ASG Law

Tag: Oral Contracts

  • Understanding Oral Contracts of Sale: Validity and Enforceability in Philippine Law

    Key Takeaway: Oral Contracts of Sale Can Be Valid and Enforceable Under Certain Conditions

    The Heirs of Anselma Godines v. Platon Demaymay and Matilde Demaymay, G.R. No. 230573, June 28, 2021

    Imagine purchasing your dream home, only to find out years later that the sale you thought was secure could be contested because it was not put in writing. This scenario is not just hypothetical; it’s a real concern in the realm of property law, as demonstrated in a recent Supreme Court case in the Philippines. The case of The Heirs of Anselma Godines versus Platon and Matilde Demaymay highlights the complexities and nuances of oral contracts of sale, a topic that can have profound implications for property owners and buyers alike.

    The crux of the case revolved around a piece of land in Masbate that Anselma Godines allegedly sold to the Demaymay spouses through an oral agreement. After Anselma’s death, her heirs contested the sale, arguing that the lack of a written contract rendered it invalid. The Supreme Court’s decision to uphold the oral sale as valid and enforceable sheds light on the legal principles governing such transactions.

    Legal Context: Understanding Oral Contracts and the Statute of Frauds

    In the Philippines, the validity of contracts, including those for the sale of real property, is governed by the Civil Code. Article 1305 defines a contract as a meeting of minds between two persons where one binds himself to give something or render some service. Importantly, Article 1356 states that contracts are obligatory in whatever form they may have been entered into, provided all essential requisites for their validity are present.

    However, the Statute of Frauds, found in Article 1403(2) of the Civil Code, requires that certain transactions, including sales of real property, must be in writing to be enforceable. This provision aims to prevent fraud and perjury by ensuring that significant transactions have a written record. Yet, the law does not render oral contracts void; rather, it makes them unenforceable by action unless they are partially or fully executed.

    For example, if a seller receives payment and hands over possession of the property based on an oral agreement, the contract may be considered executed and thus enforceable. This nuance is crucial for understanding the outcome of the Godines case and its implications for similar transactions.

    Case Breakdown: The Journey of Anselma Godines’ Heirs

    Anselma Godines, before her death in 1968, allegedly sold a parcel of land to the Demaymay spouses through an oral agreement. The spouses took possession of the land and paid the purchase price in installments, with the final payment allegedly confirmed by Anselma’s daughter, Alma, in 1970.

    Years later, Anselma’s heirs discovered that the land was tax-declared under Matilde Demaymay’s name and sought to reclaim it, arguing that the oral sale was unenforceable. The case traversed multiple courts, from the Municipal Circuit Trial Court (MCTC) to the Regional Trial Court (RTC), and finally to the Court of Appeals (CA).

    The MCTC initially ruled in favor of the heirs, declaring the oral sale unenforceable. However, the RTC and CA reversed this decision, recognizing the validity of the oral sale based on the partial and subsequent full execution of the contract.

    The Supreme Court upheld the CA’s decision, emphasizing that:

    “The Statute of Frauds is inapplicable in the present case as the verbal sale between Anselma and the spouses Demaymay had already been partially consummated when the former received the initial payment of P1,010.00 from the latter. In fact, the said sale was already totally executed upon receipt of the balance of P450.00.”

    The Court further noted:

    “Possession of the property and payment of real property taxes may serve as indicators that an oral sale of a piece of land has been performed or executed.”

    This ruling underscores the importance of execution in validating oral contracts of sale.

    Practical Implications: Navigating Oral Contracts of Sale

    The Godines case serves as a reminder that oral contracts can be valid and enforceable if they are executed. For property buyers and sellers, this means that taking possession and making payments can solidify an oral agreement, even without a written contract.

    However, to avoid potential disputes, it is advisable to document significant transactions in writing. For those who find themselves in similar situations, understanding the nuances of executed versus executory contracts can be crucial in defending their rights.

    Key Lessons:

    • Ensure that any oral agreement for the sale of property is followed by actions that demonstrate execution, such as payment and possession.
    • Be aware that the Statute of Frauds does not invalidate oral contracts but makes them unenforceable by action unless executed.
    • Consider documenting all significant transactions in writing to avoid future disputes.

    Frequently Asked Questions

    What is an oral contract of sale?

