Case Summary (G.R. No. L-11311)
Places and Institutional Actors
Property: Lot I (and the segregated Lot I‑E and Lot I‑B) in Malate, Manila. Government/administrative actors: Rural Progress Administration (administered estate lands), Bureau of Lands (approved subdivision and segregation).
Key Dates and Transactional Events
Relevant factual dates (as alleged): plaintiff re-occupied property after the liberation of Manila; defendant later acquired title to Lot I; plaintiff caused survey and segregation at her expense; plaintiff paid monthly rental to defendant after defendant acquired title; in July 1954 plaintiff tendered the purchase price, which defendant refused. (The decision predates 1990; see Applicable Constitution.)
Applicable Law and Constitutional Basis
Primary statutory law invoked: the Statute of Frauds as embodied in Article 1403 of the Civil Code (oral contracts to sell real estate not enforceable) and procedural reference to Rule 123, Section 21 of the Rules of Court as cited below. Constitutional basis: the decision was rendered before 1990; therefore the applicable constitutional framework at the time is the 1935 Constitution.
Procedural Posture
Plaintiff filed a complaint seeking to compel specific performance of an oral agreement by defendant to sell a 55.60‑square‑meter portion of Lot I. Defendant moved to dismiss; the trial court granted the motion and dismissed the complaint on the ground that oral contracts for the sale of land are unenforceable under the Statute of Frauds. The appeal followed. On a motion to dismiss, the allegations of the complaint were treated as admitted for purposes of the ruling below.
Central Legal Issue
Whether the complaint’s allegations, taken as true on a motion to dismiss, described acts constituting partial performance sufficient to remove an oral contract for the sale of land from the operation of the Statute of Frauds, thereby making the contract enforceable.
Trial Court’s Reasoning and Error Identified
The trial court recognized the general rule that oral agreements for the sale of land are unenforceable and concluded that the plaintiff’s alleged acts (specifically the desistance from asserting title) did not constitute an essential part of an executory contract of sale. The trial court took the position that only payment of part of the purchase price (an "essential part") could qualify as partial performance to take the contract out of the Statute of Frauds. The appellate opinion rejects this narrow formulation as legally defective.
Appellate Court’s Analysis of Partial Performance Doctrine
The appellate court reviewed authorities (including quoted passages from American Jurisprudence reproduced in the record) recognizing that acts other than payment of price may constitute partial performance: continued possession, making substantial and permanent improvements, rendition of services, payment of taxes, relinquishment of rights, tender of payment (especially where improvements have been made), and surveying or subdivision where done pursuant to the agreement. The court emphasized that partial performance is to be assessed by reference to whether the acts relied upon unequivocally point to the existence of the alleged parol contract and whether denying enforcement would produce an unconscionable result or fraud upon the party who has relied upon the agreement.
Application of Law to Facts — Combination of Acts as Sufficient Partial Performance
The appellate court found that plaintiff’s allegations, taken together, described a combination of acts that amounted to partial performance: she (1) desisted from claiming Lot I in reliance on defendant’s promise; (2) continued possession (including expansion of a house over adjoining portion); (3) caused survey and segregation of the promised portion at her own expense pursuant to the agreement (resulting in Lot I‑E in the approved subdivision plan); (4) paid the monthly rental agreed upon after defendant acquired title; and (5) tendered the purchase price when the subdivision plan was approved, which defendant refused. The court held that although some of these acts, standing alone, might not suffice, their combination produced an unequivocal change in plaintiff’s position in reliance on the agreement and that it would be a fraud to allow defendant to deny the agreement now. Consequently, the Statute of Frauds did not bar enforcement.
Holding, Remedy, and Disposition
The appellate court reversed the trial
Case Syllabus (G.R. No. L-11311)
Citation and Procedural Title
- Reported at 103 Phil. 870, G.R. No. L-11311, decided May 28, 1958.
- Parties: Marta C. Ortega (Plaintiff and Appellant) v. Daniel Leonardo (Defendant and Appellee).
- Decision authored by Justice Bengzon; Paras, C.J., Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concurred.
Central Legal Issue
- Whether the Statute of Frauds (general rule precluding enforcement of oral contracts for the sale of land) bars enforcement of the parties’ oral agreement, or whether the plaintiff’s allegations of partial performance remove the case from the operation of the Statute of Frauds.
