Form of Contracts – Arts.

1356-1358
1. any form – oral
2. special form
a. validity – Arts. 748, 749, 1744, 1773, 1874, 1956, 2134,
Act 1147, Sec. 22
b. enforceability – Arts. 1403, 1878
c. greater efficacy or convenience – Arts. 1358

Lao Sok v. Sabaysabay, 138 SCRA 134

That petitioner Lao Sok promised to give his employees their separation pay, as soon as he receives
the insurance proceeds for his burned building was not rebutted.

It was in reality not a mere 'promise' as petitioner terms it but a contract, because all the essential
requisites of a valid contract are present, to wit: (1) consent was freely given by the parties, (2) there
was a subject matter, which is the payment of the separation pay of private respondents, and (3) a
cause, which is the loss of job of private respondents who had been petitioner's salesladies for
several years.

Lao Sok made an offer which was duly accepted by the private respondents. There was, therefore, a
meeting of the minds between two parties whereby one bound himself with respect to the other, to
give something or to render some service (Article 1305, Civil Code). By the unconditional
acceptance of the offer that they would be paid separation pay, a contract was therefore perfected.

Petitioner contends that the contract though orally made is unenforceable since it does not comply
with the Statute of Frauds.

This contention has no merit.

Contracts in whatever form they may have been entered into are binding on the parties unless form
is essential for the validity and enforceability of that particular contract.

The requirement of writing for the offer made by Lao Sok is only for convenience and not
enforceability. In fact, the petitioner could be compelled to put the offer in writing, a step no longer
necessary now because of this petition.

Gallardo v. IAC, 155 SCRA 248

 The crux of the matter now centers on whether or not the unnotarized deed of sale
purportedly executed on August 10, 1937 by the primitive owner Pedro Villanueva, in favor of
petitioners, can be considered as a valid instrument for effecting the alienation by way of sale
of a parcel of land registered under the Torrens System. Corollary thereto, it becomes
necessary to examine other matters surrounding the execution of the alleged document of sale
(Exhibit B).
 Petitioners claim that the sale although not in a public document, is nevertheless valid and
binding citing this Court’s rulings in the cases of Cauto v. Cortes, 8 Phil. 459, 460; Guerrero v.
Miguel, 10 Phil. 52, 53; Bucton v. Gabar, 55 SCRA 499 wherein this Court ruled that even a
verbal contract of sale of real estate produces legal effects between the parties.
 The contention is unmeritorious.
  As the respondent court aptly stated in its decision:
 “True, as argued by appellants, a private conveyance of registered property is valid
as between the parties. However, the only right the vendee of registered property in a
private document is to compel through court processes the vendor to execute a deed of
conveyance sufficient in law for purposes of registration. Plaintiffs-appellants’ reliance
on Article 1356 of the Civil Code is unfortunate. The general rule enunciated in said
Art. 1356 is that contracts are obligatory, in whatever form they may have been entered,
provided all the essential requisites for their validity are present. The next sentence
provides the exception, requiring a contract to be in some form when the law so requires
for validity or enforceability. Said law is Section 127 of Act 496 which requires, among
other things, that the conveyance be executed ‘before the judge of a court of record or
clerk of a court of record or a notary public or a justice of the peace, who shall certify
such acknowledgment substantially in form next hereinafter stated.’
 “Such law was violated in this case. The action of the Register of Deeds of Laguna in
allowing the registration of the private deed of sale was unauthorized and did not lend a
bit of validity to the defective private document of sale.”

It is therefore evident that Exhibit “E” in the case at bar is definitely not registerable under the
Land Registration Act.

 Likewise noteworthy is the case of Pornellosa and Angels v. Land Tenure Administration and
Guzman, 110 Phil. 986, where the Court ruled:
 “The deed of sale (Exhibit A), allegedly executed by Vicente San Jose in favor of
Pornellosa is a mere private document and does not conclusively establish their right to
the parcel of land. While it is valid and binding upon the parties with respect to the sale
of the house erected thereon, yet it is not sufficient to convey title or any right to the
residential lot in litigation. Acts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over immovable property
must appear in a public document.”
 Upon consideration of the facts and circumstances surrounding the execution of the assailed
document, the trial court found that said private document (Exhibit “B”) was null and void and
that it was signed by somebody else not Pedro Villanueva. 

Paredes v. Espino, 22 SCRA 1000

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 offer 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 (Mrs.
Espino and I), are going there (Puerto Princess, 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. Princess. As it is now, there is no schedule yet
of the boats plying between Manila and Pto. Princess for next week.
          Plaintiff also appended as Annex "A-1", a telegram apparently from defendant advising plaintiff
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 Certificate 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 can not be enforced by virtue of the
Statute of Frauds.

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, suffices to make the verbal agreement enforceable, taking it out of the
operation of the statute.

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 plaintiff's opposition to the motion 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 TCT 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
sufficient 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 Shaffer 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 plaintiff having alleged that the contract is backed by letter and telegram, and the same being a
sufficient 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.

Sps. Aguinaldo v. TORRES, G.R. No. 225808, 11 September 2017

While respondent denied participation in the execution of the 1979 deed of sale, he claimed that the subject
properties were validly sold by petitioners to him through the 1991 deed of sale.[39] On the other hand, petitioners
denied the existence and due execution of the said deed, claiming that they could not have signed the same as they
were in the USA when it was supposedly executed.[40]

Thus, central to the resolution of the instant controversy is the determination of the authenticity of the 1991 deed of
sale which, however, is a question of fact rather than of law.[41] It bears to stress that it is not the function of the Court
to re-examine, winnow, and weigh anew the respective sets of evidence of the parties,[42] absent a showing that they
fall under certain recognized exceptions,[43] none of which are present here.

At the outset, it should be pointed out that the 1991 deed of sale was improperly notarized, having been signed by
respondent and witness Bucapal in Makati City and by petitioners in the USA, but notarized in Tanza, Cavite,
[44]
 which is in violation of the notarial officer's duty to demand that the party acknowledging a document must appear
before him,[45] sign the document in his presence,[46] and affirm the contents and truth of what are stated therein.
[47]
 As aptly observed by the CA, the evidence on record amply shows that Nelia could not have been in the
Philippines at the time the said deed was signed.[48]

The improper notarization of the 1991 deed of sale stripped it of its public character and reduced it to a private
instrument.[49] Hence, it is to be examined under the parameters of Section 20, Rule 132 of the Rules of Court (Rules)
which pertinently provides that "[b]efore any private document offered as authentic is received in evidence, its
due execution and authenticity must be proved either: (a) [b]y anyone who saw the document executed or written;
or (b) by evidence of the genuineness of the signature or handwriting of the maker."[50] Emphases supplied.

In relation thereto, Section 22, Rule 132 of the same Rules provides the manner by which the genuineness of
handwriting may be proved, i.e.: (a) by any witness who believes it to be the handwriting of such person because
he has seen the person write; or he has seen writing purporting to be his upon which the witness has acted or been
charged; (b) by a comparison, made by the witness or the court, with writings admitted or treated as genuine
by the party against whom the evidence is offered, or proved to be genuine to the satisfaction of the judge.

Interpretation of Contracts – Arts. 1370-1379

Lim v. CA, 99 SCRA 668

At this juncture, it is well to lay down cardinal rules in the

interpretation of contracts as provided in the New Civil Code, thus -

Art. 1370. If the terms of a contract are Clear and leave no doubt
upon the intention of the contracting parties. the literal meaning of
its stipulation shall control. cha

If the words appear to be contrary to the evident intention of the

parties, the latter shall prevail over the former.   chanroblesvirtualawlibrary chanrobles virtual law library

Art. 1371. In order to judge the intention. Of the contracting

parties, their contemporaneous and subsequent acts shall be
principally considered.   chanroblesvirtualawlibrary chanrobles virtual law library

Art. 1375. Words which may have different significations shall be

understood in that which is most in keeping with the nature and
object of the contract.   chanroblesvirtualawlibrary chanrobles virtual law library

Art. 1377. The interpretation of obscure words or stipulations in a

contract shall not favor the party who caused the obscurity.
According to the trial court, "(t)here is no question that the contract
was signed on November 13, 1970, in the office of the Hind Sugar
Company at Manaoag, Pangasinan. The contract itself is so clear
and explicit that it cast no doubt as to its meaning. "Cash upon
signing of this contract meaning to say, that once the contract was
signed, the payment of the 4.085 piculs of sugar which is
P142,975.00 was made. After the said contract was signed and as
sustained by the plaintiff, he has already delivered the P142,975.00
in cash to the cashier of the defendan't, the said plaintiff was given
all the delivery orders covering the 4,085 piculs of sugar sold and
by the giving of the delivery orders to the plaintiff, the latter was
entitled to withdraw all the 4,085 piculs sugar from the company's
warehouse" This is also the stand of the petition. ch

Art. 1373. If some stipulation of any contract should admit of

several meanings, it shall be understood as bearing that import
which is most adequate to render it effectua.