    An oral contract of sale is an agreement for the sale of property that is made verbally without being documented in writing.

    Are oral contracts of sale valid in the Philippines?

    Yes, oral contracts of sale can be valid if they meet all the essential requisites for their validity and are executed, meaning the buyer has taken possession and made payments.

    What is the Statute of Frauds?

    The Statute of Frauds requires certain transactions, like sales of real property, to be in writing to be enforceable. However, it does not render oral contracts void; it only makes them unenforceable by action unless executed.

    How can an oral contract of sale be enforced?

    An oral contract of sale can be enforced if it is partially or fully executed. This means the buyer has taken possession of the property and made payments as agreed.

    What should I do if I enter into an oral contract of sale?

    To ensure enforceability, take possession of the property and make payments as agreed. It is also advisable to document the agreement in writing to avoid future disputes.

    Can I challenge an oral contract of sale?

    Yes, you can challenge an oral contract of sale, but it may be upheld if it has been executed. Legal advice is recommended to navigate such situations.

    ASG Law specializes in property law and contract enforcement. Contact us or email hello@asglawpartners.com to schedule a consultation.

  • Unlocking the Secrets of Oral Contracts: How Partial Performance Can Override the Statute of Frauds

    The Power of Actions: How Partial Performance Can Validate Oral Contracts

    Estate of Valeriano C. Bueno and Genoveva I. Bueno, Represented by Valeriano I. Bueno, Jr. and Susan I. Bueno, Petitioners, vs. Estate of Atty. Eduardo M. Peralta, Sr. and Luz B. Peralta, Represented by Dr. Edgardo B. Peralta, Respondents., G.R. No. 205810, September 09, 2020

    Imagine a family who has lived in a house for decades, believing it to be theirs, only to face a legal battle over ownership. This scenario played out in a landmark Philippine Supreme Court case, where the validity of an oral contract for a property transfer was at the heart of the dispute. The case highlights the critical role of partial performance in upholding oral agreements, even when they fall under the Statute of Frauds.

    The central issue revolved around whether an oral agreement to transfer a property in exchange for legal services could be enforced. The Bueno family had allegedly promised a property to Atty. Eduardo Peralta, Sr., in lieu of his legal services. After years of occupation and improvements by Peralta’s family, the Bueno estate refused to formalize the transfer, leading to a legal showdown over the enforceability of their oral contract.

    The Legal Framework: Understanding the Statute of Frauds and Partial Performance

    The Statute of Frauds, as outlined in Article 1403(2) of the Philippine Civil Code, stipulates that certain contracts, including those for the sale of real property, must be in writing to be enforceable. This law aims to prevent fraud and perjury by requiring written evidence of agreements that could lead to disputes based on memory alone.

    However, the law also provides an exception for contracts that have been partially or fully performed. This principle is crucial because it acknowledges that actions can speak louder than words. When one party has acted upon the agreement, such as by paying for services or making improvements on a property, the contract may be taken out of the Statute of Frauds’ purview.

    For instance, if someone begins making significant improvements on a property based on an oral promise of ownership, these actions can be considered partial performance, thereby validating the oral contract. This exception is rooted in equity, ensuring that parties who have relied on oral agreements are not unfairly disadvantaged.

    The Journey of the Case: From Oral Promise to Supreme Court Ruling

    The case began with Atty. Eduardo Peralta, Sr., who was engaged by Valeriano Bueno, Sr., to provide legal services for his family and companies. In 1960, as partial payment for these services, Bueno allegedly gave Peralta a property in Manila. Peralta and his family moved into the property, making substantial improvements and paying the real property taxes, all with the understanding that the property was theirs.

    After Peralta’s death in 1983, his son, Dr. Edgardo Peralta, sought to formalize the property transfer. However, the Bueno family refused, leading to a lawsuit for specific performance. The case wound its way through the courts, with the Regional Trial Court initially dismissing the claim due to the Statute of Frauds. However, the Court of Appeals overturned this decision, recognizing the oral contract as enforceable due to partial performance.

    The Supreme Court ultimately affirmed the Court of Appeals’ decision, emphasizing that the oral agreement was ratified by the parties’ conduct over the years. The Court noted, “The oral contract between Bueno and Atty. Peralta is removed from the application of the Statute of Frauds with failure of the Estate of Bueno’s counsel to object to parol evidence of the contract.” Additionally, the Court highlighted that “the acceptance of benefits under them” further ratified the contract.

