta"; and that there was only one
condition, that Bueno would execute a deed of sale once the loan on the property had
been paid. As to Genoveva's supposed consent, Atty. Nio did not testify that he heard
her consent, but only that she was "in conformity with the giving of that property
because whether she liked it or not, if Mr. Peralta would be paid, even three times the
value of the property should be paid."

Thus, as Atty. Nio testi!ed, Bueno had given Peralta the property in 1960, and
reiterated in 1966 that it had already been completely given, without condition for
Peralta to perform any additional obligation in return. Atty. Nio even speci!ed that
Bueno gave the house "in his kindness."

Although the contract was deemed analogous to a contract of sale, where the
purchase price had been completely paid, the majority itself concludes that the oral
contract was "borne out of kindness and generosity," pointing out that Bueno "had the
propensity to promise real property to his employees." Atty. Nio also testi!ed that
Peralta had no reciprocal obligation to transfer the real property. Thus, the contract
testi!ed to by Atty. Nio and accepted as proved was a donation.

Donations of real property, however, must comply with other requirements for
validity, which should be addressed if the contract testi!ed to by Atty. Nio was the one
that was deemed rati!ed.

True, under Article 1405 of the Civil Code, the failure to object to the
presentation of oral evidence to prove contracts infringing on the Statute of Frauds
rati!es those contracts. However, neither the Court of Appeals nor this Court's
majority accepted that Atty. Nio's testimony described the contract accurately or
completely, as neither concluded that Bueno had given the property entirely out of
kindness. Yet, to the majority, the terms of the oral contract allegedly witnessed by
Atty. Nio were the ones purportedly rati!ed through the counsel's failure to object.

The majority also maintained that the conduct of the parties established the
existence of the contract. It cites Heirs of Alido v. Campano, where this Court
concluded that the actions and inactions of the parties established that a sale of real
property had been consummated because, among others, the buyer's possession had
not been questioned during the seller's lifetime, and the seller had allowed the buyer
to exercise all the owner's rights and responsibilities over the real property.

Heirs of Alido, in turn, cited Ortega v. Leonardo to assert that possession of a

property and making improvements on it may serve as indicators that the real
property has been sold. Ortega, however, did not conclusively determine that an oral
contract had been entered into and partially performed. Rather, it observed that
certain acts, under proper circumstances, could potentially constitute partial
performance, and decided only that trial should proceed to determine whether the
contract existed and had been partially performed: cHECAS

Thus, it is stated that "The continuance in possession by a purchaser who is

already in possession may, in a proper case, be su#ciently referable to the parol
contract of sale to constitute a part performance thereof. There may be additional acts
or peculiar circumstances which su#ciently refer the possession to the contract. . . .
Continued possession under an oral contract of sale, by one already in possession as a
tenant, has been held a su#cient part performance, where, accompanied by other acts
which characterize the continued possession and refer it to the contract of purchase.
Especially is this true where the circumstances of the case include the making of
substantial, permanent, and valuable improvements."

It is also stated that "The making of valuable permanent improvements on the

land by the purchaser, in pursuance of the agreement and with the knowledge of the
vendor, has been said to be the strongest and most unequivocal act of part
performance by which a verbal contract to sell land is taken out of the statute of
frauds, and is ordinarily an important element in such part performance. . . .
Possession by the purchaser under a parol contract for the purchase of real property,
together with his making valuable and permanent improvements on the property
which are referable exclusively to the contract, in reliance on the contract, in the
honest belief that he has a right to make them, and with the knowledge and consent or
acquiescence of the vendor, is deemed a part performance of the contract. The entry
into possession and the making of the improvements are held on amount to such an
alteration in the purchaser's position as will warrant the court's entering a degree of
speci!c performance."

Again, it is stated that "A tender or o"er of payment, declined by the vendor, has
been said to be equivalent to actual payment, for the purposes of determining whether
or not there has been a part performance of the contract. This is apparently true where
the tender is by a purchaser who has made improvements. But the doctrine now
generally accepted, that not even the payment of the purchase price, without
something more, . . . is a su#cient part performance.

And the relinquishment of rights or the compromise thereof has likewise been
held to constitute part performance.

In the light of the above four paragraphs, it would appear that the complaint in
this case described several circumstances indicating partial performance:
relinquishment of rights continued possession, building of improvements, tender of
payment plus the surveying of the lot at plainti"'s expense and the payment of rentals.
(Citations omitted)

Thus, Ortega stated that when partial performance has been alleged, the party
so alleging must have the opportunity during trial to establish the partial performance,
and in so doing, the terms of the contract.

Moreover, unlike this case, the terms of the oral contract in Ortega were alleged
by an actual party to the contract, and were also clear:

Stripped of non-essentials, the complaint averred that long before and until her
house had been completely destroyed during the liberation of the City of Manila,
plainti" occupied a parcel of land, designated as Lot I, Block 3, etc. (hereinafter called
Lot I) located at San Andres Street, Malate, Manila; that after liberation she reoccupied
it; that when the administration and disposition of the said Lot I (together with other
lots in the Ana Sarmiento Estate) were assigned by the Government to the Rural
Progress Administration plainti" asserted her right thereto (as occupant) for purposes
of purchase; that defendant also asserted a similar right, alleging occupancy of a
portion of the land subsequent to plainti"'s; that during the investigation of such
con$icting interests, defendant asked plainti" to desist from pressing her claim and
de!nitely promised that if and when he succeeded in getting title to Lot I, he would sell
to her a portion thereof with an area of 55.60 square meters (particularly described) at
the rate of P25.00 per square meter, provided she paid for the surveying and
subdivision of the Lot, and provided further that after he acquired title, she could
continue holding the lot as tenant by paying a monthly rental of P10.00 until said
portion shall have been segregated and the purchase price fully paid; that plainti"
accepted defendant's o"er, and desisted from further claiming Lot I; that defendant
!nally acquired title thereto; that relying upon their agreement, plainti" caused the
survey and segregation of the portion which defendant had promised to sell, incurring
expenses therefor, said portion being now designated as Lot I-B in a duly prepared and
approved subdivision plan; that in remodelling her son's house constructed on a lot
adjoining Lot I she extended it over said Lot I-B; that after defendant had acquired Lot I
plainti" regularly paid him the monthly rental of P10.00; that in July 1954, after the
plans of subdivision and segregation of the lot had been approved by the Bureau of
Lands, plainti" tendered to defendant the purchase price which the latter refused to
accept, without cause or reason. (Citations omitted)

Since those terms were alleged by an actual party to the alleged contract, a
discernible and clear link could be drawn between the actions alleged as partial
performance and the alleged oral contract. Thus, it was possible to determine that the
acts done as partial performance were "referable exclusively to the contract, in
reliance on the contract." AHDacC

Furthermore, Ortega was careful to point out that it was the con$uence of each
of the enumerated bases that could establish partial performance for purposes of
removing the contract from the coverage of the Statute of Frauds:
 We shall not take time to discuss whether one or the other or any two or three
of them constituted su#cient performance to take the matter away from the operation
of the Statute of Frauds. Enough to hold that the combination of all of them amounted
to partial performance, and we do so line with the accepted basis of the doctrine, that
it would be a fraud upon the plainti" if the defendant were permitted to oppose
performance of his part after he has allowed or induced the former to perform in
reliance upon the agreement.

The paragraph immediately preceding will serve as our comment on the

appellee's quotations from American Jurisprudence itself to the e"ect that
"relinquishment" is not part performance, and that neither "surveying the land'' nor
tender of payment is su#cient. The precedents hereinabove transcribed oppose or
explain away or qualify the appellee's citations. And at the risk of being repetitious we
say: granting that none of the three circumstances indicated by him, (relinquishment,
survey, tender) would separately su#ce, still the combination of the three with the
others already mentioned, amounts to more than enough.

This Court in Ortega did not rule on whether an oral contract had been partially
performed, and it was also careful to enumerate a number of actions that must be
present to constitute partial performance. It is thus improper in this case to rely on
Heirs of Alido, which in turn relied on Ortega. To do so would be to disregard the
purpose of the general rule that sales of real property must be in writing to be
enforceable.

The better rule is the one stated in Babao, where this Court said that the parol
evidence relied on must be "certain, de!nite, clear, unambiguous, and unequivocal in
its terms . . . and be clearly established by the evidence."

The majority correctly observes that speci!c words may not be necessary in all
cases to establish the existence of an oral contract. Nonetheless, in cases such as this,
where there is a clear statutory protection, courts must exercise greater caution and
methodically consider the evidence presented and what it actually proves, step by
step. The testimony of Bueno's son, Valeriano, Jr., on being aware of his father's
willingness to transfer ownership over the property at a future date if Peralta "would
render his services to his father until his retirement" is, for purposes of determining
that an oral contract exists, and that the obligations of the parties had been fully
ful!lled, too vague.

Yet, the majority cites Valeriano, Jr.'s testimony, where he expressly said that he
had "no knowledge" that the property had been given to Peralta as partial
consideration for legal services rendered. He only said that he learned that his father
was willing to give Peralta the property.

The majority also maintains that petitioners judicially admitted that Bueno
committed to transfer the property:

It is plain to Us, based on the allegations in the petition and the Reply, that the Estate of
Bueno reiterated a con!rmation of Bueno's commitment to transfer the property to
Atty. Peralta. Such repeated and consistent representation from the Estate of Bueno
and their counsel demonstrate the existence of the contract between Bueno and the
Atty. Peralta, which the Court considers as judicial admissions.

...

In addition, We note explicit remarks from the Estate of Bueno during the
various stages of the suit that can be deemed as negative pregnant statements, or that
form of denial which is at the same time an a#rmative assertion favorable to the
opposing party. It is said to be a denial pregnant with an admission of the substantial
facts in the pleading responded to. It is in e"ect an admission of the averment to
which it is directed.

These statements call into e"ect the principle of estoppel under Article 1431 of
the New Civil Code. Any other evidence to prove the agreement is unnecessary in light
of the Estate of Bueno's conduct over the years, from the time the agreement was
made, to the moment Atty. Peralta and his family took possession of the subject
property in 1962, and through the years that they occupied the same.

Consequently, the Court may disregard all evidence submitted by the Estate of
Bueno contrary to, or inconsistent with, their judicial admissions. (Citations omitted)
 Since the very reason for the Statute of Frauds is to prevent fraud, the evidence
relied on to evade coverage of the Statute of Frauds must be clear.

Whatever agreement there may have been on the transfer of interest in the real
property, it remains unclear what the obligations of this agreement were; and
whatever these obligations were, it is likewise unclear if they had not already been
ful!lled. If it is true that Bueno committed to transfer ownership of the property to
Peralta, this had not been reduced to writing. Under the Statute of Frauds, this Court
cannot enforce such agreement.

ACCORDINGLY, I vote that the Court of Appeals' August 31, 2012 Decision and
February 18, 2013 Resolution in CA-G.R. CV No. 86410 be REVERSED and SET ASISDE,
and the Regional Trial Court's October 11, 2005 Decision in Civil Case No. 96-76696 be
REINSTATED. HCaDIS
 Title
Syquia vs. Court of Appeals

Case Ponente Decision Date

G.R. No. L-61932 PARAS, J Jun 30, 1987

In the case of Syquia v. Court of Appeals, the court ruled in favor of

Litton, a!rming the lower court's decision, stating that the written lease
contract did not provide for renewal or extension, and rejected Syquia's
claim of verbal assurances for lease renewal based on the Parol
Evidence Rule and the Statute of Frauds.

Case Digest (G.R. No. L-61932)

GPT-4o (v3)

Facts:

The case of Syquia v. Court of Appeals involves an ejectment dispute between

Enrique P. Syquia (petitioner) and Edward Litton (private respondent). The
dispute originated from an ejectment action "led by Litton based on the
expiration of a lease contract over the Dutch Inn Building. Initially, the
property was owned by the heirs of Doña Rosa Litton and leased to Litton
Finance and Investment Corporation, which subsequently sublet the property
to Syquia from February 1, 1970, to January 31, 1979. On August 9, 1976, the
Litton co-ownership was dissolved, and ownership of the Dutch Inn Building
was adjudicated to Edward Litton. Litton noti"ed Syquia in writing on
December 1, 1976, to remit rental payments to him starting January 1977, to
which Syquia complied.

As the lease expiration approached, Syquia expressed his willingness to renew

the lease in a letter dated December 1, 1978. However, Litton, through his
counsel, consistently referred to the lease contract's clear terms, which did not
provide for renewal or extension. Litton demanded Syquia vacate the premises
by January 31, 1979, and upon failure to do so, pay P58,685.00 per month as
compensation for use and occupation. Syquia objected, citing his signi"cant
investment in the property and alleged verbal assurances of lease renewal
from Litton's predecessors.

Upon Syquia's refusal to vacate, Litton "led an ejectment case. The City Court
ruled in favor of Litton, ordering Syquia to vacate and pay P31,781.16 per month.
On appeal, the RTC reduced the monthly rental to P28,000.00 and dismissed
Syquia's counterclaim. The Court of Appeals a!rmed the RTC's decision,
leading to Syquia's appeal to the Supreme Court.

Issue:

1. Is Syquia entitled to a renewal of the lease contract based on alleged verbal

assurances from Litton's predecessors?

2. Did the Court of Appeals err in its interpretation and application of Article
1403 of the Civil Code and Section 7, Rule 130 of the Rules of Court?

3. Did the Court of Appeals commit grave abuse of discretion in a!rming the
increased rental and denying Syquia's claims for damages and
compensation?

Ruling:

1. The Supreme Court ruled that Syquia is not entitled to a renewal of the
lease contract based on alleged verbal assurances.

2. The Court of Appeals did not err in its interpretation and application of
Article 1403 of the Civil Code and Section 7, Rule 130 of the Rules of Court.

3. The Court of Appeals did not commit grave abuse of discretion in a!rming
the increased rental and denying Syquia's claims for damages and
compensation.

Ratio:

The Supreme Court upheld the lower courts' "ndings that the lease contract,
which expired on January 31, 1979, did not provide for renewal or extension.
The alleged verbal assurances of lease renewal were unenforceable under the
Statute of Frauds (Article 1403 of the Civil Code) and the Parol Evidence Rule
(Section 7, Rule 130 of the Rules of Court). The written lease contract was
deemed complete and unambiguous, precluding any oral modi"cations. The
Court emphasized that Syquia, as an experienced businessman, should have
ensured that any verbal assurances were documented in writing to protect his
interests.

The Court also found that the increased rental of P28,000.00 per month was
supported by substantial evidence, speci"cally the testimony of an expert
witness. The Court rejected Syquia's claims for damages and compensation,
noting that his continued occupation of the premises after the lease expiration
was without legal basis. The case was remanded to the RTC for determination
of the parties' rights under Article 1678 of the Civil Code regarding the
improvements made by Syquia in good faith.
 Title
Syquia vs. Court of Appeals

Case Ponente Decision Date

G.R. No. L-61932 PARAS, J Jun 30, 1987

In the case of Syquia v. Court of Appeals, the court ruled in favor of

Litton, a!rming the lower court's decision, stating that the written lease
contract did not provide for renewal or extension, and rejected Syquia's
claim of verbal assurances for lease renewal based on the Parol
Evidence Rule and the Statute of Frauds.

SECOND DIVISION

G.R. No. L-61932. June 30, 1987.

ENRIQUE P. SYQUIA, petitioner, vs. THE HONORABLE COURT OF APPEALS AND

EDWARD LITTON, respondents.

DECISION

PARAS, J p:

Before Us is an appeal by certiorari from the split decision 1 of a division of "ve

of the Court of Appeals dated March 16, 1982 as well as that resolution of the Court of
Appeals denying petitioner's Motion for Reconsideration.

The instant action arose from an ejectment case against petitioner by Edward
Litton based on the expiration of the Contract of Lease over the Dutch Inn Building
originally owned by the Heirs of Doa Rosa Litton or the Litton co-ownership who
leased it to Litton Finance and Investment Corporation. The latter sublet it to herein
petitioner for a period commencing on February 1, 1970 and ending on January 31,
1979.

On August 9, 1976, the Litton co-ownership was dissolved by partition (Exh. "E")
and the ownership of the Dutch Inn Building and the lots on which it is built was
adjudicated to herein private respondent Edward Litton. On December 1, 1976, the
latter gave notice in writing (Exh. "F") that as the new owner of said properties, rentals
of the same should be remitted to him starting January, 1977. Petitioner signi"ed his
conformity (Exh. "F-1 ") to this notice and accordingly paid his rentals directly to
private respondent.

On December 1, 1978, petitioner wrote to respondent manifesting his

willingness to renew the contract of lease upon its expiration on January 31, 1979
under such terms as may be agreeable to both of them (Exh. "I" for petitioner and Exh.
"S" for respondents).

A series of communications ensued between them, private respondent, thru

counsel, consistently invoking the clear and unequivocal terms of the contract of lease
(Exh. "G") especially the duration thereof which allegedly does not provide for renewal
or extension. On December 15, 1978 and thereafter on January 4, 11 and 22, 1979,
private respondent, thru counsel, asked petitioner in writing to vacate the premises on
or before the expiration of the lease contract on January 31, 1979, and upon his failure
to vacate the premises after the expiry date of the lease contract, he should pay the
amount of P58,685.00 per month as compensation for the use and occupation of the
premises (Exh. "L"). Petitioner objected to the amount as not being fair and reasonable
rental, petitioner invoking the huge investment he has put in the Dutch Inn Building
from 1970 to 1979 and also the alleged verbal assurance by plainti#-appellee's
predecessor-in-interest of petitioner's priority to renew the lease of the premises in
question.

Upon petitioner's refusal to vacate the premises upon written demand made by
private respondent on February 1, 1979, private respondent "led the case for ejectment
based on the expiration of the Contract of Lease. The City Court rendered a decision 2
in favor of plainti# Edward Litton (herein private respondent) and ordered defendant,
Enrique Syquia (herein petitioner) to vacate the premises and to pay plainti# Litton,
P31,781.16 a month as the reasonable value of the use and occupation of the premises
from February 1, 1979 until defendant Syquia vacates the premises the amount of
P3,000.00 as attorney's fees and the costs. On appeal to the RTC (then CFI), the
judgment 3 was slightly modi"ed in that the monthly rental was reduced to
P28,000.00, less any amount that defendant may have deposited with the court and
withdrawn by the plainti# and that defendant's counterclaim was dismissed for lack of
merit.

The case was elevated to the Court of Appeals by way of Petition for Review
under Republic Act 6031, with Syquia assailing the aforementioned decision. The
appellate court upon a split vote of four Justices concurring to one dissenting,
a!rmed the decision of the lower court and dismissed the petition for review. Hence
this appeal, petitioner relying on the following arguments:

Respondent Court of Appeals has decided this case not in accord with law as
well as applicable decisions of the Supreme Court.

Respondent Court of Appeals has gravely erred in its interpretation and

application of Art. 1403 of the Civil Code of the Philippines and likewise erred in its
failure to correctly apply Section 7, Rule 130 of our Rules of Court.

Respondent Court of Appeals has committed grave abuse of discretion

amounting to lack of jurisdiction in a!rming the lower Court's award of increased
rental and/or reasonable compensation for the use of the premises in question in the
amount of P28,000.00 a month.

Respondent Court of Appeals has committed grave abuse of discretion in its

failure to extend petitioner's stay in the leased premises.

E
 Respondent Court of Appeals has likewise erred in its failure to award unto
petitioner the reasonable amount of damages and/or compensation as has been
proven by him and unrebutted by private respondent.

Respondent Court of Appeals has committed a grave abuse of discretion in its

failure to extend petitioner's stay in the leased premises.

Respondent Court of Appeals has likewise erred in its failure to award unto
petitioner the reasonable amount of damages and/or compensation as has been
proven by him and is more than substantially shown by the records. (pp. 29-30, rollo).

To have a better grasp of the facts and issues of the case, We "nd it necessary to
quote the pertinent portion of the judgment of the Regional Trial Court, to wit:

"After a careful perusal of the evidence of both parties, their arguments and
their memoranda, the court "nds that the principal issue is whether or not the
defendant is entitled to a renewal of the contract of lease, Exhibit "G", which on its face,
expired on January 31, 1979. In other words, can the alleged verbal assurances of
George Litton Sr. and Gloria Litton del Rio be su!cient basis to vary the written
contract and allow the defendant an extension of the lease contract, which, on its
surface, already expired on January 31, 1979? There is no dispute that the contract of
lease, Exhibit "G", entered into by and between the defendant and plainti#'s
predecessors-in-interest, has been terminated by its express provision appearing in
paragraph 1, which states that the lease shall be for a period of nine (9) years
commencing on January 1, 1970 and ending on January 31, 1979.

"Defendant claims that this case was "led prematurely considering that he is
entitled to a renewal of the contract, that one of the inducements which made him
enter into a lease agreement with plainti#'s predecessor-in-interest was the oral
assurance of said plainti#'s predecessor-in-interest that the defendant is entitled to a
renewal or a priority to lease the premises upon the expiration of the contract of lease;
that in view of the close relationship then existing between the defendant and George
Litton Sr. and Gloria Litton del Rio and the trust and con"dence relied by defendant on
both parties, defendant did not insist on the insertion of the provision regarding his
priority to lease the premises in Exhibit "G"; that Exhibit "G" is merely a copy of a
previous contract of lease, Exhibit "12"; that when defendant pointed to George Litton
Sr. and Gloria Litton del Rio of his priority to lease the premises, the latter assured him
that he should not worry regarding the absence of the option to renew the lease
contract, Exhibit "G" because he would be given priority to lease the premises upon
the expiration of the lease contract; that because of this verbal assurance of George
Litton Sr. and Gloria Litton del Rio, and that plainti#, having assumed or acquired the
rights and obligations of the former when he became the owner of the property
subject of this case, the plainti# is now duty-bound to respect the verbal assurance
given by the plainti#'s predecessor to give him a renewal or priority to a new lease
over the property and that defendant should now be made to exercise his option to
renew the lease. In other words, plainti# should be compelled to abide by the
commitment made by his predecessor-in-interest.

