G.R. No. L-23377. April 27, 1967
CARLOS KAHN AND LUZ S. KAHN, PLAINTIFFS-APPELLANTS, VS. JACOBO ASUNCION, DECEASED, SUBSTITUTED BY TRINIDAD R. DE ASUNCION, ROBERTO ASUNCION, SILVINO ANTONIO AND CONSUELO ASUNCIO…
BENGZON, J.P., J.:
Assisted by her husband, Luz S. Kahn filed on March 30,
1964 a suit
against spouses Jacobo Asuncion and Trinidad R. de
Asuncion in the Court of First Instance of Rizal, to
enforce an alleged oral agreement entered into by her and defendants sometime
in January 1964.
Plaintiff’s complaint stated the terms of the unwritten contract
to be as follows:
(a)
Plaintiff Luz S. Kahn shall develop into a subdivision
of 50 lots, defendants’ parcel of land known as Lot No. 644-B-2-C-2-B covered
by Transfer Certificate of Title No. 39854, Register of Deeds for Quezon City;
(b)
Plaintiff and defendants shall divide the subdivision’s
gross income at 55% for plaintiff and 45% for defendants;
(c)
Plaintiff, by way of accommodating defendants,
shall borrow money from a lending institution to pay therewith the debts
secured by encumbrances on defendants’ afore-stated lot;
(d)
Defendants shall amortize said loan by paying
75% of their 45% share in gross income aforementioned, to the lending
institution until full liquidation of loan and interest;
(e)
The subdivision lots which shall be 400 square
meters, more or less, shall be sold at a price of not less than P40.00 per
square meter, and all proceeds received from the sale shall immediately be
distributed to the parties, subject to defendants’ payment of the loan next
abovementioned;
(f)
Plaintiff shall spend at least P160,000.00 for the subdivision’s development
and the acquisition of a right of way to provide access and outlet to the
national highway;
(g)
Plaintiff shall have exclusive control in the
hiring and dismissal of engineers, surveyors,
clerks and laborers, in the development and administration of the subdivision
lots, but all expenses arising out of or in connection with the subdivision or sale of the lots, wages
and salaries of subdivision personnel, shall be taken from plaintiff’s 55%
share in gross income; and
(h)
Defendants shall immediately deliver possession
of the subject lot to said plaintiff.
Plaintiff further averred that in compliance with her
obligations under the contract, she has done the following:
(1) Obtained
a loan and/or overdraft line with her bank to pay the monetary encumbrances on
the subject lot;
(2)
Conferred, negotiated, assured and guaranteed
prospective buyers of the sale in their favor of subdivision lots;
(3) Contracted an engineer to take charge of
subdividing the land;
(4) Caused
to be made and paid for a project study
showing the probable profits of the parties; and
(5) Taken
over the negotiation for a right of way on the property of the Philippine
Housing and Homesite Corporation abutting the
national highway.
She thus sought from defendants the reduction of the alleged oral agreement into a public instrument, and the
delivery of the parcel of land in order that it be subdivided.
And since defendants likewise
allegedly promised to grant the subdivision a 12-meter right of way thru
another lot of theirs, plaintiff
further sought to compel them to grant said right of way. Alleging finally that defendants fraudulently
attempted to defeat their agreement, refused and delayed performance of their
obligations, plaintiff asked for P20,000 actual damages, P100,000 moral
damages, P50,000 exemplary damages and P20,000 attorney’s fees.
On April 28, 1964,
defendants filed their answer stating that no agreement was reached for the development of the subject land into a subdivision;
that all negotiations to develop it on a joint venture were abandoned; that the
parties continued negotiations for an outright sale of the land to plaintiff
but reached no agreement. Raised also
was the affirmative defense that the claim on which plaintiff’s causes of
action are based is unenforceable under the statute of frauds.
On April 29, 1964,
defendants moved for a preliminary hearing on the aforesaid defense. And the court granted the same. After said
hearing, and submission of memoranda by the parties, the court issued an order on June 4, 1964 dismissing plaintiff’s complaint on
the ground that the claim asserted therein is not enforceable under the statute
of frauds.
Plaintiff thereupon appealed to Us to raise questions of law.
In the course of the litigation, a notice of lis pendens was registered with reference
to defendants’ subject land. Defendants
filed here a motion to cancel said notice.
And We deferred action thereon until the case is taken on the
merits. Subsequently, also, defendants-appellees‘ counsel manifested that defendant Jacobo Asuncion died in December 1965; his surviving spouse – and co-defendant
– Trinidad R. Asuncion was
allowed to be substituted in his place.