The evidence for the petitioner establishes that after paying the
cash consideration to Cashier Garcia and Manager Abalos, the
parties signed the contract and thereafter a signed copy of said
contract was given to petitioner and also the four (4) delivery orders
covering the 4,085 piculs of sugar sold. The questioned stipulation
recites exactly the act of payment which is the paying of the money
on the occasion of or at the time of the signing. Respondent would
have Us believe that the stipulation does not mean what it conveys
because petitioner has not paid cash after the signing of the
contract nor at any time thereafter. We cannot agree with the
respondent for otherwise the sanctity of the written contract can
easily be violated and impugned, for otherwise oral testimony would
prevail over a written document to vary, alter or modify the written
terms, and most importantly, respondent's interpretation would
render the stipulation ineffectual as a mere agreement. chanroblesvirtualaw

Republic v. Castellvi, 58 SCRA 336

It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain cannot be
considered to have taken place in 1947 when the Republic commenced to occupy the property as
lessee thereof. We find merit in the contention of Castellvi that two essential elements in the "taking"
of property under the power of eminent domain, namely: (1) that the entrance and occupation by the
condemnor must be for a permanent, or indefinite period, and (2) that in devoting the property to
public use the owner was ousted from the property and deprived of its beneficial use, were not
present when the Republic entered and occupied the Castellvi property in 1947.

Untenable also is the Republic's contention that although the contract between the parties was one
of lease on a year to year basis, it was "in reality a more or less permanent right to occupy the
premises under the guise of lease with the 'right and privilege' to buy the property should the lessor
wish to terminate the lease," and "the right to buy the property is merged as an integral part of the
lease relationship ... so much so that the fair market value has been agreed upon, not, as of the time
of purchase, but as of the time of occupancy"   We cannot accept the Republic's contention that a
15

lease on a year to year basis can give rise to a permanent right to occupy, since by express legal
provision a lease made for a determinate time, as was the lease of Castellvi's land in the instant
case, ceases upon the day fixed, without need of a demand (Article 1669, Civil Code). Neither can it
be said that the right of eminent domain may be exercised by simply leasing the premises to be
expropriated (Rule 67, Section 1, Rules of Court). Nor can it be accepted that the Republic would
enter into a contract of lease where its real intention was to buy, or why the Republic should enter
into a simulated contract of lease ("under the guise of lease", as expressed by counsel for the
Republic) when all the time the Republic had the right of eminent domain, and could expropriate
Castellvi's land if it wanted to without resorting to any guise whatsoever. Neither can we see how a
right to buy could be merged in a contract of lease in the absence of any agreement between the
parties to that effect. To sustain the contention of the Republic is to sanction a practice whereby in
order to secure a low price for a land which the government intends to expropriate (or would
eventually expropriate) it would first negotiate with the owner of the land to lease the land (for say
ten or twenty years) then expropriate the same when the lease is about to terminate, then claim that
the "taking" of the property for the purposes of the expropriation be reckoned as of the date when
the Government started to occupy the property under the lease, and then assert that the value of the
property being expropriated be reckoned as of the start of the lease, in spite of the fact that the value
of the property, for many good reasons, had in the meantime increased during the period of the
lease. This would be sanctioning what obviously is a deceptive scheme, which would have the effect
of depriving the owner of the property of its true and fair market value at the time when the
expropriation proceedings were actually instituted in court. The Republic's claim that it had the "right
and privilege" to buy the property at the value that it had at the time when it first occupied the
property as lessee nowhere appears in the lease contract. What was agreed expressly in paragraph
No. 5 of the lease agreement was that, should the lessor require the lessee to return the premises in
the same condition as at the time the same was first occupied by the AFP, the lessee would have
the "right and privilege" (or option) of paying the lessor what it would fairly cost to put the premises in
the same condition as it was at the commencement of the lease, in lieu of the lessee's performance
of the undertaking to put the land in said condition. The "fair value" at the time of occupancy,
mentioned in the lease agreement, does not refer to the value of the property if bought by the
lessee, but refers to the cost of restoring the property in the same condition as of the time when the
lessee took possession of the property. Such fair value cannot refer to the purchase price, for
purchase was never intended by the parties to the lease contract. It is a rule in the interpretation of
contracts that "However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which the parties
intended to agree" (Art. 1372, Civil Code).

We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as of the year
1947 when the Republic first occupied the same pursuant to the contract of lease, and that the just
compensation to be paid for the Castellvi property should not be determined on the basis of the
value of the property as of that year. The lower court did not commit an error when it held that the
"taking" of the property under expropriation commenced with the filing of the complaint in this case.
Eastern Shipping v. Margarina-Verkaufs-Union, 93 SCRA 256

After trial, the lower court rejected petitioner's defense that did not exceed 5% of respondent's
interest in the cargo it was not liable under Philippine Law for the damage which I rendered judgment
on April 25, 1969 "ordering the defendant, Eastern Shipping Lines, Inc. to pay to the plaintiff,
Margarine-Verkaufs-Union GMBH, the sum of US$ 591.38, with interest at the legal rate from the
date of the filing of the complaint until fully paid, plus US$ 250.00 as attorney's fees and the costs of
the suit."

In this review on questions of law, petitioner reiterates as its first assignment t of error its submittal
that Article 848 of the Code of Commerce   which would bar claims for averages not exceeding 5%
1

of the claimant's interest should be applied rather than the lower court's ruling that petitioner's bill of
lading expressly contained "an agreement to the contrary," i.e. for the application of the York-
Antwerp Rules which provide for respondent's fun recovery of the damage loss.

The Court finds no error and upholds the lower court's ruling sustaining respondent's damage claim
although the amount thereof did not exceed 5% of respondent's interest in the cargo and would have
been barred by the cited article of the Commerce Code. We hold that the lower court correctly ruled
the cited codal article to be "not applicable in this particular case for the reason that the bill of lading
(Exhibit "F") contains "an agreement to the contrary" for it is expressly provided in the last sentence
of the first paragraph (Exhibit "1-A") that "In case of average, same shall be adjusted according to
York-Antwerp Rules of 1950." The insertion of said condition is expressly authorized by
Commonwealth Act No. 65 which has adopted in toto the U.S. Carriage of Goods by Sea Act. Now,
it has not been shown that said rules limit the recovery of damage to cases within a certain
percentage or proportion that said damage may bear to claimant's interest either in the vessel or
cargo as provided in Article 848 of the Code of Commerce On the contrary, Rule 3 of said York-
Antwerp Rules expressly states that "Damage done to a ship and cargo, or either of them, by water
or otherwise, including damage by breaching or scuttling a burning ship, in extinguishing a fire on
board the ship, shall be made good as general average. ... "

There is a clear and irreconcilable inconsistency between the York-Antwerp Rules expressly
adopted by the parties as their contract under the bill of lading which sustains respondent's claim
and the codal article cited by petitioner which would bar the same. Furthermore, as correctly
contended by respondent, what is here involved is a contract of adhesion as embodied in the printed
bill of lading issued by petitioner for the shipment to which respondent as the consignee merely
adhered, having no choice in the matter, and consequently, any ambiguity therein must be construed
against petitioner as the author.

