Verbal Sale of Land
I. The General Rule:
Requirement of a Written Contract for Sale of Land
The primary legal provision governing this matter is the Statute of Frauds, which is embodied in Article 1403, paragraph 2(e) of the Civil Code of the Philippines. This article states:
> "Art. 1403. The following contracts are unenforceable, unless they are ratified:
> ...
> (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 secondary evidence of its contents:
> ...
> (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;"
Under this provision, a contract for the sale of real property must be in writing to be enforceable by action. This means that if one party denies the existence of a verbal agreement for the sale of land, the other party cannot compel its enforcement in court solely based on oral testimony, unless certain exceptions apply. The purpose of the Statute of Frauds is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses.
II. The Exception: The Doctrine of Part Performance
The Supreme Court's decision, as highlighted in the news, reiterates a crucial exception to the Statute of Frauds: the Doctrine of Part Performance. While the Statute of Frauds makes certain contracts unenforceable if not in writing, it does not render them void. A verbal contract for the sale of land is therefore valid, but merely unenforceable by action. However, if the contract has been partially or fully executed, it is taken out of the ambit of the Statute of Frauds.
The news article correctly states the essence of this doctrine: "the sale is still considered valid even without a written contract if it has already been fully or partly carried out. In such cases, a verbal agreement can still be legally binding, and witnesses may be allowed to testify to prove that the sale happened."
III. Jurisprudence on the Doctrine of Part Performance
The Supreme Court has consistently applied the doctrine of part performance in various cases. The acts constituting part performance must be unequivocal and clearly indicate the existence of a contract of sale.
While the news article does not name the specific Supreme Court case, its description aligns with established jurisprudence. Here are some key principles from various Supreme Court decisions on the matter:
* Acts Constituting Part Performance: The SC has recognized various acts as evidence of part performance, including:
* Taking possession of the land: As mentioned in the news article, "taking possession of the land and making improvements on it are 'strong signs that a verbal sale had already taken place.'" This is a very common indicator.
* Making improvements on the property: Significant improvements made by the buyer on the land are strong evidence that a sale, albeit verbal, has transpired.
* Payment of the purchase price, or a substantial portion thereof: While the article notes that payments to an unauthorized person were ineffective for the payment itself, the act of making payments, especially coupled with possession, generally points to an existing agreement.
* Delivery of the title: The news article specifically highlights that Ocampo "had already received the land title," which is a very strong indicator of a consummated or partially executed sale.
* Basis of the Doctrine: The doctrine of part performance is based on the principle that it would be a fraud upon the buyer if, after performing acts in reliance on the verbal agreement, the seller were allowed to invoke the Statute of Frauds to renege on the agreement. It prevents the Statute of Frauds from becoming an instrument of fraud itself.
* Proof of Verbal Agreement: Once part performance is established, parol evidence (oral testimony) becomes admissible to prove the existence and terms of the verbal agreement. This is why the SC stated that "witnesses may be allowed to testify to prove that the sale happened."
* Consequences of Part Performance: If part performance is proven, the verbal contract of sale is taken out of the Statute of Frauds, and it becomes fully enforceable. The court can then compel the parties to execute the necessary documents to formalize the sale.
IV. Key Points
* Validity of Verbal Sale Despite Statute of Frauds: While the Civil Code (Article 1403, 2(e)) requires a sale of land to be in writing to be enforceable in court, a verbal sale is still considered valid even without a written contract if it has been fully or partly carried out.
* Part Performance as an Exception: The performance of acts indicating an actual transaction takes the verbal agreement outside the coverage of the Statute of Frauds, making it legally binding and enforceable.
* Specific Acts Constituting Part Performance: Taking possession of the land and making improvements on it are strong indicators that a verbal sale has already occurred. The article also mentions the buyer receiving the land title.
* Admissibility of Parol Evidence: Once part performance is shown, witnesses may be allowed to testify to prove that the verbal sale happened.
* Obligation to Pay Remaining Balance: Despite the validity of the verbal sale due to part performance, the buyer is still obligated to pay the remaining balance of the purchase price, with interest, to the rightful heirs if the previous payments were made to an unauthorized person. This highlights that the validation of the verbal sale by part performance pertains to its existence and enforceability, not necessarily the fulfillment of all financial obligations if not properly rendered.
The Statute of Frauds is intended to prevent fraud. It should not be used as a shield for those seeking to evade their legitimate obligations after a contract has been substantially performed.
Generated by Gemini AI app, June 27, 2025.
News:
SC: Verbal sale of land valid under certain circumstances
By Benjamin Pulta
June 27, 2025, 5:31 pm
Philippine News Agency
https://www.pna.gov.ph/articles/1253085