"Defendant further claims that he is entitled to exercise his option to extend or

renew the lease considering the huge investment he has made on the Dutch Inn
Building. Plainti#, however, insists that by the expiration of the contract of lease, he
has the right to demand to take action for unlawful detainer and that defendant should
vacate the premises and to pay the amount of P58,685.00 as monthly rental, which is
the reasonable compensation for the use of the premises after January 31, 1979.

"From his testimony in the lower court, defendant stated that he was assured or
promised by George Litton Sr. and Gloria Litton del Rio, representatives of the Litton
Finance & Investment Corp.; that he, defendant, Enrique Syquia, would be given
priority to lease the same property after the expiration of the lease contract.

"According to the plainti#, there is infringement of the Statute of Frauds as well

as the Parol Evidence Rule. On the other hand, the defendant invokes the exception
contained in Section 7, Rule 130 of the Rules of Court (Parol Evidence Rule). Defendant
contends that antecedent factors were involved which induced him to enter into the
contract of lease with Litton Finance & Investment Corp. This brings us to the
provisions of Statute of Frauds under Article 1403, No. 2(E), which provides as follows:

'Art. 1403. The following contracts are unenforceable unless they are rati"ed:

(1) . . .

(2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an agreement hereafter made shall be unenforceable
by action, unless the same, or some note or memorandum thereof, be in writing, and
subscribed by the party charged, or by his agent; evidence, therefore, of the agreement
cannot be received without the writing, or a secondary evidence of its contents:

(A) . . .

(B) . . .

(C) . . .

(D) . . .

(E) An agreement for the leasing for a longer period than one year, or for the
sale of real property or of an interest therein.'

So, under 2(e) of Article 1403 of the Civil Code as quoted above, the alleged oral
assurance or promise of the representatives of the Litton Finance & Investment Corp,
that defendant should be given priority or a renewal of Exhibit "G" cannot be
enforceable against plainti#. Likewise, under the Parol Evidence Rule, defendant's
claim that he is entitled to a renewal of the contract of lease for the reason that the
lessors have given him the option to renew the contract cannot be maintained. The
Parol Evidence Rule, Sec. 7. Rule 130 of the Rules of Court provides:

'When the terms of an agreement have been reduced to writing, it is to be

considered as containing all such terms, and therefore, there can be, between the
parties and their successors in interest, no evidence of the terms of the agreement
other than the contents of the writing, except in the following cases:
 (A) Where a mistake or imperfection of the writing, or its failure to express the
true intent and agreement of the parties, or the validity of the agreement is put in issue
by the pleadings;

(B) When there is an intrinsic ambiguity in the writing. The term "agreement"
including wills.'

"Applying the Parol Evidence Rule to the instant case, it is clear that there being
a written agreement between the parties, the same should be controlling between
them. The exceptions provided for in (A) and (B) cannot apply in the instant case in
view of the fact that the contract of lease, Exhibit "G" is clear, thus precluding any
mistake or imperfection or failure to express the true intent and agreement of the
parties. The Court cannot see any ambiguity in the contract. The tests of completeness
of a written contract is the contract itself, as provided for under Sec. 1494 of Jones on
Evidence . . ..

"Following these doctrines, there is absolutely no room to read into Exhibit "G"
the alleged extension or renewal or assurance or priority to lease after the contract
shall have expired, because the document is in itself, complete, and no ambiguities can
be ascribed to its terms and neither is there any mistake or imperfection or failure to
express the true intent and agreement of the parties therein, simply because the
provisions for extension or renewal are not found in or capable of being inferred from
the express terms of Exhibit "G". It is signi"cant to note that defendant failed to point
out the mistake or imperfection or failure to express the true intent and agreement of
the parties or any ambiguity of the contract.

...

"The testimony of the defendant that there was am oral understanding between
him and the representatives of Litton Finance & Investment Corp. to be allowed to
extend or renew or be given priority to lease the property at the expiration of the
contract of lease on January 31, 1979 is belied by his letter to plainti# dated December
1, 1978, which is inconsistent to what all along said defendant had professed. This is
shown by paragraph 2 of the letter marked as Exhibit "S" for the plainti# and Exhibit
"I" for the defendant:
 'Since our contract of lease will terminate on January 31, 1979, we are writing
you this letter to inform you that we are willing to renew said contract under such
terms as may be agreeable to both of us.'

It is signi"cant from this portion of the letter that the defendant never
mentioned his option or priority to lease the property. It is the observation of the court
that the alleged verbal assurance of George Litton Sr. and Gloria Litton del Rio is only
in afterthought of the defendant. It is merely an eleventh hour defense of the
defendant when the plainti# refused to renew the contract. The inference of said letter
is very clear. That the defendant had no right or reference to renew the contract and
that was the reason why he was requesting to negotiate for the renewal of the contract.

"Assuming for the sake of argument that there really was a verbal agreement or
promise on the part of George Litton Sr. and Gloria del Rio to allow defendant to renew
the contract of lease at its expiration, the court believes that such assurance or
promise would not have any binding e#ect on the original lessor, the Litton Finance
Investment Corporation, considering that defendant did not adduce any evidence to
show in what capacity George Litton Sr. and Gloria Litton del Rio gave that assurance
and considering further that it was James Litton who signed the contract of lease,
Exhibit "G" in representation of Litton Finance & Investment Corporation as its
Director-Vice President. Under the Corporation Law, 'corporation's acts are only valid
if a board resolution authorizes said acts, otherwise, said unauthorized acts are not
binding to it.' The evidence does not show that the act of George Litton Sr. and Gloria
Litton del Rio had been rati"ed.

"The last issue is the reasonable compensation for the use and occupation by
the defendant of the premises in question. The lower court "xed the reasonable
compensation in the amount of P31,781.16 a month. This court cannot understand how
the lower court reached at that alleged reasonable monthly compensation.

"Antonio Doria, the expert witness, presented by the defendant appears to be a

natural and unbiased witness. Under cross examination by the plainti#, he testi"ed as
follows:

...
 (pp, 141-155, Rollo).

From the foregoing, it is crystal clear that the court a quo did not whimsically
decide the case, nor decide it without substantial basis in support thereof.

In dismissing the petition of appellant Syquia, respondent Court of Appeals

relied heavily on the "ndings of fact of the Regional Trial Court and concluded that
there is "a lot more than substantial evidence supporting the court a quo's "nding of
fact and that the conclusions arrived at by his Honor are clearly not against the law
and jurisprudence." The case involves unlawful detainer and respondent Court of
Appeals correctly applied the "substantial evidence" rule as provided for under R.A.
6031, amending Section 45 Judiciary Law of 1948. Said act which was applied in the
case of Gindoy vs. Tapucar, 4 provides that "in cases falling under the exclusive
original jurisdiction of Municipal and City Courts 5 which are appealed to the Court of
First Instance, 6 the decision of the latter shall be "nal, provided, that the "ndings of
facts contained in said decision are supported by substantial evidence as basis thereof,
and the conclusions are not clearly against the law and jurisprudence." 7

It is noted that petitioner is among other things a successful and experienced

business man. Considering his huge investment made on the building, he should have
taken steps to protect his investment within the protective mantle of the law by
insisting that the alleged verbal assurance be reduced into writing. His failure to do so
has considerably weakened his claim.

Proof of the alleged verbal assurance of a lease renewal cannot be allowed both
under the Parol Evidence Rule and the Statute of Frauds for failure to put in writing
said alleged stipulation, Upon the other hand. We are inclined to consider Syquia as
having constructed in good faith the improvements he introduced in the Dutch Inn
Building. His rights to said improvements are governed by Art. 1678 of the Civil Code,
which provides:

"Art. 1678. If the lessee makes, in good faith, useful improvements which are
suitable to the use for which the lease is intended, without altering the form or
substance of the property leased, the lessor upon the termination of the lease shall pay
the lessee one-half of the value of the improvements at that time. Should the lessor
refuse to reimburse said amount, the lessee may remove the improvements, even
though the principal thing may su#er damage thereby. He shall not, however, cause
any more impairment upon the property leased than is necessary.

"With regard to ornamental expenses, the lessee shall not be entitled to any
reimbursement, but he may remove the ornamental objects, provided no damage is
caused to the principal thing, and the lessor does not choose to retain them by paying
their value at the time the lease is extinguished."

Petitioner admits the fact of ownership of the private respondent over the
building in question. As the owner, it is only logical that he should have the freedom to
choose the tenant of the premises under such terms and conditions as may enable
him to realize reasonable and fair returns therefrom. Since petitioner stubbornly
refused to vacate the premises despite repeated demands of respondent, he should be
obliged to compensate the latter such amount as may be deemed fair and reasonable
under the circumstances. What then is reasonable? An expert witness in the person of
Mr. Antonio Doria testi"ed in the court below and thus established that P28,000.00 is
fair and reasonable rental under the premises. However, judicial notice is requested by
private respondent of the runaway in$ation which supervened since January 31, 1979,
contending that had the premises been vacated at the expiration of the contract on
January 31, 1979, the latter (private respondent) could have leased it immediately to
other interested parties under such terms that could have taken into consideration the
in$ation rate at the time and provided for periodic rate escalation corresponding to
subsequent in$ation. He contends likewise that petitioner is a possessor in bad faith
with his continued enjoyment of the premises after the expiration of the lease.

We cannot grant the foregoing prayer of private respondent without denying

due process of law to petitioner. While We can take judicial cognizance of the fact of
in$ation. there is no su!cient evidence presented to substantiate respondent's claim
of his actual loss in petitioner's failure to surrender the premises.

We now come to the next assignment of error. The instant case is not within the
scope of Art. 1687 of the Civil Code which covers lease contracts with no "xed period.
The contract of lease in question is with a de"nite period. Thus to extend the lease of
petitioner would be completely devoid of legal basis. Inasmuch as the stipulated
period of the contract between the parties had already expired and private respondent
is unwilling to extend the same. There is no way therefore that herein petitioner can
hold on to the property after January 31, 1979 without conformity of plainti#-appellee.

WHEREFORE, premises considered, the assailed decision is hereby

AFFIRMED, with the modi"cation that this case is hereby REMANDED to the Regional
Trial Court involved for the determination of the parties rights under Art. 1678 of the
Civil Code (supra).

SO ORDERED.

Fernan (Chairman), Gutierrez, Jr., Padilla Bidin and Cortes, JJ., concur.
 Title
Paredes vs. Espino

Case Ponente Decision Date

G.R. No. L-23351 REYES, J.B.L., J Mar 13, 1968

A dispute over a property sale in Puerto Princesa, Palawan leads to a

legal battle as the court determines whether a contract between the
parties is enforceable under the Statute of Frauds.

Case Digest (G.R. No. L-23351)

GPT-4o (v3)

Facts:

The case of "Paredes v. Espino" revolves around a property sale dispute in

Puerto Princesa, Palawan. The plainti!-appellant, Cirilo Paredes, initiated legal
action against the defendant-appellee, Jose L. Espino, seeking to compel the
execution of a deed of sale and to claim damages. Paredes alleged that Espino
had agreed to sell Lot No. 67 of the Puerto Princesa Cadastre to him at a price of
P4.00 per square meter. This agreement was reportedly "nalized through a
series of letters and telegrams, with the actual execution of the deed of sale and
payment scheduled to occur upon Espino's arrival in Puerto Princesa.
However, upon his arrival, Espino refused to execute the deed despite Paredes
being ready and willing to pay the agreed price. Paredes contended that
Espino's refusal caused him to lose expected pro"ts from a resale of the
property and resulted in mental anguish. The lower court dismissed Paredes'
complaint, ruling that the claim was unenforceable under the Statute of Frauds
due to the absence of a written contract. Paredes subsequently appealed the
decision.

Issue:

1. Is the enforcement of the contract for the sale of the property barred by the
Statute of Frauds?

Ruling:
The Supreme Court ruled that the contract was enforceable and that the lower
court erred in dismissing the complaint. The case was remanded to the Court
of First Instance of Palawan for trial and decision.

Ratio:

The Supreme Court held that the Statute of Frauds, as embodied in Article 1403
of the Civil Code of the Philippines, does not necessitate the contract itself to be
in writing. Instead, a written note or memorandum that encapsulates the
essentials of the contract and is signed by the party charged or their agent
su#ces to make a verbal agreement enforceable. In this case, the letters and
telegrams exchanged between Paredes and Espino constituted an adequate
memorandum of the transaction. These documents were signed by Espino,
referred to the property in question, speci"ed its area, and stated the purchase
price. Therefore, they satis"ed the requirements of the Statute of Frauds. The
Court also noted that the authenticity of the letters need not be established
until the trial, and if there were any doubts about the existence of the written
memorandum, the lower court should have called for a preliminary hearing
rather than dismissing the complaint.
 Title
Paredes vs. Espino

Case Ponente Decision Date

G.R. No. L-23351 REYES, J.B.L., J Mar 13, 1968

A dispute over a property sale in Puerto Princesa, Palawan leads to a

legal battle as the court determines whether a contract between the
parties is enforceable under the Statute of Frauds.

EN BANC

G.R. No. L-23351. March 13, 1968.

CIRILO PAREDES, plainti!-appellant, vs. JOSE L. ESPINO, defendant-appellee.

Simeon Capule for plainti!-appellant.

Iigo R. Pea for defendant-appellee.

SYLLABUS

1. CONTRACTS; WRITTEN NOTE OR MEMORANDUM, ENFORCEABILITY OF;

ARTICLE 1403, N.C.C., APPLICATION OF. The Statute of Frauds, embodied in Article
1403, Civil Code of the Philippines, does not require that the contract itself be in
writing. The plain text of Art. 1403, paragraph (2) is clear that a written note or
memorandum, embodying the essentials of the contract and signed by the party
charged, or his agent, su"ces to make the verbal agreement enforceable, taking it out
of the operation of the statute.

2. ID,, ID.; COMPLIANCE WITH STATUTE OF FRAUDS. The letter, sent by

defendant-appellee marked as annex "A" coupled with that one marked as appendix B,
constitute an adequate memorandum of the transaction. They are signed by the
defendant-appellee; refer to the property sold as a lot in Puerto Princesa, Palawan,
covered by T.C.T. No. 62; give its area as 1026 square meters and the purchase price of
four (P4) pesos per square meter payable in cash. We have in them, therefore, all the
essential terms of the contract, and they satisfy the requirements of the Statute of
Frauds. We have ruled that a su"cient memorandum may be contained in two or
more documents. (Berg vs. Magdalena Estate, Inc., 92 Phil., 110, 115).

3. ID; ID.; PRELIMINARY HEARING, NOT DISMISSAL THE PROPER COURSE OF

ACTION IN CASE OF DOUBT ABOUT THE EXISTENCE OF MEMORANDUM. The
establishment of the authenticity of the letters is not necessary for the purpose of
showing prima facie that the contract is enforceable. Whether the agreement is in
writing or not, is a question of evidence. (Sha!er vs. Palma, L-24115, March 1, 1968).
The authenticity of the writing need not be established until the trial is held. If the
court below entertained any doubts about the existence of the written memorandum,
it should have called for a preliminary hearing on that point, and not dismissed the
complaint.

DECISION

REYES, J.B.L., J p:

Appeal from an order of the Court of First Instance of Palawan in its Civil Case
No. 453, granting a motion to dismiss the complaint.

Appellant Cirilo Paredes had #led action to compel defendant- appellee Jose L.
Espino to execute a deed of sale and to pay damages. The complaint alleged that the
defendant "had entered into the sale" to plainti! of Lot No. 67 of the Puerto Princesa
Cadastre at P4.00 a square meter; that the deal had been "closed by letter and
telegram" but the actual execution of the deed of sale and payment of the price were
deferred to the arrival of defendant at Puerto Princesa; that defendant upon arrival
had refused to execute the deed of sale altho plainti! was able and willing to pay the
price, and continued to refuse despite written demands of plainti!; that as a result,
plainti! had lost expected pro#ts from a resale of the property, and caused plainti!
mental anguish and su!ering, for which reason the complaint prayed for speci#c
performance and damages.
 Defendant #led a motion to dismiss upon the ground that the complaint stated
no cause of action, and that the plainti!'s claim upon which the action was founded
was unenforceable under the Statute of Frauds.

Plainti! opposed in writing the motion to dismiss and annexed to his

opposition a copy of a letter purportedly signed by defendant (Annex "A"), wherein it
was stated (Record on Appeal, pp. 19-20)

"106 Gonzaga St.

Tuguegarao, Cagayan

May 18, 1964

Mr. Cirilo Paredes

Pto. Princesa, Palawan

Dear Mr. Paredes:

So far I received two letters from you, one dated April 17 and the other April 29,
both 1964. In reply thereto, please be informed that after consulting with my wife, we
both decided to accept your last o!er of Four (P4.00) pesos per square meter of the lot
which contains 1826 square meters and on cash basis.

In order that we can facilitate the transaction of the sale in question, we (Espino
and I) are going there (Puerto Princesa, Pal.) to be there during the last week of the
month, May. I will send you a telegram, as per your request, when I will reach Manila
before taking the boat for Pto. Princesa. As it is now, there is no schedule yet of the
boats plying between Manila and Pto. Princesa for next week."

Plainti! also appended as Annex "A-1", a telegram apparently from defendant

advising plainti! of his arrival by boat about the last week of May 1964 (Annex "A-1",
Record on Appeal, p. 21), as well as a previous letter of defendant (Appendix B, Record
on Appeal, p. 35) referring to the lot as the one covered by Certi#cate of Title No. 62.
 These allegations and documents notwithstanding, the Court below dismissed
the complaint on the ground that there being no written contract, under Article 1403 of
the Civil Code of the Philippines

"Although the contract is valid in itself, the same cannot be enforced by virtue
of the Statute of Frauds." (Record on Appeal, p. 37).

Plainti! duly appealed to this Court.

The sole issue here is whether enforcement of the contract pleaded in the
complaint is barred by the Statute of Frauds; and the Court a quo plainly erred in
holding that it was unenforceable.

The Statute of Frauds, embodied in Article 1403 of the Civil Code of the
Philippines, does not require that the contract itself be in writing. The plain text of
Article 1403, paragraph (2) is clear that a written note or memorandum, embodying
the essentials of the contract and signed by the party charged, or his agent, su"ces to
make the verbal agreement enforceable, taking it out of the operation of the statute.

"ART. 1403. The following contracts are unenforceable, unless they are rati#ed:

(1) . . .

(2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an agreement hereafter made shall be unenforceable
by action, unless the same, or some note or memorandum thereof, be in writing, and
subscribed by the party charged, or by his agent; evidence, therefore, of the agreement
cannot be received without the writing or a secondary evidence of its contents:

...

(e) An agreement for the leasing for a longer period than one year, or for the
sale of real property or of an interest therein.

..."
 In the case at bar, the complaint in its paragraph 3 pleads that "the deal had
been closed by letter and telegram" (Record on Appeal, p. 2), and the letter referred to
was evidently the one copy of which was appended as Exhibit A to plainti!'s
opposition to the motion to dismiss. This letter, transcribed above in part, together
with that one marked as Appendix B, constitute an adequate memorandum of the
transaction. They are signed by the defendant-appellee; refer to the property sold as a
lot in Puerto Princesa, Palawan, covered by T.C.T. No. 62; give its area as 1826 square
meters and the purchase price of Four (P4.00) pesos per square meter payable in cash.
We have in them, therefore, all the essential terms of the contract, and they satisfy the
requirements of the Statute of Frauds. We have ruled in Berg vs. Magdalena Estate
Inc., 92 Phil. 110, 115, that a su"cient memorandum may be contained in two or more
documents.

Defendant-appellee argues that the authenticity of the letters has not been
established. That is not necessary for the purpose of showing prima facie that the
contract is enforceable. For as ruled by us in Sha!er vs. Palma, L-24115, March 1, 1968,
whether the agreement is in writing or not, is a question of evidence; and the
authenticity of the writing need not be established until the trial is held. The plainti!
having alleged that the contract is backed by letter and telegram, and the same being a
su"cient memorandum, his cause of action is thereby established, especially since
the defendant has not denied the letters in question. At any rate, if the Court below
entertained any doubts about the existence of the written memorandum, it should
have called for a preliminary hearing on that point, and not dismissed the complaint.

WHEREFORE, the appealed order is hereby set aside, and the case remanded to
the Court of origin for trial and decision. Costs against defendant-appellee Jose L.
Espino. So Ordered.

Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and

Fernando, JJ., concur.
 Title
Heirs of Villeza vs. Aliangan

Case Ponente Decision Date

G.R. No. 244667-69 CAGUIOA, J Dec 2, 2020

The case involves a dispute over land ownership between the heirs of
Corazon Villeza and Elizabeth and Rosalina Aliangan, with the Supreme
Court ruling that oral contracts of sale can be enforceable if partially
executed and that the obligations arising from such contracts are
transmissible to the heirs of the parties involved.