I. Kinds of Contracts as to Validity

1. Valid and binding
2. Valid but defective
i) Rescissible Contracts – Arts. 1380-1389, 1191
ii) Voidable Contracts – Arts. 1390-1402, 1327-1328, 1330
iii) Unenforceable Contracts – Arts. 1403-1408, 1317, 1878
3. Void or Inexistent – Arts. 1409-1422, 1318, 1353, 1378, 1491,
1898

Rescissible Contracts
Cabaliw v. Sadorra, 64 SCRA 310

Cabaliw was the second wife of Benigno. During their marriage, they bought 2 parcels of land. They had a
daughter Soledad.  Benigno abandoned his wife Cabaliw, thus the latter filed an action in court for
support. The Court ordered Benigno to pay her P75 a month. However, Benigno did not pay and instead
sold their property to his son-in-law by his daughter Encarnacion in the first marriage, Soterro. The
transaction was done without Cabaliw’s consent. Prior to the sale, Soterro already knew that there was a
judgment rendered against his father-in-law but proceeded to buy the property anyway. When Cabaliw
found out, she instituted an action along with her daughter to recover the properties.

Alienations by onerous title are presumed fraudulent when made by persons against whome some
judgment has been rendered or some writ of attachment has been issued. Benigno was ordered by the
Court to pay Cabaliw support and he failed to do so. Instead, he sold his properties to his son-in-law. The
close relationship between Benigno and Soterro is a badge of fraud. Soterro knew about the judgment
against Benigno but proceeded to purchase the properties anyway. He cannot be said to be a purchaser
in good faith. The presumption of fraud is not overcome by the fact that the transactions were all made in
the nature of public instruments between Soterro and Benigno. The properties sold were conjugal
properties. These cannot be sold without Cabaliw’s consent.

 As well said in the dissenting opinion of Justice Magno Gatmaitan, the principle invoked by the
majority opinion that to destroy the validity of an existing public document "strong and convincing
evidence is necessary", operates "where the action was brought by one party against the other to
impugn the contract ... but that rule can not operate and does not, where the case is one wherein the
suit is not between the parties inter se but is one instituted by a third person, not a party to the
contract but precisely the victim of it because executed to his prejudice and behind his back; neither
law, nor justice, nor reason, nor logic, should so permit, otherwise, in such a suit, the courts would
be furnishing a most effective shield of defense to the aggressor." (pp. 30-31, CA Decision)

Furthermore, the presumption of fraud established by the law in favor of petitioners is bolstered by
other indicia of bad faith on the part of the vendor and vendee. Thus (1) the vendee is the son-in-law
of the vendor. In the early case of Regalado vs. Luchsinger & Co., 5 Phil. 625, this Court held that
the close relationship between the vendor and the vendee is one of the known badges of fraud. (2)
At the time of the conveyance, the vendee, Sotero, was living with his father-in-law, the vendor, and
he knew that there was a judgment directing the latter to give a monthly support to his wife Isidora
and that his father-in-law was avoiding payment and execution of the judgment.  (3) It was known to
6

the vendee that his father-in-law had no properties other than those two parcels of land which were
being sold to him.  The fact that a vendor transfers all of his property to a third person when there is
7

a judgment against him is a strong indication of a scheme to defraud one who may have a valid
interest over his properties.8

Added to the above circumstances is the undisputed fact that the vendee Sotero Sadorra secured
the cancellation of the lis pendens on O.C.T. No. 1, which was annotated in 1940 at the instance of
Isidora Cabaliw, and the issuance of a transfer certificate of title in his favor, by executing an
affidavit, Exhibit H, on June 7, 1948, wherein he referred to Isidora as "the late Isidora Cabaliw'
when he knew for a fact that she was alive, and alleged that Civil Case 449 of the Court of First
Instance of Nueva Vizcaya was decided in his favor where in truth there was no such decision
because the proceedings in said case were interrupted by the last world war. Such conduct of
Sotero Sadorra reveals, as stated by the lower court, an "utter lack of sincerity and truthfulness" and
belies his pretensions of good faith.
On the part of the transferee, he did not present satisfactory and convincing evidence sufficient to
overthrow the presumption and evidence of a fraudulent transaction. His is the burden of rebutting
the presumption of fraud established by law, and having failed to do so, the fraudulent nature of the
conveyance in question prevails. 9

The decision of the Court of Appeals makes mention of Art. 1413 of the old Civil Code which
authorizes the husband as administrator to alienate and bind by onerous title the property of the
conjugal partnership without the consent of the wife, and by reason thereof, concludes that petitioner
Isidora Cabaliw can not now seek annulment of the sale made by her husband. On this point,
counsel for petitioners rightly claims that the lack of consent of the wife to the conveyances made by
her husband was never invoked nor placed in issue before the trial court. What was claimed all
along by plaintiff, Isidora Cabaliw now petitioner, was that the conveyances or deeds of sale were
executed by her husband to avoid payment of the monthly support adjudged in her favor and to
deprive her of the means to execute said judgment. In other words, petitioner seeks relief not so
much as an aggrieved wife but more as a judgment creditor of Benigno Sadorra. Art. 1413 therefore
is inapplicable; but even if it were, the result would be the same because the very article reserves to
the wife the right to seek redress in court for alienations which prejudice her or her heirs. 10 The
undisputed facts before Us clearly show that, the sales made by the husband were merely a scheme
to place beyond the reach of the wife the only properties belonging to the conjugal partnership and
deprive her of what rightly belongs to her and her only daughter Soledad.

Hongkong & Shanghai Bank v. Pauli, 161 SCRA 634

Hongkong & Shanghai Banking Corporation filed a complaint against the defendant Ralph Pauli, to
collect the sum of P258,964.15. Judgment was rendered in favor of the Bank. The decision having
become final, the Bank endeavored to execute it but the writs of execution were returned unsatisfied
because no leviable assets of Pauli could be located by the sheriffs.

Unknown to the Hongkong & Shanghai Bank, Pauli had on January 8, 1957 purchased from the
Philippine National Bank (PNB) a sugar cane plantation known as Hacienda Riverside (Lot No. 693
of Saravia Cadastre, Negros Occidental). To avoid discovery of the transaction by his creditors, he
did not register the deed of Sale. Six years later, on March 1, 1963, he fraudulently sold the
hacienda to his daughter, defendant-appellee Sally Garganera, and her husband Mateo Garganera.
The sale was registered on March 5, 1963. Transfer Certificate of Title No. 34425 was issued to the
Garganeras.

The Bank filed a new complaint against Pauli and the Garganeras which was docketed as Civil Case
No. 465 in the Court of First Instance of Negros Occidental, Branch I, praying for annulment of the
Conditional Sale as well as the Deed of Sale, of Hacienda Riverside to the Garganeras and also for
annulment of Garganera's Certificate of Title No. T-34425.

Has the action for annulment of the sale of Lot 693 to the Garganeras prescribed? Did prescription
of the action commence to run from the registration of the sale, or from the discovery of the
transaction by the Bank?

When a transaction involves registered land, the four-year period fixed in Article 1391 within winch to
bring an action for annulment of the deed, shall be computed from the registration of the conveyance
(March 5, 1963) on the familiar theory that the registration of the document is constructive notice of
the conveyance to the whole world

Plaintiff's submission that the four-year period commenced to run from the date when the Bank
obtained actual knowledge of the fraudulent sale of Pauli's land to the Garganeras (sometime in
1969) and that hence the four-year period for bringing an action to annul the sale had not yet expired
when it filed the action for annullment on February 17, 1971, is unacceptable. That theory would
diminish public faith in the integrity of torrens titles and impair commercial transactions involving
registered lands for it would render uncertain the computation of the period for the prescription of
such actions.

Civil Case No. 465, the action for annulment of the Sale is not barred by res judicata, specifically, the
prior judgment in Civil Case No. 75319, for revival of the judgment in the collection suit, Civil Case
No. 32799, for the subject matter and causes of action in the two cases are different. The three (3)
Identities required for the application of the bar by prior judgment: Identity of parties, of subject
matter and causes of action, are lacking.

Nevertheless, as the plaintiff's right of action in Civil Case No. 465 had already prescribed, the trial
court did not err in dismissing the case.

Voidable Contracts

Felipe v. Heirs of Aldon, 120 SCRA 628

The sale made by Gimena is certainly a defective contract but of what category? The answer: it is a voidable contract.
According to Art. 1390 of the Civil Code, among the voidable contracts are "[T]hose where one of the parties is incapable of
giving consent to the contract." (Par. 1.) In the instant case-Gimena had no capacity to give consent to the contract of sale. The
capacity to give consent belonged not even to the husband alone but to both spouses.

