Serna v. Dela Cruz
REITERATIONFacts
The Antecedents: Respondents filed an action for specific performance and damages against petitioners, alleging that they paid P252,379.27 as partial payment for two parcels of land owned by petitioners. An Agreement was executed on November 9, 1998, acknowledging the partial payments and stating a balance of P47,621.00. Respondents claimed that when they tendered the balance, petitioners refused to accept it, intending to sell the properties to others for a higher price. Petitioners admitted a previous agreement to sell but claimed it was abandoned due to respondents' failure to pay the balance on agreed dates. They also claimed they intended to return the money received. Procedural History: The Regional Trial Court (RTC) ruled in favor of respondents, ordering petitioners to accept the balance, execute a Deed of Absolute Sale, and pay damages and attorney's fees. The Court of Appeals (CA) affirmed the RTC Decision in toto. The CA found the Agreement genuine and due to execution, not subject to the Statute of Frauds due to partial execution, and sustained the award for damages due to petitioners' bad faith. The Petition: Petitioners seek to reverse the CA Decision, arguing that respondents failed to establish their cause of action through the purported Agreement, that the Agreement is unenforceable under the Statute of Frauds, and that the award of damages lacks basis.
Issue(s)
Whether the genuineness and due execution of the Agreement has been established. Whether a verbal contract of sale is barred by the Statute of Frauds. Whether the award of damages and attorney's fees is proper.
Ruling
The petition is denied. The Decision of the Court of Appeals is affirmed with modification, ordering that the award of moral and exemplary damages, and attorney's fees shall earn legal interest at the rate of six percent (6%) per annum from the finality of this Decision until full satisfaction.
Ratio Decidendi
On the genuineness and due execution of the Agreement: The Court held that the genuineness and due execution of the Agreement were established. Petitioners themselves judicially admitted the existence of the document in their Answer, which did not require further proof. The Agreement was further corroborated by the testimony of the witness, Nelson Cordero, who saw it executed in the presence of both parties. The requirements for proving a private document under Rule 132, Section 20 of the Rules of Court were met, specifically by evidence of anyone who saw the document executed. Petitioners' counter-arguments focused on respondents' failure to pay the balance, implicitly acknowledging the Agreement's existence and their obligation under it. On whether a verbal contract of sale is barred by the Statute of Frauds: The Court ruled that the Statute of Frauds does not apply in this case. The Statute, found in Article 1403(2) of the Civil Code, requires certain contracts to be in writing to be enforceable. However, it only applies to executory contracts, meaning those where no performance has yet been made. In this case, the contract was partially executed as respondents had paid a substantial portion of the purchase price, and petitioners had received these payments. Article 1356 of the Civil Code states that contracts are obligatory in whatever form they are entered into, provided the essential requisites are present. Furthermore, Article 1405 provides that contracts infringing the Statute of Frauds are ratified by acceptance of benefits, which occurred when petitioners received the partial payments. On the award of damages and attorney's fees: The Court found the award of damages and attorney's fees to be proper. The issue of damages is a factual one, and the Court generally defers to the findings of the lower courts when supported by substantial evidence. Petitioners acted in bad faith by refusing to accept the balance of the purchase price despite a valid contract of sale and substantial partial payment. This refusal was motivated by the desire to sell the properties to another buyer for a higher price. Such conduct constitutes a breach of a known duty due to some motive or interest, partaking of the nature of fraud, which warrants the award of moral damages and attorney's fees. Even if respondents had delayed payment, petitioners' proper recourse would have been to legally rescind the contract, not to unilaterally refuse payment.
Main Doctrine
A verbal contract of sale, even if it involves real property, is enforceable if it has been partially performed, as the Statute of Frauds applies only to executory contracts. Furthermore, judicial admissions made by a party in their pleadings are binding and do not require further proof.