Case Digest (G.R. No. 244667-69)

GPT-4o (v3)

Facts:

The case "Heirs of Villeza v. Aliangan" revolves around a dispute over three
parcels of land located in Angadanan, Isabela. The con!ict is between the heirs
of Corazon Villeza and the sisters Elizabeth and Rosalina Aliangan. The
properties in question were allegedly sold by Corazon Villeza to the Aliangan
sisters through oral contracts and a Deed of Conditional Sale (DCS). Corazon
Villeza passed away on August 3, 2009, without executing any formal deed of
conveyance for the properties. Subsequently, the Aliangan sisters "led three
separate complaints for "Speci"c Performance and Damages" to compel the
heirs of Corazon Villeza to execute the necessary deeds to transfer ownership
of the properties. The Regional Trial Court (RTC) of Cauayan City, Isabela, ruled
in favor of the Aliangan sisters, determining that the totality of evidence
proved the sales and that the Aliangan sisters had fully paid for the properties.
Consequently, the RTC ordered the heirs to execute the necessary documents
to transfer ownership. The Court of Appeals (CA) a#rmed the RTC's decision
with modi"cations, speci"cally deleting the awards for moral and exemplary
damages. Dissatis"ed with the CA's decision, the heirs of Corazon Villeza "led
a petition for review with the Supreme Court.

Issue:
1. Did the Court of Appeals err in ruling that there was a perfected agreement
of sale between the respondents and Corazon Villeza?

2. Did the Court of Appeals err in not dismissing the cases for speci"c
performance for lack of cause of action, arguing that the respondents
should have "led their claims against the estate of Corazon under Rules 86
and 87 of the Rules of Court?

3. Did the Court of Appeals err in a#rming the RTC's decision ordering the
petitioners to execute deeds of conveyance in favor of the respondents?

Ruling:

The Supreme Court denied the petition and a#rmed the Court of Appeals'
decision with modi"cations. The Court ruled that the Deed of Conditional Sale
(DCS) and the oral contracts of sale were valid and enforceable. The heirs of
Corazon Villeza were ordered to execute the necessary documents to transfer
ownership of the properties to the Aliangan sisters and to deliver physical
possession of the properties. The awards for moral and exemplary damages
were deleted, but the award for attorney's fees and costs of the suit was upheld.

Ratio:

The Supreme Court found that the Deed of Conditional Sale (DCS) was a valid
contract to sell, as it stipulated that a Deed of Absolute Sale would be executed
upon full payment of the purchase price. The Court held that the DCS was
perfected upon the meeting of minds between the parties and that the full
payment of the purchase price by the Aliangan sisters consummated the
contract. The Court also ruled that the oral contracts of sale for the Bunay and
Poblacion properties were enforceable, as they had been rati"ed by the
acceptance of bene"ts and were partially executed. The Court rejected the
petitioners' argument that they were not bound by the contracts because they
were not privies to them, citing Article 1311 of the Civil Code, which states that
contracts take e$ect between the parties, their assigns, and heirs. The Court
emphasized that the obligations arising from the contracts were transmissible
to the heirs of Corazon Villeza and that the heirs could be compelled to execute
the necessary documents to transfer ownership of the properties.
 Title
Heirs of Villeza vs. Aliangan

Case Ponente Decision Date

G.R. No. 244667-69 CAGUIOA, J Dec 2, 2020

The case involves a dispute over land ownership between the heirs of
Corazon Villeza and Elizabeth and Rosalina Aliangan, with the Supreme
Court ruling that oral contracts of sale can be enforceable if partially
executed and that the obligations arising from such contracts are
transmissible to the heirs of the parties involved.

FIRST DIVISION

G.R. Nos. 244667-69. December 2, 2020.

(Formerly UDK 16373-75)

HEIRS OF CORAZON VILLEZA, Namely: IMELDA V. DELA CRUZ, I, * STELLA IMELDA

II VILLEZA, IMELDA VILLEZA III, ROBYL ** O. VILLEZA AND ABIGAIL WEHR,
petitioners, vs. ELIZABETH S. ALIANGAN AND ROSALINA S. ALIANGAN, rep. by
ROGER A. BANANG, respondents.

DECISION

CAGUIOA, J p:

Before the Court is the Petition for Review (Petition) under Rule 45 of the Rules
of Court !led by petitioners assailing the Decision dated December 17, 2018 (Decision)
of the Court of Appeals in CA-G.R. CV Nos. 108495-97. The CA Decision denied the
three appeals of petitioners and a"rmed with modi!cation the three Decisions all
dated August 30, 2016 of the Regional Trial Court of Cauayan City, Isabela, Branch 20
(RTC), in Civil Case Nos. (CV) Br. 20-3009, Br. 20-3010, and Br. 20-3011. HTcADC

The Facts and Antecedent Proceedings

 The CA Decision narrates the antecedents as follows:

In controversy are three (3) parcels of land with improvements located at

Angadanan, Isabela all registered under the name of Corazon Villeza (Corazon).

It is alleged that Corazon, during her lifetime, sold the subject properties to
sisters Elizabeth Aliangan (Elizabeth) (a long-time neighbor and friend) and Rosalina
Aliangan (Rosalina), respondents herein. On August 3, 2009, however, Corazon died
without executing any deed of conveyance in respondents' favor. Respondents thus
!led three (3) separate Amended Complaints for "Speci!c Performance and Damages,"
docketed as Civil Cases Nos. Br. 20-3009, Br. 20-3010 and Br. 20-3011, to compel
[petitioners Heirs of Corazon Villeza, namely Imelda V. dela Cruz, I, Stella Imelda II
Villeza, Imelda Villeza III, Robyl O. Villeza and Abigail Wehr, (petitioners)], legal heirs
and collateral relatives of Corazon, to execute the subject deeds. [It appears that aside
from petitioners, the other defendants are Lilibeth Villeza Baliwag, Maria Victoria
Villeza Barcena, Elmer V. Agpaoa, Dennis V. Agpaoa and Kenneth V. Agpaoa, who are
heirs of Rosario Agpaoa (other defendants)].

The RTC, in its Order dated May 19, 2011 consolidated CV Br. 20-3010 and Br.
20-3011 with CV Br. 20-3009, but opted to render three (3) separate Decisions to
obviate confusion.

Centro I Property; CV Br. 20-3009

In an Amended Complaint dated March 1, 2011, respondents averred the

following:

On January 10, 2006, Elizabeth and Rosalina, as buyers, and Corazon and
Rosario Agpaoa (Rosario), as sellers, entered into a Deed of Conditional Sale for the
sale of a residential house and an undivided parcel of land, with a total area of 540.5
square meters, located at Centro I, Angadanan, Isabela (Centro I property) for a
purchase price of P450,000.00.

At the time of the execution of the aforementioned deed, the Centro I property
formed part of Transfer Certi!cate of Title (TCT) No. T-299995, a 2,162 sq.m. parcel of
land registered under the name of Inocencio Agpaoa (Inocencio).

On November 14, 2006, TCT No. T-299995 was cancelled and TCT No. T-356999
(now only covering the 540.5 sq.m. Centro I property) was issued in Corazon's name.

Thereafter, Elizabeth and Rosalina went back to Toronto, Canada where they
sent monthly remittances of P10,000.00 from February 2006 to December 2007 to
Rosario as partial payments for the Centro I property. Rosario also acknowledged
receiving a total amount of P184,233.00, duly witnessed and signed by Corazon, for the
Centro I property. Respondents averred that they continued sending monthly
remittances to Rosario from January to April 2008.

On August 3, 2009 and September 1, 2009, respectively, Corazon and Rosario

died without transferring ownership of TCT No. T-356999 in respondents' favor.
Alleging full payment of the Centro I property, respondents entreated petitioners, as
heirs of Corazon, to honor the Deed of Conditional Sale dated January 10, 2006.
Petitioners did not accede to such request.

Worse, respondents discovered two (2) contracts conveying the Centro I

property to di#erent persons, viz.: (a) a Deed of Absolute Sale dated February 9, 2007,
executed by one Kenneth Agpaoa selling a parcel of land covered by TCT No. T-356999
to Rosario; and (b) a Deed of Absolute Sale dated February 9, 2007 executed by Rosario
selling the same parcel of land covered by TCT No. T-356999 to Corazon. It is averred
that the signatures of Corazon and Rosario in these documents are forgeries.

Repudiating the January 10, 2006 Deed of Conditional Sale for allegedly being
void ab initio, petitioners, in their Answer, argued, to wit: (a) when the subject deed
was executed on January 10, 2006, Inocencio x x x was still the registered owner of
the Centro I property considering that TCT No. T-356999 was only issued in Corazon's
name on November 14, 2006, Corazon cannot thus appropriate something she does
not own; (b) Corazon was the sole registered owner of TCT No. T-356999, whatever
amount received and acknowledged by Rosario, if any, could never bind Corazon's
property; and (c) respondents, being Canadian citizens, are disquali!ed under the
Constitution from owning real property in the Philippines.
 Petitioners add that respondents have no cause of action against them as they
were neither privies to the purported contract nor were they appointed as executors or
administrators of Corazon's estate. Respondents' actions with the RTC are asserted to
be premature considering that Corazon's estate is yet to undergo probate proceedings.

[Bunay property; CV Br. 20-3010]

In an Amended Complaint dated March 1, 2011, respondent Elizabeth x x x

averred the following:

Corazon is the registered owner of an agricultural land with improvements

located at Brgy. Bunay, Angadanan, Isabela, with an area of 36,834 sq.m., more or less,
covered by TCT No. T-297393 (Bunay property).

In 2005, Corazon orally o#ered for sale the Bunay property to Elizabeth for
P250,000.00. On June 22, 2007, Elizabeth, while in Toronto, Canada, sent two (2)
remittances each worth P125,000.00 (or a total of P250,000.00) addressed to Corazon
as payment for the Bunay property. These remittances were received by Corazon
herself. aScITE

Due to Corazon's untimely demise on August 3, 2009 without transferring

ownership of the Bunay property, Elizabeth went back to the Philippines to attend her
wake and show petitioners, heirs of Corazon, proof of purchase of the Bunay property.
Petitioners however refused to honor the same.

In their Answer dated June 1, 2010, petitioners reiterated their arguments in CV

Br. 20-3009 while denying the existence of any oral contract of sale of the Bunay
property between Corazon and Elizabeth. Petitioners maintained that the two (2)
remittance receipts are not evidence to prove the sale, are self-serving and hearsay.

Poblacion property; CV Br. 20-3011

In an Amended Complaint dated March 1, 2011, respondent Rosalina x x x

averred the following:

Corazon is the registered owner of a parcel of land located at Poblacion,

Angadanan, Isabela, with an area of 225 sq.m., more or less, covered by TCT No. T-
106311 (Poblacion property).

In 2000, Corazon orally o#ered for sale the Poblacion property including the
house erected thereon to Rosalina. From June 2000 to April 2003, Rosalina, while in
Toronto, Canada, sent several remittances (allegedly as payment of the Poblacion
property) to Corazon amounting to P307,020.52. On February 11, 2005, Corazon
acknowledged receipt of P85,000.00 representing payment in full of the Poblacion
property.

Due however to Corazon's untimely demise on August 3, 2009, ownership of

the Poblacion property was not transferred to Rosalina. When shown evidence of
Rosalina's purchase of the Poblacion property, petitioners repudiated the same.

In their Answer, petitioners reiterated their arguments in CV Br. 20-3009 and

CV Br. 20-3010 while denying the authenticity of the oral contract of sale of the
Poblacion property between Corazon and Rosalina.

In an Order dated November 8, 2011, the RTC declared defendants heirs Lilibeth
Villeza Baliwag, Maria Victoria Villeza Barcena, Elmer Villeza Agpaoa, Dennis Villeza
Agpaoa and Kenneth Villeza Agpaoa in default for failure to !le their responsive
pleading within the prescribed period.

During the pre-trial conference, the parties stipulated on the jurisdiction of the
RTC and the identity of the parties and the subject parcels of land.

On August 30, 2016, the RTC rendered the x x x Decisions in favor of

respondents. The RTC ratiocinated that the totality of evidence adduced proved that
Corazon, during her lifetime, sold the subject properties to respondents. The RTC
found that under the January 10, 2006 Deed of Conditional Sale, respondents have
already paid the entire purchase price. The remittance receipts also show that Corazon
intended to sell: the Bunay property to Elizabeth; and the Poblacion property to
Rosalina. Anent the issue of respondents' citizenship, the RTC found that respondents,
being former Filipino citizens are not disquali!ed by law to acquire real properties
subject to certain limitations. The RTC added that Elizabeth has in fact re-acquired
Philippine citizenship when she took her oath of allegiance to the Republic of the
Philippines on November 4, 2009 in accordance with Republic Act No. 9225.

[The dispositive portions of the Decisions state:

CV Br. 20-3009

WHEREFORE, in light of the foregoing, judgment is hereby rendered in favor of

the plainti#s (respondents) and against the defendants. Defendants are hereby
ordered to:

(1) To execute the corresponding document to e#ectuate the transfer of

property containing an area of 540 square meters, more or less, located at Centro I,
Angadanan, Isabela covered and embraced by Transfer Certi!cate of Title No. T-
356999 in favor of the plainti#s;

(2) To surrender to the plainti#s the owner's duplicate copy of TCT No. T-
356999 so that the plainti#s could register in their names, as the lawful purchaser for
value of the property described therein;

(3) To pay P100,000.00 as moral damages;

(4) To pay P50,000.00 as exemplary damages;

(5) To pay P150,000.00 as attorney's fees and cost of the suit.

SO ORDERED.

CV Br. 20-3010

WHEREFORE, in light of the foregoing, judgment is hereby rendered in favor of

the plainti#s and against the defendants. Defendants are hereby ordered to: HEITAD

(1) To execute the corresponding document to e#ectuate the transfer of

property covered by Transfer Certi!cate of Title No. T-297393 in favor of the plainti#
Elizabeth Aliangan;
 (2) To surrender the owner's duplicate copy of TCT No. T-297393 to plainti#
Elizabeth Aliangan so that she could register into her name the property described
therein;

(3) To pay P100,000.00 as moral damages;

(4) To pay P50,000.00 as exemplary damages;

(5) To pay P150,000.00 as attorney's fees and cost of the suit.

SO ORDERED.

CV Br. 20-3011

WHEREFORE, in light of the foregoing, judgment is hereby rendered in favor of

the plainti#s and against the defendants. Defendants are hereby ordered to:

(1) To execute the corresponding document to e#ectuate the transfer of

property covered by Transfer Certi!cate of Title No. T-106311 in favor of the plainti#
Elizabeth [sic] Aliangan and to surrender the owner's duplicate copy of TCT No. T-
106311 for the plainti# to register into her name the property described therein;

(2) To pay P100,000.00 as moral damages;

(3) To pay P50,000.00 as exemplary damages;

(4) To pay P150,000.00 as attorney's fees and cost of the suit.

SO ORDERED.]

Aggrieved, petitioners appealed to the CA.

Ruling of the CA

The CA, in its Decision dated December 17, 2018, found the appeals without
merit.

The CA stated that the actions for speci!c performance were not !led
prematurely because probate courts or courts of administration proceedings cannot
determine questions arising as to the ownership of property alleged to be part of the
estate of the decedent but claimed by some other person to be his property, not by
virtue of any right of inheritance from the decedent, but by title adverse to that of the
decedent and the latter's estate.

As to petitioners' argument that respondents' cause of action, if any, is against

the estate of Corazon and not against them, the CA pronounced that Corazon died
without issue, leaving her collateral relatives, respondents herein, as heirs to her
estate, and pursuant to Article 1311 of the Civil Code, contracts take e#ect between the
parties, their assigns and heirs. As heirs, they take the estate by right of succession
subject to all obligations resting thereon in the hands of her from whom they derive
their rights.

Regarding the Deed of Conditional Sale (DCS) executed on January 10, 2006
over the Centro I property, the CA regarded it as a "contract to sell" because of its
provision that: "the corresponding Deed of Absolute Sale shall be executed by the
VENDORS upon full payment of the balance." The obligation of Corazon to transfer
ownership by delivery arises upon full payment of the purchase price.

On petitioners' argument that at the time the DCS was executed the land was
still registered in the name of Inocencio, as owner, and it was only on November 14,
2006 that Corazon became the registered owner of the Centro I property, the CA noted
that based on the RTC's !nding, the !nal payment for the Centro I property was made
in April 2008 at which time, Corazon had every right to transfer ownership thereof.

As to the payment of the purchase price, the CA reviewed the records of the
case and found no cogent reason to deviate from the !nding of the RTC that there is
preponderance of evidence showing full payment by respondents of the P450,000.00
purchase price of the Centro I property.

The CA jointly resolved the issues pertaining to the oral contracts of sale of the
Bunay property in favor of Elizabeth and the Poblacion property in favor of Rosalina in
order not to be repetitious.
 The CA noted that while the sales were agreed upon orally by the parties, they
are not covered by the Statute of Frauds and are, thus, enforceable because there can
be no serious argument about the total execution of the two sales. The CA pointed out
that the oral contract of sale between Corazon and Elizabeth for the Bunay property
was evidenced by two remittances totaling P250,000.00 and their corresponding
receipts signed by Corazon. Regarding the oral contract of sale between Corazon and
Rosalina for the Poblacion property, it was evidenced by several remittances starting
June 2000 to April 2003 amounting to P207,020.52, with an Acknowledgment Receipt
dated February 11, 2005 signed by Corazon wherein she acknowledged receipt of
P85,000.00 representing full payment.

The CA concluded that respondents having fully paid the respective purchase
prices for the Centro I, Bunay and Poblacion properties, petitioners and the other
defendants may be compelled to execute the necessary documents transferring
ownership of the Centro I property covered by TCT No. T-356999 to Elizabeth and
Rosalina, the Bunay property covered by TCT No. T-297393 to Elizabeth and the
Poblacion property covered by TCT No. 106311 to Rosalina. ATICcS

As to damages, the CA found that the awards of moral and exemplary damages
were not properly substantiated while the award of attorney's fees is justi!ed by
paragraphs 2 and 11 of Article 2208 of the Civil Code which allow recovery of counsel's
fees where a defendant's act or omission has compelled the plainti# to litigate with a
third person or to incur expenses to protect his interest and where the court deems it
just and equitable that attorney's fees and expenses of litigation should be awarded.

The dispositive portion of the CA Decision states:

WHEREFORE, premises considered, the three (3) separate Appeals are

DENIED. The three (3) Decisions all dated August 30, 2016 of Branch 20, Regional Trial
Court of Cauayan City, Isabela in Civil Case Nos. Br. 20-3009, Br. 20-3010 and Br. No.
20-3011 are hereby AFFIRMED WITH MODIFICATION in that the awards of moral and
exemplary damages are DELETED.

SO ORDERED.
 Hence the present Petition. Respondents !led their Comment dated August 15,
2019, wherein they merely questioned the timeliness of the payment by petitioners of
the required fees. Petitioners !led their Reply dated December 2, 2019.

The Issues

The Petition states the following issues to be resolved:

1. Whether the CA erred in ruling that there is a perfected agreement of sale

between respondents and Corazon.

2. Whether the CA erred in not dismissing the cases for speci!c performance
for lack of cause of action because respondents should have !led their claims against
the estate of Corazon under Rules 86 and 87 of the Rules of Court.

3. Whether the CA erred in a"rming the Decision of the RTC ordering

petitioners to execute deeds of conveyance in favor respondents.

The Court's Ruling

The Petition lacks merit.

The issues raised and arguments propounded by petitioners are recycled. In

fact, they have been resoundingly rejected by both the RTC and the CA.

Petitioners' arguments in support of the errors of the CA that they identi!ed

have been discussed jointly in their Petition.

Firstly, they reiterate that the sale of the Centro 1 property between Corazon
and respondents is void because at the time the DCS was executed Corazon could not
have sold the property belonging to Inocencio without his consent. The consideration
of the sale was not established with certainty and petitioners claimed that the
remittances made by respondents to Corazon were intended to purchase materials
which were used in the construction of respondents' house. Petitioners also argue that
they knew nothing about the purported sale. Thus, respondents could only recover
from Corazon during her lifetime and upon her death, respondents should have
brought a claim against her estate.

Secondly, no written deeds of conveyance over the Bunay and Poblacion

properties were presented by respondents to show that contracts of sale were
executed by Corazon in respondents' favor. The receipts presented do not prove that
contracts of sale had been executed.

Lastly, petitioners claim that Corazon died intestate as a spinster and she did
not have any children, and petitioners are children of Corazon's siblings. Citing Article
1311 of the Civil Code, petitioners argue that, not being parties to the contracts of sale
between respondents and Corazon, they cannot be sued for the enforcement of the
supposed obligations arising from said contracts. Petitioners also argue that the DCS
does not contain a stipulation pour autrui in their favor to make it binding upon them.
They further argue that respondents should have !led the cases of speci!c
performance against Corazon's estate pursuant to Section 8, Rule 89 of the Rules of
Court and that prior notice should !rst be served on the heirs and other interested
persons of the application for approval of any conveyance of any property held in trust
by the administrator before approval by the probate court of the disposition pursuant
to Section 9, Rule 89 of the Rules of Court.

As mentioned earlier, the foregoing arguments have been totally rejected by the
lower courts and the Court does not !nd their rejection erroneous.

Before delving into the substantive issues, the Court will clarify certain
preliminary procedural matters.

On the argument of petitioners that the consideration of the sale contemplated

in the DCS was not established with certainty and that the remittances made by
respondents to Corazon were intended to purchase materials, which were used in the
construction of respondents' house, this matter calls for reassessment of the factual
!ndings of the lower courts. Petitioners having availed of a review of the CA Decision
via a Rule 45 certiorari petition are precluded from raising factual issues. Section 2 of
Rule 45 of the Rules of Court is clear. Only questions of law may be raised in the
certiorari petition and must be distinctly set forth.
 As to the payment of the purchase prices of the three properties, the CA's
!nding that, upon its review of the records of the case, there is no cogent reason to
deviate from the !nding of the RTC that there is preponderance of evidence showing
full payment by respondents of the P450,000.00 purchase price of the Centro I
property stands. The CA stated: "The sum of these payments (consisting of receipts
and remittances) amounted to P454,233.00, an amount exceeding the contract price of
P450,000.00; thus, this court agrees with the RTC's !ndings in CV Br. No. 20-2009,
that respondents have fully paid the Centro I property."