The view that the contract made by Gimena is a voidable contract is supported by the legal provision that contracts entered by
the husband without the consent of the wife when such consent is required, are annullable at her instance during the marriage
and within ten years from the transaction questioned. (Art. 173, Civil Code.)

Gimena's contract is not rescissible for in such contract all the essential elements are untainted but Gimena's consent was
tainted. Neither can the contract be classified as unenforceable because it does not fit any of those described in Art. 1403 of
the Civil Code. And finally, the contract cannot be void or inexistent because it is not one of those mentioned in Art. 1409 of the
Civil Code. By process of elimination, it must perforce be a voidable contract.

The voidable contract of Gimena was subject to annulment by her husband only during the marriage because he was the victim
who had an interest in the contract. Gimena, who was the party responsible for the defect, could not ask for its annulment.
Their children could not likewise seek the annulment of the contract while the marriage subsisted because they merely had an
inchoate right to the lands sold. The termination of the marriage and the dissolution of the conjugal partnership by the death of
Maximo Aldon did not improve the situation of Gimena. What she could not do during the marriage, she could not do
thereafter.

House Int’l. v. IAC, 151 SCRA 703

Petitioner House International Building Tenants Association, Inc. (ASSOCIATION, for

short) is a domestic non-stock, non-profit civic corporation, whose incorporators,
directors and members constitute the great majority of more than a hundred heads of
families who are tenants of long and good standing of the 14-storey House
International Building located at 777 Ongpin Street, Binondo, Manila. The land and the
improvements thereon were formerly owned by Atty. Felipe Ang who mortgaged the
same to the Government Service Insurance System (hereinafter referred to as GSIS) to
secure payment of an obligation. After foreclosure of the mortgage and for failure of
Ang to exercise his right of redemption over the foreclosed property, the ownership
thereof was consolidated with the GSIS which subsequently sold it to Centertown
Marketing Corporation (CENTERTOWN, for short) in a deed of conditional sale, without
notice to the tenants of the building and without securing the prior clearance of the
then Ministry of Human Settlements.

As CENTERTOWN was not authorized by its Articles of Incorporation to engage in the

real estate business, it organized a sister corporation, with almost all the same
incorporators and stockholders, as CENTERTOWN’s, under the corporate name of Manila
Towers Development Corporation (TOWERS, for short) for the primary purpose of
engaging in the real estate business. Subsequently, CENTERTOWN assigned to its sister
corporation TOWERS all its rights and obligations under the Deed of Conditional Sale,
with the consent and approval of the GSIS.

Thereafter, herein petitioner filed a complaint with the Regional Trial Court of Manila
against CENTERTOWN, TOWERS and GSIS for annulment of the deed of conditional sale
and the subsequent assignment thereof by CENTERTOWN to TOWERS. The complaint
alleged in part that the Deed of Conditional Sale is null and void ab initio for being ultra
vires, since defendant CENTERTOWN is not qualified to acquire real estate property or
to engage in real estate transactions.

The main thrust of the petitioner’s challenge on the validity of the conditional sale is
that the contract is ultra vires because the respondent CENTERTOWN is not qualified to
acquire properties under its Articles of Incorporation. The petitioner has confused a void
contract with an ultra vires contract which is merely voidable.

Art. 1397. The action for the annulment of contracts may be instituted by all who are
thereby obliged principally or subsidiarily.

Petitioner is neither a party nor a privy to the Deed of Conditional Sale and the
assignment thereof: thus, it cannot assail the validity of the said contracts.

Poole-Blunden v. Union Bank, G.R. No. 205838, 29 November 2017

Banks are required to observe a high degree of diligence in their affairs. This
encompasses their dealings concerning properties offered as security for loans. A bank
that wrongly advertises the area of a property acquired through foreclosure because it
failed to dutifully ascertain the property's specifications is grossly negligent as to
practically be in bad faith in offering that property to prospective buyers. Any sale made
on this account is voidable for causal fraud. In actions to void such sales, banks cannot
hide under the defense that a sale was made on an as-is-where-is basis. As-is-where-is
stipulations can only encompass physical features that are readily perceptible by an
ordinary person possessing no specialized skills.

Sometime in March 2001, Poole-Blunden came across an advertisement placed by

Union Bank in the Manila Bulletin. The ad was for the public auction of certain
properties. One of these properties was a condominium unit, identified as Unit 2-C of T-
Tower Condominium (the "Unit"), located at 5040 P. Burgos corner Calderon Streets,
Makati City.6 UnionBank had acquired the property through foreclosure proceedings
"after the developer defaulted in the payment of its loan from [UnionBank]." 7
The Unit was advertised to have an area of 95 square meters. Thinking that it was
sufficient and spacious enough for his residential needs, Poole-Blunden decided to
register for the sale and bid on the unit. 8

About a week prior to the auction, Poole-Blunden visited the unit for inspection. He was
accompanied by a representative of UnionBank. The unit had an irregular shape; it was
neither a square nor a rectangle and included a circular terrace. Poole-Blunden did not
doubt the unit's area as advertised. However, he found that the ceiling was in bad
condition, that the parquet floor was damaged, and that the unit was in need of other
substantial repairs to be habitable. 9

On the day of the auction, Poole-Blunden inspected the Master Title of the project
owner to the condominium in the name of Integrated Network (TCT No. 171433) and
the Condominium Certificate of Title of UnionBank (CCT No. 36151) to verify once again
the details as advertised and the ownership of the unit. Both documents were on
display at the auction venue.10

Poole-Blunden placed his bid and won the unit for P2,650,000.00. 11 On May 7, 2001,
Poole-Blunden entered into a Contract to Sell with UnionBank. This Contract stipulated
that Poole-Blunden would pay 10% of the purchase price as down payment 12 and that
the balance shall be paid over a period of 15 years in equal monthly instalments, with
interest of 15% per annum starting July 7, 2001.13

Poole-Blunden started occupying the unit in June 2001. By July 20, 2003, he was able
to fully pay for the Unit, paying a total amount of P3,257,142.49. 14

In late 2003, Poole-Blunden decided to construct two (2) additional bedrooms in the
Unit. Upon examining it, he noticed apparent problems in its dimensions. He took rough
measurements of the Unit, which indicated that its floor area was just about 70 square
meters, not 95 square meters, as advertised by UnionBank. 15

Poole-Blunden got in touch with an officer of UnionBank to raise the matter, but no
action was taken.16 On July 12, 2004, Poole-Blunden wrote to UnionBank, informing it
of the discrepancy. He asked for a rescission of the Contract to Sell, along with a refund
of the amounts he had paid, in the event that it was conclusively established that the
area of the unit was less than 95 square meters.

Unenforceable Contracts

Ortega v. Leonardo, 103 Phil 870

1. SALE; PAROL CONTRACT OF SALE OF REALTY UNENFORCEABLE; DOCTRINE OF PART

PERFORMANCE. — While, as a general rule, an oral agreement to sell a piece of land is
not provable, however, where there is partial performance of the sale contract, the
principle excluding evidence of parol contracts for the sale of realty will not apply.

2. ID.; CIRCUMSTANCES INDICATING PARTIAL PERFORMANCE. — Some circumstance

indicating partial performance of an oral contract of sale of realty are: relinquishment of
rights, continued possession, building of improvements, tender of payment rendition of
services, payment of taxes, surveying of the land at the vendee’s expense, etc.

Complaint averred that long before and until her house had been completely destroyed
during the liberation of the City of Manila, plaintiff 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 2 plaintiff 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 plaintiff’s; that
during the investigation of such conflicting interests, defendant asked plaintiff to desist
from pressing her claim and definitely promised that if and when he succeeded in
getting title to Lot I, 3 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 plaintiff accepted defendant’s offer, and desisted from further claiming Lot I;
that defendant finally acquired title thereto; that relying upon their agreement, plaintiff
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 plaintiff 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, plaintiff tendered to defendant the purchase price
which the latter refused to accept, without cause or reason.

