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G.R. No.

L-19196 November 29, 1968

and JOVITO S. FRANCISCO,respondents.

On May 19, 1951, the spouses Angel Villarica and Nieves Palma Gil de Villarica sold
to the spouses Gaudencio Consunji and Juliana Monteverde a lot containing an area
of 1,174 sq. meters, situated in the poblacion of the City of Davao, for the price of
P35,000. The instrument of absolute sale dated May 19, 1951 (Exh. "B"), in the form
of a deed poll, drafted by Counselor Juan B. Espolong who had been appointed by
the Villaricas as their agent to sell the lot, was acknowledged on May 25, 1951, before
the same Juan B. Espolong who was also a Notary Public. The public instrument of
absolute sale and the vendors' TCT No. 2786 were delivered to the vendees. On the
same day, May 25, 1951, the spouses Consunji executed another public instrument,
Exh. "D", whereby they granted the spouses Villarica an option to buy the same
property within the period of one year for the price of P37,750. In July, same year, the
spouses Consunji registered the absolute deed of sale, Exh. "B", in consequence of
which TCT No. 2786 in the names of the spouses Villarica was cancelled and a new
TCT No. 3147 was issued in the names of the spouses Consunji. In February, 1953,
the spouses Consunji sold the lot to Jovito S. Francisco for the price of P47,000 by
means of a public instrument of sale Exh. "4". This public instrument of sale was
registered in view of which TCT No. 3147 in the names of the spouse Consunji was
cancelled and a new TCT in the name of Jovito S. Francisco was issued.

On April 14, 1953, the spouses Villarica brought an action in the Court of First
Instance of Davao against the spouses Consunji and Jovito S. Francisco for the
reformation of the instrument of absolute sale, Exh. "B", into an equitable mortgage
as a security for a usurious loan of P28,000 alleging that such was the real intention of
the parties. Defendants answered that the deed of absolute sale expressed the real
intention of the parties and they also alleged a counterclaim for sums of money
borrowed by the plaintiffs from the Consunjis which were then due and demandable.
After trial, the Court of First Instance of Davao rendered its decision holding that the
instrument of absolute sale, Exh. "B", was really intended as an equitable mortgage.
Judgment was accordingly rendered reforming the deed of absolute sale into an
equitable mortgage. Judgment was likewise rendered in favor of defendant Consunjis
on their counterclaim for sums of money. Judgment was also rendered in favor of
defendant Francisco as purchaser in good faith. Both parties appealed to the Court of

On September 15, 1961, the Court of Appeals rendered its decision finding that the
public instrument of absolute sale, Exh. "B", expressed the true intention of the parties
and that the defendants-appellants' (Consunjis) counterclaim for sums of money was
substantiated by the evidence. Accordingly the Court of Appeals rendered judgment
as follows:


Whether there is a right to repurchase?


In Exh. "D" the Consunjis as new owners of the lot granted the Villaricas an option to
buy the property within the period of one year from May 25, 1951 for the price of
P37,750. Said option to buy is different and distinct from the right of repurchase which
must be reserved by the vendor, by stipulation to that effect, in the contract of sale.
This is clear from Article 1601 of the Civil Code, which provides:

Conventional redemption shall take place when the vendor reserves the right to
repurchase the thing sold, with the obligation to comply with the provisions of article
1616 and other stipulation which may have been agreed upon.

The right of repurchase is not a right granted the vendor by the vendee in a
subsequent instrument, but is a right reserved by the vendor in the same instrument of
sale as one of the stipulations of the contract. Once the instrument of absolute sale
is executed, the vendor can no longer reserve the right to repurchase, and any
right thereafter granted the vendor by the vendee in a separate instrument
cannot be a right of repurchase but some other right like the option to buy in
the instant case. Hence, Exhibits "B" and "D" cannot be considered as
evidencing a contract of sale with pacto de retro. Since Exh. "D" did not
evidence a right to repurchase but an option to buy, the extension of the period
of one year for the exercise of the option by one month does not fall under No. 3,
of Article 1602 of the Civil Code, which provides that:

When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed.
ANTONIA TORRES, assisted by her husband, ANGELO TORRES;
and EMETERIA BARING, petitioners, vs. COURT OF
APPEALS and MANUEL TORRES, respondents.

Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a "joint
venture agreement" with Respondent Manuel Torres for the development of a parcel of land
into a subdivision.Pursuant to the contract, they executed a Deed of Sale covering the said
parcel of land in favor of respondent, who then had it registered in his name. By mortgaging
the property, respondent obtained from Equitable Bank a loan of P40,000 which, under the
Joint Venture Agreement, was to be used for the development of the subdivision. [4] All three
of them also agreed to share the proceeds from the sale of the subdivided lots.

The project did not push through, and the land was subsequently foreclosed by the bank.

According to petitioners, the project failed because of respondents lack of funds or

means and skills. They add that respondent used the loan not for the development of the
subdivision, but in furtherance of his own company, Universal Umbrella Company.

