G.R. No. 166714 ; February 9, 2007
AMELIA S. ROBERTS, Petitioner, vs. MARTIN B. PAPIO, Respondent.

FACTS

Spouses Martin and Lucina Papio owned a residential lot in Makati. To prevent its foreclosure due to a loan, they executed a Deed of Absolute Sale over the property on April 13, 1982, in favor of Martin’s cousin, Amelia Roberts, for ₱85,000. The amount was used to redeem the property. Subsequently, the parties executed a two-year lease contract dated April 15, 1982, with Roberts as lessor and Papio as lessee. Title was transferred to Roberts. Papio paid rentals until 1985 but thereafter occupied the property for about thirteen years without paying rent despite demands.
Roberts filed an unlawful detainer complaint before the Metropolitan Trial Court (MeTC). Papio, in his defense, claimed the sale was actually an equitable mortgage or, alternatively, that there was a separate oral contract of repurchase. He alleged he had paid Roberts ₱250,000 through her representative to repurchase the property. The MeTC ruled for Roberts, a decision affirmed with modification by the Regional Trial Court (RTC). The Court of Appeals (CA) reversed, finding the existence of an oral contract of repurchase and declaring Roberts as a mere trustee for Papio, ordering her to execute a deed of reconveyance.

ISSUE

Whether the Court of Appeals erred in recognizing an alleged oral contract of repurchase over the subject parcel of land.

RULING

Yes. The Supreme Court reversed the CA decision and reinstated the RTC judgment. The Court held that the alleged oral contract for the repurchase of the land is unenforceable under the Statute of Frauds. Article 1403(2)(e) of the Civil Code requires that a contract for the sale of real property or an interest therein must be in writing to be enforceable. Papio’s claim of an oral promise to resell and his alleged payments totaling ₱250,000 pertain to the creation of a real right over immovable property, which cannot be proved by parole evidence. The receipts for payments he presented were not acknowledged by Roberts and were issued by an alleged agent whose authority was not established, making them inadmissible against Roberts.
The Court found the Deed of Absolute Sale and the Contract of Lease to be clear, unequivocal, and reflective of the true agreement of the parties. There was no convincing evidence to prove the transaction was an equitable mortgage, as none of the circumstances enumerated in Article 1602 of the Civil Code were present. The subsequent lease agreement between the parties, where Papio paid rent to Roberts, was inconsistent with his claim of retained ownership or a trust relationship. Thus, Roberts is the rightful owner, and Papio is a lessee who has unlawfully withheld possession.