Carbonel v. Poncio, 103 Phil 655

STATUTE OF FRAUDS; WHEN APPLICABLE; PART PERFORMANCE; ORAL EVIDENCE

ADMISSIBLE TO PROVE BOTH CONTRACT AND PART PERFORMANCE. — The Statute of
Frauds is applicable only to executory contracts, not to contracts that are totally or
partially performed. The reason is simple. In executory contracts there is a wide field
for fraud because, unless they be in writing there is no palpable evidence of the
intention of the contracting parties. 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 benefits 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. So that 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 effect 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

on January 27, 1955, she purchased from defendant José Poncio, at P9.50 a square
meter, a parcel of land of about 195 square meters, more or less, located in San Juan
del Monte, Rizal, known as Lot No. 13-B of subdivision plan Psd-19567, and more
particularly described in Transfer Certificate of Title No. 5040 (now No. 37842),
excluding the improvements thereon; that plaintiff paid P247.26 on account of the price
and assumed Poncio’s obligation with the Republic Savings Bank amounting to
P1,177.48, with the understanding that the balance would be payable upon execution of
the corresponding deed of conveyance; that one of the conditions of the sale was that
Poncio would continue staying in said land for one year, as stated in a document signed
by him (and later marked as Exhibit A), a translation of which was attached to the said
complaint; that Poncio refuses to execute the corresponding deed of sale, despite
repeated demands; that plaintiff has thereby suffered damages in the sum of P5,000,
aside from attorney’s fees amounting to P1,000; that Poncio has conveyed the same
property to defendants Ramón R. Infante and Emma L. Infante, who knew of the first
sale to plaintiff; and that the Infantes had thereby caused damages to plaintiff in the
sum of P5,000.

Plaintiff prayed, therefore, that she be declared owner of the land in question; that the
sale to the Infantes be annulled; that Poncio be required to execute the corresponding
deed of conveyance in plaintiff’s favor; that the Register of Deeds of Rizal be directed to
issue the corresponding title in plaintiff’s name; and that defendants be sentenced to
pay damages.

Defendants moved to dismiss said complaint upon the ground that plaintiff’s claim is
unenforceable under the Statute of Frauds, and that said pleading does not state facts
sufficient to constitute a cause of action. The motion was denied, "without prejudice to
considering, when this case is decided on the merits, whether the same falls under the
Statute of Frauds." cralaw virtua1aw library

Thereafter, the Infantes filed an answer denying most of the allegations of said
complaint and alleged, by way of special defense, that they purchased the land in
question in good faith, for value, and without knowledge of the alleged sale to plaintiff;
and that plaintiff’s claim is unenforceable under the Statute of Frauds. They, likewise,
set up oounterclaims for damages.

We are of the opinion and so hold that the appeal is well taken. It is well settled in this
jurisdiction that the Statute of Frauds is applicable only to executory contracts 

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 effect,
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 specific 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 sufficient 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 field 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 benefits 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 plaintiff if the defendant were
permitted to escape performance of his part of the oral agreement after he has
permitted the plaintiff 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 effect 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).

May 1958 - Philippine Supreme Court Decisions/Resolutions

Philippine Supreme Court

Jurisprudence
Philippine Supreme Court Jurisprudence > Year 1958 > May 1958 Decisions > G.R. No.
L-11231 May 12, 1958 - ROSARIO CARBONNEL v. JOSE PONCIO

103 Phil 655:

 EN BANC

[G.R. No. L-11231. May 12, 1958.]

ROSARIO CARBONNEL, Plaintiff-Appellant, v. JOSE PONCIO, RAMON INFANTE,

and EMMA INFANTE, Defendants-Appellees.

Tolentino & Garcia & D. R. Cruz for Appellant.

Guillermo B. Guevarra, Ricardo P. Guevarra and Emmanuel S. Tipon

for Appellees.

SYLLABUS

1. STATUTE OF FRAUDS; WHEN APPLICABLE; PART PERFORMANCE; ORAL EVIDENCE

ADMISSIBLE TO PROVE BOTH CONTRACT AND PART PERFORMANCE. — The Statute of
Frauds is applicable only to executory contracts, not to contracts that are totally or
partially performed. The reason is simple. In executory contracts there is a wide field
for fraud because, unless they be in writing there is no palpable evidence of the
intention of the contracting parties. 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 benefits 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. So that 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 effect 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).

DECISION

CONCEPCION, J.:

The issue in this case is whether the Statute of Frauds is applicable thereto.

Plaintiff Rosario Carbonnel alleges, in her second amended complaint, filed with the
Court of First Instance of Rizal, that, on January 27, 1955, she purchased from
defendant José Poncio, at P9.50 a square meter, a parcel of land of about 195 square
meters, more or less, located in San Juan del Monte, Rizal, known as Lot No. 13-B of
subdivision plan Psd-19567, and more particularly described in Transfer Certificate of
Title No. 5040 (now No. 37842), excluding the improvements thereon; that plaintiff
paid P247.26 on account of the price and assumed Poncio’s obligation with the Republic
Savings Bank amounting to P1,177.48, with the understanding that the balance would
be payable upon execution of the corresponding deed of conveyance; that one of the
conditions of the sale was that Poncio would continue staying in said land for one year,
as stated in a document signed by him (and later marked as Exhibit A), a translation of
which was attached to the said complaint; that Poncio refuses to execute the
corresponding deed of sale, despite repeated demands; that plaintiff has thereby
suffered damages in the sum of P5,000, aside from attorney’s fees amounting to
P1,000; that Poncio has conveyed the same property to defendants Ramón R. Infante
and Emma L. Infante, who knew of the first sale to plaintiff; and that the Infantes had
thereby caused damages to plaintiff in the sum of P5,000.

Plaintiff prayed, therefore, that she be declared owner of the land in question; that the
sale to the Infantes be annulled; that Poncio be required to execute the corresponding
deed of conveyance in plaintiff’s favor; that the Register of Deeds of Rizal be directed to
issue the corresponding title in plaintiff’s name; and that defendants be sentenced to
pay damages.

Defendants moved to dismiss said complaint upon the ground that plaintiff’s claim is
unenforceable under the Statute of Frauds, and that said pleading does not state facts
sufficient to constitute a cause of action. The motion was denied, "without prejudice to
considering, when this case is decided on the merits, whether the same falls under the
Statute of Frauds."cralaw virtua1aw library

Thereafter, the Infantes filed an answer denying most of the allegations of said
complaint and alleged, by way of special defense, that they purchased the land in
question in good faith, for value, and without knowledge of the alleged sale to plaintiff;
and that plaintiff’s claim is unenforceable under the Statute of Frauds. They, likewise,
set up oounterclaims for damages.

In his answer, Poncio denied specifically some allegations of said complaint and alleged
that he had no knowledge sufficient to form a belief as to the truth of the other
averments therein. By way of special defenses, he alleged that he had consistently
turned down several offers, made by plaintiff, to buy the land in question, at P15 a
square meter, for he believes that it is worth not less than P20 a square meter; that
Mrs. Infante, likewise, tried to buy the land at P15 a square meter; that, on or about
January 27, 1955, Poncio was advised by plaintiff that should she decide to buy the
property at P20 a square meter, she would allow him to remain in the property for one
year; that plaintiff then induced Poncio to sign a document, copy of which is probably
the one appended to the second amended complaint; that Poncio signed it "relying
upon the statement of the plaintiff that the document was a permit for him to remain in
the premises in the event that defendant decided to sell the property to the plaintiff at
P20 a square meter" ; that on January 30, 1955, Mrs. Infante improved her offer and
he agreed to sell the land and its improvements to her for P3,535; that Poncio has not
lost "his mind," to sell his property, worth at least P4,000, for the paltry sum of
P1,177.48, the amount of his obligation to the Republic Savings Bank; and that
plaintiff’s action is barred by the Statute of Frauds. Poncio similarly set up a
counterclaim for damages.

As, the case came up for trial, on February 23, 1956, plaintiff introduced the testimony
of one Constancio Meonada, who said that he is janitor of the Sto. Domingo Church and
a high school, as well as auto-mechanic, graduate; that he has been and still is a
paying boarder in plaintiff’s house; that Poncio is his townmate, both being from
Mahatao, Batanes; that, after making a rough draft, based upon data furnished by
plaintiff, he typed Exhibit A, which is in the Batanes dialect; that, thereafter, Poncio
came to plaintiff’s house, where he was shown Exhibit A; that after the witness had
read its contents to Poncio and given him a copy thereof, Poncio signed Exhibit A and
so did the plaintiff; that Meonada likewise signed at the foot of Exhibit A, as attesting
witness; and that translated freely into English, Exhibit A, reads as follows: jgc:chanrobles.com.ph

"From this date, January 27, José Poncio may stay in this lot that I bought from him
until one year without payment. After that one year and he cannot find any place where
to transfer his house, he can also stay in this lot and he will pay according to
agreement." (t.s.n., p. 4.)

