Case Digest on Obligations and Contracts: Statute of Frauds - San Miguel Properties, Inc. v. BF Homes, Inc. G.R. No. 169343

San Miguel Properties, Inc. v. BF Homes, Inc.

G.R. No. 169343, [August 5, 2015]

Facts:

BF homes (BF) and San Miguel Properties Inc. (SMPI) entered three successive Deeds of Absolute Sale whereby the latter sold to the former a total of 130 Italia lots. SMPI completed payments of the 130 lots but only 110 of out of the 130 transfer of certificate of titles were delivered to SMPI. After demand which was unheeded, SMPI filed a complaint for specific performance with damages with the HLURB. In its answer, BF claims that Orendain was not authorized to enter into the Deed of Absolute Sale and that the Deeds of Absolute Sale were not notarized and were undated.

Issue: Whether the Deeds of Absolute Sale are unenforceable for failure to comply with the Statute of Frauds

Ruling: The Deeds are enforceable. The contracts of sale of the 130 Italia II lots between BF Homes and SMPI were reduced into writing into the three Deeds of Absolute Sale which were signed by the representatives of the two corporations. The only defect was that the Deeds were not notarized and, therefore, were not public documents as required by Article 1358(1) of the Civil Code. The requirement of a public document in Article 1358 is not for the validity of the instrument but for its efficacy. Although a conveyance of land is not made in a public document, it does not affect the validity of such conveyance.

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

The Statute of Frauds is applicable only to contracts which are executory and not to those which have been consummated either totally or partially. If a contract has been totally or partially performed, the exclusion of parole 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. This rule, however, is predicated on the fact of ratification of the contract within the meaning of Article 1405 of the Civil Code either (1) by failure to object to the presentation of oral evidence to prove the same, or (2) by the acceptance of benefits under them.

The Deeds are already in writing and signed by the parties, and only lack notarization, a formality which SMPI could compel BF Homes to comply with. As private documents, the Deeds are still binding between the parties and the conveyance of the 130 Italia II lots by BF Homes to SMPI by virtue of said Deeds is valid. And second, the Deeds were already ratified as BF Homes had accepted the benefits from said contracts when it received full payment from SMPI of the purchase price for the 130 Italia II lots. The Deeds were also substantially performed considering that BF Homes had previously delivered to SMPI the TCTs for 110 out of the 130 lots, only refusing to deliver the TCTs for the remaining 20 lots.