    The Supreme Court’s ruling was based on the evidence of partial performance, including Peralta’s continuous occupation of the property and the improvements made, which were seen as clear indicators of the contract’s validity.

    Navigating the Future: Practical Implications and Key Lessons

    This ruling sets a precedent that oral contracts for property transfers can be enforceable if there is clear evidence of partial performance. For property owners and businesses, this means that any oral agreements should be carefully documented, and any actions taken in reliance on such agreements should be well-documented to support claims of partial performance.

    Key Lessons:

    • Document oral agreements, even if they are not required by law, to avoid disputes.
    • Understand that actions taken in reliance on an oral contract can validate it, even under the Statute of Frauds.
    • Seek legal advice before making significant investments based on oral promises.

    Frequently Asked Questions

    What is the Statute of Frauds?
    The Statute of Frauds is a legal principle that requires certain contracts, like those involving real property, to be in writing to be enforceable.

    Can an oral contract be enforced in the Philippines?
    Yes, an oral contract can be enforced if it has been partially or fully performed, as evidenced by actions taken by the parties in reliance on the agreement.

    What constitutes partial performance?
    Partial performance includes actions like making improvements on a property or paying for services rendered, which are done in reliance on the oral agreement.

    How can I protect myself when entering into an oral agreement?
    Document any actions taken under the agreement and seek legal advice to ensure your interests are protected.

    What should I do if someone refuses to honor an oral agreement?
    Consult with a lawyer to assess whether there is evidence of partial performance that could support your claim in court.

    ASG Law specializes in property law and contract disputes. Contact us or email hello@asglawpartners.com to schedule a consultation and protect your rights.

  • Enforceability of Oral Contracts: Protecting Contractors’ Rights Through Quantum Meruit

    In Kabisig Real Wealth Dev., Inc. vs. Young Builders Corporation, the Supreme Court addressed the enforceability of contracts for construction services, even in the absence of a written agreement. The Court ruled that Kabisig Real Wealth Dev., Inc. was liable to Young Builders Corporation for the renovation work completed on its building, despite the lack of a formal written contract. This decision underscores the principle that contracts are binding regardless of their form, provided that the essential elements for validity are present, and it protects contractors by allowing recovery for services rendered based on the principle of quantum meruit.

    Building Without a Blueprint: Can a Contractor Recover for Unwritten Agreements?

    The case began when Kabisig Real Wealth Dev., Inc., through Fernando Tio, engaged Young Builders Corporation to renovate its building in Cebu City. Young Builders completed the renovation in September 2001 and billed Kabisig P4,123,320.95. Kabisig refused to pay, arguing there was no written contract and they were never informed of the estimated cost. Young Builders then filed a lawsuit to collect the sum of money owed for the services rendered. The central legal question was whether Kabisig was liable to Young Builders for the damages claimed, even without a written contract. This raised fundamental issues about contract law and the rights of contractors in the Philippines.

    The Regional Trial Court (RTC) of Cebu City ruled in favor of Young Builders, ordering Kabisig to pay P4,123,320.95, plus interest. The Court of Appeals (CA) affirmed the RTC’s decision but modified the award, deleting the actual damages and instead awarding temperate damages of P2,400,000.00. The appellate court reasoned that while Young Builders failed to provide sufficient proof of actual damages, they were still entitled to compensation for the completed work. Dissatisfied, Kabisig elevated the case to the Supreme Court, questioning its liability to Young Builders for the damages claimed.

    The Supreme Court, in its analysis, referenced Article 1318 of the Civil Code, which outlines the essential requisites for a valid contract: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. It emphasized that consent is crucial, as it is manifested by the meeting of the offer and the acceptance. Citing established jurisprudence, the Court noted that a contract is perfected at the moment there is a meeting of the minds upon the thing that is the object and upon the price.

    The Court found that Tio, acting on behalf of Kabisig, commissioned Young Builders to renovate the building. Despite Tio’s argument that the renovation was for the benefit of other partners, the documents related to the project were under the names of Kabisig and Tio. The Supreme Court emphasized that the absence of a written contract was not a valid defense, citing Article 1356 of the Civil Code:

    Art. 1356. Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present.