Then, taking the witness stand, plaintiff testified that she has known Poncio since
childhood, he being related to her mother; that Poncio’s lot adjoins her lot, in San Juan,
Rizal; that one day Poncio told her that he wanted to sell his property; that, after both
had agreed on its price, he said that his lot is mortgaged to the Republic Savings Bank;
and that, at noon time, on the same day, he came back stating that both would "go to
the bank to pay the balance in arrears." At this juncture, defense counsel moved to
strike out the statement of the witness, invoking, in support of the motion, the Statute
of Frauds. After an extended discussion, the parties agreed to submit memoranda and
the hearing was suspended. Later on, the lower court issued an order dismissing
plaintiff’s complaint, without costs, upon the ground that her cause of action is
unenforceable under the Statute of Frauds. The counterclaims were, also, dismissed.
Hence, this appeal by plaintiff.

We are of the opinion and so hold that the appeal is well taken. It is well settled in this
jurisdiction that the Statute of Frauds is applicable only to executory contracts
(Facturan v. Sabanal, 81 Phil., 512), not to contracts that are totally or partially
performed (Almirol, Et Al., v. Monserrat, 48 Phil., 67, 70; Robles v. Lizarraga
Hermanos, 50 Phil., 387; Diana v. 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 effect,
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 specific 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 sufficient 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 field 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 benefits 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 plaintiff if the defendant were
permitted to escape performance of his part of the oral agreement after he has
permitted the plaintiff 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 effect 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).

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.

Apart from the foregoing, there are in the case at bar several circumstances indicating
that plaintiff’s claim might not be entirely devoid of factual basis. Thus, for instance,
Poncio admitted in his answer that plaintiff had offered several times to purchase his
land.
Again, there is Exhibit A, as document signed by the defendant. It is in the Batanes
dialect, which, according to plaintiff’s uncontradicted evidence, is the one spoken by
Poncio, he being a native of said region. Exhibit A states that Poncio would stay in the
land sold by him to plaintiff for one year, from January 27, 1955, free of charge, and
that, if he cannot find a place where to transfer his house thereon, he may remain in
said lot under such terms as may be agreed upon. Incidentally, the allegation in
Poncio’s answer to the effect that he signed Exhibit A under the belief that it "was a
permit for him to remain in the premises in the event" that "he decided to sell the
property" to the plaintiff at P20 a sq. m." is, on its face, somewhat difficult to believe.
Indeed, if he had not decided as yet to sell the land to plaintiff, who, had never
increased her offer of P15 a square meter, there was no reason for Poncio to get said
permit from her. Upon the other hand, if plaintiff intended to mislead Poncio, she would
have caused Exhibit A to be drafted, probably in English, instead of taking the trouble
of seeing to it that it was written precisely in his native dialect, the Batanes. Moreover,
Poncio’s signature on Exhibit A suggests that he is neither illiterate nor so ignorant as
to sign a document without reading its contents, apart from the fact that Meonada had
read Exhibit A to him and given him a copy thereof, before he signed thereon,
according to Meonada’s uncontradicted testimony.

Babao v. Perez, 102 Phil 756

Plaintiff is the judicial  administrator  of  the estate of the late  Santiago
Babao while defendant Florencio Perez is the judicial  administrator of  the 
estate of the  late Celestina Perez.  The other defendants are purchasers and
actual owners  of portions  of the land  which  is  sought to be recovered in 
the present litigation.

The complaint alleges that Celestina Perez was in her lifetime the owner of
the parcel of land in question which was not registered either  under Act
496 or  under the Spanish  Mortgage Law; that sometime in 1924 when the
deceased  Santiago  Babao  married Maria  Cleofe  Perez, niece of  Celestina
Perez, the latter and the former entered into a verbal agreement whereby
Santiago  Babao bound himself to improve the land by levelling and
clearing all the forest trees standing thereon and planting in lieu thereof
coconuts,  rice, corn and  other crops  such as bananas and  bamboo trees, 
and  to  act  at the same time as administrator thereof during the lifetime of
Celestina Perez, all  expenses for labor and  materials  to be  at his  cost, in
consideration  of which Celestina in turn bound  herself to convey to
Santiago Babao or his  wife 1/2 of the  land, together with  all  the
improvements  thereon  upon her death; that pursuant  to said verbal 
agreement, Santiago Babao in 1924 left his job as administrator of  the
Liana Estate in San Juan, Batangas for which he was receiving a salary of
P150 a  month,  and started levelling and clearing the land having planted
in an area of 50 hectares  5,000 coconuts trees, and  rice and corn in
another area of 70 hectares,  leaving out only about 50 hectares
unimproved, all of which having been administered by him from 1924 to
1946; that for clearing and improving the portions of land above-
mentioned, he incurred expenses amounting to P7,400 which added to his
salary as administrator  from 1924 to 1946  at the rate of P150  a  month
amounting to P39,600, makes a total of P47,000; that in violation of the
aforesaid verbal agreement, Celestina  Perez, acting through. Leovigildo
Perez,  to whom she extended  a power of  attorney to sell, sold few days
before she died about 1271/2 hectares of 'the land in question in
consequence of which Santiago  Babao was deprived of the possession and
administration  thereof from 1945;  that  said  sales  were fictitious  and
were made in clear violation  of the oral agreement made between
Celestina  Perez  and Santiago Babao and as such the same are null and 
void; that Celestina Perez died on August 24, 1947 as a result of which
intestate proceedings were instituted  for the settlement of her estate and
one Florencio Perez was named as judicial administrator; that Santiago
Babao  died  on January 6, 1948 and as a consequence intestate 
proceedings were  instituted for the settlement of  his  estate and
Bienvenido Babao  was appointed judicial administrator; and that in the
event the estate of Santiago  Babao failed to recover the 1/2  portion of  the 
land herein litigated,  said  estate would  suffer an  irreparable damage of 
not less  than P366.700 representing fruits which it has failed to receive
during the last 20 years. 

That  the  alleged verbal agreement is one  which by its terms is not to  be 
performed within one year is  very apparent from  the allegations  of  the
complaint. Thus, it is therein alleged that  the agreement  was  allegedly
made in 1924 and by its terms Santiago  Babao bound himself  (1)  to
improve  all  the  156 hectares of forest lands by levelling  and clearing  all
the forest trees and planting thereon  coconuts,  rice, corn  and  other  crops
such as  bananas and bamboo trees,  and (2)  to act at the same time as
administrator of said land  and improvements during the  lifetime of 
Celestina Perez.  And in consideration of such undertaking-,  Celestina 
Perez "bound herself  to  give and deliver,  either  to Santiago Babao or his
wife Cleofe Perez, one-half  (1/2) of the  whole  area of said land  as
improved with all the improvements thereon "upon her death".   It  is also
alleged in the complaint that  Celestina  Perez  died on August 24,  1947, or 
23 years after the making of the alleged  agreement,  while Santiago  Babao
died  on January  6,  1948.   From the above terms, therefore, it is  not 
difficult to  see that the undertaking assumed  by Santiago  Babao which
was to clear, level and plant to coconut trees and other plants 156 hectares
of forest  land could not be accomplished in one year.  In fact, the alleged
improvements were supposedly accomplished during the lifetime of 
Celestina, which lasted over a period  of  28  years,  and even then not all 
was cleared and  planted but only a portion thereof.   Another part of  his 
undertaking is that he is to administer the land  during the  lifetime of 
Celestina, and  as we  have already said, her  death occurred 23 years after
the agreement.