For the Bunay property, the CA stated that: "the records show that Elizabeth had
given P250,000.00 as full payment [as evidenced by two remittances and
acknowledgment receipts]."

For the Poblacion property, the CA stated that: "Rosalina had, on several
occasions, sent Corazon remittances totaling P307,020.52 as partial payments of the
purchase price x x x and presented a document wherein Corazon acknowledged
receipt of P85,000.00 as payment in full of Corazon's 225 sq.m. parcel of land x x x."
TIADCc

Thus, the Court, faced with a Rule 45 review of the CA Decision, is bound by the
CA's factual conclusion that "respondents have fully paid the respective purchase
prices for the Centro I, Bunay and Poblacion properties," which merely a"rms the
RTC's !ndings.

Petitioners cited Rules 86 and 87 of the Rules of Court in the grounds of their
Petition in support of their claim that respondents should have !led their claim against
Corazon's estate. In the discussion portion, they mentioned Rule 73 in passing, but
they zeroed in on Sections 8 and 9 of Rule 89. Rules 86 and 87 were not even
mentioned. Rule 86 is on "Claims Against the Estate," Rule 87 is on "Actions by and
against Executors and Administrators," while Rule 73 is on "Venue and Process" of the
"Settlement of Estates of Deceased Persons." There being no discussion in the Petition
of the speci!c application of Rules 73, 86 and 87 in the present cases, the Court will not
argue for them and only consider petitioners' argument in relation to Sections 8 and 9
of Rule 89.
 Petitioners argue that the actions for speci!c performance should be !led
against the estate of Corazon because they were not privies to the contracts entered
into by Corazon and that whatever actions for the execution of deeds of conveyance
over real property which the decedent contracted prior to his or her death, or held in
trust should be pursued in accordance with Sections 8 and 9, Rule 89 of the Rules of
Court.

Section 8, Rule 89 provides:

SEC. 8. When court may authorize conveyance of realty which deceased

contracted to convey. Notice. E#ect of deed. Where the deceased was in his lifetime
under contract, binding in law, to deed real property, or an interest therein, the court
having jurisdiction of the estate may, on application for that purpose, authorize the
executor or administrator to convey such property according to such contract, or with
such modi!cations as are agreed upon by the parties and approved by the court; and if
the contract is to convey real property to the executor or administrator, the clerk of
court shall execute the deed. The deed executed by such executor, administrator, or
clerk of court shall be as e#ectual to convey the property as if executed by the
deceased in his lifetime; but no such conveyance shall be authorized until notice of the
application for that purpose has been given personally or by mail to all persons
interested, and such further notice has been given, by publication or otherwise, as the
court deems proper; nor if the assets in the hands of the executor or administrator will
thereby be reduced so as to prevent a creditor from receiving his full debt or diminish
his dividend.

On the other hand, Section 9, Rule 89 provides:

SEC. 9. When court may authorize conveyance of lands which deceased held in
trust. Where the deceased in his lifetime held real property in trust for another person,
the court may, after notice is given as required in the last preceding section, authorize
the executor or administrator to deed such real property to the person, or his executor
or administrator, for whose use and bene!t it was so held; and the court may order the
execution of such trust, whether created by deed or by law.

Clearly, Section 9 of Rule 89 !nds no application in these cases inasmuch as the

subject properties located in Centro I, Bunay and Poblacion were not held in trust by
Corazon for respondents or any other person. Respondents have not even alleged any
trust arrangement in any of the three Amended Complaints.

Section 8, Rule 89 presupposes a pending probate or administration proceeding

for the testate or intestate estate of a decedent. The heirs of Corazon have not initiated
a special proceeding for the settlement of her estate where an administrator has been
appointed. Without such special proceeding, respondents are not required to make an
application to authorize the administrator to convey the subject properties according
to the contracts that Corazon entered into but was unable to execute due to her death.

The Court agrees with the CA that petitioners' invocation of Section 8, Rule 89 is
misplaced because that section presupposes that there is no controversy as to the
contract contemplated therein, and if objections obtain, the remedy of the person
seeking the execution of the contract is an ordinary and separate action to compel the
same. This is so given that, as correctly observed by the CA, subject to settled
exceptions not present in the instant three cases, the law does not extend the
jurisdiction of a probate court to the determination of questions of ownership, and
similarly, a court of administration proceedings cannot determine questions which
arise as to the ownership of property alleged to be part of the decedent's estate, but
claimed by some other person to be his or her property, not by virtue of any right of
inheritance from the decedent, but by title adverse to that of the decedent and the
latter's estate. The institution by respondents of the actions for speci!c performance
was thus the proper recourse because petitioners dispute the validity of the
conveyances over the contested properties.

Proceeding now to the substantive issues.

Regarding the Centro I property, is the DCS a valid contract between Corazon
and Rosario, as sellers, and respondents, as buyers?

The salient provisions of the DCS are as follows:

"x x x
 That Corazon C. Villeza and Rosario V. Agpaoa are the present owners of an
unregistered residential lot with an area of x x x (540.5) Square Meters, more or less,
together with a residential house located at Centro I, Angadanan, Isabela; AIDSTE

That FOR AND IN CONSIDERATION of the sum of x x x (P450,000.00),

Philippine currency, to be paid in installments basis, the VENDORS (Corazon and
Rosario) does hereby SELL, TRANSFER and CONVEY, by way of CONDITIONAL SALE,
unto the said VENDEES (respondents), the aforesaid residential house and
unregistered residential lot, free from any lien or encumbrance;

That the down payment in the amount of x x x (P50,000.00), Philippine

Currency, shall be paid upon the execution of this Conditional Sale;

That the remaining balance of x x x (P400,000.00), Philippine currency, shall

be paid in equal monthly installment of x x x (P10,000.00), Philippine currency, until
the herein remaining balance shall have been fully paid; and

That the corresponding Deed of Absolute Sale (DAS) shall be executed by the
VENDORS upon full payment of the balance.

x x x." (Emphasis ours)

Given the stipulation: "that the corresponding Deed of Absolute Sale (DAS) shall
be executed by the VENDORS upon full payment of the balance," the CA characterized
the DCS as a contract to sell.

As de!ned in Article 1458 of the Civil Code, a contract of sale is a contract

whereby one of the contracting parties obligates himself to transfer the ownership and
to deliver a determinate thing, and the other to pay therefor a price certain in money or
its equivalent. It may be absolute or conditional.

Professor Araceli Baviera (Prof. Baviera), a noted civil law professor, made this
comment on the de!nition of "Sale":

The Spanish Civil Code de!ned a contract of purchase and sale as one where a
contracting party obligates himself to deliver a determinate thing and the other to pay
a certain price therefor in money or in something representing it. The New Civil Code
de!nes a contract of sale as a contract where one of the parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other party to pay
therefor a price certain in money or its equivalent. The Uniform Sales Act de!nes a
sale of goods as an agreement whereby the seller transfers the property in goods to the
buyer for a consideration called the price, while a contract to sell goods is a contract
whereby the seller agrees to transfer the property in goods to the buyer for a
consideration called the price. Under the Uniform Commercial Code, a "contract for
sale" includes both a present sale of goods and a contract to sell goods at a future time,
and a "sale" consists in the passing of title from seller to the buyer for a price.

The Spanish Civil Code followed the Roman law de!nition imposing a duty on
the seller to deliver, but the seller was not bound to make the buyer owner
immediately and directly. According to the Code Commission, the de!nition in the
Spanish Civil Code is unsatisfactory because even if the seller is not the owner of the
thing sold, he may validly sell, subject to the warranty against eviction. The present
de!nition is similar to the de!nition in the German Civil Code imposing two
obligations on the seller. The implication of these separate obligations is that the seller
may reserve ownership over the thing sold, notwithstanding delivery to the buyer.

As to "Contract to Sell" or "Executory Contract of Sale," Prof. Baviera noted:

A sale is an executory contract, "if the seller merely promises to transfer the
property at some future date, or when the agreement contemplates the performance of
some act or condition necessary to complete the transfer. Under such a contract, until
the act is performed or the condition ful!lled, which is necessary to convert the
executory into an executed contract, no title passes to the buyer, as against the seller
or persons claiming under him."

Thus, it can be gathered from the above discussion that the de!nition of sale in
Article 1458 envisions both a contract of sale and a contract to sell as understood in the
Uniform Sales Act.

In a contract of sale, the seller transfers the property sold to the buyer for a
consideration called the price, which means ownership is transferred to the buyer
upon its execution through any of the modes of delivery or tradition.

On the other hand, in a contract to sell, the seller merely "agrees to transfer" the
property object of the sale to the buyer for a consideration called the price, which
implies that ownership is not right away transferred to the buyer. AaCTcI

Pursuant to Article 1478 of the Civil Code, even if the object of the sale is
delivered to the buyer upon the execution of the contract, the parties may still stipulate
that the ownership in the thing shall not pass to the purchaser until he has fully paid
the price. The withholding of ownership despite delivery of the object to the buyer
must be expressly stipulated. Otherwise, with the delivery or tradition of the object to
the buyer, ownership is acquired by the buyer. Under Article 712, ownership and other
real rights over property are acquired and transmitted by tradition, in consequence of
certain contracts, like sale. Speci!cally, in sales, Article 1496 states that: "The
ownership of the thing sold is acquired by the vendee from the moment it is delivered
to him in any of the ways speci!ed in Articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the vendor to the
vendee."

The instance wherein the transfer of ownership is withheld by the seller

despite delivery of the object sold highlights the two obligations of the seller in a
contract of sale under Article 1495, which provides: "The vendor is bound to transfer
the ownership of and deliver, as well as warrant the thing which is the object of the
sale." To fully comply with his obligations, the seller has still to transfer the ownership
of the object of the sale despite its delivery to the buyer at an earlier time if transfer of
ownership has been withheld until full payment of the consideration.

Going back to the DCS, the provision: "that the corresponding Deed of Absolute
Sale shall be executed by the VENDORS upon full payment of the balance" is
sanctioned by Article 1478 of the Civil Code, which allows the parties to stipulate that
the ownership in the thing shall not pass to the purchaser until he has fully paid the
price. The provision where the seller agrees to execute a deed of absolute sale when
the buyer has paid in full the purchase price has been construed by the Court to
signify that the seller has withheld the transfer of ownership until the purchase price
has been paid in full, making the agreement between the seller and the buyer a
contract to sell and not a contract of sale.

The categorization of an agreement or contract pertaining to the sale of an

immovable containing a stipulation that a deed of absolute sale will be executed upon
full payment of the consideration or purchase price as a contract to sell is settled
jurisprudence as enunciated by the Court in Diego v. Diego, viz.:

It is settled jurisprudence, to the point of being elementary, that an agreement

which stipulates that the seller shall execute a deed of sale only upon or after full
payment of the purchase price is a contract to sell, not a contract of sale. In Reyes v.
Tuparan, this Court declared in categorical terms that "where the vendor promises to
execute a deed of absolute sale upon the completion by the vendee of the payment of
the price, the contract is only a contract to sell. The aforecited stipulation shows that
the vendors reserved title to the subject property until full payment of the purchase
price."

In this case, it is not disputed as in fact both parties agreed that the deed of sale
shall only be executed upon payment of the remaining balance of the purchase price.
Thus, pursuant to the above stated jurisprudence, we similarly declare that the
transaction entered into by the parties is a contract to sell. (Emphasis in the original;
citations omitted)

It must be remembered that the execution of a public instrument, such as a

deed of absolute sale, is equivalent to the delivery of the object of the sale pursuant to
Article 1498 of the Civil Code, which states: "when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing which
is the object of the contract, if from the deed the contrary does not appear or cannot
clearly be inferred." With respect to the Centro I property, there was no physical
delivery thereof upon the execution of the DCS and Corazon remained in possession
thereof until she died, with her heirs continuing such possession after her death.
Thus, the execution of the DAS upon full payment of the purchase price was
contemplated as the mode of delivery to transfer ownership of the Centro I property to
respondents with the possessors vacating the premises.
 The DCS is, therefore, a contract to sell as correctly ruled by the CA. That the
DCS is a contract to sell does not in any way compromise its validity and
enforceability, given the fact that the essential requisites of a perfected contract are
evident from the DCS. Article 1475 of the Civil Code provides:

ART. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject
to the provisions of the law governing the form of contracts. (1450a)

Not only is the DCS a binding perfected contract, the buyers, herein
respondents, have in fact fully paid the agreed purchase price of P450,000.00 and
have complied with their prestation under the DCS. With the payment in full of the
purchase price by the buyers, the DCS has been performed or consummated. At that
point, had the sellers, Corazon and Rosario, been still alive, they could be compelled by
court action to execute the DAS over the Centro I property, which they contractually
promised to execute upon full payment of the purchase price. To reiterate, as the
sellers, it was incumbent upon them to comply with their obligations under Article
1458 of the Civil Code, which are "to transfer the ownership of and to deliver a
determinate thing," and Article 1495, which provides that "the vendor is bound to
transfer the ownership of and deliver, as well as warrant the thing which is the object
of the sale."

Whether petitioners and the other defendants, being heirs of the sellers,
Corazon and Rosario having died in the meantime, may be compelled to execute the
DAS and deliver possession of the Centro I property to respondents, this matter will be
discussed subsequently.

Regarding petitioners' contention that the DCS is not valid because at the time it
was executed on January 10, 2006 the Centro I property was then registered in the
name of Inocencio and it was only on November 14, 2006 that Corazon became the
registered owner thereof by virtue of TCT T-356999, the same is not tenable. In this
regard, the CA correctly ruled that:
 Like a contract of sale, a contract to sell is consensual. It is perfected at the
moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price. At this stage, the seller's ownership of the thing sold is
not an element in the perfection of the contract of sale. It is, therefore, not required
that, at the perfection stage, the seller be the owner of the thing sold or even that such
subject matter of the sale exists at that point in time. Thus, under Article 1434 of the
Civil Code, when a person sells or alienates a thing which, at that time, was not his, but
later acquires title thereto, such title passes by operation of law to the buyer or grantee.
This is the same principle behind the sale of "future goods" under Article 1462 of the
Civil Code.However, under Article 1459, at the time of delivery or consummation stage
of the sale, it is required that the seller be the owner of the thing sold. Otherwise, he
will not be able to comply with his obligation to transfer ownership to the buyer. It is at
the consummation stage where the principle of nemo dat quod non habet (one cannot
give what one does not have) applies. (Citations omitted)

Indeed, as earlier mentioned, under Article 1475 of the Civil Code, the contract
of sale is perfected at the moment there is a meeting of the minds upon the thing
which is the object of the contract and upon the price, and from that moment, the
parties may reciprocally demand performance, subject to the provisions of the law
governing the forms of contracts. According to Article 1462, the goods which form the
subject of a contract of sale may be either existing goods, owned or possessed by the
seller, or goods to be manufactured, raised, or acquired by the seller after the
perfection of the contract of sale, called "future goods." There may even be a contract
of sale of goods, whose acquisition by the seller depends upon a contingency which
may or may not happen. EcTCAD

At such time when the contract of sale or contract to sell is perfected, the seller
does not need to have the right to transfer ownership of the object of the sale. All that
is required is that provided by Article 1459 of the Civil Code which states that "the
vendor must have a right to transfer the ownership thereof at the time it is delivered."
Thus, while the seller may not own the object of the sale at the time the contract is
perfected, for the sale to be validly consummated, the seller must be the owner thereof
at the time of its delivery or tradition to the buyer.
 With respect to the Centro I property, while on January 10, 2006 when the DCS
was executed it was still registered in Inocencio's name, the certi!cate of title over the
property was already transferred to Corazon on November 14, 2006 when TCT T-
356999 was issued in her name. From that time, Corazon had the right to transfer the
ownership of the Centro I property such that in April 2008, when the purchase price
was paid in full by respondents, the sellers could have transferred the ownership
thereof to the buyers, as indeed they had the obligation to do so.

Also, the fact that the seller is not the owner of the object of the sale at the time
it is sold and delivered does not prevent title or ownership from passing to the buyer
by operation of law if subsequently the seller acquires title thereto or becomes the
owner thereof pursuant to Article 1434 of the Civil Code.The said Article provides:

ART. 1434. When a person who is not the owner of a thing sells or alienates and
delivers it, and later the seller or grantor acquires title thereto, such title passes by
operation of law to the buyer or grantee.

In view of the foregoing, the CA was correct when it concluded that the DCS is
valid and enforceable.

Regarding the Bunay and Poblacion properties, are the oral contracts of sale
covering them valid and enforceable?

According to Article 1483 of the Civil Code, "subject to the provisions of the
Statute of Frauds and of any other applicable statute, a contract of sale may be made in
writing, or by word of mouth, or partly in writing and partly by word of mouth, or may
be inferred from the conduct of the parties." This provision echoes Article 1356, which
provides that contracts shall be obligatory in whatever form they may be entered into
provided all the essential requisites for their validity are present; however, when the
law requires that a contract be in some form in order that it may be valid or
enforceable, or that a contract be proved in a certain way, that requirement is absolute
and indispensable.

With respect to the Statute of Frauds, which is provided in Article 1403 (2) of
the Civil Code, an agreement for the sale of real property or of an interest therein is
unenforceable by action, unless the same, or some note or memorandum thereof, be
in writing, and subscribed by the party charged, or by his agent; and evidence of the
agreement cannot be received without the writing, or a secondary evidence of its
contents.

The Court in Swedish Match, AB v. Court of Appeals noted:

The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil Code
requires certain contracts enumerated therein to be evidenced by some note or
memorandum in order to be enforceable. The term "Statute of Frauds" is descriptive of
statutes which require certain classes of contracts to be in writing. The Statute does
not deprive the parties of the right to contract with respect to the matters therein
involved, but merely regulates the formalities of the contract necessary to render it
enforceable. Evidence of the agreement cannot be received without the writing or a
secondary evidence of its contents.

The Statute, however, simply provides the method by which the contracts
enumerated therein may be proved but does not declare them invalid because they are
not reduced to writing. By law, contracts are obligatory in whatever form they may
have been entered into, provided all the essential requisites for their validity are
present. However, when the law requires that a contract be in some form in order that
it may be valid or enforceable, or that a contract be proved in a certain way, that
requirement is absolute and indispensable. Consequently, the e#ect of non-
compliance with the requirement of the Statute is simply that no action can be
enforced unless the requirement is complied with. Clearly, the form required is for
evidentiary purposes only. Hence, if the parties permit a contract to be proved, without
any objection, it is then just as binding as if the Statute has been complied with.

The purpose of the Statute is to prevent fraud and perjury in the enforcement of
obligations depending for their evidence on the unassisted memory of witnesses, by
requiring certain enumerated contracts and transactions to be evidenced by a writing
signed by the party to be charged. (Citations omitted)

In the early case of Berg v. Magdalena Estate, Inc. (Berg), the Court stated
certain principles governing the meaning, extent and scope of the rule underlying the
Statute of Frauds relative to the note or memorandum that may serve as proof to
determine the existence of an oral contract or agreement contemplated thereby, viz.:

Before we proceed, it is important to state at this juncture some principles

governing the meaning, extent and scope of the rule underlying the statute of frauds
relative to the note or memorandum that may serve as proof to determine the
existence of an oral contract or agreement contemplated by it, and for our purpose, it
su"ces for us to quote the following authorities: HSAcaE

"No particular form of language or instrument is necessary to constitute a

memorandum or note in writing under the statute of frauds; any document or writing,
formal or informal, written either for the purpose of furnishing evidence of the
contract or for another purpose, which satis!es all the requirements of the statute as
to contents and signature, as discussed respectively infra secs. 178-200, and infra secs.
201-215, is a su"cient memorandum or note. A memorandum may be written as well
with lead pencil as with pen and ink. It may also be !lled in on a printed form." (37 C. J.
S., 653-654.)

"The note or memorandum required by the statute of fraud need not be

contained in a single document, nor, when contained in two or more papers, need
each paper be su"cient as to contents and signature to satisfy the statute. Two or
more writings properly connected may be considered together, matters missing or
uncertain in one may be supplied or rendered certain by another, and their su"ciency
will depend on whether, taken together, they meet the requirements of the statute as to
contents and the requirements of the statute as to signature, as considered
respectively infra secs. 179-200 and secs. 201-215.

"Papers connected. The rule is frequently applied to two or more, or a series of,
letters or telegrams, or letters and telegrams su"ciently connected to allow their
consideration together; but the rule is not con!ned in its application to letters and
telegrams; any other documents can be read together when one refers to the other.
Thus, the rule has been applied so as to allow the consideration together, when
properly connected, of a letter and an order of court, a letter and order for goods, a
letter and a deposition, letters or telegrams and undelivered deeds, wills,
correspondence and related papers, a check and a letter, a receipt and a check, deeds
and a map, a memorandum of agreement and a deed, a memorandum of sale and an
abstract of title, a memorandum of sale and a will, a memorandum of sale and a
receipt, and a contract, deed, and instructions to a depository in escrow. The number
of papers connected to make out a memorandum is immaterial." (37 C. J. S. 656-659).

