On the legal effect of an unwritten sale of land
“A verbal contract isn’t worth the paper it’s written on,” said American producer Samuel Goldwyn. But, as the Supreme Court has discussed in Ocampo v. Batara-Sapad, an unwritten contract on the sale of land may still validly bind its parties.
In this case, Marcos Batara, who owned the disputed land, died. He was survived by his children, respondents Noblesa Batara-Sapad and Ernesto Batara, who, at the time of his death, were not aware of this ownership.
Real property arrearages
Decades later, Noblesa received a written directive from the local city treasurer’s office to settle the real property arrearages on the disputed lot. She then investigated the matter and discovered that her cousin, petitioner Benedicto Ocampo, had been occupying the disputed lot.
According to Benedicto, he had purchased the lot from Marcos, his uncle, though he could not produce written proof of this sale.
Consequently, Noblesa asked Benedicto to pay the purchase price himself or sell the lot to third parties so they could divide the proceeds thereon. Benedicto agreed to pay a certain amount. Nevertheless, he eventually failed to so pay, despite Noblesa’s demands.
Aggrieved, Noblesa filed against Benedicto and his wife, petitioner Daisy Garcia-Ocampo, an action for recovery of possession of the disputed lot before the Municipal Trial Court in Cities (MTCC).
Benedicto and Daisy countered that they started possessing the lot after buying it from Marcos. Benedicto then supposedly paid the purchase price in installments, though upon Marcos’ death, he then remitted the rest of his payments to Marcelo Batara, Marcos’ brother.
He admitted, however, that this sale was not evidenced by any written document since Marcos and Marcelo had died before they could prepare the necessary instruments.
Thus, to support his claim, he presented the owner’s copy of the title to the lot allegedly given to him by Marcos, as well as receipts on his real property tax payments.
MTCC ruling
The MTCC ruled in favor of Noblesa and Ernesto, directing Benedicto and Daisy to vacate the lot and surrender the owner’s copy of the said title. In so doing, it held that, among others, the sale to Benedicto did not have effect for being undocumented and unregistered.
Upon appeal, the Regional Trial Court and Court of Appeals affirmed the MTCC’s findings. Benedicto and Daisy then appealed these findings before the Supreme Court.
Here, Benedicto and Daisy argued that Noblesa and Ernesto had impliedly ratified the verbal sale of the lot when they did not object to the payments made as testified by the witnesses before the MTCC.
Meanwhile, Noblesa and Ernesto claimed that the sale was unenforceable for being unwritten, thus supposedly rendering inadmissible the supporting testimonial evidence presented by Benedicto and Daisy.
SC decision
The Supreme Court reversed and set aside the Court of Appeals’ decision. In so doing, it cited relevant Civil Code provisions to the effect that contracts for the sale of real property must be made in a public document and subscribed by the parties charged or their representatives, both of which are usually done through a notarial act.
Contracts failing to comply with these requirements cannot, among others, be enforced by court action.
But, they shall remain valid since the purpose of these requirements is to ensure their efficacy—that is, after the existence of the contract has been admitted, the contracting party may be compelled to execute the corresponding document.
Moreover, the scope of these requirements is limited to enforcing an unwritten contract and thus, does not apply to a contract that has been partially or completely implemented, such as taking possession of the lot and making improvements thereon, in the case of an oral sale thereof.
In this case, the Supreme Court has admitted in evidence the testimonies of Benedicto and his witnesses regarding the circumstances of the verbal sale of the disputed lot.
Based on these testimonies, a sale has clearly occurred—that is, Marcos has transferred ownership of the lot to Benedicto and Daisy by delivery, as defined by law.
Nevertheless, Benedicto and Daisy’s payments to Marcelo were ineffective since he was not established to have been authorized to receive them upon Marcos’ death. Instead, they should have remitted their payments to Noblesa and Ernesto, as Marcos’ heirs, upon turning 18, or the legal age.