Main Issue: Whether there was a contract of partnership?


petitioners would contribute property to the partnership in the form of land which was to
be developed into a subdivision; while respondent would give, in addition to his industry, the
amount needed for general expenses and other costs. Furthermore, the income from the said
project would be divided according to the stipulated percentage. Clearly, the contract
manifested the intention of the parties to form a partnership.[11]

It should be stressed that the parties implemented the contract. Thus, petitioners
transferred the title to the land to facilitate its use in the name of the respondent. On the other
hand, respondent caused the subject land to be mortgaged, the proceeds of which were used
for the survey and the subdivision of the land. As noted earlier, he developed the roads, the
curbs and the gutters of the subdivision and entered into a contract to construct low-cost
housing units on the property.


Sometime in 1949, officers of the National Airport Corporation informed the owners of the
various lots surrounding the Lahug Airport that the government will purchase their lands for
the expansion of the airport. The landowners were convinced to sell their properties,
otherwise, the government will be forced to institute expropriation proceedings in
courts. They were also assured that their properties will be returned to them when these are no
longer being used by the airport (TSN-Daclan, 15 June 1992, pp. 5-7; TSN-Sanchez, 29
September 1992, p. 12; TSN-Daclan, 9 February 1993, pp. 7-9, 12).

Initially, Inez Ouano did not want to sell her property because she does not have enough to
bequeath to her grandchildren and the price offered by the government was very
low. Nonetheless, she agreed to sell since the government was going to expropriate the land
anyway. She was also reassured by the promise that the land will be returned to her when it is
no longer in use (TSN-Daclan, 15 June 1992, pp. 5-6).

Eufemio Vercide, one of the affected landowners testified that in a meeting called by the
NAC, the landowners were given documents to sign, and he asked for a rider or certification
which would indicate that the land will be returned to him should it not be used by the
airport. He testified that it was only after the rider was given to him that he signed the
document of sale (TSN-Catin, 24 September 1992; Deposition of Eufemio Vercide; Records
pp. 146-155). The rider dated 8 November, 1949, signed by Mariano Reyes for the NAC and
Vercide reads, as follows:

This RIDDER (sic), shall remain in full force up to whensoever and whatever
the Lahug Airport may happen in the future. All statements in anticipations herein below
stated, shall remain valid in favor of the landowners.

That in the event that this Lahug Airport will be left dead and of no use, or be transferred to
another place or locality, then the parcels of land mentioned in the attached Doc. no. 698,
Page 8, Book No. XVII, Series of 1949 by Atty. Daniel Tumulak, shall be returned to the
same owner, EUFEMIO O. VERCIDE at the same selling price without any interest (Exhibit
F-1; Records, p. 92).

The sale of Inez property was covered by a Deed of Sale signed by her and Mariano Reyes
representing the NAC. The deed indicates that the Lot 742 was sold for P2,596.40;
and Lot 953 for P1,125.20. The deed does not contain any provision regarding Inez right to
repurchase the properties. Nor does she have any rider such as the one given to Vercide.

Nonetheless, during her lifetime, Inez used to remind her granddaughter Melba Limbaco, who
was living with her, about the assurance by the NAC officials that the properties will be
returned. Inez also made Melba understand that the latter can recover the land herself should
Inez die before the proper time arises.

Upon learning that other landowners were able to recover their properties and that the then
Pres. Aquino had ordered that the airport be transferred to Mactan, the appellees tried to
repurchase the properties originally owned by their grandmother. On 2 October 1991, they
wrote to Capt. Antonio Oppus, the manager of appellant, signifying their intention to
repurchase the properties originally owned by their grandmother (Exhibit D, Records, pp.
82-83). Capt. Oppus replied through a letter dated 17 October 1991 denying their request
because the deed of sale covering the properties does not contain any condition relating to the
right to repurchase. These properties, it was explained, had become the absolute properties of
the NAC (Exhibit E, Records, p. 84).[4]


Whether the statute of frauds does not apply in the instant case as the contract has been
partially executed.


the CA correctly held that the Statute of Frauds does not apply to the case at
bench. In support thereof, the CA declared:

It will be stressed that the right to repurchase is part of the contract of sale, albeit not
incorporated in the deed of sale. It is not an independent agreement or contract. It is therefore,
correct for the trial court to hold that the contract has been partially executed by the sale of
the properties to the appellant.[11]

Under Art. 1403 of the Civil Code, a contract for the sale of real property shall be
unenforceable unless the same or some note or memorandum thereof be in writing
and subscribed by the party charged or his agent. Evidence of the agreement cannot
be received without the writing, or a secondary evidence of its contents. In the case at
bench, the deed of sale and the verbal agreement allowing the right of repurchase
should be considered as an integral whole. The deed of sale relied upon by petitioner
is in itself the note or memorandum evidencing the contract. Thus, the requirement of
the Statute of Frauds has been sufficiently complied with. Moreover, the principle of
the Statute of frauds only applies to executory contracts and not to contracts either
partially or totally performed,[12] as in this case, where the sale has been
consummated; hence, the same is taken out of the scope of the Statute of Frauds. As
the deed of sale has been consummated, by virtue of which, petitioner accepted some
benefits thereunder, it cannot now deny the existence of the agreement. [13] The
Statute of Frauds was enacted for the purpose of preventing fraud. It should not be
made the instrument to further them.[14]