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[BIENVENIDO BABAO v. FLORENCIO PEREZ](https://www.lawyerly.ph/juris/view/c337c?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. L-8334, Dec 28, 1957 ]

BIENVENIDO BABAO v. FLORENCIO PEREZ +

DECISION

102 Phil. 756

[ G. R. No. L-8334, December 28, 1957 ]

BIENVENIDO BABAO, ETC., PLAINTIFF AND APPELLEE, VS. FLORENCIO PEREZ, ETC., ET AL., DEFENDANTS AND APPELLANTS.

D E C I S I O N

BAUTISTA ANGELO, J.:

This is an action to recover  one-half  (1/2) of a parcel of land  containing  an area of 156  hectares situated in San Juan, Batangas, plus the value of the produce gathered thereon from August, 1947  until actual  recovery  and in the alternative, to recover the sum of P47,000 representing reimbursement of  the amount  of useful and  necessary expenses incurred to clear and improve the aforesaid  land.

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.   Wherefore, plaintiff prayed for the conveyance of 1/2 portion of the land in question and for annulment of  the  sales of  the   portion  thereof for having been  made  fictitiously, and in the alternative, for judgment in plaintiff's favor for the  sum of P47,000 representing the amount of  useful and necessary expenses incurred by Santiago Babao in improving the land in line with the oral agreement.

Defendants denied plaintiff's claim that a verbal agreement was  entered into   between Celestina  Perez and Santiago Babao relative  to  the  clearing,  improving  and administering the land  belonging  to  the  former  having an  area of  156  hectares, as  well as the other claim that Santiago Babao  had  actually  cleared and improved a great portion thereof  at a cost of  around P7,400.  They  alleged that in 1924 and  for many  years  prior thereto, the land in question  had already been  cleared and cultivated for agricultural purposes with an exception of a portion of 50 hectares; that said land was cleared and cultivated due partly to the effort made by Celestina's  husband, Esteban de  Villa,  her overseers  and tenants,  and partly  to  the "trusco" system employed by them whereby persons were allowed to clear the  land and plant thereon and from the . harvest were compensated according to  a  graduated scale of division  varying  from year to year; that the  coconut trees, banana plants  and  bamboo trees now standing thereon were planted not  by Santiago Babao nor at his expense but by the  tenants  of the spouses Esteban de  Villa  and Celestina Perez  who were duly compensated according to the "trusco" system; that although Santiago Babao  and Maria Cleofe Perez were married in 1924,  the former did not have anything to  do with the land in question  for Esteban de Villa was then still living and actively managed the same with the help of his  overseer  and tenants until he died in 1930; that it  was only in. that year when Santiago  Babao began administering the land  in the capacity of a nephew of  Celestina until 1935 when Celestina,  disgusted with the conduct of Santiago, left the company of Santiago  and  his wife  and  went to live with her nephew Bernardo Perez  until her death in 1947;  that since then Celestina Perez prohibited Santiago from interfering with the administration  of the land  and  designated another person in  his place,  and for the work he  did from 1930 to 1935, he  was more than compensated because the proceeds  of the harvests  during  said years  were all  given to him and  his  wife and Celestina was given only what was barely  sufficient for her maintenance.

Defendants also alleged that the sales mads by Celestina Perez through her attorney-in-fact  Leovigildo Perez of several portions of  the land were not fictitious as alleged but  were made  with  full  knowledge  and  authority of Celestina who executed in favor of  Leovigildo  Perez a power of attorney under the  authority of a notary public in the  presence of  Santiago  Babao himself  who did not interpose any objection to the execution of said power of attorney  and,  therefore,  said  sales  are  real,  valid  and genuine,  having  been executed in accordance  with  law. Defendants  prayed  that the complaint be dismissed with costs, after  awarding to  them  moral  damages' in the amount that the court may deem proper  to  fix.

