> Statue of
Frauds
Verbal or oral contracts are as good as written contracts. This is
because a contract, as defined by law, is perfected by the mere
meeting of the minds of the parties. Contracts, in fact, are
obligatory regardless of the form they may have been entered into,
provided all the requirements for their validity – consent, object
and cause – are present.
Notwithstanding this rule, there are still contracts that need to
be in writing, not for the purpose of making them valid, but for
the purpose of enforcing them. This is where the statute of frauds
comes in.
Nature and Purpose
Statute of frauds refers to the rule that require certain classes
of contracts to be in writing in order for them to be enforceable.
It does not make the contract that is not reduced into writing
invalid but merely makes an action for specific performance
ineffective.
The contract which is subject to the statue of frauds remains
valid as to the parties but whether or not a party therein could
be compelled to perform his undertaking as stipulated, if he later
on refuses to go through with it, is a different matter.
The purpose, then, of the statute of frauds is to prevent fraud
and perjury in the enforcement of obligations depending for their
evidence upon the unassisted memory of witnesses by requiring
certain enumerated contracts and transactions to be evidenced by a
writing signed by the party to be charged (PNB vs. Phil. Vegetable
Oil Co., 49 Phil. 897)
Contracts subject to the statute of frauds
Article 1403, paragraph 2 specifies the contracts that are
unenforceable in action unless a note of the same be in writing
and subscribed by the party being obliged to perform his end in
the contract. These are: (1) an agreement that is to be performed
after one year from its making; (2) a promise to pay for the debt
of another; (3) an agreement made in consideration of marriage
except a mutual promise to marry; (4) an agreement for the sale of
goods at a price of five hundred pesos and above; (5) an agreement
to lease involving a period of more than one year or an agreement
for the sale of real property or an interest therein; and (6) a
representation that a third person is with a good credit.
It is noteworthy that all the enumerated contracts subject to the
statute of frauds are all executory contracts. In other words,
none of them has been performed yet. The statute of frauds, then,
will not apply if the contract is partially or completely
executed.
Consequences
According, if a contract is subject to the statute of frauds, the
same can only be enforced if a note or a memorandum thereof is in
writing and signed by the party being required to perform his
undertaking therein. Unless this evidence is produced, such
contract, although valid between the parties, is unenforceable.
