CARLOS M. CLET (SUBSTITUTED BY HIS HEIRS JOCELYN A. CLET, CHARLOTTE PORTIA CLET, JOSEF CARLOS CHINO CLET, AND JAN CARLOS CLET), SELVI M. CLET, ANNABEL M. CLET-CATABAY, LALEN M. …

Clet versus Clet-Solis

The Case

This is an ordinary appeal in an action for specific performance and damages. The plaintiffs, the heirs of Juanito Clet, sued Norma Clet-Solis, their uncle's niece, to compel her to execute a deed of sale over her hereditary share in a parcel of land in Alangilan, Batangas City, which she had acknowledged selling to Juanito in 1965. The case matters because it is a clean illustration of the Statute of Frauds at work: an oral sale of real property cannot be enforced by action, yet the Court holds that the seller ratified it through a sworn affidavit and by her silence while the buyers occupied the land. It also teaches the difference between a writing that is a memorandum of the contract and a writing that is proof of ratification.

Procedural History

The plaintiffs filed a complaint for specific performance and damages before the Regional Trial Court of Batangas City, Branch 3. After pre-trial and trial, the trial court rendered its decision holding the defendant liable to execute a deed of conveyance over one-half of her one-seventh hereditary share, and to pay twenty thousand pesos in attorney's fees plus costs. Both parties appealed, each filing a notice of appeal. The plaintiffs assigned as errors the trial court's findings that there was no contract of sale, that the transaction was a mere mortgage, that the unnotarized affidavit had no legal effect, and that the defendant was liable for only half of her share. The defendant assigned as her lone error the order requiring her to convey one-half of her share. The case reached the Supreme Court by ordinary appeal.

Facts

Sometime in 1965, Norma Clet-Solis, as the sole surviving heir of her deceased father Aniceto Clet, sold her right to whatever share she might be entitled to in the land of her paternal grandparents, Sancho and Florentina Melo, to her uncle Juanito Clet, for seven hundred pesos. The sale was never reduced to a written deed and was never registered, because niece and uncle trusted one another and saw no need for one. Norma later signed an undated and unnotarized affidavit attesting that she had made that sale.

Juanito died in January 2002. The lot was later subdivided, and the portion corresponding to Norma's share was placed under a transfer certificate of title issued in September 2002, with Norma appearing as a co-owner to the extent of one-seventh. When the plaintiffs demanded in writing that Norma execute the deed of sale, she refused. The plaintiffs then sued.

Norma's defense was that she had merely borrowed seven hundred pesos from Juanito thirty-five years earlier and was made to sign an affidavit without witnesses. She claimed she had offered to give one-half of her share in payment of the loan, and that she had told the Register of Deeds she was not selling her one-seventh share. At pre-trial, the parties stipulated on the due execution and contents of the affidavit, and that the defendants never sent any demand letter asking the plaintiffs to vacate the property.

Issues

• Whether or not there was a valid contract of sale between the defendant and Juanito, rather than a mere loan secured by mortgage.
• Whether or not the oral contract of sale is unenforceable under the Statute of Frauds.
• Whether or not the affidavit signed by the defendant may serve as a writing or memorandum of the oral contract.
• Whether or not the defendant ratified the oral contract, so that it may be enforced by action.
• Whether or not the defendant may be compelled to execute a deed of sale over her entire one-seventh share, and whether the award of attorney's fees should stand.

Applicable Provisions

Article 1358 of the Civil Code provides:

Article 1358. The following must appear in a public document: (1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by Article 1403, Number 2 and 1405.

This provision tells us that a sale of real property or of an interest in it is governed by the Statute of Frauds and by the rule on ratification.

Article 1403 of the Civil Code provides:

Article 1403. The following contracts are unenforceable, unless they are ratified: Number 2. Those that do not comply with the Statute of Frauds as set forth in this number. 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. (e) An agreement for the leasing for a longer period than a year, or for the sale of real property or of an interest therein.

This is the affirmative defense the defendant raised: the oral sale of an interest in real property cannot be enforced unless it is in writing and subscribed by the party charged.

Article 1405 of the Civil Code provides:

Article 1405. Contracts infringing the Statute of Frauds, referred to in Number 2 of Article 1403, are ratified by the failure to object to the presentation of oral evidence to prove the same, or by the acceptance of benefits under them.

This is the provision the Court uses to hold that the defendant ratified the oral sale.

Section 4 of Rule 129 of the Revised Rules on Evidence provides:

Section 4. Judicial admissions. An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof.

This supports the Court's reliance on the defendant's pre-trial stipulation on the due execution of the affidavit.

Ruling

On the first issue, the Court held that there was no competent evidence of a loan secured by mortgage. The defendant admitted there was no documentary evidence of the seven hundred peso loan, and her only evidence was her self-serving testimony. With no loan, there could be no accessory contract of mortgage. The Court likewise rejected the trial court's finding that she had sold one-half of her share, because her own evidence showed she merely offered to sell one-half and the plaintiffs refused, filing suit instead to compel a sale of her entire share. There was no meeting of the minds.

On the second issue, the Court held that the action was based on an oral contract of sale, and that it is unenforceable under the Statute of Frauds. The Court explained that the statute does not make the contract invalid; it only makes ineffective the action for specific performance.

On the third issue, the Court held that the affidavit was not a memorandum of the oral contract, because there was no showing that it was contemporaneous with the contract. The memorandum serves to assist the memory of the parties as to the details of an oral contract, and that function is not served if the writing is not contemporaneous.

On the fourth issue, the Court held that the affidavit was nonetheless competent proof of ratification. The defendant stipulated on its due execution at pre-trial, and judicial admissions bind the parties. She also testified that she voluntarily signed it, knowing its contents. Her failure to demand that the plaintiffs vacate the property, despite their possession, reinforced the existence of the sale and belied her claim of a mere loan.

On the fifth issue, the Court held that the refusal to execute the deed gave rise to an action for specific performance under Article 1357 of the Civil Code, and ordered the defendant to execute a deed of sale over her entire one-seventh share. The award of attorney's fees was deleted, because the trial court failed to state its factual and legal basis.

Doctrine

An oral sale of real property or of an interest in it is unenforceable by action under the Statute of Frauds, unless it is ratified. The Statute of Frauds does not invalidate the contract; it only bars the action for specific performance. A writing is a memorandum of the oral contract only if it is contemporaneous with it. A sworn affidavit executed long after the oral sale is not such a memorandum, but it may be proof of ratification, especially where its due execution is admitted at pre-trial and the seller accepted the benefits of the sale by allowing the buyer to possess the land without objection.

Disposition

The plaintiffs' appeal was granted and the defendant's appeal was denied. The trial court's decision was affirmed with modifications: the defendant was ordered to execute a deed of sale over her entire one-seventh share, and the award of twenty thousand pesos in attorney's fees was deleted.

Remember This

The single line to memorize: the Statute of Frauds bars the action, not the contract, and an oral sale of real property may be ratified by a sworn affidavit and by the seller's acceptance of benefits. Examiners use this case to test the distinction between a memorandum and a ratification, and the effect of a pre-trial stipulation on due execution.