Deed of Sale Valid Between Parties Even If Not Notarized

THE ESTATE OF PEDRO C. GONZALES and HEIRS OF PEDRO C. GONZALES, Petitioners, vs. THE HEIRS OF MARCOS PEREZ,  Respondents (THIRD DIVISION, G.R. No. 169681, November 5, 2009, has provided that:

"On the question of whether the subject Deed of Sale is invalid on the ground that it does not appear in a public document, Article 1358 of the same Code enumerates the acts and contracts that should be embodied in a public document, to wit:

            Art. 1358. The following must appear in a public document:

(1)      Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by Articles 1403, No. 2 and 1405;

(2)   The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;

(3)   The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person; and

(4)  The cession of actions or rights proceeding from an act appearing in a public document.

            All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by Articles 1403, No. 2 and 1405.

          On the other hand, pertinent portions of Article 1403 of the Civil Code provide as follows:

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

x 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:

(a)       An agreement that by its terms is not to be performed within a year from the making thereof;

            x 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;  x x x x

          Under Article 1403(2), the sale of real property should be in writing and subscribed by the party charged for it to be enforceable. In the case before the Court, the Deed of Sale between Pedro and Marcos is in writing and subscribed by Pedro and his wife Francisca; hence, it is enforceable under the Statute of Frauds.

          However, not having been subscribed and sworn to before a notary public, the Deed of Sale is not a public document  and, therefore, does not comply with Article 1358 of the Civil Code.

          Nonetheless, it is a settled rule that the failure to observe the proper form prescribed by Article 1358 does not render the acts or contracts enumerated therein invalid. It has been uniformly held that the form required under the said Article is not essential to the validity or enforceability of the transaction, but merely for convenience. The Court agrees with the CA in holding that a sale of real property, though not consigned in a public instrument or formal writing, is, nevertheless, valid and binding among the parties, for the time-honored rule is that even a verbal contract of sale of real estate produces legal effects between the parties. Stated differently, although a conveyance of land is not made in a public document, it does not affect the validity of such conveyance. Article 1358 does not require the accomplishment of the acts or contracts in a public instrument in order to validate the act or contract but only to insure its efficacy."