G.R. No.

L-8334        December 28, 1957

BIENVENIDO BABAO, ETC., plaintiff-appellee,
vs.
FLORENCIO PEREZ, ETC., ET AL., defendants-appellants.
Ozaeta, Lichauco and Picazo for appellants.
Feria, Manglapuz and Associates for appellee.

FACTS OF THE CASE:

Celestina Perez was the owner of a parcel of land. In 1924, when Santiago Babao
married her niece Maria Cleofe, Babao and Celestina Perez entered into a verbal agreement
where Santiago bound himself to (1) improve the land by levelling and clearing all forest trees
and planting coconuts, rice, corn and other crops and (2) act as the administrator thereof during
the lifetime of Perez. In consideration of which, Perez bound herself to convey to Babao or his
wife ½ of the land together with all of its improvements upon her death. A few days before she
died, Perez sold 127 ½ hectares of the land depriving Babao of its possession and
administration.

When Santiago Babao died in 1948, Bienvenido Babao was appointed the judicial
administrator of his estate. He filed a case for the conveyance of the ½ portion of the land and
for the annulment of the sales of the portion having been made fictitiously and in the alternative,
for judgment in favor of Babao for P47,000, the useful and necessary expenses he incurred in
improving the land.

While the case was pending in the lower court, counsel for Perez filed a motion to
dismiss on the grounds that the alleged verbal agreement was unenforceable under the Statute
of Frauds. However, the trial court denied the motion because it appeared that Babao fully
complied with his part of the oral contract. The court held that the Statute of Frauds cannot be
invoked because the performance by one party of his part of the contract takes the case out of
the statute.

ISSUE:

W/N the verbal agreement falls within the prohibition of the Statute of Frauds, and is
therefore, unenforceable.

RULING:

YES. Art. 1403 NCC (formerly Sec. 21 of Rule 123, Rules of Court) provides as follows:

“In the following cases an agreement hereafter made shall be unenforceable by action,
unless the 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 a 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 leasing for a longer period than one year, or for the sale of real
property or of an interest therein;

The alleged verbal agreement is one which by its terms is not to be performed
within one year. The undertaking assumed by 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
Perez, over a period of 23 years and even then not all was cleared and planted but only a
portion thereof.

Contracts which by their terms are not to be performed within one year, may be taken
out of the statute through the performance by one party. All that is required in such case is
complete performance within one 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 part will suffice and if anything remains to be done after the
expiration of the year besides mere payment of money, the statute will apply. (Corpus Juris).
It is therefore not correct to state that Babao has fully complied with his part within the year from
the alleged contract.

Even assuming that the agreement is one of sale of real property of interest therein, it
cannot also be contended that the provision does not apply because there was part
performance. It must be noted that the statute is one based on equity and operates only under
certain specified conditions and when adequate relief at law is unavailable. One requisite is that
the agreement relied upon must be certain, definite, clear, unambiguous and unequivocal in
its terms before the statute may operate.

The verbal agreement is indeed vague and ambiguous for it does not specify how
many hectares was to be planted with coconuts, how many to rice and corn, etc. It is important
to specify because the costs would depend on what is being planted (planting coconuts cost
more than planting bananas, bamboos, converting forest land to rice and corn). On the part of
Perez, her promise is also incapable of execution. How could she give and deliver ½ of the land
upon her death? The agreement being vague and ambiguous, the doctrine of part performance
cannot be invoked to take the case out of the operation of the statute.

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