Case Summary (G.R. No. L-8334)
Facts
Celestina Perez owned an unregistered 156-hectare parcel. In 1924 she purportedly entered a verbal agreement with her nephew by marriage, Santiago Babao, whereby he would clear, level, plant coconuts, rice, corn, bananas, and bamboo, and administer the land during her lifetime at his expense. In consideration, Celestina bound herself to convey one-half of the improved estate to Santiago or his wife upon her death. Between 1924 and 1946, Santiago allegedly expended ₱7,400 on improvements and forewent P39,600 in salary to administer the land. Shortly before her death in 1947, Celestina, by power of attorney, sold approximately 127.5 hectares, which Santiago claimed was in violation of their oral agreement and thus fictitious. Celestina died August 24, 1947; Santiago died January 6, 1948. Bienvenido Babao, as administrator, filed suit seeking conveyance of one-half of the parcel, annulment of the intermediate sales as void under the oral agreement, and alternatively, ₱47,000 in reimbursement.
Procedural History
Trial Court: Found the oral agreement enforceable by reason of part performance, annulled the sales, and ordered conveyance of half the parcel plus damages.
Court of Appeals: Reversed in toto for lack of jurisdiction (amount in controversy exceeded ₱50,000) but thereafter transmitted the records to the Supreme Court.
Issue
Whether the alleged oral agreement for improvement and eventual conveyance of real property falls within the Statute of Frauds, rendering it unenforceable by parol evidence despite claimed part performance.
Applicable Law
– 1935 Civil Code of the Philippines (Statute of Frauds formerly §21, Rule 123, Rules of Court; now Art. 1403 Civil Code)
• Contracts not to be performed within one year
• Agreements for the sale of real property or interests therein
– Equity principles on part performance and estoppel by conduct
Analysis
Statute of Frauds Scope
The oral agreement required performance over Celestina’s lifetime (23 years) and conferred an interest in land, thus falling squarely under clauses (a) and (e) of the Statute of Frauds.Part Performance Exception
While part performance can remove a contract from the statute if one party fully performs within one year, here the alleged improvements and administration extended far beyond a year, and full performance within a year did not occur.Certainty and Definiteness
Equity will enforce an oral contract only if its terms and subject matter are certain and unequivocal. The agreement’s terms—allocation of planting areas, sp
Case Syllabus (G.R. No. L-8334)
Background and Parties
- Plaintiff-Appellee: Judicial Administrator of the estate of the late Santiago Babao
- Defendant-Appellant: Judicial Administrator of the estate of the late Celestina Perez
- Other Defendants: Purchasers and record owners of portions of the 156-hectare parcel
Facts of the Alleged Oral Agreement
- Celestina Perez owned a 156-hectare forest land in San Juan, Batangas (unregistered)
- In 1924, she and Santiago Babao allegedly made a verbal contract:
• Babao to clear, level, and plant the land (coconuts, rice, corn, bananas, bamboo) at his own expense
• Babao to administer the property during Celestina’s lifetime
• Celestina to convey one-half of the land with improvements to Babao (or his wife) upon her death - Babao resigned a P150-per-month administrator’s post to execute the improvements:
• 50 ha planted to about 5,000 coconut trees
• 70 ha planted to rice and corn
• 50 ha remained unimproved - From 1924 to 1946, Babao administered the land, incurring P7,400 in clearing costs and foregoing P39,600 in salary (total P47,000)
- Shortly before her death (Aug. 24, 1947), Celestina, via power of attorney to Leovigildo Perez, sold 127½ ha to third parties
- Santiago Babao died Jan. 6, 1948; intestate proceedings ensued for both estates
Claims of Plaintiff-Appellee
- Specific performance: conveyance of one-half (78 ha) of the parcel with improvements
- Annulment of the purportedly fictitious sales as null and void
- Alternative recovery: P47,000 for out-of-pocket expenses and lost salary
- Recovery of accrued fruits and profits (estimated at not less than P366,700 for 20 years)
Defenses of the Appellants
- Denial of any binding oral agreement regarding improvements or future conveyance
- Land was largely cleared and cultivated prior to 1924 under