Validity, Proof, Default, Remedies, and Demand Letters

1) Big picture: oral agreements can be enforceable

In the Philippines, a contract is generally binding even if made verbally, so long as it has the essential requisites of a valid contract:

Consent (meeting of the minds: offer + acceptance)
Object (the service to be done, sufficiently determinate)
Cause/consideration (why each party binds itself—often payment for service)

For service arrangements (freelance work, repairs, construction tasks, professional services, deliveries tied to service, project-based work), there is no blanket rule that “it must be in writing.” Many enforceable service deals start as verbal agreements—especially when paired with partial payment, performance, and messages confirming terms.

What changes with a verbal contract is usually not validity, but proof and clarity of terms.

2) When writing matters: the Statute of Frauds and special-form contracts

Philippine law recognizes situations where certain agreements must be in writing to be enforceable (this is commonly discussed under the “Statute of Frauds” concept).

Key points in practice:

The Statute of Frauds applies to certain types of agreements (classically including some long-term arrangements or those not performable within a year, sales of real property, etc.).
Important practical rule: if there has already been partial performance or acceptance of benefits, courts often treat the agreement as taken out of the Statute of Frauds (so it may still be enforceable), because the law is aimed at preventing fraud, not enabling it.

For most everyday service contracts, enforceability is usually not blocked by form—but specific scenarios can trigger special-form requirements (for example, transactions involving real property rights, or agreements that by their nature fall under categories requiring writing).

3) Classifying the obligation: “to do” vs “to give”

Service contracts typically create an obligation to do (perform work, provide professional service, produce output). Some service arrangements also include obligations to give (deliverables, materials, equipment, or transfer of a thing).

Why this matters:

Delay (“default”) rules are framed around obligations.
Remedies differ depending on whether the obligation is to do, not do, or give.

For service deliverables (design files, reports, repaired items, constructed portions), the obligation is usually “to do” (produce/perform), even if something is eventually delivered.

4) Proving a verbal service contract: what evidence matters most

Because there is no single signed document to point to, disputes usually hinge on evidence showing:

There was an agreement, and
What the terms were (scope, price, timeline, milestones, revisions, acceptance criteria, penalties, etc.)

Commonly useful evidence in Philippine disputes:

A. Communications

Text messages, chat logs (Messenger/Viber/WhatsApp), emails
Voice notes (if authentic and legally obtained)
Screenshots (best paired with device/metadata context and witness testimony)

B. Payment trail

Bank transfers, e-wallet records, deposit slips
Official receipts, acknowledgments, invoice requests
Proof of downpayment or progress billing

C. Performance indicators

Drafts, work-in-progress files, submission emails
Site photos (for repair/construction work)
Delivery attempts, courier records
Client feedback and revision instructions

D. Witnesses

People present during negotiations
Staff who coordinated, accepted, or supervised work
Anyone who heard admissions like “I’ll finish by Friday” or “I received the downpayment”

E. Electronic evidence framework Philippine rules generally allow electronic data messages and electronic documents as evidence, subject to authentication and reliability requirements. Practically: the more you can show chain of communication, consistency, and corroboration (payments + messages + work product), the stronger the claim.

5) Delayed delivery in service contracts: when delay becomes legal default

“Delay” in common speech is not always “delay” in the legal sense. Under Philippine civil law, default (mora) often requires a demand—but there are important exceptions.

A. When does default begin?

As a general rule, a party is considered in default only after demand is made by the other party—either:

Judicial demand (filing a case), or
Extrajudicial demand (a written demand letter, email demand, formal message)

B. When demand is not required

Demand may not be necessary in typical situations such as:

The obligation or the law expressly states no demand is needed, or
Time is of the essence—the date is a controlling motive and delay defeats the purpose (e.g., deliver a wedding video before the wedding date; provide event lights on event day; file a bid packet by a fixed deadline known to both), or
Demand would be useless (e.g., the other party has made performance impossible, explicitly refused, or has abandoned the project)

In real disputes, many demand letters emphasize that time was essential (or that the provider has already repudiated), to strengthen the case that default arose without repeated pleading.

C. Types of default that can appear in service disputes

Mora solvendi: delay by the party obliged to perform (service provider fails to deliver)
Mora accipiendi: delay by the party obliged to accept (client refuses to accept deliverables without valid reason, or fails to provide required inputs causing stoppage)
Compensatio morae: both parties in delay (often in messy projects—client doesn’t provide materials, provider doesn’t work; both contribute)

6) Common fact patterns in the Philippines (and how they’re analyzed)

Scenario 1: Provider misses deadline; client already paid

Typical legal posture:

Existence of reciprocal obligations (pay vs perform)
Client may demand completion, or treat breach as grounds for rescission plus damages (depending on gravity)

Scenario 2: No clear deadline was agreed verbally

Courts often look at:

Industry custom and reasonableness
Messages implying target dates
Whether deliverables were expected within a timeframe (e.g., “rush job,” “for next week’s event”)
Whether the client repeatedly followed up and the provider acknowledged timelines

If no specific date exists, the remedy may include fixing a reasonable period to perform and then demanding performance within that period.