After hearing,  the  court rendered judgment  the  dispositive part  of  which reads:
"WHERFORE, judgment  is rendered in favor of the  plaintiff and against the defendants,
(1) Declaring  the sales of Lupang  Parang  by and between the defendants, fraudulent and fictitious, null and void;
(2) Ordering: defendant Florencio Perez as  administrator of the testate estate  of the deceased  Celestina Perez, to pay plaintiff the sum  of P3,786.66 annually from August 25, 1947 until delivery  of the land to the latter, with interest thereon at  the rate of 6 per cent  per annum from the date of the  filing of the complaint;
(3) Divesting the title of defendants over 1/2  of Lupang Parang both  in quantity and quality and vesting title thereover in plaintiff pursuant to  section  10 of Rule  39.  To carry out  this judgment, the Clerk of Court is hereby appointed representative of this Court to designate a disinterested surveyor for the necessary survey and division, the expenses  therefor to be defrayed  half  and half by plaintiff and Floreneio Peres;
(4) Ordering defendants to  surrender the possession of the half adjudicated and vested in favor of the plaintiff after the  same has been designated under  the  proceeding  paragraph; and
(5) To pay the costs."
Defendants in  due  time took the  case on appeal to the Court  of Appeals  where the  parties  submitted  their respective  briefs  within  the  reglementary   period,  and thereafter the court rendered judgment reversing in toto the  decision appealed from and dismissing the case without  pronouncement as  to  costs.  But when  its  attention was called, thru a  proper motion, that  that  court  acted without jurisdiction because the amount involved was more than P50,000, the court in  a resolution entered on August 14, 1954 set aside its decision and forwarded the case to us  to  have the case  remanded  to the Court  of Appeals proved futile.

While this case was pending in the lower court, counsel for appellants filed a motion to  dismiss on the  ground, among others, that the alleged verbal agreement between Santiago  Babao  and  Celestina  Perez  was  unenforceable under  the  Statute of  Frauds.  The trial  court denied this motion on the ground that it  appears from the complaint "that  Santiago fully  complied with  his  part  of  the oral contract between the parties  and that this is an action not only for specific  performance but also  for damages." Consequently,  the  court held  that the Statute of Frauds cannot be invoked  for  the reason that  "performance  by one party of his  part of the  contract takes the  case  out of the statute."  And pursuant to such  ruling, when  the case was tried on the merits, the  court  overruled all  objections  of counsel for appellants to the introduction  of  oral testimony to prove the alleged  verbal agreement. The important question then to be determined is whether or  not the alleged verbal agreement falls within the prohibition  of the Statute of  Frauds.

This statute, formerly incorporated as Section 21 of Rule 123 of our Rules of Court, is now found in Article 1403 of the new Civil Code, which provides, in so  far as pertinent to this  case, as follows:
"In  the following eases  an  agreement hereafter made shall be unenforceable by action  unless tile same,  or some note  or  memorandum thereof, be  in writing, and subscribed by the party charged, or by  his agent, evidence  therefore,  of. the agreement  cannot be received without  the writing, or secondary  evidence of  its contents;
"(a)  An  agreement  that by its terms  is not to be  performed within a year from the making thereof.

*             *           *         *          *            *             *

"(e)  An agreement * * * for the sale of real property or of an interest therein."
Appellants contend that the alleged verbal agreement falls under paragraphs  (a) and (e) above-quoted because the same may be considered as an agreement which by its terms, is not to be performed within one year from the making thereof,  or one  which  involves a  sale  of  real property or  of an interest  therein.  If  this  premise is correct, appellants  contend, then the trial court erred in allowing the introduction of parole  evidence to prove the alleged agreement over the vigorous objection of counsel for appellants.

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?"

The terms of the alleged contract would  appear more vague if we consider the testimony of Carlos Orense who claimed to have been present at the time the alleged agreement  was made  between  Celestina Perez  and Santiago Babao for apparently  the same does  not  run along the same  line as the one claimed by appellee.  This is what Orense said: "You,  Santiago, leave  the  Liana estate and attend to this lupang parang.  Have it cleared and planted to coconuts, for  that  land will  eventually  fall  in your hands" (as translated from Tagalog),  which runs counter with the  claim of  appellee.  The agreement  being  vague and ambiguous, the  doctrine of part  performance cannot therefore be Invoked to take this case out of the operation of the statute,
"Obviously, there can bo  no part performance  until there is  a definite and complete,  agreement between  the  parties.  In order to warrant  the specific enforcement of a parol  contract for the sale 6% land, on the ground of part performance, all the essential terms of the  contract must be established by competent proof, and shown to be definite, certain, clear, and unambiguous.

