PAUL SCHENKER, PLAINTIFF AND APPELLANT, VS. WILLIAM F. GEMPERLE, DEFENDANT AND APPELLEE.

The amended complaint, in a nutshell, avers that sometime in the summer of
1953, at Zurich, Switzerland, plaintiff Paul Schenker and defendant William F.
Gemperle agreed to organize a Philippine Corporation, later named as “The
Philippine Swiss Trading Co., Inc.”, and to divide the capital stock equally
between themselves and/or their associates. This verbal agreement was
acknowledged and confirmed in writing by defendant in his letter of September
14, 1953 (Annex A, amended complaint). Defendant caused articles of
incorporation to be drafted and sent to plaintiff at Zurich. In a moment of
indiscretion and mistaken trust, according to him, the plaintiff signed and
remitted to the defendant at Manila, the said articles which placed in the name
of plaintiff only 24% of the total subscription and the balance of 76% being in
the name of defendant and his relatives. Explaining the discrepancy between the
articles and their verbal covenant, the defendant stated in said letter Annex A,
that “Temporarily, I had to place in my name 75% of the shares because there is
a local law which provides that when one intends to make contracts with the
government, 75% of the subscribed capital has to be Filipino as otherwise the
Flag Law will be applied.” In the same letter, however, defendant assured the
plaintiff that he would give the latter “exactly the same share holding as I
have”. The plaintiff paid to the defendant the sum of P1,000.00 for his
subscription. In view of the consistent refusals of the defendant to live up to
their agreement, notwithstanding repeated demands, the plaintiff filed the
present complaint, praying that defendant be condemned:

“(a) upon the first cause of action, to transfer or cause to be
transferred or assigned to the plaintiff 26% of the entire capital stock issued
and subscribed, as of the date he obeys said judgment, of Philippine Swiss
Trading Co., Inc., or enough thereof to make the plaintiff’s interest and
participation in said corporation total 50% of said entire capital stock issued
and subscribed, which ever may be more;

(b) upon the second cause of action, to return to the plaintiff or
properly account to him for the unexpended balance, in the sum of P2,000.00,
Philippine Currency, of the remittance alleged in paragraph 18(a) of the
complaint;

(c) upon the third cause of action, to pay the plaintiff the sum of
P20,000.00, Philippine Currency, by way of recompense for business lost, profits
unrealized and goodwill impaired or destroyed; and

(d) upon all three causes of actions, to pay the plaintiff the
additional sum of P100(0O0.00, Philippine Currency, * * *.

The plaintiff also prays for costs, and for such other and further relief as
to the Court may appear just and equitable.

An answer was filed, with the customary admissions and denials and with
affirmative defenses and counterclaims.

On November 21, 1958, the defendant filed a pleading styled “manifestation
and motion to dismiss” (Section 10, Rule 9)—alleging that—

“With reference to the first cause of action, the amended complaint states no
cause of action”.

In support of the motion to dismiss, defendants claimed that—

“There is no allegation in the amended complaint that the alleged obligation
of the defendant to have the plaintiff’s shareholding in the capital stock
subscribed in Articles of Incorporation in the proportion of 50% thereof is
already due.

Such being the situation, the demands allegedly made upon the defendant for
his compliance with the obligation sued upon have been futile, because legally
the alleged obligation is not yet due. It not having fixed a period for its
compliance, there has been no default thereof.“

* * * * * * *

In his opposition to the motion to dismiss, filed on November 3, 1958,
plaintiff contended that the oral agreement was the actual as well as the
expressed basis of plaintiff’s cause of action; the letter Annex A, was not the
agreement but only an evidence of it and if the references of Annex A were
deleted from the amended complaint, the latter would not, for that reason alone,
cease to state a cause of action; the obligation being pure, it is demandable
immediately (Art. 1179, Civil Code); the filing of the complaint itself
constituted a judicial demand for performance, thereby making the defendant’s
obligation to become due; even if Annex A is considered as the basis of the
action, it is still a pure obligation, because it says “will give you, however,
exactly the same share holding as I have”—which imparts an unconditional
promise; and supposing that from the allegations of the complaint, it may
reasonably be inferred that it was intended to give the defendant time to
fulfill his obligation, the present action can be considered one for the fixing
of such time (Art. 1197 Civil Code).