Bearing in mind the foregoing rules, we are of the opinion that the applications
marked exhibits "3" and "4", whether considered separately or jointly, satisfy all the
requirements of the statute as to contents and signature and, as such, they constitute
su"cient proof to evidence the agreement in question. And we say so because in both
applications all the requirements of a contract are present, namely, the parties, the
price or consideration, and the subject-matter. In the application exhibit "3", Ernest
Berg appears as the seller and the Magdalena Estate, Inc., as the purchaser, the
former's interest in the Crystal Arcade as the subject-matter, and the sum of P200,000
as the consideration. And the application appears signed by Ernest Berg, the party
sought to be charged by the obligation. In other words, it can clearly be implied that
between Ernest Berg and the Magdalena Estate, Inc. there has been a clear agreement
to sell said property for P200,000. From the language of the application no other
logical conclusion can be drawn for if there has not been any previous agreement
between the parties it is foolhardy to suppose that Ernest Berg would take the trouble
of !ling an application with the Treasury Department of the United States to secure a
license to sell the property. The claim of Ernest Berg that the negotiations he had with
Hemady ended with an o#er on his part to buy his interest for P350,000 cannot be
sustained, for if such is the case it is indeed hard to comprehend why he should state
in his application that he was selling the property for P200,000. The fact that in the
same application Berg also asked for license to place the money in an account in his
name, or in the name of the company he represents, and to apply the same to the
payment of the obligations of said company is of no consequence, nor does it argue
against the purpose of the application, for that request only means that, should the sale
be carried out, he would deposit the money in the name of the company and later
would apply it to the payment of its obligations.

In Litonjua v. Fernandez (Litonjua), the Court elucidated on what the note or

memorandum should contain, viz.:
 x x x The statute is satis!ed or, as it is often stated, a contract or bargain is taken
within the statute by making and executing a note or memorandum of the contract
which is su"cient to state the requirements of the statute. The application of such
statute presupposes the existence of a perfected contract. However, for a note or
memorandum to satisfy the statute, it must be complete in itself and cannot rest partly
in writing and partly in parol. The note or memorandum must contain the names of
the parties, the terms and conditions of the contract and a description of the property
su"cient to render it capable of identi!cation. Such note or memorandum must
contain the essential elements of the contract expressed with certainty that may be
ascertained from the note or memorandum itself, or some other writing to which it
refers or within which it is connected, without resorting to parol evidence. To be
binding on the persons to be charged, such note or memorandum must be signed by
the said party or by his agent duly authorized in writing. HESIcT

In City of Cebu v. Heirs of Rubi, we held that the exchange of written

correspondence between the parties may constitute su"cient writing to evidence the
agreement for purposes of complying with the statute of frauds. (Italics in the original;
citations omitted)

Even if the requirement of a note, memorandum or writing in Article 1403 (2) is

not met, contracts infringing the Statute of Frauds become enforceable when they are
rati!ed by the failure to object to the presentation of oral evidence to prove the same,
or by acceptance of bene!ts under them according to Article 1405 of the Civil Code.

It is the well-established rule that the Statute of Frauds is applicable only to

executory contracts and not to partially or totally consummated ones, and the basis of
this rule is the fact that in consummated contracts, there is already a rati!cation of the
contract by acceptance of bene!ts within the meaning of Article 1405.

On this score, the disquisition of the Court en banc in Carbonnel v. Poncio, et

al., bears reiterating:

x x x It is well settled in this jurisdiction that the Statute of Frauds is applicable

only to executory contracts (Facturan vs. Sabanal, 81 Phil. 512), not to contracts that are
totally or partially performed (Almirol, et al. vs. Monserrat, 48 Phil. 67, 70; Robles vs.
Lizarraga Hermanos, 50 Phil. 387; Diana vs. Macalibo, 74 Phil. 70).

"Subject to a rule to the contrary followed in a few jurisdictions, it is the

accepted view that part performance of a parol contract for the sale of real estate has
the e#ect, subject to certain conditions concerning the nature and extent of the acts
constituting performance and the right to equitable relief generally, of taking such
contract from the operation of the statute of frauds, so that chancery may decree its
speci!c performance or grant other equitable relief. It is well settled in Great Britain
and in this country, with the exception of a few states, that a su"cient part
performance by the purchaser under a parol contract for the sale of real estate
removes the contract from the operation of the statute of frauds." (49 Am. Jur. 722-
723.)

In the words of former Chief Justice Moran: "The reason is simple. In executory
contracts there is a wide !eld for fraud because unless they be in writing there is no
palpable evidence of the intention of the contracting parties. The statute has precisely
been enacted to prevent fraud." (Comments on the Rules of Court, by Moran, Vol. III
1957 ed., p. 178.) However, if a contract has been totally or partially performed, the
exclusion of parol evidence would promote fraud or bad faith, for it would enable the
defendant to keep the bene!ts already derived by him from the transaction in
litigation, and, at the same time, evade the obligations, responsibilities or liabilities
assumed or contracted by him thereby.

For obvious reasons, it is not enough for a party to allege partial performance in
order to hold that there has been such performance and to render a decision declaring
that the Statute of Frauds is inapplicable. But neither is such party required to
establish such partial performance by documentary proof before he could have the
opportunity to introduce oral testimony on the transaction. Indeed, such oral
testimony would usually be unnecessary if there were documents proving partial
performance. Thus, the rejection of any and all testimonial evidence on partial
performance, would nullify the rule that the Statute of Frauds is inapplicable to
contracts which have been partly executed, and lead to the very evils that the statute
seeks to prevent.
 "The true basis of the doctrine of part performance according to the
overwhelming weight of authority, is that it would be a fraud upon the plainti# if the
defendant were permitted to escape performance of his part of the oral agreement
after he has permitted the plainti# to perform in reliance upon the agreement. The
oral contract is enforced in harmony with the principle that courts of equity will not
allow the statute of frauds to be used as an instrument of fraud. In other words, the
doctrine of part performance was established for the same purpose for which, the
statute of frauds itself was enacted, namely, for the prevention of fraud, and arose
from the necessity of preventing the statute from becoming an agent of fraud for it
could not have been the intention of the statute to enable any party to commit a fraud
with impunity." (49 Am. Jur., 725-726; italics supplied.)

When the party concerned has pleaded partial performance, such party is
entitled to a reasonable chance to establish by parol evidence the truth of this
allegation, as well as the contract itself. "The recognition of the exceptional e#ect of
part performance in taking an oral contract out of the statute of frauds involves the
principle that oral evidence is admissible in such cases to prove both the contract and
the part performance of the contract" (49 Am. Jur., 927). caITAC

Upon submission of the case for decision on the merits, the Court should
determine whether said allegation is true, bearing in mind that parol evidence is easier
to concoct and more likely to be colored or inaccurate than documentary evidence. If
the evidence of record fails to prove clearly that there has been partial performance,
then the Court should apply the Statute of Frauds, if the cause of action involved falls
within the purview thereof. If the Court is, however, convinced that the obligation in
question has been partly executed and that the allegation of partial performance was
not resorted to as a devise to circumvent the Statute, then the same should not be
applied.

While the contracts of sale of the Bunay and Poblacion properties were orally
made between Corazon and Elizabeth, and between Corazon and Rosalina,
respectively, there were, in fact, remittances and receipts signed by Corazon
evidencing the payments made by Elizabeth and Rosalina.
 As to the Bunay property, the CA observed:

Here, the oral contract of sale between Corazon and Elizabeth for the 36,834
sq.m. Bunay property was evidenced by two (2) remittances (totaling P250,000.00)
and their corresponding receipts signed by Corazon herself. The remittances also
included a message to Corazon which uniformly read:

"I'll call you. Worth P250,000. For the full payment of Azon's rice and corn !eld at
Nakar, San Guillermo."

...

For the Bunay property, the records show that Elizabeth had given P250,000.00
as full payment for: "Azon's rice and corn !eld at Nakar, San Guillermo." It should be
noted that the only agricultural land registered under the name of Corazon at the time
of the oral sale was the Bunay property at Angadanan, Isabela. No explanation was
presented as to the discrepancy of the two (2) properties; neither did defendants-
appellants (petitioners) question such disparity. Verily, Gemma Villanueva (Gemma),
Corazon's long-time caretaker of the Bunay property, testi!ed that in 2008, Corazon
told her that the property they were tilling was already sold to Elizabeth Aliangan and
that her share in the cropping for April 2009 should be given to Elizabeth. Considering
that Nakar, San Guillermo is just adjacent to Bunay, Angadanan, the parties may have
mistakenly thought that the Bunay property is within the boundary of Nakar. This
confusion does not however negate the fact that Corazon received P250,000.00 as full
payment of her rice and corn !eld. Without doubt, there is total execution of the oral
contract of sale of the Bunay property.

With respect to the Poblacion property, the CA noted:

While the oral contract of sale between Corazon and Rosalina for the 225 sq.m.
Poblacion property was evidenced by several remittances starting June 2000 to April
2003 amounting to P207,020.52, Rosalina alleged that a remittance worth
P100,000.00 got lost beyond recovery. Corazon however signed an Acknowledgement
Receipt dated February 11, 2005, which reads in part:
 "ACKNOWLEDGEMENT RECEIPT

KNOW ALL MEN BY THESE PRESENTS:

That, I, CORAZON C. VILLEZA, x x x hereby acknowledged to have received the

amount of EIGHTY FIVE THOUSAND PESOS (P85,000.00), Philippine Currency, from
ROSALINA S. ALIANGAN, x x x representing payment (FULL) of the certain parcel of
land with an area of 225 Square Meters, more or less, including a residential house
therein located at Centro I, Angadanan, Isabela."

...

x x x Again, there seems to be a confusion as to the proper address of the

property subject of the sale. This Court however observes that only the 225 sq.m.
parcel of land registered in Corazon's name when the Acknowledgement Receipt
dated February 11, 2005 was executed was the Poblacion property under TCT No. T-
106311. There can be no other conclusion than the object of the oral contract of sale
was the Poblacion property.

The Court !nds that the remittances and receipts which were executed in
relation to the Bunay property may not qualify as "some note or memorandum thereof,
x x x in writing, and subscribed by the party charged" in compliance with Article 1403
(2) because they are lacking in the required details as prescribed in Litonjua and Berg.
The Court notes that it was Elizabeth who wrote the details of the oral sale in the
remittances and Corazon, the party charged, did not subscribe therein. While the
receipts might have been signed by Corazon, they do not apparently re$ect the
application of the amounts which Elizabeth remitted to Corazon. If the receipts
re$ected that the amounts indicated therein were for the payment of the purchase
price of the Bunay property, then petitioners would not be insisting that said amounts
were intended to purchase materials which were used in the construction of
respondents' house.

However, with respect to the Poblacion property, the Court !nds that the
remittances together with the Acknowledgement Receipt su"ciently satisfy the note
or memorandum requirement under Article 1403 (2) of the Civil Code.Speci!cally, the
Acknowledgement Receipt contains the names of the parties, the terms and conditions
of the contract (i.e., the P85,000.00 being the remaining balance of the purchase price,
which amounted to the P85,000.00 plus the previous remittances), a description of the
property su"cient to render it capable of identi!cation and signature of Corazon, the
party charged.

Nonetheless, the remittances and receipts are su"cient proof that the oral sales
had been rati!ed by Corazon.

When Corazon received the full consideration of the sales from Elizabeth and
Rosalina, which is supported by the undisturbed !nding of both the RTC and CA that
the respective purchase prices for the Bunay and Poblacion properties had been fully
paid by Elizabeth and Rosalina to Corazon, there was rati!cation of the oral contracts
of sale by acceptance of bene!ts, making them enforceable. With the complete
payment of the consideration by respondents, the oral contracts of sale covering the
Bunay and Poblacion properties have been "partially executed," rendering the Statute
of Frauds inapplicable.

The Court agrees with the CA that while there may be disparities in the
locations of the properties subject of the oral sales, the disparities have been
adequately explained and petitioners did not even question them. Petitioners did not
also raise this factual issue in their Petition, which the Court may not now rule upon
given that petitioners availed of a Rule 45 certiorari review. ICHDca

Thus, the CA did not err in recognizing the total execution of the said two sales
and their enforceability.

These oral contracts of sale being enforceable, they should be reduced into
public documents so that they can be registered in the Registry of Deeds. In this
regard, Article 1406 of the Civil Code allows the parties to avail themselves of the right
under Article 1357, which states:

ART. 1357. If the law requires a document or other special form, as in the acts
and contracts enumerated in the following article, the contracting parties may compel
each other to observe that form, once the contract has been perfected. This right may
be exercised simultaneously with the action upon the contract. (1279a)

Now that the DCS, with respect to the Centro I property, and the oral contracts
of sale, regarding the Bunay and Poblacion properties, are declared valid and
enforceable, may the heirs of the sellers be compelled to comply with the obligations
of the deceased sellers and to execute the necessary public documents for their
registration with the proper Registry of Deeds?

Petitioners' claim that they are not bound by contracts entered into by Corazon
because they are not privies thereto and there is no stipulation pour autrui in the DCS
in their favor, citing Article 1311 of the Civil Code.

Article 1311 states:

ART. 1311. Contracts take e#ect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is not
liable beyond the value of the property he received from the decedent.

If a contract should contain some stipulation in favor of a third person, he may

demand its ful!llment provided he communicated his acceptance to the obligor before
its revocation. A mere incidental bene!t or interest of a person is not su"cient. The
contracting parties must have clearly and deliberately conferred a favor upon a third
person. (1257a)

Petitioners' invocation of stipulation pour autrui is preposterous.

It is apparent from the relevant portions of the DCS quoted above that
petitioners are not privies or parties thereto and there is no stipulation pour autrui in
their favor, which the contracting parties clearly and deliberately conferred upon
them.

Also, such stipulation creates a right in favor of the third person upon whom
the stipulation is conferred, which he can enforce against the contracting parties even
if he is not a party to the contract. With respect to the DCS, no such stipulation exists in
favor of petitioners. Rather, petitioners are being made liable to comply with the
obligations of Corazon, and respondents who are parties to the DCS are the ones
enforcing the contract.

Clearly petitioners and the other defendants are not parties to the DCS and the
two oral contracts of sale. There is also no evidence that they were aware of, or
consented to, the contracts when they were entered into by their predecessors in
interest, Corazon and Rosario. Can they, nevertheless, be bound by those contracts as
heirs of Corazon and Rosario? To resolve this question, the relevant issue is whether
the obligations of Corazon and Rosario arising from the DCS with respect to the Centro
I property and the obligations of Corazon arising from the oral contracts of sale with
respect to the Bunay and Poblacion properties are transmitted to petitioners as well as
the other defendants, as heirs, and not extinguished by the death of Corazon and
Rosario.

The !rst paragraph of Article 1311 "Contracts take e#ect only between the
parties, their assigns and heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the value of the property he received
from the decedent." expresses the doctrine of the relative and personal character of
contracts. Under relativity of contracts, it is a general principle of law that a contract
can only bind the parties who had entered into it or their successors or heirs who have
assumed their personality or juridical possession, and that, as a consequence, such
contract cannot favor or prejudice a third person (in conformity with the axiom res
inter alios acta aliis neque nocet podest). TCAScE

In the early case of Mojica v. Fernandez, the Court ruled that the heirs of a
deceased person cannot be regarded as "third persons" with respect to a contract of
sale or lease of real estate executed by their decedent in his lifetime, viz.:

But with respect to the contract[, the venta con pacto de retro (sale with right of
repurchase),] entered into by the deceased and evidenced by the document of
September 1, 1901, the heirs cannot be regarded as "third persons." Article 27 of the
Mortgage Law de!nes a "third person" to be "one who has taken part in the act or
contract recorded." Under the Civil Code, the heirs, by virtue of the right of succession
are subrogated to all the rights and obligations of the deceased (art. 661) and can not be
regarded as third parties with respect to a contract to which the deceased was a party,
touching the estate of the deceased. (Barrios vs. Dolo, 2 Phil. Rep., 44.) This doctrine
was enunciated by the supreme court of Spain in its decision of January 27, 1881,
wherein it held that "both judicial and extrajudicial acts, formally accepted by one who
was a lawful party thereto, are e#ective as to the heirs and successors of such persons,
who are not to be regarded as third persons for this purpose;" also in its decision of
January 28, 1892, wherein it held that "the heirs are no more than the continuation of
the juridical personality of their predecessor in interest, and can in no way be
considered as third persons within the meaning of article 27 of the Mortgage Law."

The principle on which these decisions rest is not a#ected by the provisions of
the new Code of Civil Procedure, and, in accordance with that principle, the heirs of a
deceased person can not be held to be "third persons" in relation to any contracts
touching the real estate of their decedent which comes into their hands by right of
inheritance; they take such property subject to all the obligations resting thereon in
the hands of him from whom they derive their rights.

...

But we have said that with respect to the contract entered into by the deceased,
and evidenced by the private document of September 1, 1901, the heirs cannot be
regarded as "third persons," and, therefore, under the provisions of article 1279 of the
Civil Code, the heirs of Pedro Sanchez may be compelled in a proper action to execute
the public instrument evidencing the said contract, as required by the provisions of
article 1280 of that code.

In Alvarez v. Intermediate Appellate Court, where the Court rejected the

contention of the heirs of the deceased seller, who fraudulently sold two lots owned by
another, that the liability arising therefrom should be the sole liability of the deceased
or his estate, the Court pronounced:

Petitioners further contend that the liability arising from the sale of Lots Nos.
773-A and 773-B made by Rosendo Alvarez to Dr. Rodolfo Siason should be the sole
liability of the late Rosendo Alvarez or of his estate, after his death.
 Such contention is untenable for it overlooks the doctrine obtaining in this
jurisdiction on the general transmissibility of the rights and obligations of the
deceased to his legitimate children and heirs. Thus, the pertinent provisions of the
Civil Code state:

"Art. 774. Succession is a mode of acquisition by virtue of which the property,

rights and obligations to the extent of the value of the inheritance, of a person are
transmitted through his death to another or others either by his will or by operation of
law.

"Art. 776. The inheritance includes all the property, rights and obligations of a
person which are not extinguished by his death.

"Art. 1311. Contract stake e#ect only between the parties, their assigns and heirs
except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is not
liable beyond the value of the property received from the decedent."

As explained by this Court through Associate Justice J.B.L. Reyes in the case of
Estate of Hemady vs. Luzon Surety Co., Inc.

"The binding e#ect of contracts upon the heirs of the deceased party is not
altered by the provision of our Rules of Court that money debts of a deceased must be
liquidated and paid from his estate before the residue is distributed among said heirs
(Rule 89). The reason is that whatever payment is thus made from the estate is
ultimately a payment by the heirs or distributees, since the amount of the paid claim in
fact diminishes or reduces the shares that the heirs would have been entitled to
receive.

"Under our law, therefore, the general rule is that a party's contractual rights
and obligations are transmissible to the successors. The rule is a consequence of the
progressive 'depersonalization' of patrimonial rights and duties that, as observed by
Victorio Polacco, has characterized the history of these institutions. From the Roman
concept of a relation from person to person, the obligation has evolved into a relation
from patrimony to patrimony, with the persons occupying only a representative
position, barring those rare cases where the obligation is strictly personal, i.e., is
contracted intuitu personae, in consideration of its performance by a speci!c person
and by no other. x x x"

Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the
legal consequences of their father's transaction, which gave rise to the present claim
for damages. That petitioners did not inherit the property involved herein is of no
moment because by legal !ction, the monetary equivalent thereof devolved into the
mass of their father's hereditary estate, and we have ruled that the hereditary assets
are always liable in their totality for the payment of the debts of the estate.

The discussion on Article 1311 of the Court in DKC Holdings Corporation v.

Court of Appeals is likewise enlightening:

The general rule, therefore, is that heirs are bound by contracts entered into by
their predecessors-in-interest except when the rights and obligations arising
therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision of
law. cTDaEH

In the case at bar, there is neither contractual stipulation nor legal provision
making the rights and obligations under the contract intransmissible. More
importantly, the nature of the rights and obligations therein are, by their nature,
transmissible.

The nature of intransmissible rights as explained by Arturo Tolentino, an

eminent civilist, is as follows:

"Among contracts which are intransmissible are those which are purely
personal, either by provision of law, such as in cases of partnerships and agency, or by
the very nature of the obligations arising therefrom, such as those requiring special
personal quali!cations of the obligor. It may also be stated that contracts for the
payment of money debts are not transmitted to the heirs of a party, but constitute a
charge against his estate. Thus, where the client in a contract for professional services
of a lawyer died, leaving minor heirs, and the lawyer, instead of presenting his claim,
for professional services under the contract to the probate court, substituted the
minors as parties for his client, it was held that the contract could not be enforced
against the minors; the lawyer was limited to a recovery on the basis of quantum
meruit."

In American jurisprudence, "(W)here acts stipulated in a contract require the

exercise of special knowledge, genius, skill, taste, ability, experience, judgment,
discretion, integrity, or other personal quali!cation of one or both parties, the
agreement is of a personal nature, and terminates on the death of the party who is
required to render such service."

It has also been held that a good measure for determining whether a contract
terminates upon the death of one of the parties is whether it is of such a character that
it may be performed by the promissor's personal representative. Contracts to perform
personal acts which cannot be as well performed by others are discharged by the
death of the promissor. Conversely, where the service or act is of such a character that
it may as well be performed by another, or where the contract, by its terms, shows that
performance by others was contemplated, death does not terminate the contract or
excuse nonperformance.

In the case at bar, there is no personal act required from the late Encarnacion
Bartolome. Rather, the obligation of Encarnacion in the contract to deliver possession
of the subject property to petitioner upon the exercise by the latter of its option to lease
the same may very well be performed by her heir Victor.

As early as 1903, it was held that "(H)e who contracts does so for himself and
his heirs." In 1952, it was ruled that if the predecessor was duty-bound to reconvey
land to another, and at his death the reconveyance had not been made, the heirs can
be compelled to execute the proper deed for reconveyance. This was grounded upon
the principle that heirs cannot escape the legal consequence of a transaction entered
into by their predecessor-in-interest because they have inherited the property subject
to the liability a#ecting their common ancestor.