"And this  clearness  and  deiiniteness  must  extend  to  both the terms  and  the  subject-matter  of the contract.

"The rule that a court will  not  specifically  enforce  a  contract for the sale  of land  unless its terms have been  definitely understood  and  agreed  upon by  the parties,  and established  by the evidence, is especially applicable to  oral contracts sought to be en- forced  on the ground of part performance.  An oral contract, to be enforced on  this  ground,  must  at  least  have  that  degree of certainty  which  is required  o:f written  contracts  sought  to  bff specifically enforced.

"The parol  contract  must  be sufficiently clear and definite to render the precise acts which are to be performed thereunder clearly ascertainable.  Its terms must be so clear and complete as to allow no reasonable doubt  respecting its  enforcement according  to the understanding of the  parties."   (101 A,  L.  R., pp. 950-951)

"In  this  jurisdiction,  as in  the United  States,  the existence of an oral agreement  or understanding  such  as that  alleged in the complaint in  the case at bar  cannot be  maintained  on vague, uncertain, and indefinite  testimony, against the reasonable presumption that prudent  men who enter into such contracts will execute them in writing, and  comply  with the formalities prescribed by  law for the creation of  a valid  mortgage.   But  where  the  evidence  as to the existence  of such  an understanding  or agreement  is  clear, convincing, and  satisfactory, the same  broad  principles  of equity operate in  this jurisdiction  as in the United  States  to compel the parties to  live  up  to the terms of  their contract."   (Cuyugan vs. Santos, 34  Phil., 100, 101.)
There is another flaw that we find in  the decision of the court a  quo.  During the trial of  this case, counsel for appellants objected  the  admission  of  the  testimony  of plaintiff Bernardo Babao and that  of his  mother  Cleofe Perez as to  what  occurred between Celestina Perez and Santiago Babao with regard to  the agreement on  the ground  that their testimony was  prohibited  by  section 26(c) of Rule  123 of the Rules of Court.  This  rule prohibits parties or assignors of parties to a case, or persons in whose behalf a case is prosecuted, against an executor or  administrator of  a deceased  person  upon a  claim or testifying as to any matter  of  fact occurring before  the death of such deceased person.   But the trial court  over- ruled  the opposition  saying that said  rule did not apply where the complaint against the estate of  a deceased person alleges fraud, citing  the case of Ong  Chua  vs.  Carr,  53 Phil.,  980.   Here again the court is in error  because if in that case the witness was allowed to testify it was because the  existence of fraud was first established by  sufficient and competent evidence.  Here, however,  the  alleged fraud is predicated upon the  existence of the agreement  itself which violates the rule of petitio principii.  Evidently,  the fraud to exist must be established by evidence aliunde and not  by the same evidence which is  to sought to be prevented.  The infringement of the rule is evident.
'"* * * The reason for this rule is that 'if death has  closed  the lips of one party,  the policy of the law  is to close  the lips of  the other.'  Another reason  is that 'the temptation to falsehood  and concealment in such  cases  is  considered  too  great to  allow  the surviving party to testify  in his own behalf.'  Accordingly,  the jncompetency applies  whether  the deceased  died before or after the commencement of the action  against him,  if at the time  the testimony was  given  he was dead and cannot disprove it, since the reason  for the  prohibition, which is to  discourage perjury, exists in both instances."  (Moran, Comments on the  Rules of Court, Vol. 3, 1952 Ed., p, 234.)
Having reached  the conclusion that all the parol evidence  of appellee was submitted in violation of the Statute of Frauds, or of the rule which prohibits testimony against deceased persons, we find unnecessary to  discuss the other issues raised in appellants' brief.

Wherefore, the decision appealed from is reversed, and the case is dismissed,  with costs against appellee.

Paras, C.  J.,  Bengzon, Padilla, Reyes,  A.,  Labrador, Reyes,  J. B. L.,  and Endencia, JJ., concur.



1 This rule  was quoted with  approval by  our Supreme Court in the case of Shoemaker vs. La Tondeña, Inc., supra.

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