On September 30, 1959; the trial court granted the motion to dismiss in so
far as the first cause of action is concerned, predicating its ruling upon the
following considerations: that the agreement did not fix the time within which
the defendant sought to perform its alleged promise and, therefore, the
obligation was not due and the action for its compliance was premature (Barretto
vs. City of Manila, 7 Phil. 416-420); that the obligation is not pure, because
its compliance is dependent upon a future or uncertain event; that the alleged
oral agreement had been novated, after the execution of the articles of
incorporation, and that the action being for specific performance and there
being a need to fix the period for compliance of the agreement and the present
complaint does not alltege facts or lacks the characteristics for an action to
fix the period, a separate action to that effect should have been filed, because
the action which should be brought in order to have a term fixed is different
from the action to enforce the obligation; thus conveying the notion that the
fixing of the period is incompatible with an action for specific performance.
Plaintiff appealed on questions of law.

Article 1197 of the Civil Code, provides—

“If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix
the duration thereof.

The courts shall also fix the duration of the period when it depends upon the
will of the debtor.

In every case, the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once fixed by the
courts, the period cannot be changed by them.”

The ultimate facts to be alleged in a complaint to properly and adequately
plead the right of action granted by the above quoted provision of llaw are (1)
Facts showing that a contract was entered into, imposing on one of the parties
an obligation or obligations in favor of the other; (2) Facts showing that the
performance of the obligation was left to the will of the obligor or clearly
showing or from which an inference may reasonably be drawn, that a period was
intended by the parties. The first cause of action, under consideration, sets
out facts describing an obligation with an indefinite period, thereby bringing
the case within the pale of the article above quoted, albeit it fails to
specifically and categorically demand that the court fix the duration of the
period. Under the circumstances, the court could render judgment granting the
remedy indicated in said article 1197, notwithstanding the fact that the
complaint does not positively and by explicit expression ask for such relief.
What determines the nature and character of an action is not the prayer but the
essential basic allegations of fact set forth in the pertinent pleading. A
judgment may grant the relief to which a party in whose favor it is entered is
entitled, even if the party has not demanded such relief in his pleadings (Sec.
9, Rule 35; Baguioro vs. Barrios, 77 Phil. 120). The amended complaint in
question moreover “prays for * * * such other and further relief as the Court
may appear just and equitable”, which is broad and comprehensive enough, to
justify the extension of a remedy different from or together with, the
right to be declared owner or to recover the ownership or the possession of
Twenty-six (26%) percent of the capital stock of the Philippine Swiss Trading
Co., Inc., presently in the name of the defendant. The case of Barretto vs. City
of Manila, supra, cited by the trial court, is of little help to the
defendant-appellee. It strengthens rather the plaintiff-appellant’s position. In
the Barretto case, as in the present, the essential allegations of the pleadings
made out an obligation subject to an indefinite period. In the Barretto case,
like the one at bar, the complaint did not ask for the fixing of the period, but
for immediate and more positive relief, yet this Court remanded the said case to
the court of origin “for determination of the time within which the contiguous
property must be acquired by the city in order to complty with the condition of
the donation”—all of which go to show that the fixing of the period in the case
at bar, may and/or could be properly undertaken by the trial court.

Even discarding the above considerations, still there is no gainsaying the
fact that the obligation in question, is pure, because “its performance does not
depend upon a future or uncertain event or upon a past event unknown to the
parties” and as such, “is demandable at once” (Art. 1179 New Civil Code). It was
so understood and treated by the defendant-appellee himself. The immediate
payment by the plaintiff-appellant of his subscriptions, after the organization
of the corporation, can only mean that the obligation should be immediately
fulfilled, giving the defendant only such time as might reasonably be necessary
for its actual fulfillment. The contract was to organize the corporation and to
divide equally, after its organization, its capital stock.

In view hereof, the Order appealed from is reversed and the case remanded to
the court of origin, for further and appropriate proceedings. No costs.

Bengzon, C. J., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L.,
Dizon, Regala, and Makalintal, JJ., concur.