Relevant Legal Background (as presented in the decision)
- The well-known general rule: the Statute of Frauds precludes enforcement of oral contracts for the sale of land.
- There exists an exception for partially executed (partially performed) contracts.
- American Jurisprudence is cited at length regarding acts constituting part performance: possession, making of improvements, rendition of services, payment of taxes, relinquishment of rights, tender or offer of payment, payment of price combined with other acts, and surveying and similar acts when referable to the parol contract.
- Specific quoted points from American Jurisprudence included in the decision:
- Continued possession by a purchaser already in possession may, in a proper case, be referable to the parol contract of sale to constitute part performance, especially where making substantial, permanent, and valuable improvements.
- The making of valuable permanent improvements by the purchaser, in pursuance of the agreement and with the knowledge of the vendor, is a strong and often conclusive act of part performance.
- Possession plus making valuable and permanent improvements, referable exclusively to the contract, in reliance on the contract and with vendor knowledge or acquiescence, is part performance that can justify specific performance.
- A tender or offer of payment, declined by the vendor, may be equivalent to actual payment for determining part performance, particularly where the tender is by a purchaser who has made improvements.
- The doctrine that payment of the purchase price, without more, is generally insufficient as part performance.
- Relinquishment of rights or compromise of rights has likewise been held to constitute part performance.
Detailed Allegations of the Complaint (facts as alleged and admitted on motion to dismiss)
- Pre-war and until her house was destroyed during the liberation of the City of Manila, plaintiff occupied a parcel designated Lot I, Block 3, located at San Andres Street, Malate, Manila (hereinafter Lot I).
- After liberation, plaintiff re-occupied Lot I.
- When administration and disposition of Lot I (together with other lots in the Ana Sarmiento Estate) were assigned by the Government to the Rural Progress Administration (RPA), plaintiff asserted her right thereto as occupant for purposes of purchase.
- Defendant also asserted a similar right, alleging occupancy of a portion of the land subsequent to plaintiff’s occupancy.
- During the investigation of conflicting claims, defendant asked plaintiff to desist from pressing her claim and promised that if and when he succeeded in getting title to Lot I, he would sell to her a portion thereof with an area of 55.60 square meters (particularly described) at the rate of P25.00 per square meter.
- The defendant’s promise was conditioned: plaintiff was to pay for the surveying and subdivision of the Lot, and after defendant acquired title plaintiff could continue holding the lot as tenant by paying monthly rent of P10.00 until the portion was segregated and the purchase price fully paid.
- Plaintiff accepted defendant’s offer and desisted from further claiming Lot I.
- Defendant finally acquired title to Lot I.
- Relying upon their agreement, plaintiff caused the survey and segregation of the portion defendant had promised to sell, incurring expenses therefor; that portion is now designated Lot I-E in a duly prepared and approved subdivision plan.
- In remodeling her son’s house constructed on a lot adjoining Lot I, plaintiff extended it over said Lot I-B.
- After defendant acquired Lot I, plaintiff regularly paid him the monthly rental of P10.00.
- In July 1954, after the plans of subdivision and segregation had been approved by the Bureau of Lands, plaintiff tendered to defendant the purchase price which defendant refused to accept, without cause or reason.
- Additional factual notations in the record:
- The RPA administration/disposition appears to be in connection with purchase of landed estates for resale to occupants. [source footnote]
- The survey referred to was of about 234 square meters. [source footnote]
- An occupant of the landed estate has preference to buy. [source footnote]
- The survey was at plaintiff’s expense and pursuant to their agreement. [source footnote]
Lower Court’s Ruling and Reasoning (court of first instance)
- The trial court granted defendant’s motion to dismiss, applying the Statute of Frauds general rule that an oral agreement to sell land is not enforceable (citing Art. 1403, Civil Code; Section 21, Rule 123, Rules of Court).
- The court below acknowledged plaintiff’s argument that the contract was partially performed because plaintiff desisted from claiming the portion of Lot I due to defendant’s promise to transfer it after issuance of title to defendant.
- The trial court held that even if plaintiff desisted from claiming Lot I on de