Mactan Cebu International Airport Authority v. Court of Appeals

G.R. No. 121506 (October 30, 1996)

MCIAA contested a ruling favoring Inez Ouano's heirs’ land repurchase rights without a clause.

Facts:

In 1949, the National Airport Corporation (NAC) informed landowners surrounding the Lahug Airport that the government intended to purchase their properties for airport expansion. The landowners were persuaded to sell their lands under the threat of imminent expropriation. They were assured that their properties would be returned once they were no longer needed for airport purposes.

Inez Ouano, one of the landowners, initially hesitated to sell her property due to the low price offered and her desire to leave something for her grandchildren. However, she ultimately agreed to sell, influenced by the government's threat of expropriation and the promise of return of her land.

Eufemio Vercide, another affected landowner, testified that he received a rider or certification from NAC, which guaranteed that his land would be returned if it was no longer used for airport purposes. This rider was a crucial factor in his decision to sell.

In contrast, Inez's deed of sale did not include any provision for a right of repurchase, nor did she receive a similar rider. Nevertheless, throughout her life, Inez communicated to her granddaughter, Melba Limbaco, that NAC had assured her the land would be returned.

In 1991, after learning that other landowners had successfully reclaimed their properties, Melba and her family sought to repurchase Inez's land. Their request was denied by the MCIAA, which argued that the deed of sale did not contain a repurchase condition, and the properties had become absolute property of NAC.

Consequently, Melba and her family filed a case for reconveyance with the Regional Trial Court (RTC), which ruled in their favor. The Court of Appeals (CA) affirmed this decision, leading to the current petition by MCIAA.

Legal Issues:

  1. Did the Court of Appeals err in ruling that there was an agreement allowing Inez Ouano and her successors to repurchase the lots despite the absence of a rider in the deed of sale?
  2. Did the Court of Appeals err in determining that the Statute of Frauds did not apply to this case, given that the contract had been partially executed?

Arguments:

  • Petitioner (MCIAA):

    • Argued that the absence of a rider in Inez's deed of sale precluded any claim of a right to repurchase.
    • Contended that the Statute of Frauds applied, asserting that the contract for the sale of real property must be in writing and that the lack of a written agreement for repurchase rendered the claim unenforceable.

  • Respondents (Melba Limbaco and others):

    • Asserted that parol evidence could be introduced to establish the existence of an agreement for the right of repurchase, as the NAC had made representations that induced Inez to sell her property.
    • Argued that the Statute of Frauds did not apply because the sale had been consummated, and the right to repurchase was part of the executed contract.

Court's Decision and Legal Reasoning:

The Supreme Court denied the petition, affirming the decisions of the RTC and CA. The Court held that:

  1. Parol Evidence: The CA correctly admitted parol evidence to establish the right of repurchase. The Court emphasized that when a parol agreement is the moving cause of a written contract, such evidence is admissible to clarify the true intent of the parties. The assurances given by NAC to Inez were deemed sufficient to support the claim of a right to repurchase.

  2. Statute of Frauds: The Court ruled that the Statute of Frauds did not apply in this case. It clarified that the right to repurchase was integral to the contract of sale, even if not explicitly stated in the deed. Since the sale had been executed, the contract was not subject to the Statute of Frauds, which applies only to executory contracts. The Court noted that the Statute of Frauds should not be used to facilitate fraud, and since the petitioner had accepted benefits from the sale, it could not deny the existence of the agreement.

Significant Legal Principles Established:

  • The admissibility of parol evidence to establish rights not explicitly stated in a written contract, particularly when such rights were a significant factor in the execution of the contract.
  • Clarification of the application of the Statute of Frauds, particularly in cases where contracts have been partially or fully executed, thus removing them from the statute's scope.