But the trial court expressed the view that the statute does riot  apply
because it  assumed that Santiago  Babao fully  complied with his  part of
the oral contract between the parties,  and in its opinion "performance by
one party of his part of the contract takes the case out of the statute." Even
if this assumption were  correct, still  we find  one flaw  in  its  logic  which 
fully  nullifies it for it fails to consider that in order that a partial 
performance  of the contract may take the case out of the operation of the
statute,  it must  appear  clear that  the full  performance has been made by
one  party within  one  year,  as  otherwise the statute would apply.  Thus,
the rule on this point is well stated  in Corpus  Juris in the  following  wise: 
"Contracts which  by their terms are not to be performed within one year,
may be taken out of the statute through performance by one party  
thereto.  All  that  is required in such case is complete performance within
the year by one party, however many years may have to elapse before the 
agreement is performed by the other party.   But nothing less  than full
performance by one party will suffice, and it has been held that, if
anything remains to be done after the expiration of the  year besides the
mere payment of money, the statute will apply."1 (Italics supplied).  It- is
not therefore correct to  state that  Santiago  Babao has fully  complied 
with  his  part  within  the year  from the alleged contract in question.

"When, in  an oral contract  which, by its terms,  is not to be performed 

within  one year from the execution thereof, one  of the contracting: parties
has complied  within the year with the obligations imposed on him by said
contract, the other  party cannot avoid the fulfillment  of those incumbent
on him under the same  contract by invoking  the  statute  of frauds because
the latter  aims to  prevent and not  to protect fraud."  (Shoemaker  vs. La
Tondeña,  Inc. 68 Phil.,  2A.)

"The broad view is that the statute of Frauds applies  only to agreements

not to be performed on either side within a year from the making thereof.   
Agreements to be fully performed on one side within the  year are taken out
of the operation of the statute." (National Bank vs. Philippine Vegetable Oil
Co.,  49 Phil, 857, 858.)
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 the noted that this statute is one
based on  equity. It is  based  on equitable  estoppel or  estoppel  by
conduct. It operates only  under  certain  specified conditions and when
adequate relief at law is  unavailable  (49 Am.  Jur., Statute of Frauds, 
Section 422, p. 727).   And  one  of the requisites that need be present is that
the agreement relied on must be certain, definite,  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,  definite, 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
definiteness 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  specific
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  specific, performance where both the  equities and the statute
support the defendant's  case." (49 Am. Jur.,  p. 729.)

The alleged agreement is far from complying with the above requirement
for,  according to the complaint, Santiago Babao bound himself to convert
a  big parcel  of forest land of 156 hectares into a veritable farm planted to
coconuts, rice,  corn and other crops such  as bananas and bamboo trees
and to act as administrator of said farm during the  lifetime of Celestina
Perez;, while the latter in turn bound herself to give either to Santiago or
his wife 1/2  of the land as improved  with all the  improvements
thereon upon her death.  This agreement is indeed vague and ambiguous
for it does not specify how  many hectares was  to be  planted  to  coconuts,
how many to rice and corn,  and what portion to bananas and bamboo
trees.  And as counsel for appellants puts it, "as the alleged contract stands, 
if Santiago Babao should  plant one-half hectares to coconuts, one-half to 
rice, and another half hectare  to corn,  and the rest to bananas  and
bamboo trees, he  would be entitled to receive one-half of 156 hectares, or 
78 hectares, of land for his  services.  That certainly would  be unfair and
unheard of;  no  sane  property  owner  would enter into such contract.   It
costs much more time, money, and labor to plant coconut trees than to
plant bananas and bamboo trees; and it also costs less to convert forest
land to rice  and corn land than to convert  it into a  coconut plantation.  On
the part of Celestina  Perez, her promise is also incapable of execution. 
How  could  she give and deliver one-half of the  land upon  her death?"

Cabague v. Auxilio, 92 Phil 294

According to the Rules of Court parol evidence is not admissible to prove an

agreement made upon the consideration of marriage other than a mutual
promise to marry.

The complaint alleged, in short; (a) that defendants promised such

marriage to plaintiffs, provided the latter would improve the defendants'
house in Basud and spend for the wedding feast and the needs of the bride;
(b) that relying upon such promises plaintiffs made the improvement and
spent P700; and (c) that without cause defendants refused to honor their
pledged word.
The defendants moved to dismiss, arguing that the contract was oral,
unenforceable under the rule of evidence hereinbefore mentioned.

It should be observed preliminarily that, under the former rules of

procedure, when the complaint did not state whether the contract sued on
was in writing or not, the statute of frauds could be no ground for
demurrer. Under the new Rules "defendant may now present a motion to
dismiss on the ground that the contract was not in writing, even if such fact
is not apparent on the face of the complaint. 

For breach of that mutual promise to marry, Geronimo may sue Socorro for
damages. This is such action, and evidence of such mutual promise is
admissible.[2] However Felipe Cabague's action may not prosper, because it
is to enforce an agreement in consideration of marriage. Evidently as to
Felipe Cabague and Matias Auxilio this action could not be maintained on
the theory of "mutual promise to marry".[3] Neither may it be regarded as
action by Felipe against Socorro "on a mutual promise to marry."

Yuvienco v. Dacuycuy, 104 SCRA 668

RTC: Our first task then is to dwell on the issue of whether or not in the light of the foregoing
circumstances, the complaint in controversy states sufficiently a cause of action. This issue
necessarily entails the determination of whether or not the plaintiffs have alleged facts adequately
showing the existence of a perfected contract of sale between herein petitioners and the occupant
represented by respondent Yao King Ong.

In the instant case, We can lay aside, for the moment, petitioners' contention that the letter of July
12, 1978 of Atty. Pedro C. Gamboa to respondents Yao King Ong and his companions constitute an
offer that is "certain", although the petitioners claim that it was a mere expression of willingness to
sell the subject property and not a direct offer of sale to said respondents. What We consider as
more important and truly decisive is what is the correct juridical significance of the telegram of
respondents instructing Atty. Gamboa to "proceed to Tacloban to negotiate details." We underline
the word "negotiate" advisedly because to Our mind it is the key word that negates and makes it
legally impossible for Us to hold that respondents' acceptance of petitioners' offer, assuming that it
was a "certain" offer indeed, was the "absolute" one that Article 1319 above-quoted requires.

Respondents now maintain that what the telegram refers to as "details" to be "negotiated" are mere
"accidental elements", not the essential elements of the contract. They even invite attention to the
fact that they have alleged in their complaint (Par. 6) that it was as early as "in the month of October,
1977 (that) negotiations between plaintiffs and defendants for the purchase and sale (in question) —
were made, thus resulting to offers of same defendants and counter-offer of plaintiffs". But to Our
mind such alleged facts precisely indicate the failure of any meeting of the minds of the parties, and
it is only from the letter and telegrams above-quoted that one can determine whether or not such
meeting of the minds did materialize. 

For anyone to read in the telegram of Yao that they accepted the price of P6,500,000.00 would be
an inference not necessarily warranted by the words "we agree to buy" and "proceed Tacloban to
negotiate details"

But the foregoing conclusion is not enough to carry the day for respondents. It only brings Us to the
question of whether or not the claim for specific performance of respondents is enforceable under
the Statute of Frauds. In this respect, We man, view the situation at hand from two angles, namely,
(1) that the allegations contained in paragraphs 8 to 12 of respondents' complaint should be taken
together with the documents already aforementioned and (2) that the said allegations constitute a
separate and distinct cause of action. We hold that either way We view the situation, the conclusion
is inescapable e that the claim of respondents that petitioners have unjustifiably refused to proceed
with the sale to them of the property v in question is unenforceable under the Statute of Frauds.

It is nowhere alleged in said paragraphs 8 to 12 of the complaint that there is any writing or
memorandum, much less a duly signed agreement to the effect that the price of P6,500,000 fixed by
petitioners for the real property herein involved was agreed to be paid not in cash but in installments
as alleged by respondents. The only documented indication of the non-wholly-cash payment extant
in the record is that stipulated in Annexes 9 and 10 above-referred to, the deeds already signed by
the petitioners and taken to Tacloban by Atty. Gamboa for the signatures of the respondents. In
other words, the 90-day term for the balance of P4.5 M insisted upon by respondents choices not
appear in any note, writing or memorandum signed by either the petitioners or any of them, not even
by Atty. Gamboa. Hence, looking at the pose of respondents that there was a perfected agreement
of purchase and sale between them and petitioners under which they would pay in installments of
P2 M down and P4.5 M within ninety 90) days afterwards it is evident that such oral contract
involving the "sale of real property" comes squarely under the Statute of Frauds (Article 1403, No.
2(e), Civil Code.)

