### Facts:
This case originated from an action for specific performance and damages filed by respondents (Tito and Iluminada Dela Cruz) against petitioners (Marito Serna and Maria Fe Serna) concerning two parcels of land in Aramaywan, Quezon, Palawan. The respondents claimed they paid a total of P252,379.27 towards the purchase but when they attempted to pay the balance, the petitioners refused, aiming to sell the properties to others at a higher price. Despite respondents’ allegations of having an Agreement signed by the petitioners acknowledging the partial payments, the petitioners countered, arguing the deal was abandoned and that they attempted to return the payments which respondents refused.
The Regional Trial Court (RTC) ruled in favor of the respondents, directing the petitioners to accept the remaining balance, execute a Deed of Sale, and pay damages and attorney’s fees, on the basis that a contract of sale was made, with ownership thus passing to the respondents upon their partial payment and possession of the properties.
The Court of Appeals (CA) upheld the RTC’s decision, emphasizing the established execution of the Agreement and deeming the contract between the parties as a contract of sale partially executed, rendering the Statute of Frauds inapplicable.
### Issues:
1. Whether the genuineness and due execution of the Agreement were sufficiently established.
2. Whether the verbal contract of sale is barred by the Statute of Frauds.
### Court’s Decision:
The Supreme Court denied the petition, affirming the CA and RTC’s decisions. The Court elaborated that the genuineness and due execution of the Agreement were confirmed by petitions’ admissions and witness testimonies. The Court also resolved that the Statute of Frauds does not apply to this case because the contract had been partially executed through the acceptance of payment towards the purchase price. The contract was thereby taken out of the scope of the Statute. Additionally, the court found the award of damages and attorney’s fees appropriate, modifying it only to include legal interest.
### Doctrine:
– **Genuineness and Due Execution:** Judicial admissions are conclusive, saving the necessity for proof, and can only be contradicted by showing a palpable mistake.
– **Statute of Frauds:** The Statute of Frauds applies solely to executory contracts. Contracts partially executed through payment are not covered by the Statute, as they signify at least partial compliance or performance of the contractual terms.
– **Contractual Obligations and Bad Faith:** Refusing to fulfill a contract when partial performance has been undertaken by the other party constitutes bad faith, justifying the award of damages.
### Class Notes:
**Key Concepts:**
– **Genuineness and Due Execution:** An admission in court documents binds the party making it. A party cannot later deny such admissions without showing a mistake or that no admission was made.
– **Statute of Frauds (Article 1403, Civil Code):** Requires certain agreements to be in writing. However, contracts partially executed exit the scope of the Statute, emphasizing the significance of actions towards contractual fulfillment over mere formality.
– **Damages for Bad Faith:** Awarded when a party’s refusal to honor a contract constitutes dishonesty or purposeful neglect, especially when such refusal is motivated by the opportunity to gain from an alternative transaction.
**Statutes Cited:**
– Civil Code, Article 1403 (Statute of Frauds)
– Civil Code, Article 1356
– Rules of Court, Rule 132, Section 20 (Proof of private document)
– Civil Code, Article 1592 (Payment of price even after period)
### Historical Background:
The legal principles emphasized in this case connect to longstanding doctrines surrounding contract law, namely the importance of executing agreements in good faith and ensuring that contracts, once entered, are honored unless a legitimate and legal basis exists for their termination or rescission. The case restates the balance between formal requirements for contracts under the Statute of Frauds and the realities of partial performance altering the enforceability of oral agreements.
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