    The Court clarified that there is no legal requirement for a written contract for the agreement in question to be valid and enforceable. Furthermore, it noted that Kabisig did not object to the renovation work until the bill was due.

    Regarding the damages awarded, the Supreme Court concurred with the Court of Appeals’ reduction of the amount. It explained that actual or compensatory damages, as defined under Article 2199 of the Civil Code, are intended to compensate for loss or injury sustained. These damages can either be for loss already possessed (daño emergente) or failure to receive a benefit (lucro cesante). To recover actual damages, the injured party must prove the amount of loss with a reasonable degree of certainty, based on competent proof and the best evidence available.

    The Court found that Young Builders failed to submit competent proof of the specific amount of actual damages claimed. The documents presented lacked the names of Kabisig or Tio, their conformity, or any indication that the amounts reflected were directly related to the renovation project. Given the absence of sufficient proof of actual damages, the Supreme Court upheld the CA’s decision to award temperate damages. Temperate damages are awarded when the court finds that some pecuniary loss has been suffered, but its amount cannot be proved with certainty.

    In determining the compensation due to Young Builders, the Supreme Court invoked the principle of quantum meruit. This principle allows a contractor to recover the reasonable value of services rendered, even without a written contract. The Court emphasized that the measure of recovery under quantum meruit should relate to the reasonable value of the services performed. This principle prevents undue enrichment, based on the equitable idea that it is unjust for a person to retain a benefit without paying for it. The Court stated that this principle should only be applied if no express contract was entered into and no specific statutory provision was applicable.

    Regarding the interest rate, the Court modified the appellate court’s decision to align with prevailing jurisprudence. When an obligation to pay a sum of money is breached, the interest due should be that stipulated in writing. In the absence of a stipulation, the rate of interest shall be 12% per annum, later reduced to 6%, from the time of default, i.e., from judicial or extrajudicial demand, subject to Article 1169 of the Civil Code. The legal interest for a judgment awarding a sum of money shall be 6% per annum from the time the judgment becomes final and executory until its satisfaction.

    FAQs

    What was the key issue in this case? The key issue was whether Kabisig Real Wealth Dev., Inc. was liable to pay Young Builders Corporation for renovation services rendered, despite the absence of a written contract. The case centered on the enforceability of oral agreements and the right to compensation for services performed.
    What is the principle of quantum meruit? Quantum meruit is a legal principle that allows a party to recover the reasonable value of services rendered, even in the absence of an express contract. This principle is invoked to prevent unjust enrichment, ensuring that a party is compensated for the benefits they have conferred upon another.
    Are written contracts always required for construction agreements? No, written contracts are not always required for construction agreements to be valid and enforceable. Under Philippine law, contracts are obligatory in whatever form they may be, provided that all the essential requisites for their validity are present, as stated in Article 1356 of the Civil Code.
    What are temperate damages? Temperate damages are awarded when the court finds that some pecuniary loss has been suffered, but the amount of the loss cannot be proved with certainty. These damages are more than nominal but less than compensatory, providing a fair compensation when the exact amount of damages is difficult to determine.
    What evidence is needed to claim actual damages? To claim actual damages, the injured party must prove the actual amount of loss with a reasonable degree of certainty, based on competent proof and the best evidence available. This typically includes documents such as receipts, invoices, and other records that directly link the expenses to the project or service in question.
    What was the initial interest rate applied in this case, and how did it change? Initially, the interest rate was set at 12% per annum from the date of demand. However, the Supreme Court modified this, applying the 12% rate from the time of demand on September 11, 2001, to June 30, 2013, and then reducing it to 6% per annum from July 1, 2013, until full satisfaction, in accordance with Bangko Sentral ng Pilipinas Circular No. 799.
    Why was Kabisig held liable despite the claim that the renovation was for other parties? Kabisig was held liable because the documents pertaining to the renovation project were under the names of Kabisig and Fernando Tio. Additionally, the other parties who were allegedly the beneficiaries of the renovation were not impleaded in the case, making Kabisig directly responsible for the contractual obligations.
    What is the significance of Article 1318 of the Civil Code in this case? Article 1318 of the Civil Code is significant because it outlines the essential requisites for a valid contract: consent, object, and cause. The Supreme Court referenced this article to emphasize that for a contract to be valid, these elements must be present, highlighting the importance of consent in establishing contractual obligations.