RULING:

The foregoing disquisition of respondent judge misses at least two (2) juridical substantive aspects
of the Statute of Frauds insofar as sale of real property is concerned. First, His Honor assumed that
the requirement of perfection of such kind of contract under Article 1475 of the Civil Code which
provides that "(t)he 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", the Statute would no longer apply as
long as the total price or consideration is mentioned in some note or memorandum and there is no
need of any indication of the manner in which such total price is to be paid.

We cannot agree. In the reality of the economic world and the exacting demands of business
interests monetary in character, payment on installments or staggered payment of the total price is
entirely a different matter from cash payment, considering the unpredictable trends in the sudden
fluctuation of the rate of interest. In other words, it is indisputable that the value of money - varies
from day to day, hence the indispensability of providing in any sale of the terms of payment when not
expressly or impliedly intended to be in cash.

Thus, We hold that in any sale of real property on installments, the Statute of Frauds read together
with the perfection requirements of Article 1475 of the Civil Code must be understood and applied in
the sense that the idea of payment on installments must be in the requisite of a note or
memorandum therein contemplated. Stated otherwise, the inessential elements" mentioned in the
case of Parades vs. Espino, 22 SCRA 1000, relied upon by respondent judge must be deemed to
include the requirement just discussed when it comes to installment sales. There is nothing in the
monograph re — the Statute of Frauds appearing in 21 SCRA 250 also cited by His Honor indicative
of any contrary view to this ruling of Ours, for the essence and thrust of the said monograph refers
only to the form of the note or memorandum which would comply with the Statute, and no doubt,
while such note or memorandum need not be in one single document or writing and it can be in just
sufficiently implicit tenor, imperatively the separate notes must, when put together', contain all the
requisites of a perfected contract of sale. To put it the other way, under the Statute of Frauds, the
contents of the note or memorandum, whether in one writing or in separate ones merely indicative
for an adequate understanding of all the essential elements of the entire agreement, may be said to
be the contract itself, except as to the form.

Secondly, We are of the considered opinion that under the rules on proper pleading, the ruling of the
trial court that, even if the allegation of the existence of a sale of real property in a complaint is
challenged as barred from enforceability by the Statute of Frauds, the plaintiff may simply say there
are documents, notes or memoranda without either quoting them in or annexing them to the
complaint, as if holding an ace in the sleeves is not correct. To go directly to the point, for Us to
sanction such a procedure is to tolerate and even encourage undue delay in litigation, for the simple
reason that to await the stage of trial for the showing or presentation of the requisite documentary
proof when it already exists and is asked to be produced by the adverse party would amount to
unnecessarily postponing, with the concomitant waste of time and the prolongation of the
proceedings, something that can immediately be evidenced and thereby determinable with
decisiveness and precision by the court without further delay.
Clarin v. Rulona, 127 SCRA 512

1. CIVIL LAW; CONTRACTS; SALES; PERFECTION THEREOF, CASE AT BAR. — A

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. Such contract is binding in
whatever form it may have been entered into. Construing Exhibits A and B together, it
can be seen that the petitioner agreed to sell and the respondent agreed to buy a
definite object, that is, ten hectares of land which is part and parcel of Lot 20 PLD No.
4, owned in common by the petitioner and his sisters although the boundaries of the
ten hectares would be delineated at a later date. The parties also agreed on a definite
price which is P2,500.00. Exhibit B further shows that the petitioner has received from
the respondent as initial payment, the amount of P800.00. Hence, it cannot be denied
that there was a perfected contract of sale between the parties and that such contract
was already partially executed when the petitioner received the initial payment of
P800.00. The latter’s acceptance of the payment clearly showed his consent to the
contract thereby precluding him from rejecting its binding effect.

2. ID.; ID.; ID.; ID.; PARTIAL EXECUTION; EFFECTS. — With the contract being
partially executed, the same is no longer covered by the requirements of the Statute of
Frauds in order to be enforceable. Therefore, with the contract being valid and
enforceable, the petitioner cannot avoid his obligation by interposing that Exhibit A is
not a public document. On the contrary, under Article 1357 of the Civil Code, the
petitioner can even be compelled by the respondent to execute a public document to
embody their valid and enforceable contract.

Bisaya Land Transportation v. Sanchez, 153 SCRA 532

What then is the status of the Contracts which Receiver Amor entered into with Sanchez, without the
approval of the court which appointed him receiver? Even the petitioners noticeably waver as to the
exact status of these Contracts. The petitioners allege in their Memorandum 16 submitted to this Court
that they are void contracts under Article 1409(l) of the Civil Code, whereas, in their Petition, 17 they
labelled the contracts as unenforceable under Article 1403(l) of the Civil Code.

The determination, therefore, of whether the questioned contracts are void or merely unenforceable is
important, because of the settled distinction that a void and inexistent contract can not be ratified and
become enforceable, whereas an unenforceable contract may still be ratified and, thereafter, enforced.
The petitioners allege that the Contracts are void, citing Article 1409(l) of the Civil Code which provides
that contracts whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy, are inexistent and void from the beginning. In the case at bar, the contracts of agency
were entered into for the management and operation of BISTRANCO's business in Butuan City. Said
Contracts necessarily imposed obligations and liabilities on the contracting parties, thereby affecting the
disposition of the assets and business of the company under receivership. But a perusal of the Contracts
in question would show that there is nothing in their cause, object or purpose which renders them void.
The purpose of the Contracts was to create an agency for BISTRANCO with Marciano Sanchez as its
agent in Butuan City. Even as to the other provisions of the Contracts, there is nothing in their cause or
object which can be said as contrary to law, morals, good customs, public order or public policy so as to
render them void.
On the other hand, paragraph 1. Article 1403 of the Civil Code provides that contracts "entered into in
the name of another person by one who has been given no authority or legal representation, or who has
acted beyond his powers" are unenforceable, unless they are ratified.

In the case at bar, it is undisputed that Atty. Adolfo Amor was entrusted, as receiver, with the
administration of BISTRANCO and it business. But the act of entering into a contract is one which
requires the authorization of the court which appointed him receiver. Consequently, the questioned
Contracts can rightfully be classified as unenforceable for having been entered into by one who had
acted beyond his powers, due to Receiver Amor's failure to secure the court's approval of said
Contracts.

These unenforceable Contracts were nevertheless deemed ratified in the case at bar, based upon the
facts and circumstances on record which have led this Court to conclude that BISTRANCO had actually
ratified the questioned Contracts.

Benjamin G. Roa, as Executive Vice-President of BISTRANCO, still sent Sanchez three (3) separate letters
with the following contents: (3) reducing his passage commission from 10%, as he used to receive in the
previous years, to 7-1/2% "as stated in the agency contract dated 27 July 1976, 18 (2) advising Sanchez
that in view of "his failure to post a bond or such other securities acceptable to the company in the sum
of P5,000.00 pursuant to par. 8 of the Contract executed by Sanchez the plaintiff with BISTRANCO on 27
July 1976, we are recalling all unused passage tickets issued your agency" and reminding him (Sanchez)
also that "pursuant to par. 2 of aforementioned Contract, solicitation of cargo and passengers shall be
undertaken by you strictly in accordance with the scheduled rates of the Company; 19 and (3) informing
Sanchez that "we (petitioners) are abiding strictly with the terms of the contracts executed between
Marciano C Sanchez, and Atty. Adolfo V Amor in behalf of BISTRANCO, etc. etc. 20\

The three (3) letters of Benjamin G. Roa in effect recognized and gave efficacy to the Contracts in
question. 

Void or Inexistent

Clemente v. CA, Jalandoon, GR No. 175483, October 14, 2015

Hernandez v. CA, 160 SCRA 821
Rubias v. Batiller, 51 SCRA 120
Javier v. vda. De Cruz, 80 SCRA 343
Menil v. CA, 84 SCRA 413
Director of Lands v. Alba, 88 SCRA 513
Tongoy v. CA, 123 SCRA 99
Lita Enterprises v. IAC, 129 SCRA 79
Arsenal v. IAC, 143 SCRA 40
Manotok Realty v. IAC, 149 SCRA 372
Portugal v. IAC, 159 SCRA 178
Yanas v. Acaylar, 136 SCRA 52
Barsobia v. Cuenco, 113 SCRA 547
Godinez v. Fong, 120 SCRA 223
Yap v. Grageda, 121 SCRA 244
Pineda v. de la Rama, 121 SCRA 671