It is futile for Victor to insist that he is not a party to the contract because of the
clear provision of Article 1311 of the Civil Code.Indeed, being an heir of Encarnacion,
there is privity of interest between him and his deceased mother. He only succeeds to
what rights his mother had and what is valid and binding against her is also valid and
binding as against him. This is clear from Para aque Kings Enterprises vs. Court of
Appeals, where this Court rejected a similar defense

With respect to the contention of respondent Raymundo that he is not privy to

the lease contract, not being the lessor nor the lessee referred to therein, he could thus
not have violated its provisions, but he is nevertheless a proper party. Clearly, he
stepped into the shoes of the owner-lessor of the land as, by virtue of his purchase, he
assumed all the obligations of the lessor under the lease contract. Moreover, he
received bene!ts in the form of rental payments. Furthermore, the complaint, as well
as the petition, prayed for the annulment of the sale of the properties to him. Both
pleadings also alleged collusion between him and respondent Santos which defeated
the exercise by petitioner of its right of !rst refusal.

In order then to accord complete relief to petitioner, respondent Raymundo

was a necessary, if not indispensable, party to the case. A favorable judgment for the
petitioner will necessarily a#ect the rights of respondent Raymundo as the buyer of
the property over which petitioner would like to assert its right of !rst option to buy.

In the case at bar, the subject matter of the contract is likewise a lease, which is
a property right. The death of a party does not excuse nonperformance of a contract
which involves a property right, and the rights and obligations thereunder pass to the
personal representatives of the deceased. Similarly, nonperformance is not excused by
the death of the party when the other party has a property interest in the subject
matter of the contract.

Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is
bound by the subject Contract of Lease with Option to Buy.

To better understand Article 1311 insofar as heirs are concerned, it must be

construed in relation to Article 776, which provides: "The inheritance includes all the
property, rights and obligations of a person which are not extinguished by his death."
In determining which rights are intransmissible (extinguished by a person's death) or
transmissible (not extinguished by his death), the following general rules have been
laid down:
 First: That rights which are purely personal, not in the inaccurate equivalent of
this term in contractual obligations, but in its proper sense, are, by their nature and
purpose, intransmissible, for they are extinguished by death; examples, those relating
to civil personality, to family rights, and to the discharge of public o"ce. cSaATC

Second: That rights which are patrimonial or relating to property are, as a

general rule, not extinguished by death and properly constitute part of the inheritance,
except those expressly provided by law or by the will of the testator, such as usufruct
and those known as personal servitudes.

Third: That rights of obligation are by nature transmissible and may constitute
part of the inheritance, both with respect to the rights of the creditor and as regards
the obligations of the debtor.

The third rule stated above has three exceptions, especially with respect to the
obligations of the debtor. They are: (1) those which are personal, in the sense that the
personal quali!cations and circumstances of the debtor have been taken into account
in the creation of the obligation, (2) those that are intransmissible by express
agreement or by will of the testator, and (3) those that are intransmissible by express
provision of law, such as life pensions given under contract.

...

x x x In connection with "obligations" as forming part of the inheritance, the

provisions of the Rules of Court on the settlement of the estates of deceased persons
should not be overlooked. The heirs of the deceased are no longer liable for the debts
he may leave at the time of his death. Such debts are chargeable against the property
or assets left by the deceased. The property of the deceased may always be subjected
to the payment of his debts in whatever hands it may be found, inasmuch as the right
of a creditor to a lien upon such property, created by the mere fact of the debtor's
death, may be said to be recognized by the provisions of the Rules of Court. Only what
remains after all such debts have been paid will be subject to distribution among the
heirs. In other words, the heirs are no longer personally liable for the debts of the
deceased; such debts must be collected only from the property left upon his death, and
if this should not be su"cient to cover all of them, the heirs cannot be made to pay the
uncollectible balance.

...

This should not be understood to mean, however, that "obligations" are no

longer a part of the inheritance. Only money debts are chargeable against the estate
left by the deceased; these are the obligations which do not pass to the heirs, but
constitute a charge against the hereditary property. There are other obligations,
however, which do not constitute money debts; these are not extinguished by death,
and must still be considered as forming part of the inheritance. Thus, if the deceased
is a lessee for a de!nite period, paying a periodical rental, then his heirs will inherit
the obligation to pay the rentals as they fall due together with the rights arising from
the lease contract. (Citations omitted)

In Bonilla v. Barcena, the Court stated:

x x x The question as to whether an action survives or not depends on the

nature of the action and the damage sued for. In the causes of action which survive the
wrong complained a#ects primarily and principally property and property rights, the
injuries to the person being merely incidental, while in the causes of action which do
not survive the injury complained of is to the person, the property and rights of
property a#ected being incidental. Following the foregoing criterion the claim of the
deceased plainti# which is an action to quiet title over the parcels of land in litigation
a#ects primarily and principally property and property rights and therefore is one that
survives even after her death. x x x (Citations omitted)

In National Housing Authority v. Almeida, the Court ruled that the obligations of
the seller and the buyer in a contract to sell are transmissible, viz.:

The death of Margarita Herrera does not extinguish her interest over the
property. Margarita Herrera had an existing Contract to Sell with NHA as the seller.
Upon Margarita Herrera's demise, this Contract to Sell was neither nulli!ed nor
revoked. This Contract to Sell was an obligation on both parties Margarita Herrera and
NHA. Obligations are transmissible. Margarita Herrera's obligation to pay became
transmissible at the time of her death either by will or by operation of law.
 If we sustain the position of the NHA that this document is not a will, then the
interests of the decedent should transfer by virtue of an operation of law and not by
virtue of a resolution by the NHA. For as it stands, NHA cannot make another contract
to sell to other parties of a property already initially paid for by the decedent. Such
would be an act contrary to the law on succession and the law on sales and
obligations.

From the foregoing, it is quite clear that with respect to "obligations," similar to
"rights," patrimonial obligations or those pertaining to property are by nature generally
transmissible and not extinguished by death. Thus, patrimonial obligations form part
of the inheritance of the decedent, which are transmitted to or acquired by the heirs
upon the decedent's death. This is pursuant to Article 774 of the Civil Code which
recognizes succession as a mode of acquisition whereby the property, rights and
obligations to the extent of the value of the inheritance of a person are transmitted
through his death to another or others either by his will or by operation of law, and
Article 777 which provides the transmission of the rights to the inheritance at the
precise moment of the death of the decedent. A contract of sale or a contract to sell
with land or immovable property as its object certainly involves patrimonial rights and
obligations, which by their nature are essentially transmissible or transferable. Thus,
the heirs of the seller and the buyer are bound thereby and the former cannot be
deemed as "third persons" or non-privies to the contract of sale or contract to sell.

Consequently, Article 1311 of the Civil Code upon which petitioners rely to
negate their liability is itself the very basis of the obligation that respondents are
exacting from them. Since the obligations of the sellers in the DCS and the two oral
contracts of sale were transmitted upon the death of Corazon and Rosario to
petitioners and the other defendants, the latter are bound to comply with the
obligations to deliver and transfer ownership of the Centro I property to respondents,
the Bunay property to Elizabeth, and the Poblacion property to Rosario. Likewise,
since a public document is required to be registered with the Registry of Deeds to
e#ect the transfer of the certi!cates of title covering the said properties to the buyers,
petitioners and the other defendants can be compelled and are obligated to execute the
necessary public documents for that purpose pursuant to Article 1357 of the Civil
Code. cHDAIS
 WHEREFORE, the Petition is hereby DENIED. Accordingly, the Decision dated
December 17, 2018 of the Court of Appeals in CA-G.R. CV Nos. 108495-97 is AFFIRMED
WITH MODIFICATION. To avoid any confusion, the dispositive portions of the three
Decisions all dated August 30, 2016 of the Regional Trial Court of Cauayan City,
Isabela, Branch 20, in Civil Case Nos. Br. 20-3009, Br. 20-3010, and Br. 20-3011 are
restated with modi!cation:

Civil Case No. Br. 20-3009

WHEREFORE, in the light of the foregoing, judgment is hereby rendered in

favor of the plainti#s and against the defendants. Defendants are hereby ordered:

(1) To execute the corresponding document to e#ectuate the transfer of

property containing an area of 540 square meters, more or less, located at Centro I,
Angadanan, Isabela covered and embraced by Transfer Certi!cate of Title No. T-
356999 in favor of the plainti#s;

(2) To surrender to the plainti#s the owner's duplicate copy of TCT No. T-
356999 so that the plainti#s could register in their names, as the lawful purchasers for
value of the property described therein;

(3) To deliver to the plainti#s physical possession of the property described

therein;

(4) To pay P150,000.00 as attorney's fees and cost of the suit.

SO ORDERED.

Civil Case No. Br. 20-3010

WHEREFORE, in the light of the foregoing, judgment is hereby rendered in

favor of the plainti# Elizabeth Aliangan and against the defendants heirs of Corazon
Villeza. The said defendants are hereby ordered:

(1) To execute the corresponding document to e#ectuate the transfer of

property covered by Transfer Certi!cate of Title No. T-297393 in favor of the plainti#
Elizabeth Aliangan;

(2) To surrender the owner's duplicate copy of TCT No. T-297393 to plainti#
Elizabeth Aliangan so that she could register into her name the property described
therein;

(3) To deliver to the plainti# Elizabeth Aliangan physical possession of the

property described therein;

(4) To pay P150,000.00 as attorney's fees and cost of the suit.

SO ORDERED.

Civil Case No. Br. 20-3011

WHEREFORE, in the light of the foregoing, judgment is hereby rendered in

favor of the plainti# Rosario Aliangan and against the defendants heirs of Corazon
Villeza. The said defendants are hereby ordered:

(1) To execute the corresponding document to e#ectuate the transfer of

property covered by Transfer Certi!cate of Title No. T-106311 in favor of the plainti#
Rosario Aliangan and to surrender the owner's duplicate copy of TCT No. T-106311 to
enable the said plainti# to register in her name the property described therein;

(2) To deliver to the plainti# Rosario Aliangan physical possession of the

property described therein;

(3) To pay P150,000.00 as attorney's fees and cost of the suit.

SO ORDERED.

SO ORDERED.

Peralta, C.J., Hernando, Carandang and Zalameda, JJ., concur.

 Title
Litonjua vs. Ferdez

Case Ponente Decision Date

G.R. No. 148116 CALLEJO, SR., J Apr 14, 2004

A dispute arises over the existence of a verbal agreement for the sale of
two parcels of land, as the Supreme Court rules that there was no
evidence of authority to sell and the letter provided did not meet the
requirements for a perfected contract of sale.

Case Digest (G.R. No. 148116)

GPT-4o (v3)

Facts:

The case of "Litonjua v. Fernandez" revolves around a dispute concerning an

alleged verbal agreement for the sale of two parcels of land in San Pablo City,
covered by Transfer Certi!cate of Title (TCT) Nos. 36754 and 36766. The
petitioners, Antonio K. Litonjua and Aurelio K. Litonjua, Jr., were approached
by brokers Lourdes Alimario and Agapito Fisico in September 1995, who
o"ered to sell the properties on behalf of the respondents, represented by
Mary Mediatrix Fernandez and Gregorio T. Eleosida. The petitioners conducted
ocular inspections and subsequently met with Fernandez and the brokers on
November 27, 1995. During this meeting, they allegedly agreed to purchase the
properties for P150 per square meter, totaling P5,098,500. They also agreed
that the owners would shoulder the capital gains tax, transfer tax, and
documentation expenses. The !nalization of the sale was set for December 8,
1995, but Fernandez did not attend the meeting, citing issues with tenants. The
petitioners sent demand letters on January 5 and February 1, 1996, but
Fernandez responded on February 14, 1996, stating that the sale would not
push through due to tenant issues and lack of earnest money. Consequently,
the petitioners !led a complaint for speci!c performance with damages on
April 12, 1996. The Regional Trial Court of Pasig City ruled in favor of the
petitioners, ordering the respondents to execute a contract of sale and pay
attorney's fees. However, the Court of Appeals reversed this decision, leading
to the petition for review on certiorari.

Issue:

1. Was there a perfected contract of sale between the petitioners and the
respondents?

2. Does the alleged contract fall under the coverage of the statute of frauds?

3. Are the defendants declared in default bene!ted by the decision of the

Court of Appeals?

Ruling:

The Supreme Court denied the petition and a#rmed the decision of the Court
of Appeals, which ruled that there was no perfected contract of sale between
the parties. The appellate court's decision was upheld in its entirety, and the
petitioners were ordered to bear the costs.

Ratio:

The Supreme Court concurred with the Court of Appeals that there was no
perfected contract of sale between the petitioners and the respondents. The
letter dated January 16, 1996, from Fernandez did not constitute a su#cient
note or memorandum to satisfy the statute of frauds, as it lacked the essential
terms and conditions of the sale, an accurate description of the property, and
the names of the respondents-owners. Additionally, there was no documentary
evidence that Fernandez was authorized by the respondents-owners to sell the
properties. The court emphasized that a special power of attorney is necessary
to enter into any contract involving the sale of real property. The petitioners,
being experienced businessmen, should have been aware of the need to verify
Fernandez's authority. The court also noted inconsistencies in the petitioners'
claims regarding the speci!c area of the properties they intended to purchase.
The failure of Fernandez to object to parol evidence did not prejudice the
respondents-owners who had been declared in default. Therefore, the
appellate court's decision to dismiss the petitioners' complaint was justi!ed.
 Title
Litonjua vs. Ferdez

Case Ponente Decision Date

G.R. No. 148116 CALLEJO, SR., J Apr 14, 2004

A dispute arises over the existence of a verbal agreement for the sale of
two parcels of land, as the Supreme Court rules that there was no
evidence of authority to sell and the letter provided did not meet the
requirements for a perfected contract of sale.

SECOND DIVISION

G.R. No. 148116. April 14, 2004.

ANTONIO K. LITONJUA and AURELIO K. LITONJUA, JR., petitioners,

vs. MARY ANN GRACE FERNANDEZ, HEIRS OF PAZ TICZON
ELEOSIDA, represented by GREGORIO T. ELEOSIDA, HEIRS OF
DOMINGO B. TICZON, represented by MARY MEDIATRIX T.
FERNANDEZ, CRISTETA TICZON, EVANGELINE JILL R. TICZON,
ERLINDA T. BENITEZ, DOMINIC TICZON, JOSEFINA LUISA
PIAMONTE, JOHN DOES and JANE DOES, respondents.

DECISION

CALLEJO, SR., J p:

This is a petition for review on certiorari of the Decision 1 of the Court of

Appeals in CA-G.R. CV No. 64940, which reversed and set aside the June 23, 1999
Decision 2 of the Regional Trial Court of Pasig City, Branch 68, in Civil Case No. 65629,
as well as its Resolution dated April 30, 2001 denying the petitioners' motion for
reconsideration of the aforesaid decision.
 The heirs of Domingo B. Ticzon 3 are the owners of a parcel of land located in
San Pablo City, covered by Transfer Certi!cate of Title (TCT) No. T-36766 of the
Register of Deeds of San Pablo City. 4 On the other hand, the heirs of Paz Ticzon
Eleosida, represented by Gregorio T. Eleosida, are the owners of a parcel of land
located in San Pablo City, covered by TCT No. 36754, also of the Register of Deeds of
San Pablo City. 5

The Case for the Petitioners

Sometime in September 1995, Mrs. Lourdes Alimario and Agapito Fisico who
worked as brokers, o"ered to sell to the petitioners, Antonio K. Litonjua and Aurelio K.
Litonjua, Jr., the parcels of land covered by TCT Nos. 36754 and 36766. The petitioners
were shown a locator plan and copies of the titles showing that the owners of the
properties were represented by Mary Mediatrix Fernandez and Gregorio T. Eleosida,
respectively. The brokers told the petitioners that they were authorized by respondent
Fernandez to o"er the property for sale. The petitioners, thereafter, made two ocular
inspections of the property, in the course of which they saw some people gathering
coconuts.

In the afternoon of November 27, 1995, the petitioners met with respondent
Fernandez and the two brokers at the petitioners' o#ce in Mandaluyong City. 6 The
petitioners and respondent Fernandez agreed that the petitioners would buy the
property consisting of 36,742 square meters, for the price of P150 per square meter, or
the total sum of P5,098,500. They also agreed that the owners would shoulder the
capital gains tax, transfer tax and the expenses for the documentation of the sale. The
petitioners and respondent Fernandez also agreed to meet on December 8, 1995 to
!nalize the sale. It was also agreed upon that on the said date, respondent Fernandez
would present a special power of attorney executed by the owners of the property,
authorizing her to sell the property for and in their behalf, and to execute a deed of
absolute sale thereon. The petitioners would also remit the purchase price to the
owners, through respondent Fernandez. However, only Agapito Fisico attended the
meeting. He informed the petitioners that respondent Fernandez was encountering
some problems with the tenants and was trying to work out a settlement with them. 7
After a few weeks of waiting, the petitioners wrote respondent Fernandez on January
5, 1995, demanding that their transaction be !nalized by January 30, 1996. 8

When the petitioners received no response from respondent Fernandez, the

petitioners sent her another Letter 9 dated February 1, 1996, asking that the Deed of
Absolute Sale covering the property be executed in accordance with their verbal
agreement dated November 27, 1995. The petitioners also demanded the turnover of
the subject properties to them within !fteen days from receipt of the said letter;
otherwise, they would have no option but to protect their interest through legal means.

Upon receipt of the above letter, respondent Fernandez wrote the petitioners on
February 14, 1996 10 and clari!ed her stand on the matter in this wise:

1) It is not true I agreed to shoulder registration fees and other miscellaneous

expenses, etc. I do not recall we ever discussed about them. Nonetheless, I made an
assurance at that time that there was no liens/encumbrances and tenants on my
property (TCT-36755).

2) It is not true that we agreed to meet on December 8, 1995 in order to sign the
Deed of Absolute Sale. The truth of the matter is that you were the one who
emphatically stated that you would prepare a Contract to Sell and requested us to
come back !rst week of December as you would be leaving the country then. In fact,
what you were demanding from us was to apprise you of the status of the property,
whether we would be able to ascertain that there are really no tenants. Ms. Alimario
and I left your o#ce, but we did not assure you that we would be back on the !rst
week of December.

Unfortunately, some people suddenly appeared and claiming to be "tenants" for

the entire properties (including those belonging to my other relatives.) Another thing,
the Barangay Captain now refuses to give a certi!cation that our properties are not
tenanted.

Thereafter, I informed my broker, Ms. Lulu Alimario, to relay to Mr. Agapito that
due to the appearance of "alleged tenants" who are demanding for a one-hectare share,
my cousin and I have thereby changed our mind and that the sale will no longer push
through. I speci!cally instructed her to inform you thru your broker that we will not be
attending the meeting to be held sometime !rst week of December.

In view thereof, I regret to formally inform you now that we are no longer
selling the property until all problems are fully settled. We have not demanded and
received from you any earnest money, thereby, no obligations exist. In the meantime,
we hope that in the future we will eventually be able to transact business since we still
have other properties in San Pablo City. 11

Appended thereto was a copy of respondent Fernandez' letter to the petitioners

dated January 16, 1996, in response to the latter's January 5, 1996 letter. 12

On April 12, 1996, the petitioners !led the instant Complaint for speci!c
performance with damages 13 against respondent Fernandez and the registered
owners of the property. In their complaint, the petitioners alleged, inter alia, the
following:

4. On 27 November 1995, defendants o"ered to sell to plainti"s two (2) parcels

of land covered by Transfer Certi!cates of Title Nos. 36766 and 36754 measuring a
total of 36,742 square meters in Barrio Concepcion, San Pablo City. . . . After a brief
negotiation, defendants committed and speci!cally agreed to sell to plainti"s 33,990
square meters of the two (2) aforementioned parcels of land at P150.00 per square
meter.

5. The parties also unequivocally agreed to the following:

(a) The transfer tax and all the other fees and expenses for the titling of the
subject property in plainti"s' names would be for defendants' account.

(b) The plainti"s would pay the entire purchase price of P5,098,500.00 for the
aforementioned 33,990 square meters of land in plainti"s' o#ce on 8 December 1995.

6. Defendants repeatedly assured plainti"s that the two (2) subject parcels of
land were free from all liens and encumbrances and that no squatters or tenants
occupied them.

7. Plainti"s, true to their word, and relying in good faith on the commitment of
defendants, pursued the purchase of the subject parcels of lands. On 5 January 1996,
plainti"s sent a letter of even date to defendants, . . . setting the date of sale and
payment on 30 January 1996.

7.1 Defendants received the letter on 12 January 1996 but did not reply to it.

8. On 1 February 1996, plainti"s again sent a letter of even date to defendants

demanding execution of the Deed of Sale.

8.1 Defendants received the same on 6 February 1996. Again, there was no
reply. Defendants thus reneged on their commitment a second time.

9. On 14 February 1996, defendant Fernandez sent a written communication of

the same date to plainti"s enclosing therein a copy of her 16 January 1996 letter to
plainti"s which plainti"s never received before. Defendant Fernandez stated in her 16
January 1996 letter that despite the meeting of minds among the parties over the
33,990 square meters of land for P150.00 per square meter on 27 November 1995,
defendants suddenly had a change of heart and no longer wished to sell the same.
Paragraph 6 thereof unquestionably shows defendants' previous agreement as above-
mentioned and their unjusti!ed breach of their obligations under it. . . .

10. Defendants cannot unilaterally, whimsically and capriciously cancel a

perfected contract to sell. . . .

11. Plainti"s intended to use the subject property for their subdivision project to
support plainti"s' quarry operations, processing of aggregate products and
manufacture of construction materials. Consequently, by reason of defendants' failure
to honor their just obligations, plainti"s su"ered, and continue to su"er, actual
damages, consisting in unrealized pro!ts and cost of money, in the amount of at least
P5 Million.

