In Averia v. Averia, the Supreme Court addressed the enforceability of verbal agreements for the sale of real property, especially in the context of familial transactions. The Court ruled that failure to object to the presentation of oral evidence regarding such agreements constitutes a waiver of the Statute of Frauds. This means that even without a written contract, a verbal agreement for the sale of land can be enforced if the parties do not object to testimony about it in court. This decision underscores the importance of timely raising objections in legal proceedings to protect one’s rights concerning property transactions.

Unspoken Deals: Can a Handshake Secure Real Estate Within Families?

The case revolves around a dispute among the children of Macaria Francisco regarding a property she owned. Macaria had six children from her first marriage, including Gregorio, Teresa, Domingo, Angel, Felipe, and Felimon. After being widowed, she remarried Roberto Romero, who left behind three residential lots. In an extrajudicial partition, Macaria received a property on Extremadura Street, Manila. Years later, her children Domingo, Angel, Felipe, and Felimon’s widow filed a complaint against Gregorio and Teresa for judicial partition of this property. Gregorio and Teresa claimed that Macaria had verbally sold half of the property to them in consideration of expenses they bore for her legal battles and care. Additionally, Gregorio asserted that Domingo had verbally sold his share of the property to him.

The trial court initially sided with Gregorio, finding that Macaria had indeed awarded him half the property and that Domingo had sold him his share. This determination relied heavily on testimonies presented by Gregorio and his witnesses. However, the Court of Appeals reversed this decision, holding that the alleged transfers violated the Statute of Frauds, which requires agreements for the sale of real property to be in writing. The appellate court emphasized that relying solely on oral evidence was erroneous, particularly since respondents had objected to such evidence. This led to the Supreme Court review, questioning whether the appellate court erred in finding that there was no valid sale and that parol evidence was inadmissible.

The Supreme Court disagreed with the Court of Appeals’ application of the Statute of Frauds. It noted that while the Statute of Frauds generally requires real property sales agreements to be in writing, this requirement is not absolute. The Court highlighted Article 1405 of the Civil Code, which states that contracts infringing the Statute of Frauds are ratified by the failure to object to the presentation of oral evidence or by accepting benefits under them. In this case, the testimonies of several witnesses corroborating the conveyances were not objected to by the respondents, thus effectively ratifying the verbal agreements. This aspect of the ruling underscores the critical role of procedural law in determining the enforceability of agreements, even those that might initially seem invalid due to lack of written documentation. The Court pointed out the crucial detail that only the testimony of Gregorio bearing on the verbal sale by Macaria was objected to by the respondents; thus, testimonies by petitioners’ witnesses Sylvanna Vergara Clutario and Flora Lazaro Rivera bearing on the same matter were not objected to by the respondents.

Building on this principle, the Supreme Court also reiterated that the Statute of Frauds applies only to executory contracts—those that have not yet been fully performed. In situations where there has been partial or total performance, as claimed by Gregorio, oral evidence becomes admissible to prove the terms of the agreement. Gregorio argued that full payment had been made and that he had continuously occupied the property, demonstrating complete execution of the contracts. The Court cited legal experts, emphasizing that while alleging partial performance is not enough, such performance can be proven by either documentary or oral evidence, which the trial court had appropriately considered. Here are the articles on which it ruled:

ARTICLE 1403. The following contracts are unenforceable, unless they are ratified:

x x x

(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:

x x x

(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;

Moreover, the Court placed significant weight on the testimony of Sylvanna Vergara Clutario, which supported the conveyance of half the property by Macaria to Gregorio. The Court noted that her testimony was particularly credible because it was against the interest of her mother, Teresa, who was also an heir of Macaria. Upholding the transfer would reduce the share of the other heirs, including Sylvanna’s mother, thereby lending more credence to her statements. The court also mentioned, that the trial court gave weight to Atty. Mario C. R. Domingo’s (who was Macaria’s counsel in Civil Case No. 79955) statement that Gregorio and his wife were the ones who paid for his attorney’s fees amounting to P16,000.00.

Furthermore, the Court addressed the sale of Domingo’s share to Gregorio. Even though Domingo denied having sold his interest, the Court found that the testimonies of Gregorio Averia, Jr., Veronica Averia, and Felimon Dagondon sufficiently established the transaction. The fact that these testimonies were not objected to during the trial further solidified their validity in the eyes of the Court. Therefore, the Supreme Court reversed the Court of Appeals’ decision, emphasizing that the contracts of sale were proven and executed, making them enforceable despite the lack of written documentation.

FAQs

What is the Statute of Frauds?	The Statute of Frauds is a legal principle requiring certain types of contracts, including those for the sale of real property, to be in writing to be enforceable.
When does the Statute of Frauds not apply?	The Statute of Frauds does not apply when there is a failure to object to the presentation of oral evidence regarding the contract or when the contract has been fully or partially performed.
What constitutes ratification of a verbal agreement under the Statute of Frauds?	Ratification occurs when a party fails to object to the presentation of oral evidence to prove the agreement or accepts benefits under the agreement.
Can oral evidence be used to prove a real property sale?	Yes, oral evidence can be used to prove a real property sale if there is no objection to its presentation or if the contract has been fully or partially performed.
What is the significance of partial or full performance in contracts?	Partial or full performance of a contract takes it outside the scope of the Statute of Frauds, making oral evidence admissible to prove the contract’s terms.
Who has the burden of proving partial performance?	The party alleging partial performance has the burden of proving it, either through documentary or oral evidence.
How did the Court view the witnesses’ testimonies in this case?	The Court found the testimonies of the petitioners’ witnesses credible, especially Sylvanna Vergara Clutario, whose testimony was against her own interest.
What was the final ruling of the Supreme Court?	The Supreme Court granted the petition, reversed the Court of Appeals’ decision, and remanded the case to the trial court for appropriate action.

The Supreme Court’s decision in Averia v. Averia provides crucial insights into the application of the Statute of Frauds in the Philippines, particularly concerning real property transactions within families. This ruling highlights the importance of raising timely objections in legal proceedings and acknowledges that verbal agreements can be enforced under certain circumstances, especially when there is partial or total performance or a failure to object to oral evidence. This case serves as a reminder of the complexities of contract law and the need for careful documentation to avoid potential disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Averia v. Averia, G.R. No. 141877, August 13, 2004