    The Supreme Court’s decision in Kabisig Real Wealth Dev., Inc. vs. Young Builders Corporation reaffirms the principle that contracts are binding regardless of their form, provided that the essential elements for validity are present. It also underscores the importance of compensating contractors for services rendered, even in the absence of a written agreement, through the application of the principle of quantum meruit. This ruling provides clarity and protection for contractors, ensuring they receive fair compensation for their work, and reinforces the legal framework for contractual obligations in the Philippines.

    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: Kabisig Real Wealth Dev., Inc. vs. Young Builders Corporation, G.R. No. 212375, January 25, 2017

  • Oral Real Estate Sales: Enforceability Despite the Statute of Frauds

    The Supreme Court ruled that a verbal agreement for the sale of land is enforceable, despite the Statute of Frauds, if the buyer has made partial payments and taken possession of the property. This means that if a seller accepts payments and allows a buyer to occupy land under an oral agreement, the seller cannot later claim the agreement is invalid simply because it wasn’t written down. This decision protects buyers who have relied on the seller’s word and invested in the property.

    Can a Handshake Seal a Land Deal? Oral Contracts vs. Written Law

    The case of Anthony Orduña, Dennis Orduña, and Antonita Orduña vs. Eduardo J. Fuentebella, Marcos S. Cid, Benjamin F. Cid, Bernard G. Banta, and Armando Gabriel, Jr. revolves around a residential lot in Baguio City. Antonita Orduña made a verbal agreement with Armando Gabriel, Sr. to purchase the land, making partial payments over time. After Gabriel Sr.’s death, his son, Gabriel Jr., continued to accept payments. Despite this, Gabriel Jr. later sold the property to Bernard Banta, who then sold it to Marcos and Benjamin Cid, and finally to Eduardo Fuentebella. The Orduñas, already living on the land, sued to annul Fuentebella’s title, arguing their prior agreement should be honored. The core legal question is whether the verbal agreement, partially fulfilled, is enforceable against subsequent buyers who claim to be unaware of the prior deal.

    The lower courts sided with the subsequent buyers, asserting that the verbal agreement was unenforceable under the **Statute of Frauds**, which generally requires real estate sales to be in writing. However, the Supreme Court reversed these decisions, emphasizing an important exception. The Court underscored the principle that the Statute of Frauds applies primarily to executory contracts, not those that have been partially performed. In this instance, the Orduñas had not only made partial payments but had also taken possession of the property, building a home and paying property taxes.

    The Supreme Court cited Article 1403, par. (2) of the Civil Code, noting its inapplicability to partially executed contracts. This provision essentially states that certain agreements, including the sale of real property, must be in writing to be enforceable. However, the Court emphasized that this requirement is not absolute: “The legal consequence of non-compliance with the Statute does not come into play where the contract in question is completed, executed, or partially consummated.” Since the Orduñas had made partial payments and taken possession, the oral contract was deemed to have been partially executed, removing it from the Statute of Frauds’ purview.

    The rationale behind the Statute of Frauds is to prevent fraud and perjury by requiring written evidence of certain agreements. However, the Supreme Court recognized that this purpose would not be served by invalidating the Orduñas’ agreement, given the evidence of partial performance. The acceptance of benefits under the contract by Gabriel Jr., in the form of partial payments, further ratified the agreement. The court cited Article 1405 of the Civil Code, which states:

    Contracts infringing the Statute of Frauds, referred to in No. 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 principle highlights that actions speak louder than words. By accepting the payments, Gabriel Jr. effectively validated the oral agreement, preventing him (and subsequent buyers) from using the Statute of Frauds as a shield.

    Furthermore, the Court addressed the lower court’s concern about adequate consideration. The initial agreement stipulated a purchase price of PhP 125,000, with the Orduñas making partial payments towards this amount. The Supreme Court distinguished between incomplete payment and inadequacy of price, clarifying that the former is a potential ground for rescission, while the latter is generally not a basis for invalidating a sale unless it shocks the conscience. The fact that the Orduñas had agreed to pay a price significantly higher than what Gabriel Jr. later sold the property for suggested that the original agreement was indeed supported by adequate consideration.