12. Plainti"s also su"ered sleepless nights and mental anxiety on account of
defendants' fraudulent actuations for which reason defendants are liable to plainti"s
for moral damages in the amount of at least P1.5 Million.

13. By reason of defendants' above-described fraudulent actuations, plainti"s,

despite their willingness and ability to pay the agreed purchase price, have to date
been unable to take delivery of the title to the subject property. Defendants acted in a
wanton, fraudulent and malevolent manner in violating the contract to sell. By way of
example or correction for the public good, defendants are liable to plainti" for
exemplary damages in the amount of P500,000.00.

14. Defendants' bad faith and refusal to honor their just obligations to plainti"s
constrained the latter to litigate and to engage the services of undersigned counsel for
a fee in the amount of at least P250,000.00. 14

The petitioners prayed that, after due hearing, judgment be rendered in their
favor ordering the respondents to

(a) Secure at defendants' expense all clearances from the appropriate

government agencies that will enable defendants to comply with their obligations
under the Contract to Sell;

(b) Execute a Contract to Sell with terms agreed upon by the parties;

(c) Solidarily pay the plainti"s the following amounts:

1. P5,000,000.00 in actual damages;

2. P1,500,000.00 in moral damages;

3. P500,000.00 in exemplary damages;

4. P250,000.00 in attorney's fees. 15

On July 5, 1996, respondent Fernandez !led her Answer to the complaint. 16

She claimed that while the petitioners o"ered to buy the property during the meeting
of November 27, 1995, she did not accept the o"er; thus, no verbal contract to sell was
ever perfected. She speci!cally alleged that the said contract to sell was unenforceable
for failure to comply with the statute of frauds. She also maintained that even
assuming arguendo that she had, indeed, made a commitment or promise to sell the
property to the petitioners, the same was not binding upon her in the absence of any
consideration distinct and separate from the price. She, thus, prayed that judgment be
rendered as follows:

1. Dismissing the Complaint, with costs against the plainti"s;

2. On the COUNTERCLAIM, ordering plainti"s to pay defendant moral damages

in the amount of not less than P2,000,000.00 and exemplary damages in the amount
of not less than P500,000.00 and attorney's fees and reimbursement expenses of
litigation in the amount of P300,000.00. 17

On September 24, 1997, the trial court, upon motion of the petitioners, declared
the other respondents in default for failure to !le their responsive pleading within the
reglementary period. 18 At the pre-trial conference held on March 2, 1998, the parties
agreed that the following issues were to be resolved by the trial court: (1) whether or
not there was a perfected contract to sell; (2) in the event that there was, indeed, a
perfected contract to sell, whether or not the respondents breached the said contract
to sell; and (3) the corollary issue of damages. 19

Respondent Fernandez testi!ed that she requested Lourdes Alimario to look for
a buyer of the properties in San Pablo City "on a best o"er basis." She was later
informed by Alimario that the petitioners were interested to buy the properties. On
November 27, 1995, along with Alimario and another person, she met with the
petitioners in the latter's o#ce and told them that she was at the conference merely to
hear their o"er, that she could not bind the owners of the properties as she had no
written authority to sell the same. The petitioners o"ered to buy the property at P150
per square meter. After the meeting, respondent Fernandez requested Joy Marquez to
secure a barangay clearance stating that the property was free of any tenants. She was
surprised to learn that the clearance could not be secured. She contacted a cousin of
hers, also one of the owners of the property, and informed him that there was a
prospective buyer of the property but that there were tenants thereon. Her cousin told
her that he was not selling his share of the property and that he was not agreeable to
the price of P150 per square meter. She no longer informed the other owners of the
petitioners' o"er. Respondent Fernandez then asked Alimario to apprise the
petitioners of the foregoing developments, through their agent, Agapito Fisico. She
was surprised to receive a letter from the petitioners dated January 5, 1996.
Nonetheless, she informed the petitioners that she had changed her mind in pursuing
the negotiations in a Letter dated January 18, 1996. When she received petitioners'
February 1, 1996 Letter, she sent her Reply-Letter dated February 14, 1996.

After trial on the merits, the trial court rendered judgment in favor of the
petitioners on June 23, 1999, 20 the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the Court hereby renders judgment in

favor of plainti"s ANTONIO K. LITONJUA and AURELIO K. LITONJUA and against
defendants MARY MEDIATRIX T. FERNANDEZ, HEIRS OF PAZ TICZON ELEOSIDA,
represented by GREGORIO T. ELEOSIDA, JOHN DOES and JANE DOES; HEIRS OF
DOMINGO B. TICZON, represented by MARY MEDIATRIX T. FERNANDEZ, CRISTETA
TICZON, EVANGELINE JILL R. TICZON, ERLINDA T. BENITEZ, DOMINIC TICZON,
JOSEFINA LUISA PIAMONTE, JOHN DOES and JANE DOES, ordering defendants to:

1. execute a Contract of Sale and/or Absolute Deed of Sale with the terms agreed
upon by the parties and to secure all clearances from the concerned government
agencies and removal of any tenants from the subject property at their expense to
enable defendants to comply with their obligations under the perfected agreement to
sell; and

2. pay to plainti"s the sum of Two Hundred Thousand (P200,000.00) Pesos, as

and by way of attorney's fees. 21

On appeal to the Court of Appeals, the respondents ascribed the following

errors to the court a quo:

I. THE LOWER COURT ERRED IN HOLDING THAT THERE WAS A PERFECTED

CONTRACT OF SALE OF THE TWO LOTS ON NOVEMBER 27, 1995.

II. THE LOWER COURT ERRED IN NOT HOLDING THAT THE VERBAL
CONTRACT OF SALE AS CLAIMED BY PLAINTIFFS-APPELLEES ANTONIO LITONJUA
AND AURELIO LITONJUA WAS UNENFORCEABLE.

III. THE LOWER COURT ERRED IN HOLDING THAT THE LETTER OF

DEFENDANT-APPELLANT FERNANDEZ DATED JANUARY 16, 1996 WAS A
CONFIRMATION OF THE PERFECTED SALE AND CONSTITUTED AS WRITTEN
EVIDENCE THEREOF.

IV. THE LOWER COURT ERRED IN NOT HOLDING THAT A SPECIAL POWER
OF ATTORNEY WAS REQUIRED IN ORDER THAT DEFENDANT-APPELLANT
FERNANDEZ COULD NEGOTIATE THE SALE ON BEHALF OF THE OTHER
REGISTERED CO-OWNERS OF THE TWO LOTS.

V. THE LOWER COURT ERRED IN AWARDING ATTORNEY'S FEES IN THE

DISPOSITIVE PORTION OF THE DECISION WITHOUT STATING THE BASIS IN THE
TEXT OF SAID DECISION. 22

On February 28, 2001, the appellate court promulgated its decision reversing
and setting aside the judgment of the trial court and dismissing the petitioners'
complaint, as well as the respondents' counterclaim. 23 The appellate court ruled that
the petitioners failed to prove that a sale or a contract to sell over the property between
the petitioners and the private respondent had been perfected.

Hence, the instant petition for review on certiorari under Rule 45 of the Revised
Rules of Court.

The petitioners submit the following issues for the Court's resolution:

A. WHETHER OR NOT THERE WAS A PERFECTED CONTRACT OF SALE

BETWEEN THE PARTIES.

B. WHETHER OR NOT THE CONTRACT FALLS UNDER THE COVERAGE OF

THE STATUTE OF FRAUDS.

C. WHETHER OR NOT THE DEFENDANTS DECLARED IN DEFAULT ARE

BENEFITED BY THE ASSAILED DECISION OF THE COURT OF APPEALS. 24

The petition has no merit.

The general rule is that the Court's jurisdiction under Rule 45 of the Rules of
Court is limited to the review of errors of law committed by the appellate court. As the
!ndings of fact of the appellate court are deemed continued, this Court is not duty-
bound to analyze and calibrate all over again the evidence adduced by the parties in
the court a quo. 25 This rule, however, is not without exceptions, such as where the
factual !ndings of the Court of Appeals and the trial court are con$icting or
contradictory. 26 Indeed, in this case, the !ndings of the trial court and its conclusion
based on the said !ndings contradict those of the appellate court. However, upon
careful review of the records of this case, we !nd no justi!cation to grant the petition.
We, thus, a#rm the decision of the appellate court.

On the !rst and second assignment of errors, the petitioners assert that there
was a perfected contract of sale between the petitioners as buyers and the
respondents-owners, through respondent Fernandez, as sellers. The petitioners
contend that the perfection of the said contract is evidenced by the January 16, 1996
Letter of respondent Fernandez. 27 The pertinent portions of the said letter are as
follows:

. . . My cousin and I have thereby changed our mind and that the sale will no
longer push through. I speci!cally instructed her to inform you thru your broker that
we will not be attending the meeting to be held sometime !rst week of December.

In view thereof, I regret to formally inform you now that we are no longer
selling the property until all problems are fully settled. We have not demanded and
received from you any earnest money, thereby, no obligations exist . . . 28

The petitioners argue that the letter is a su#cient note or memorandum of the
perfected contract, thus, removing it from the coverage of the statute of frauds. The
letter speci!cally makes reference to a sale which respondent Fernandez agreed to
initially, but which the latter withdrew because of the emergence of some people who
claimed to be tenants on both parcels of land. According to the petitioners, the
respondents-owners, in their answer to the complaint, as well as respondent
Fernandez when she testi!ed, admitted the authenticity and due execution of the said
letter. Besides, when the petitioner Antonio Litonjua testi!ed on the contract of sale
entered into between themselves and the respondents-owners, the latter did not object
thereto. Consequently, the respondents-owners thereby rati!ed the said contract of
sale. The petitioners thus contend that the appellate court's declaration that there was
no perfected contract of sale between the petitioners and the respondents-owners is
belied by the evidence, the pleadings of the parties, and the law.

The petitioners' contention is bereft of merit. In its decision, the appellate court
ruled that the Letter of respondent Fernandez dated January 16, 1996 is hardly the
note or memorandum contemplated under Article 1403(2)(e) of the New Civil Code,
which reads:

Art. 1403. The following contracts are unenforceable, unless they are rati!ed:

...

(2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an agreement hereafter made shall be unenforceable
by action, unless the same, or some note or memorandum thereof, be in writing, and
subscribed by the party charged, or by his agent; evidence, therefore, of the agreement
cannot be received without the writing, or secondary evidence of its contents:

...

(e) An agreement for the leasing for a longer period than one year, orfor the sale
of real property or of an interest therein. 29

The appellate court based its ruling on the following disquisitions:

In the case at bar, the letter dated January 16, 1996 of defendant-appellant can
hardly be said to constitute the note or memorandum evidencing the agreement of the
parties to enter into a contract of sale as it is very clear that defendant-appellant as
seller did not accept the condition that she will be the one to pay the registration fees
and miscellaneous expenses and therein also categorically denied she had already
committed to execute the deed of sale as claimed by the plainti"s-appellees. The letter,
in fact, stated the reasons beyond the control of the defendant-appellant, why the sale
could no longer push through because of the problem with tenants. The trial court
zeroed in on the statement of the defendant-appellant that she and her cousin
changed their minds, thereby concluding that defendant-appellant had unilaterally
cancelled the sale or backed out of her previous commitment. However, the tenor of
the letter actually reveals a consistent denial that there was any such commitment on
the part of defendant-appellant to sell the subject lands to plainti"s-appellees. When
defendant-appellant used the words "changed our mind," she was clearly referring to
the decision to sell the property at all (not necessarily to plainti"s-appellees) and not
in selling the property to herein plainti"s-appellees as defendant-appellant had not yet
made the !nal decision to sell the property to said plainti"s-appellees. This conclusion
is buttressed by the last paragraph of the subject letter stating that "we are no longer
selling the property until all problems are fully settled." To read a de!nite previous
agreement for the sale of the property in favor of plainti"s-appellees into the contents
of this letter is to unduly restrict the freedom of the contracting parties to negotiate
and prejudice the right of every property owner to secure the best possible o"er and
terms in such sale transactions. We believe, therefore, that the trial court committed a
reversible error in !nding that there was a perfected contract of sale or contract to sell
under the foregoing circumstances. Hence, the defendant-appellant may not be held
liable in this action for speci!c performance with damages. 30

In Rosencor Development Corporation vs. Court of Appeals, 31 the term "statute

of frauds" is descriptive of statutes which require certain classes of contracts to be in
writing. The statute does not deprive the parties of the right to contract with respect to
the matters therein involved, but merely regulates the formalities of the contract
necessary to render it enforceable. The purpose of the statute is to prevent fraud and
perjury in the enforcement of obligations, depending for their existence on the
unassisted memory of witnesses, by requiring certain enumerated contracts and
transactions to be evidenced by a writing signed by the party to be charged. The
statute is satis!ed or, as it is often stated, a contract or bargain is taken within the
statute by making and executing a note or memorandum of the contract which is
su#cient to state the requirements of the statute. 32 The application of such statute
presupposes the existence of a perfected contract. However, for a note or
memorandum to satisfy the statute, it must be complete in itself and cannot rest partly
in writing and partly in parol. The note or memorandum must contain the names of
the parties, the terms and conditions of the contract and a description of the property
su#cient to render it capable of identi!cation. 33 Such note or memorandum must
contain the essential elements of the contract expressed with certainty that may be
ascertained from the note or memorandum itself, or some other writing to which it
refers or within which it is connected, without resorting to parol evidence. 34 To be
binding on the persons to be charged, such note or memorandum must be signed by
the said party or by his agent duly authorized in writing. 35

In City of Cebu v. Heirs of Rubi, 36 we held that the exchange of written

correspondence between the parties may constitute su#cient writing to evidence the
agreement for purposes of complying with the statute of frauds.

In this case, we agree with the !ndings of the appellate court that there was no
perfected contract of sale between the respondents-owners, as sellers, and the
petitioners, as buyers.

There is no documentary evidence on record that the respondents-owners

speci!cally authorized respondent Fernandez to sell their properties to another,
including the petitioners. Article 1878 of the New Civil Code provides that a special
power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable
consideration, 37 or to create or convey real rights over immovable property, 38 or for
any other act of strict dominion. 39 Any sale of real property by one purporting to be
the agent of the registered owner without any authority therefor in writing from the
said owner is null and void. 40 The declarations of the agent alone are generally
insu#cient to establish the fact or extent of her authority. 41 In this case, the only
evidence adduced by the petitioners to prove that respondent Fernandez was
authorized by the respondents-owners is the testimony of petitioner Antonio Litonjua
that respondent Fernandez openly represented herself to be the representative of the
respondents-owners, 42 and that she promised to present to the petitioners on
December 8, 1996 the written authority to sell the properties. 43 However, the
petitioners' claim was belied by respondent Fernandez when she testi!ed, thus:

Q Madam Witness, what else did you tell to the plainti"s?

A I told them that I was there representing myself as one of the owners of the
properties, and I was just there to listen to his proposal because that time, we were just
looking for the best o"er and I did not have yet any written authorities from my
brother and sisters and relatives. I cannot agree on anything yet since it is just a
preliminary meeting, and so, I have to secure authorities and relate the matters to my
relatives, brother and sisters, sir.

Q And what else was taken up?

A Mr. Antonio Litonjua told me that they will be leaving for another country and
he requested me to come back on the !rst week of December and in the meantime, I
should make an assurance that there are no tenants in our properties, sir. 44

The petitioners cannot feign ignorance of respondent Fernandez' lack of

authority to sell the properties for the respondents-owners. It must be stressed that
the petitioners are noted businessmen who ought to be very familiar with the
intricacies of business transactions, such as the sale of real property.

The settled rule is that persons dealing with an assumed agent are bound at
their peril, and if they would hold the principal liable, to ascertain not only the fact of
agency but also the nature and extent of authority, and in case either is controverted,
the burden of proof is upon them to prove it. 45 In this case, respondent Fernandez
speci!cally denied that she was authorized by the respondents-owners to sell the
properties, both in her answer to the complaint and when she testi!ed. The Letter
dated January 16, 1996 relied upon by the petitioners was signed by respondent
Fernandez alone, without any authority from the respondents-owners. There is no
evidence on record that the respondents-owners rati!ed all the actuations of
respondent Fernandez in connection with her dealings with the petitioners. As such,
said letter is not binding on the respondents as owners of the subject properties.

Contrary to the petitioners' contention, the letter of January 16, 1996 46 is not a
note or memorandum within the context of Article 1403(2) because it does not contain
the following: (a) all the essential terms and conditions of the sale of the properties; (b)
an accurate description of the property subject of the sale; and, (c) the names of the
respondents-owners of the properties. Furthermore, the letter made reference to only
one property, that covered by TCT No. T-36755.
 We note that the petitioners themselves were uncertain as to the speci!c area
of the properties they were seeking to buy. In their complaint, they alleged to have
agreed to buy from the respondents-owners 33,990 square meters of the total acreage
of the two lots consisting of 36,742 square meters. In their Letter to respondent
Fernandez dated January 5, 1996, the petitioners stated that they agreed to buy the two
lots, with a total area of 36,742 square meters. 47 However, in their Letter dated
February 1, 1996, the petitioners declared that they agreed to buy a portion of the
properties consisting of 33,990 square meters. 48 When he testi!ed, petitioner
Antonio Litonjua declared that the petitioners agreed to buy from the respondents-
owners 36,742 square meters at P150 per square meter or for the total price of
P5,098,500. 49

The failure of respondent Fernandez to object to parol evidence to prove (a) the
essential terms and conditions of the contract asserted by the petitioners and, (b) her
authority to sell the properties for the respondents-registered owners did not and
should not prejudice the respondents-owners who had been declared in defaults. 50

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of

the appellate court is AFFIRMED IN TOTO. Costs against the petitioners.

SO ORDERED.

Puno, Quisumbing, Austria-Martinez and Tinga, JJ ., concur.

 Title
Bunag, Jr. vs. Court of Appeals

Case Ponente Decision Date

G.R. No. 101749 REGALADO, J Jul 10, 1992

A woman seeks damages for breach of promise to marry and forcible

abduction and rape, leading to a case that explores the limits of civil
liability and the awarding of moral and exemplary damages.

Case Digest (G.R. No. 101749)

GPT-4o (v3)

Facts:

The case of "Bunag, Jr. v. Court of Appeals" involves petitioner Conrado Bunag,
Jr. and respondents the Court of Appeals and Zenaida B. Cirilo. The events in
question occurred on September 8, 1973, when Bunag, Jr. allegedly abducted
and raped Cirilo, leading to a civil case for damages. According to Cirilo, Bunag,
Jr. and an unidenti!ed male companion abducted her near San Juan de Dios
Hospital in Pasay City and took her to a motel where she was raped.
Subsequently, Bunag, Jr. took her to his grandmother's house in Pamplona, Las
Piñas, Metro Manila, where they lived together as husband and wife for 21
days. During this period, Bunag, Jr. and Cirilo applied for a marriage license,
but Bunag, Jr. later withdrew his application and left Cirilo, causing her to
return to her parents in a state of humiliation.

Cirilo !led a complaint for damages against Bunag, Jr. and his father, Conrado
Bunag, Sr., in the Regional Trial Court (RTC) of Bacoor, Cavite. The RTC found
Bunag, Jr. liable for forcible abduction and rape, awarding Cirilo P80,000 in
moral damages, P20,000 in exemplary damages, P20,000 in temperate
damages, and P10,000 in attorney's fees. Bunag, Sr. was absolved of any
liability. Both parties appealed the decision, but the Court of Appeals a"rmed
the RTC's ruling in toto. Bunag, Jr. then petitioned the Supreme Court for
review, arguing that the lower courts had misapprehended the facts and erred
in their application of the law.
Issue:

1. Did the lower courts err in !nding that Bunag, Jr. forcibly abducted and
raped Cirilo?

2. Did the lower courts err in awarding damages for breach of promise to
marry?

3. Did the dismissal of the criminal complaint for forcible abduction and rape
a#ect the civil liability of Bunag, Jr.?

Ruling:

1. The Supreme Court upheld the !ndings of the lower courts that Bunag, Jr.
forcibly abducted and raped Cirilo.

2. The Supreme Court a"rmed the award of moral and exemplary damages
to Cirilo.

3. The Supreme Court ruled that the dismissal of the criminal complaint did
not extinguish Bunag, Jr.'s civil liability.

Ratio:

The Supreme Court emphasized that !ndings of fact by the Court of Appeals
are generally conclusive and not subject to review, barring exceptional
circumstances. The Court found no compelling reason to overturn the factual
!ndings of the lower courts, which were supported by substantial evidence.
The Court reiterated that an action for breach of promise to marry is generally
not actionable in civil law, except where the plainti# has incurred expenses for
the wedding. However, moral damages are permissible under Article 21 of the
Civil Code when a person willfully causes loss or injury in a manner contrary
to morals, good customs, or public policy.

In this case, Bunag, Jr.'s actions of forcibly abducting and raping Cirilo,
followed by a promise to marry her to escape criminal liability, and
subsequently reneging on that promise, constituted acts contrary to morals
and good customs. These actions justi!ed the award of moral and exemplary
damages. The Court also clari!ed that the dismissal of the criminal complaint
at the preliminary investigation stage did not a#ect the civil action, as there
was no !nal judgment declaring that the fact from which the civil case might
arise did not exist. The Court noted the di#erent standards of proof in criminal
and civil cases, with the former requiring proof beyond a reasonable doubt and
the latter requiring a preponderance of evidence.
 Title
Bunag, Jr. vs. Court of Appeals

Case Ponente Decision Date

G.R. No. 101749 REGALADO, J Jul 10, 1992

A woman seeks damages for breach of promise to marry and forcible

abduction and rape, leading to a case that explores the limits of civil
liability and the awarding of moral and exemplary damages.

