Case Digest on Obligations and Contracts: Statute of Frauds - Anthony Orduña et al. v. Eduardo Fuentebella, et al. G.R. No. 176841

Anthony Orduña et al. v. Eduardo Fuentebella, et al.

G.R. No. 176841, June 29, 2010

Facts:

Gabriel, Sr. sold the subject lot to petitioner Antonita Orduňa, payable in installment, but no formal deed was executed to document the sale. The installments were paid to Gabriel, Sr. and later to Gabriel, Jr. after the former’s death. Improvements were thereafter made by petitioner. Without the knowledge of petitioners, Gabriel, Jr. sold the property to Banta, who then sold the same to the Cids and ultimately it was ceded to respondent Fuentebella. Petitioner, after being demanded by Fuentebella to vacate the disputed land, then filed a Complaint for Annulment of Sale, Title, Reconveyance with damages with a prayer to acquire ownership over the subject lot upon payment of their remaining balance. The RTC dismissed the petition because the verbal sale was unenforceable under the Statute of Frauds. The CA affirmed this ruling.

Issue: Whether or not the sale of the subject lot by Gabriel, Jr. to Antonita is unenforceable under the Statute of Frauds.

Ruling:

No. The Statute of Frauds expressed in Article 1403, par. 2 of the Civil Code applies only to executory contracts, i.e. those where no performance has yet been made. Stated a bit differently, the legal consequence of non-compliance with the Statute does not come into play where the contract in question is completed, executed or partially consummated. The Statute of Frauds, in context, provides that a contract for the sale of real property or of an interest therein shall be unenforceable unless the sale or some note or memorandum thereof is in writing and subscribed by the party or his agent. However, where the verbal contract of sale has been partially executed through the partial payments made by one party duly received by the vendor, as in the present case, the contract is taken out of the scope of the Statute. A contract that infringes the Statute of Frauds is ratified by the acceptance of benefits under the contract. Evidently, Gabriel, Jr., as his father earlier, had benefited from the partial payments made by the petitioners. Thus, neither Gabriel Jr. nor the other respondents’ successive purchasers of subject lot could plausibly set up the Statute of Frauds to thwart petitioners’ efforts towards establishing their lawful right over the subject lot and removing any cloud in their title. As it were, petitioners need only to pay the outstanding balance of the purchase price and that would complete the execution of the oral sale.