    The Court then tackled the issue of prescription and whether the subsequent buyers were innocent purchasers for value. The respondents argued that the Orduñas’ claim was time-barred because they filed their complaint more than one year after Fuentebella obtained his title. However, the Supreme Court clarified that the prescriptive period for reconveyance of fraudulently registered property is ten years from the date of title issuance if the claimant is not in possession. If the claimant is in possession, the action is imprescriptible.

    Because the Orduñas were in possession of the land, their claim was not subject to prescription. As the Supreme Court stated:

    The prescriptive period for the reconveyance of fraudulently registered real property is 10 years, reckoned from the date of the issuance of the certificate of title, if the plaintiff is not in possession, but imprescriptible if he is in possession of the property.

    This ruling is crucial because it protects the rights of those who have been in long-term possession of land, even if their ownership is not formally documented.

    Finally, the Court examined whether Banta, the Cids, and Fuentebella could be considered innocent purchasers for value. An innocent purchaser for value is someone who buys property without notice of another person’s right or interest and pays a fair price. However, the Supreme Court found that these subsequent buyers failed to exercise due diligence. The fact that the Orduñas were in possession of the property should have alerted them to inquire about the nature of their possession. The Court referenced the legal principle that a buyer of land in the possession of someone other than the seller must investigate the rights of the possessor.

    When a man proposes to buy or deal with realty, his duty is to read the public manuscript, i.e., to look and see who is there upon it and what his rights are. A want of caution and diligence which an honest man of ordinary prudence is accustomed to exercise in making purchases is, in contemplation of law, a want of good faith. The buyer who has failed to know or discover that the land sold to him is in adverse possession of another is a buyer in bad faith.

    The failure to investigate the Orduñas’ possession meant that the subsequent buyers could not claim the status of innocent purchasers for value. This lack of good faith also negated any claim they might have had under Article 1544 of the Civil Code, which governs double sales of immovable property.

    In conclusion, the Supreme Court reversed the lower courts’ decisions, recognizing Antonita Orduña’s right of ownership over the land. The Register of Deeds was ordered to cancel Fuentebella’s title and issue a new one in Gabriel Jr.’s name, with an annotation recognizing the conditional sale to Orduña. Upon full payment of the remaining balance, Gabriel Jr. was ordered to execute a deed of absolute sale transferring the title to Orduña.

    FAQs

    What was the key issue in this case? The key issue was whether an oral agreement for the sale of land, partially performed through payments and possession, is enforceable despite the Statute of Frauds. The court ultimately ruled that partial performance takes the agreement outside the scope of the Statute.
    What is the Statute of Frauds? The Statute of Frauds requires certain contracts, including real estate sales, to be in writing to be enforceable. This is meant to prevent fraudulent claims based on verbal agreements.
    When does the Statute of Frauds NOT apply? The Statute of Frauds does not apply when a contract has been partially performed. This typically involves the buyer making payments and taking possession of the property with the seller’s consent.
    What is an ‘innocent purchaser for value’? An innocent purchaser for value is someone who buys property without knowledge of any other claims or interests and pays a fair price. They are generally protected by law.
    Why weren’t the subsequent buyers considered ‘innocent purchasers’? The subsequent buyers were not considered innocent purchasers because the Orduñas were in possession of the property. This possession should have alerted the buyers to inquire about the Orduñas’ rights.
    What is the prescriptive period for claiming fraudulently registered property? If the claimant is not in possession, the prescriptive period is ten years from the issuance of the title. However, if the claimant is in possession, the action is imprescriptible, meaning it can be brought at any time.
    What is ‘adequate consideration’ in a sale? Adequate consideration refers to the price agreed upon for the sale. It doesn’t have to be the fair market value, but it should not be so inadequate as to shock the conscience.
    What does ‘partial performance’ mean in contract law? Partial performance refers to actions taken by one party to fulfill their obligations under a contract, even if they haven’t completed all the terms. In real estate, this usually means making payments and taking possession.
    What was the outcome of the case? The Supreme Court ruled in favor of the Orduñas, recognizing their right of ownership. The subsequent buyer’s title was canceled, and the Orduñas were given the opportunity to complete the purchase by paying the remaining balance.

    This case illustrates the importance of documenting real estate transactions in writing. However, it also provides crucial protection for buyers who have relied on a seller’s word and invested in a property, even without a formal written contract.

    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: Orduña vs. Fuentebella, G.R. No. 176841, June 29, 2010