SECOND DIVISION

G.R. No. 101749. July 10, 1992.

CONRADO BUNAG, JR., petitioner, vs. HON. COURT OF APPEALS, First Division, and
ZENAIDA B. CIRILO, respondents.

Conrado G. Bunag for petitioner.

Ocampo, Dizon & Domingo Law O!ce for respondents.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE COURT OF

APPEALS ARE AS A RULE CONCLUSIVE UPON THIS COURT. The issue raised
primarily and ineluctably involves questions of fact. We are, therefore, once again
constrained to stress the well-entrenched statutory and jurisprudential mandate that
"ndings of fact of the Court of Appeals are, as a rule, conclusive upon this Court. Only
questions of law, distinctly set forth, may be raised in a petition for review on
certiorari under Rule 45 of the Rules of Court, subject to clearly settled exceptions in
case law.

2. ID.;ID.;ID.;SUPREME COURT'S FUNCTION IS LIMITED TO REVIEWING

ERRORS. Our jurisdiction in cases brought to us from the Court of Appeals is limited to
reviewing and revising the errors of law imputed to the latter, its "ndings of fact being
conclusive. This Court has emphatically declared that it is not its function to analyze
or weigh such evidence all over again, its jurisdiction being limited to reviewing errors
of law that might have been committed by the lower court. Barring, therefore, a
showing that the "ndings complained of are totally devoid of support in the record, or
that they are so glaringly erroneous as to constitute serious abuse of discretion, such
"ndings must stand, for this Court is not expected required to examine or contrast the
oral and documentary evidence submitted by the parties. 7 Neither does the instant
case reveal any feature falling within any of the exceptions which under our decisional
rules may warrant a review of the factual "ndings of the Court of Appeals.

3. CIVIL LAW; DAMAGES; BREACH OF PROMISE TO MARRY; GENERALLY

NOT ACTIONABLE; EXCEPTION. It is true that in this jurisdiction, we adhere to the
time-honored rule that an action for breach of promise to marry has no standing in the
civil law, apart from the right to recover money or property advanced by the plainti#
upon the faith of such promise. Generally, therefore, a breach of promise to marry per
se is not actionable, except where the plainti# has actually incurred expenses for the
wedding and the necessary incidents thereof.

4. ID.; ID.; ID.; MORAL DAMAGES; RATIONALE. However, the award of moral
damages is allowed in cases speci"ed in or analogous to those provided in Article 2219
of the Civil Code.Correlatively, under Article 21 of said Code, in relation to paragraph
10 of said Article 2219, any person who wilfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall compensate the
latter for moral damages. Article 21 was adopted to remedy the countless gaps in the
statutes which leave so many victims of moral wrongs helpless even though they have
actually su#ered material and moral injury, and is intended to vouchsafe adequate
legal remedy for that untold number of moral wrongs which is impossible for human
foresight to speci"cally provide for in the statutes.

5. ID.; ID.; ID.; ID.; AWARDED WHERE PETITIONER FORCIBLY ABDUCTED

RESPONDENT AND HAD CARNAL KNOWLEDGE WITH HER. Under the
circumstances obtaining in the case at bar, the acts or petitioner in forcibly abducting
private respondent and having carnal knowledge with her against her will, and
thereafter promising to marry her in order to escape criminal liability, only to
thereafter renege on such promise after cohabiting with her for twenty-one days,
irremissibly constitutes acts contrary to morals and good customs. These are grossly
insensate and reprehensible transgressions which indisputably warrant and
abundantly justify the award of moral and exemplary damages, pursuant to Article 21,
in relation to paragraphs 3 and 10, Article 2219, and Articles 2229 and 2234 of the Civil
Code.

6. REMEDIAL LAW; CRIMINAL PROCEDURE; EXTINCTION OF PENAL ACTION

DOES NOT CARRY WITH IT EXTINCTION OF CIVIL LIABILITY; EXCEPTION.
Generally, the basis of civil liability from crime is the fundamental postulate of our law
that every person criminally liable for a felony is also civilly liable. In other words,
criminal liability will give rise to civil liability ex delicto only if the same felonious act
or omission results in damage or injury to another and is the direct and proximate
cause thereof. Hence, extinction of the penal action does not carry with it the
extinction of civil liability unless the extinction proceeds from a declaration in a "nal
judgment that the fact from which the civil might arise did not exist.

7. ID.;ID.;ID.;CASE AT BAR. In the instant case, the dismissal of the complaint

for forcible abduction with rape was by mere resolution of the "scal at the preliminary
investigation stage. There is no declaration in a "nal judgment that the fact from which
the civil case might arise did not exist. Consequently, the dismissal did not in any way
a#ect the right of herein private respondent to institute a civil action arising from the
o#ense because such preliminary dismissal of the penal action did not carry with it
the extinction of the civil action.

8. ID.;ID.;ID.;RATIONALE. The reason most often given for this holding is that
the two proceedings involved are not between the same parties. Furthermore, it has
long been emphasized, with continuing validity up to now, that there are di#erent
rules as to the competency of witnesses and the quantum of evidence in criminal civil
proceedings. In a criminal action, the State must prove its case by evidence which
shows the guilt of the accused beyond reasonable doubt, while in a civil action it is
su!cient for the plainti# to sustain his cause by preponderance of evidence only.
Thus, in Rillon, et al. vs. Rillon,we stressed that it is not now necessary that a criminal
prosecution for rape be "rst instituted and prosecuted to "nal judgment before a civil
action based on said o#ense in favor of the o#ended woman can likewise be instituted
and prosecuted to "nal judgment.

DECISION

REGALADO,J p:

Petitioner appeals for the reversal of the decision 1 of respondent Court of

Appeals promulgated on May 17, 1991 in CA-G.R. CV No. 07054, entitled "Zenaida B.
Cirilo vs. Conrado Bunag, Sr. and Conrado Bunag, Jr.," which a!rmed in toto the
decision of the Regional Trial Court, Branch XI at Bacoor, Cavite, and, implicitly,
respondent court's resolution of September 3, 1992 2 denying petitioner's motion for
reconsideration.

Respondent court having assiduously discussed the salient antecedents of this

case, vis-a-vis the factual "ndings of the court below, the evidence of record and the
contentions of the parties, it is appropriate that its "ndings, which we approve and
adopt, be extensively reproduced hereunder:

"Based on the evidence on record, the following facts are considered

indisputable: On the afternoon of September 8, 1973, defendant-appellant Bunag, Jr.
brought plainti#-appellant to a motel or hotel where they had sexual intercourse. Later
that evening, said defendant-appellant brought plainti#-appellant to the house of his
grandmother Juana de Leon in Pamplona, Las Pi as, Metro Manila, where they lived
together as husband and wife for 21 days, or until September 29, 1973. On September
10, 1973, defendant-appellant Bunag, Jr. and plainti#-appellant "led their respective
applications for a marriage license with the O!ce of the Local Civil Registrar of
Bacoor, Cavite. On October 1, 1973, after leaving plainti#-appellant, defendant-
appellant Bunag, Jr. "led an a!davit withdrawing his application for a marriage
license.

"Plainti#-appellant contends that on the afternoon of September 8, 1973,

defendant-appellant Bunag, Jr.,together with an unidenti"ed male companion,
abducted her in the vicinity of the San Juan de Dios Hospital in Pasay City and brought
her to a motel where she was raped. The court a quo,which adopted the evidence,
summarized the same which we paraphrased as follows: cdrep

P̀lainti# was 26 years old on November 5, 1974 when she testi"ed, single and
had "nished a college course in Commerce (t.s.n.,p. 4, Nov. 5, 1974).It appears that on
September 8, 1973, at about 4:00 o'clock in the afternoon, while she was walking along
Figueras Street, Pasay City on her way to the San Juan de Dios Canteen to take her
snack, defendant, Conrado Bunag, Jr.,came riding in a car driven by a male
companion. Plainti# and defendant Bunag, Jr. were sweethearts, but two weeks before
September 8, 1973, they had a quarrel, and Bunag, Jr. wanted to talk matters over with
plainti#, so that he invited her to take their merienda at the Aristocrat Restaurant in
Manila instead of at San Juan de Dios Canteen, to which plainti# obliged, as she
believed in his sincerity (t.s.n.,pp. 8-10, Nov. 5, 1974).'

P̀lainti# rode in the car and took the front seat beside the driver while Bunag,
Jr. seated himself by her right side. The car traveled north on its way to the Aristocrat
Restaurant but upon reaching San Juan Street in Pasay City, it turned abruptly to the
right, to which plainti# protested, but which the duo ignored and instead threatened
her not to make any noise as they were ready to die and would bump the car against
the post if she persisted. Frightened and silenced, the car traveled its course thru F.B.
Harrison Boulevard until they reached a motel. Plainti# was then pulled and dragged
from the car against her will, and amidst her cries and pleas. In spite of her struggle
she was no match to the joint strength of the two male combatants because of her
natural weakness being a woman and her small stature. Eventually, she was brought
inside the hotel where the defendant Bunag, Jr. de$owered her against her will and
consent. She could not "ght back and repel the attack because after Bunag, Jr. had
forced her to lie down and embraced her, his companion held her two feet, removed
her panty, after which he left. Bunag, Jr. threatened her that he would ask his
companion to come back and hold her feet if she did not surrender her womanhood to
him, thus he succeeded in feasting on her virginity. Plainti# described the pains she
felt and how blood came out of her private parts after her vagina was penetrated by the
penis of the defendant Bunag, Jr. (t.s.n.,pp. 17-24, Nov. 5, 1974).

`After that outrage on her virginity, plainti# asked Bunag, Jr. once more to allow
her to go home but the latter would not consent and stated that he would only let her
go after they were married as he intended to marry her, so much so that she promised
not to make any scandal and to marry him. Thereafter, they took a taxi together after
the car that they used had already gone, and proceeded to the house of Juana de Leon,
Bunag, Jr.'s grandmother in Pamplona, Las Pi as, Metro Manila where they arrived at
9:30 o'clock in the evening (t.s.n.,p. 26, Nov. 5, 1974).At about ten (10) o'clock that same
evening, defendant Conrado Bunag, Sr.,father of Bunag, Jr. arrived and assured
plainti# that the following day which was a Monday, she and Bunag, Jr. would go to
Bacoor, to apply for a marriage license, which they did. They "led their applications for
marriage license (Exhibits `A' and `C') and after that plainti# and defendant Bunag, Jr.
returned to the house of Juana de Leon and lived there as husband and wife from
September 8, 1973 to September 29, 1973. LLphil

`On September 29, 1973 complaint Bunag, Jr. left and never returned,
humiliating plainti# and compelled her to go back to her parents on October 3, 1973.
Plainti# was ashamed when she went home and could not sleep and eat because of the
deception done against her by defendant-appellants (t.s.n.,p. 35, Nov. 5, 1974).

`The testimony of plainti# was corroborated in toto by her uncle, Vivencio

Bansagan who declared that on September 8, 1973 when plainti# failed to arrive home
at 9:00 o'clock in the evening, his sister who is the mother of plainti# asked him to
look for her but his e#orts proved futile, and he told his sister that plainti# might have
married (baka nag-asawa, t.s.n.,pp. 5-6, March 18, 1976).However, in the afternoon of
the next day (Sunday),his sister told him that Francisco Cabrera, accompanied by
barrio captain Jacinto Manalili of Ligas, Bacoor, Cavite, informed her that plainti# and
Bunag, Jr. were in Cabrera's house, so that her sister requested him to go and see the
plainti#, which he did, and at the house of Mrs. Juana de Leon in Pamplona, Las Pi as,
Metro Manila he met defendant Conrado Bunag, Sr.,who told him, P̀are, the children
are here already. Let us settle the matter and have them married.'

`He conferred with plainti# who told that as she had already lost her honor, she
would bear her su#erings as Boy Bunag, Jr. and his father promised they would be
married.'
 "Defendants-appellants, on the other hand, deny that defendant-appellant
Conrado Bunag, Jr. abducted and raped plainti#-appellant on September 8, 1973. On
the contrary, plainti#-appellant and defendant-appellant Bunag, Jr. eloped on that date
because of the opposition of the latter's father to their relationship.

"Defendants-appellants claim that defendant-appellant Bunag, Jr. and plainti#-

appellant had earlier made plans to elope and get married, and this fact was known to
their friends, among them, Architect Chito Rodriguez. The couple made good their
plans to elope on the afternoon of September 8, 1973, when defendant-appellant
Bunag, Jr.,accompanied by his friend Guillermo Ramos, Jr.,met plainti#-appellant and
her o!cemate named Lydia in the vicinity of the San Juan de Dios Hospital. The
foursome then proceeded to (the) aforesaid hospital's canteen where they had some
snacks. Later, Guillermo Ramos, Jr. took Lydia to Quirino Avenue where she could get
a ride home, thereby leaving the defendant-appellant Bunag, Jr. and plainti#-appellant
alone. According to defendant-appellant Bunag, Jr.,after Guillermo Ramos, Jr. and
Lydia left, he and plainti#-appellant took a taxi to the Golden Gate and Flamingo Hotels
where they tried to get a room, but these were full. They "nally got a room at the
Holiday Hotel, where defendant-appellant registered using his real name and
residence certi"cate number. Three hours later, the couple checked out of the hotel
and proceeded to the house of Juana de Leon at Pamplona, Las Pi as, where they
stayed until September 19, 1973. Defendant-appellant claims that bitter disagreements
with plainti#-appellant over money and the threats made to his life prompted him to
break o# their plan to get married. llcd

"During this period, defendant-appellant Bunag, Sr. denied having gone to the
house of Juan de Leon and telling plainti#-appellant that she would be wed to
defendant-appellant Bunag, Jr. In fact, he phoned Atty. Conrado Adreneda, member of
the board of directors of Mandala Corporation, defendant-appellant Bunag, Jr.'s
employer, three times between the evening of September 8, 1973 and September 9,
1973 inquiring as to the whereabouts of his son. He came to know about his son's
whereabouts when he was told of the couple's elopement late in the afternoon of
September 9, 1973 by his mother Candida Gawaran. He likewise denied having met
relatives and emissaries of plainti#-appellant and agreeing to her marriage to his son.
3
 A complaint for damages for alleged breach of promise to marry was "led by
herein private respondent Zenaida B. Cirilo against petitioner Conrado Bunag, Jr. and
his father, Conrado Bunag, Sr.,as Civil Case No. N-2028 of the Regional Trial Court,
Branch XIX at Bacoor, Cavite. On August 20, 1983, on a "nding, inter alia, that
petitioner had forcibly abducted and raped private respondent, the trial court
rendered a decision 4 ordering petitioner Bunag, Jr. to pay private respondent
P80,000.00 as moral damages, P20,000.00 as exemplary damages, P20,000.00 by
way of temperate damages, and P10,000.00 for and as attorney's fees, as well as the
costs of suit. Defendant Conrado Bunag, Sr. was absolved from any and all liability.

Private respondent appealed that portion of the lower court's decision

disculpating Conrado Bunag, Sr. from civil liability in this case. On the other hand, the
Bunags, as defendants-appellants, assigned in their appeal several errors allegedly
committed by the trial court, which were summarized by respondent court as follows:
(1) in "nding that defendant-appellant Conrado Bunag, Jr. forcibly abducted and raped
plainti#-appellant; (2) in "nding that defendants-appellants promised plainti#-
appellant that she would be wed to defendant-appellant Conrado Bunag, Jr.; and (3) in
awarding plainti#-appellant damages for the breach of defendants-appellants' promise
of marriage. 5

As stated at the outset, on May 17, 1991 respondent Court of Appeals rendered
judgment dismissing both appeals and a!rming in toto the decision of the trial court.
His motion for reconsideration having been denied, petitioner Bunag, Jr. is before us
on a petition for review, contending that (1) respondent court failed to consider vital
exhibits, testimonies and incidents for petitioner's defense, resulting in the
misapprehensions of facts and violative of the law on preparation of judgments; and
(2) it erred in the application of the proper law and jurisprudence by holding that there
was forcible abduction with rape, not just a simple elopement and an agreement to
marry, and in the award of excessive damages. 6

Petitioner Bunag, Jr. "rst contends that both the trial and appellate courts failed
to take into consideration the alleged fact that he and private respondent had agreed to
marry, and that there was no case of forcible abduction with rape, but one of simple
elopement and agreement to marry. It is averred that the agreement to marry has been
su!ciently proven by the testimonies of the witnesses for both parties and the exhibits
presented in court.

This submission, therefore, clearly hinges on the credibility of the witnesses

and evidence presented by the parties and the weight accorded thereto in the factual
"ndings of the trial court and the Court of Appeals. In e#ect, what petitioner would
want this Court to do is to evaluate and analyze anew the evidence, both testimonial
and documentary, presented before and calibrated by the trial court, and as further
meticulously reviewed and discussed by respondent court.

The issue raised primarily and ineluctably involves questions of fact. We are,
therefore, once again constrained to stress the well-entrenched statutory and
jurisprudential mandate that "ndings of fact of the Court of Appeals are, as a rule,
conclusive upon this Court. Only questions of law, distinctly set forth, may be raised in
a petition for review on certiorari under Rule 45 of the Rules of Court, subject to clearly
settled exceptions in case law.

Our jurisdiction in cases brought to us from the Court of Appeals is limited to

reviewing and revising the errors of law imputed to the latter, its "ndings of fact being
conclusive. This Court has emphatically declared that it is not its function to analyze
or weigh such evidence all over again, its jurisdiction being limited to reviewing errors
of law that might have been committed by the lower court. Barring, therefore, a
showing that the "ndings complained of are totally devoid of support in the record, or
that they are so glaringly erroneous as to constitute serious abuse of discretion, such
"ndings must stand, for this Court is not expected required to examine or contrast the
oral and documentary evidence submitted by the parties. 7 Neither does the instant
case reveal any feature falling within any of the exceptions which under our decisional
rules may warrant a review of the factual "ndings of the Court of Appeals. On the
foregoing considerations and our review of the records, we sustain the holding of
respondent court in favor of private respondent.

Petitioner likewise asserts that since the action involves a breach of promise to
marry, the trial court erred in awarding damages. prcd

It is true that in this jurisdiction, we adhere to the time-honored rule that an

action for breach of promise to marry has no standing in the civil law, apart from the
right to recover money or property advanced by the plainti# upon the faith of such
promise. 8 Generally, therefore, a breach of promise to marry per se is not actionable,
except where the plainti# has actually incurred expenses for the wedding and the
necessary incidents thereof.

However, the award of moral damages is allowed in cases speci"ed in or

analogous to those provided in Article 2219 of the Civil Code.Correlatively, under
Article 21 of said Code, in relation to paragraph 10 of said Article 2219, any person who
wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for moral damages. 9 Article 21
was adopted to remedy the countless gaps in the statutes which leave so many victims
of moral wrongs helpless even though they have actually su#ered material and moral
injury, and is intended to vouchsafe adequate legal remedy for that untold number of
moral wrongs which is impossible for human foresight to speci"cally provide for in
the statutes. 10

Under the circumstances obtaining in the case at bar, the acts of petitioner in
forcibly abducting private respondent and having carnal knowledge with her against
her will, and thereafter promising to marry her in order to escape criminal liability,
only to thereafter renege on such promise after cohabiting with her for twenty-one
days, irremissibly constitutes acts contrary to morals and good customs. These are
grossly insensate and reprehensible transgressions which indisputably warrant and
abundantly justify the award of moral and exemplary damages, pursuant to Article 21,
in relation to paragraphs 3 and 10, Article 2219, and Articles 2229 and 2234 of the Civil
Code.

Petitioner would, however, belabor the fact that said damages were awarded by
the trial court on the basis of a "nding that he is guilty of forcible abduction with rape,
despite the prior dismissal of the complaint therefor "led by private respondent with
the Pasay City Fiscal's O!ce.

Generally, the basis of civil liability from crime is the fundamental postulate of
our law that every person criminally liable for a felony is also civilly liable. In other
words, criminal liability will give rise to civil liability ex delicto only if the same
felonious act or omission results in damage or injury to another and is the direct and
proximate cause thereof. 11 Hence, extinction of the penal action does not carry with it
the extinction of civil liability unless the extinction proceeds from a declaration in a
"nal judgment that the fact from which the civil might arise did not exist. 12

In the instant case, the dismissal of the complaint for forcible abduction with
rape was by mere resolution of the "scal at the preliminary investigation stage. There
is no declaration in a "nal judgment that the fact from which the civil case might arise
did not exist. Consequently, the dismissal did not in any way a#ect the right of herein
private respondent to institute a civil action arising from the o#ense because such
preliminary dismissal of the penal action did not carry with it the extinction of the
civil action.

The reason most often given for this holding is that the two proceedings
involved are not between the same parties. Furthermore, it has long been emphasized,
with continuing validity up to now, that there are di#erent rules as to the competency
of witnesses and the quantum of evidence in criminal and civil proceedings. In a
criminal action, the State must prove its case by evidence which shows the guilt of the
accused beyond reasonable doubt, while in a civil action it is su!cient for the plainti#
to sustain his cause by preponderance of evidence only. 13 Thus, in Rillon, et al. vs.
Rillon, 14 we stressed that it is not now necessary that a criminal prosecution for rape
be "rst instituted and prosecuted to "nal judgment before a civil action based on said
o#ense in favor of the o#ended woman can likewise be instituted and prosecuted to
"nal judgment.

WHEREFORE, the petition is hereby DENIED for lack of merit, and the assailed
judgment and resolution are hereby AFFIRMED.

SO ORDERED.

Narvasa, C . J .,and Padilla, JJ .,concur.

Nocon, J.,No part.