The parties discuss the following issue in this appeal: Does the statute of frauds bar the present
suit? Article 1403, par. (2), subpar. (e), provides:
“ART. 1403. The
following contracts are unenforceable, unless they are ratified:
x x x x x
“(2) Those that
do not comply with the Statute of Frauds as set forth in this number. In the
following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum thereof, be in writing, and
subscribed by the party charged, or by his
agent; evidence, therefore, of the agreement cannot be received without
the writing, or a secondary evidence of its contents:
x x x x x
“(e)
An agreement for the leasing for a longer period than one year, or for
the sale of real property or of an interest therein;”
x x x x x
Defendants-appellees contend that
plaintiff’s alleged contract is one for the sale of real property or an interest
therein, and, therefore, barred from enforcement by the statute of frauds, it
not being in writing.
Plaintiff however argues that even if the alleged contract with
defendants falls under the kind mentioned in the statute, the latter does not
operate to bar its enforcement because said contract has been partially
executed thru her performance of her obligations thereunder.[1]
The reason for excluding from the operation of the statute of
frauds executed agreements is that otherwise fraud would be promoted, instead
of prevented, since one party would be able to keep the benefits derived by him
from said partial execution, and, at the same time, evade his responsibilities,
obligations or liabilities under the contract.[2]
It should be remembered that the parties did not proceed to
trial and adduce evidence; rather, the suit was dismissed after a preliminary
hearing on the affirmative defense in question.
It therefore amounted to a dismissal upon a motion to dismiss.
The point of preliminary inquiry herein is therefore whether
plaintiff’s acts of partial execution redounded to defendants, benefit.
Specifically examining said acts as alleged in plaintiff’s
complaint, We note:
(1)
Obtaining a loan and/or overdraft line: For purposes of a motion to dismiss the
allegation to this effect is admitted hypothetically. Since the complaint states
“and/or”, it is not clear whether a loan was actually
obtained, thereby involving actual withdrawal of funds, or whether an overdraft
line was simply opened and the amount thereof made disposable, or any amount
actually withdrawn therefrom. Did defendants benefit from the loan and/or
overdraft line? What is the status
of the encumbrances on the subject lot? Nothing appears on record.
(2)
Negotiation with prospective buyers of the
lots: What benefit has such negotiation yielded to defendants?
(3)
Contracting an engineer to take charge of
subdividing the land: Since the
subdivision in its preliminary stage has not yet been actually undertaken, We
do not know what other preliminary steps were taken wherein defendants might have
derived any benefit from this, giving defendants opportunity to prove
otherwise.
(4)
The project study: This is the undertaking which plaintiff
categorically alleged that payment was made
therefor. Who
asked for such study? What was the agreement on this Step, if
any? No evidence at all appears before
Us.
(5)
Negotiation for a right of way on PHHC lot: Similarly, whether defendants’ lot profited
or not therefrom, so far is a matter best left for
evidence to establish.
Furthermore, that there were negotiations, first for a joint
venture and later on for an outright purchase, is not denied. That these ripened into an agreement is what
defendants deny. Plaintiffs however
insist on a perfected contract. There
lies the dispute which has to be solved in accordance with their respective
evidence.
Finally, We note that plaintiffs refer at page 12 of their brief
to an alleged handwritten document signed by defendants evidencing their
conformity to the subdivision project.
Subject to appropriate rules on pleadings and evidence, this matter
should be threshed out before the court below.
From all the foregoing, it results that the point whether
defendants benefited from plaintiff’s acts cannot as yet be ascertained from
the records. Consequently, the ground
for a motion
to dismiss under the
statute of frauds does not appear to be indubitable as required. In such a case, the Rules of Court provide
that the determination thereof be deferred until trial is had (Sec. 3, Rule 16):
“SEC. 3. Hearing and order. – After hearing
the court may deny or grant the motion to allow amendment of pleading, or may
defer the hearing and determination of the motion until the trial if the ground
alleged therein does not appear to be indubitable.”
Such procedure is without prejudice to
subsequently resolving, on the strength of evidence adduced during the trial,
the issue of whether the statute of frauds bars the enforcement of the
agreement involved.
WHEREFORE, the appealed order of dismissal is hereby set
aside and the case is remanded to the court a quo for trial and
further proceedings, without prejudice to the ultimate resolution of the
affirmative defense, as the evidence may warrant. Petition to lift annotation of lis pendens on defendants’ title
is denied. No costs.
SO ORDERED.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, and Sanchez, JJ.,
concur.
Castro, J., took no part.
[1]
Almirol v. Monserrat,
48 Phil. 67; Asturias Sugar Central,
Inc. v. Montinola, 40 O.G. [7th
Supp] No. 11, p. 89; Factoran v. Sabanal, 81 Phil. 512.
[2]
Carbonnel v. Poncia,
L-11231, May 12, 1958.