Scenario 3: Client caused delay by not providing materials/instructions

Provider may argue:

No default because performance depended on client cooperation
Client is in mora accipiendi or otherwise at fault
Costs increased due to client’s delay; provider can claim damages if provable

Scenario 4: Output delivered but defective / not as agreed

This becomes a breach of the service standard rather than pure delay:

Demand correction/re-performance
Withhold final payment if contract supports milestone acceptance
Claim damages if defects caused loss
In some settings, argue substantial breach justifying rescission

7) Remedies for delayed delivery or non-performance (Philippine civil law toolbox)

Service disputes typically invoke a mix of these:

A. Specific performance (completion)

You can demand that the provider finish the work—especially if the service is still possible and useful.

Practical add-ons often demanded:

A final completion deadline (“deliver within 5 days”)
A cure period (time to fix deficiencies)
A statement that failure will trigger rescission and damages

B. Rescission / “resolution” of reciprocal obligations

For reciprocal obligations (common in paid services), a substantial breach can allow the injured party to rescind—meaning undo the contract and demand return of what was paid (often with damages).

Rescission is usually stronger when:

The breach is substantial (not trivial)
Delay defeats the purpose
Repeated promises were broken
Provider abandoned the job
Time was essential and missed

C. Damages (actual, moral, exemplary—depending on proof and circumstances)

Common civil damages in service-delay claims:

Actual/compensatory damages: proven expenses and losses caused by delay (replacement contractor cost, rebooking fees, event penalties, extra rentals, lost profits if provable with reasonable certainty)
Liquidated damages / penalty clause: if the parties agreed on a penalty (even verbally, but proof is key)
Interest: where money is to be returned or withheld improperly; applicable rates depend on legal standards and circumstances
Attorney’s fees: not automatic; must be justified by law, stipulation, or recognized grounds

Proof discipline matters: courts require reasonable proof—receipts, contracts with replacement suppliers, invoices, correspondence showing causal link.

D. Price reduction / set-off (compensation)

Where deliverables are late/defective but partially useful, parties sometimes resolve via:

Reduction of fee, or
Set-off (offsetting damages against remaining balance), if legal requirements for compensation are met and the amounts are liquidated/ascertainable or later established.

E. Cancellation with refund (practical remedy)

Many disputes are ultimately framed as:

Cancel service, demand refund of downpayment, plus consequential costs. This is essentially rescission + restitution, often demanded extrajudicially first.

F. Replacement performance / “cover” cost recovery

Client hires another provider due to delay; seeks to recover:

Difference in cost, and
Related expenses This is usually treated as actual damages if documented.

8) The demand requirement: why written demand letters matter

Because default often starts upon demand, a well-crafted demand letter is useful to:

Establish date of default
Trigger accrual of damages/interest (where applicable)
Show reasonableness and good faith
Create a paper trail for settlement and later litigation

In Philippine practice, demand letters also help in:

Barangay conciliation preparation
Small claims (when money recovery is straightforward)
Building evidence that the other party received clear notice

Best practice: send demand through multiple channels:

Email + chat + registered courier (or personal service with acknowledgment)
If using chat, request explicit acknowledgment (“Received”)

9) Demand letter strategy for delayed service deliverables

A strong demand typically answers five questions:

What was agreed? (scope, price, timeline, deliverables)
What happened? (missed deadlines, repeated assurances)
What do you want now?
- deliver by a final date OR refund by a final date
What is the consequence if they ignore it?
- rescission, damages, barangay/court action
How should they comply?
- payment channels, delivery format, turnover process

Tone: firm, factual, non-insulting. Avoid accusations that you can’t substantiate. Keep it readable.

10) Demand letter templates (Philippine context)

Template A: Demand to complete service + final deadline

DEMAND LETTER (FINAL NOTICE) Date: ___

To: ___ Address / Email / Contact: ___

Re: Demand to Perform and Deliver Output / Complete Services

Dear ___,

On or about [date], we entered into an agreement whereby you undertook to [describe services and deliverables] for the consideration of PHP [amount], of which I have paid PHP [amount] on [date] via [method].

You committed to deliver/complete the services on or before [deadline] (as confirmed in our communications on [dates/messages]). Despite repeated follow-ups, you have failed to deliver/complete the agreed output within the agreed period, to my damage and prejudice.

Accordingly, I hereby formally demand that you:

Complete and deliver the agreed output/services no later than [final deadline date and time]; and
Coordinate turnover via [email/file link/physical delivery].

Should you fail to comply within the period stated, I will be constrained to treat your non-performance as a breach and pursue the appropriate remedies, including rescission of the agreement, refund of all amounts paid, and recovery of damages and costs, without further notice.

Please confirm receipt of this letter and your definite plan for completion within [24/48] hours.

