Verbal contract is binding when executed

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Persida Acosta

Persida Acosta

Dear PAO,
My friend and I had a verbal agreement regarding the renovation of his house in Mandaluyong City. We stipulated that I will shoulder all the expenses and materials of the construction, then my friend will just refund me the cost of renovation. He seemed to be evading me after I told him that the project was already finished and the cost amounted to P124,000.00. Can I collect from him even if I do not have a written agreement to support my claim?     
John

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Dear John,
You can collect from your friend even in the absence of any written agreement to support your claim. A contract was perfected from the moment both of you agreed as to the renovation of his house. Under Article 1305 of the Civil Code of the Philippines, a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.

Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present (Article 1356, Ibid). The following are the requisites of a contract:

Consent of the contracting parties;

Object certain which is the subject of the contract; and

Cause of the obligation which is established (Article 1318, Id.).

The contract that you entered into should have been in writing to be enforced as required under the Statute of Frauds (Article 1403 (2), Id.), however, this will not apply if the contract is already executed like the one in your case. This finds support from the pronouncement of the Supreme Court in the case of Ordua et al., vs Fuentebella et al. (G.R. No. 176841, June 29, 2010):

Foremost of these is that the Statute of Frauds expressed in Article 1403, par. (2), of the Civil Code applies only to executory contracts, i.e., those where no performance has yet been made. Stated a bit differently, 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.

You need to send a demand letter to your friend for the payment of P124,000.00. In case of non-payment, you can initiate a collection of sum of money before the Municipal Trial Court designated as Small Claims Court where you or your friend resides, since the amount you intend to collect does not exceed P200,000.00 (Section 2, 2016 Revised Rules of Procedure for Small Claims Cases (A.M. No. 08-8-7-SC)).

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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