LINA MONTILLA vs COURT OF APPEALS and EMILIO ARAGON, JR.

G.R. No. L-47968 May 9, 1988

FACTS:

Herein defendant files an action against petitioner for failing to comply with the latters obligation to sell a piece of land located in Poblacion, Iloilo City in accordance to the parties verbal contract.

The price of the said lot as stipulated is P57,650.00 (at the rate of P50.00 per square meter), with the condition that Aragon constructed on the lot a house of strong materials and paid a nominal monthly rental in the meantime, to which was complied with by Aragon.

In her answer Montilla categorically denied ever having entered into such an agreement, and set up the affirmative defenses of (1) unenforceability of the alleged agreement under the Statute of Frauds; and (2) failure of the complaint to state a cause of action, no allegation having been made therein of any consideration for the promise to sell distinct and separate from the price, as required by Article 1479 of the Civil Code.

Trial Court rendered judgment in favor of Aragon, on the grounds that Montilla admitted her acceptance of the verbal contract.

ISSUE:

Whether or not a verbal contract was established? If in the affirmative, whether or not the contract was unenforceable because violative of the Statute of Frauds and because not supported by any consideration distinct from the price.

HELD:

NO.

For while those defenses (by Montilla) imply an acceptance by the pleader of the truth of the agreement at which the defenses are directed, the acceptance is at best hypothetical, assumed only for purposes of determining the validity of the defenses, but cannot in any sense be taken as an unconditional and irretrievably binding factual admission. The import of the answer, couched in language that could not be made any plainer is that there was no verbal contract to sell ever agreed to by Montilla, but that, even assuming hypothetically, or for the sake of argument that there was, the agreement was unenforceable because in breach of the Statute of Frauds. It was therefore reversible error for the Trial Court to have burdened Montilla with an admission of the verbal contract to sell sued upon.

There being therefore no admission whatever on Montilla's part of the existence or ratification of the claimed contract to sell, and taking account of her disavowal in her pleadings and in her evidence of that contract, and necessarily of any fulfillment of the terms thereof, it is clear that the action for its enforcement should have been dismissed pursuant to the Statute of Frauds, in relation to Rule 16 of the Rules of Court.

The action is also dismissible upon another legal ground. Assuming arguendo veritability of the oral promise to sell by Montilla, the promise was nevertheless not binding upon her in view of the absence of any consideration therefor distinct from the stipulated price. This is the principle laid down by the second paragraph of Article 1479: "An accepted unilateral promise to .. sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price."