Sincerely, [Name] [Address] [Contact]

Template B: Demand to rescind + refund (for useless delay or abandonment)

DEMAND LETTER FOR RESCISSION AND REFUND Date: ___

To: ___ Address / Email / Contact: ___

Re: Rescission of Service Agreement and Demand for Refund

Dear ___,

On or about [date], we agreed that you would [services/deliverables] for PHP [amount]. I paid PHP [amount] on [date] via [method].

You failed to deliver the agreed output/services within the agreed timeframe (deadline: [date]) and despite repeated follow-ups, you have not completed the work. Considering the purpose of the engagement and the length of delay, your performance has become late and no longer useful for the intended purpose.

I am therefore rescinding our agreement and I hereby formally demand that you refund the total amount of PHP [amount] within [5] days from receipt of this letter, through [bank/e-wallet details].

If you fail to refund within the period stated, I will pursue the appropriate legal remedies to recover the amount due, including damages, interest, and costs, and initiate proceedings as may be required.

Please confirm receipt and your refund schedule within [24/48] hours.

Sincerely, [Name] [Address] [Contact]

Template C: Demand with itemized damages (replacement provider costs)

DEMAND FOR REFUND AND REIMBURSEMENT OF DAMAGES Date: ___

To: ___ Address / Email / Contact: ___

Re: Refund and Reimbursement Due to Delay / Non-Delivery

Dear ___,

We agreed on [date] that you would [services/deliverables] for PHP [amount], with delivery by [deadline]. I paid PHP [amount] on [date].

Due to your failure to deliver on time, I was compelled to obtain replacement services from another provider. As a result, I incurred the following costs attributable to your breach:

Replacement provider fee: PHP ___
Additional expenses (rentals/penalties/rebooking): PHP ___
Other documented costs: PHP ___

Total: PHP ___

I hereby formally demand that you, within [5] days from receipt, pay:

Refund: PHP ___; and
Reimbursement of damages: PHP ___; Total amount due: PHP ___

Failing compliance, I will pursue the appropriate legal remedies for collection and damages.

Sincerely, [Name] [Address] [Contact]

11) Procedural realities in the Philippines: where disputes usually go

A. Barangay conciliation (Katarungang Pambarangay)

Many civil disputes between residents of the same city/municipality (and meeting coverage rules) require barangay conciliation before filing in court. Non-compliance can lead to dismissal for prematurity.

Practical tips:

Bring printed screenshots, payment proofs, and a simple timeline.
Be ready with a specific settlement proposal (refund amount, deadlines, delivery terms).

B. Small Claims (money recovery)

If the primary relief is payment/refund (a sum of money) and the claim fits small claims rules, small claims can be a fast route. Small claims has simplified procedures and generally does not require lawyers for parties, subject to rules.

Small claims is typically suitable when:

You mainly want a refund or liquidated amount
The facts are straightforward
You have clear proof of payment and breach

C. Regular civil action

If you need:

Specific performance with complex relief,
Extensive damages,
Injunction-type relief, or
Issues requiring full trial, a regular civil case may be necessary.

12) Prescription periods: don’t sleep on deadlines

Civil actions prescribe (expire) after certain periods. Commonly discussed rules include:

Written contracts: longer prescriptive period
Oral contracts: shorter prescriptive period
Quasi-delict (tort): different period

A typical rule taught in practice is:

Actions upon oral contracts prescribe sooner than those upon written contracts.

Because classification can be contested (e.g., whether chats/emails count as “written” evidence of the contract), it’s wise to treat older claims with caution and preserve evidence early.

13) Defensive arguments you should anticipate

In delayed service disputes, the other party commonly argues:

No definite deadline was agreed
Client caused delay (no inputs, changing scope, late approvals)
Force majeure / fortuitous event made timely performance impossible
Work was substantially completed; client is unreasonably rejecting
Payment terms were not met; provider had no duty to proceed
Agreement was conditional (e.g., “I’ll start once you send files”)

Your evidence and demand letter should preempt these where possible:

Show your timely cooperation (messages sending inputs, approvals)
Show scope stability (or document change requests and agreed added fees)
Show deadline acknowledgments and promises

14) Practical drafting lessons to prevent repeat problems

Even if the original deal was verbal, you can “paper” it after the fact by sending a confirmation message:

Scope and deliverables
Price and payment schedule
Delivery date and time
Revision limits
Acceptance criteria
Consequences of delay (penalty, refund triggers)
Ownership/usage rights (for creative work)
Expense handling and materials responsibility
Termination clause and refund policy

A short written confirmation, acknowledged by the other party, can dramatically reduce disputes.

Key takeaways

Verbal service contracts can be valid and enforceable in the Philippines; the real battle is often proof of terms.
Default usually begins upon demand, unless exceptions apply (especially where time is of the essence or demand is useless).
Core remedies include specific performance, rescission with refund, and damages, supported by documented loss and clear causation.
A demand letter is both a legal tool (to establish default) and a practical settlement lever—write it factually, set deadlines, and serve it reliably.