The answer to your question would be that the complete verbal phrase in the sentence is the following one: singing in the trees . That is, the correct option would be D. In addition to this, the type of this verbal phrase is participle (B).
A verbal phrase consists of a verbal and any objects and modifiers. A verbal is a verb form that does not serve as a verb in the sentence, it functions as an adjective, a noun or an adverb instead. In this case, the participle phrase functions as an adjective modifying the NP "the birds".