SECOND DIVISION
[ G.R. No. 55048, May 27, 1981 ]
SUGA SOTTO YUVIENCO,
BRITANIA SOTTO, AND MARCELINO
SOTTO, PETITIONERS, VS. HON. AUXENCIO
C. DACUYCUY, JUDGE OF THE CFI OF LEYTE,
DELY RODRIGUEZ, FELIPE ANG
CRUZ, CONSTANCIA NOGAR,
MANUEL GO, INOCENTES DIME, WILLY JULIO, JAIME YU,
OSCAR DY, DY CHIU SENG, BENITO YOUNG, FERNANDO YU, SEBASTIAN YU, CARLOS UY, HOC CHUAN AND MANUEL DY, RESPONDENTS.
D E C I S I O N
BARREDO, J.:
Petition for certiorari and prohibition to declare void
for being in grave abuse of discretion the orders of respondent judge dated
November 2, 1978 and August 29, 1980, in Civil Case No. 5759 of the Court of
First Instance of Leyte, which denied the motion
filed by petitioners to dismiss the complaint of private respondents for
specific performance of an alleged agreement of sale of real property, the said
motion being based on the grounds that the respondents' complaint states no
cause of action and/or that the claim alleged therein is unenforceable under
the Statute of frauds.
Finding initially prima facie merit in the petition, We required respondents to answer and We issued temporary
restraining order on October 7, 1980
enjoining the execution of the questioned orders.
In essence, the theory of petitioners is that while it is true
that they did express willingness to sell to private respondents the subject
property for P6,500,000 provided the latter made known their own decision to
buy it not later than July 31, 1978, the respondents' reply that they were
agreeable was not absolute, so much so that when ultimately petitioners'
representative went to Cebu City with a prepared and
duly signed contract for the purpose of perfecting and consummating the
transaction, respondents and said representative found variance between the
terms of payment stipulated in the prepared document and what respondents had
in mind, hence the bankdraft which respondents were
delivering to petitioners' representative was returned and the document
remained unsigned by respondents. Hence the action below for specific performance.
To be more specific, the parties do not dispute that on July 12, 1978, petitioners, thru a
certain Pedro C. Gamboa, sent to respondents the
following letter:
"Mr. Yao King Ong
Life Bakery
Tacloban City
Dear Mr. Yao:
This refers to the Sotto property (land and building) situated at Tacloban City. My clients are willing to sell them at a total price of P6,500,000.00.
While there are other parties who are interested to buy the property, I am giving you and the other occupants the preference, but such priority has to be exercised within a given number of days as I do not want to lose the opportunity if you are not interested. I am therefore giving you and the rest of the occupants until July 31, 1978 within which to decide whether you want to buy the property. If I do not hear from you by July 31, I will offer or close the deal with the other interested buyer.
Thank you so much for the hospitality extended to me during my last trip to Tacloban, and I hope to hear from you very soon.
Very truly yours,
Pedro C. Gamboa”[1]
(Page 9, Record.)
Reacting to the foregoing letter, the following telegram was sent
by "Yao King Ong &
tenants" to Atty. Pedro Gamboa in Cebu City:
"Atty. Pedro Gamboa
Room 314, Maria Cristina Bldg.
Osmeña Boulevard, Cebu City
Reurlet dated
July 12 inform Dra. Yuvienco
we agree to buy property proceed Tacloban to
negotiate details
Yao King Ong & tenants"
(Page 10, Record.)
Likewise uncontroverted is the fact
that under date of July 27, 1978,
Atty. Gamboa wired Yao King
Ong in Tacloban
City as follows:
"NLT
YAO KING ONG
LIFE BAKERY
TACLOBAN CITY
PROPOSAL ACCEPTED ARRIVING TUESDAY MORNING WITH CONTRACT PREPARE PAYMENT BANK DRAFT
ATTY GAMBOA"
(Page 10, id.)
Now, Paragraph 10 of the complaint below of respondents alleges:
"10. That on August 1, 1978, defendant Pedro Gamboa arrived Tacloban City bringing with him the prepared contract to purchase and to sell referred to in his telegram dated July 27, 1978 (Annex 'D' hereof), for the purpose of closing the transactions referred to in paragraphs 8 and 9 hereof, however, to the complete surprise of plaintiffs, the defendant (except def. Tacloban City Ice Plant, Inc.) without giving notice to plaintiffs, changed the mode of payment with respect to the balance of P4,500,000.00 by imposing upon plaintiffs to pay same amount within thirty (30) days from execution of the contract instead of the former term of ninety (90) days as stated in paragraph 8 hereof." (Pp. 10-11, Record.)
Additionally and to reenforce
their position, respondents alleged further in their complaint:
"8. That on July 12, 1978, defendants (except defendant Tacloban City Ice Plant, Inc.) finally sent a telegram letter to plaintiffs-tenants, through same Mr. Yao King Ong, notifying them that defendants are willing to sell the properties (lands and building) at a total price of P6,500,000.00, which herein plaintiffs-tenants have agreed to buy the said properties for said price; a copy of which letter is hereto attached as integral part hereof and marked as Annex 'C', and plaintiffs accepted the offer through a telegram dated July 25, 1978, sent to defendants (through defendant Pedro C. Gamboa), a copy of which telegram is hereto attached as integral part hereof and marked as Annex 'C-1' and as a consequence hereof, plaintiffs (except plaintiff Tacloban Merchants' Realty Development Corporation) and defendants (except defendant Tacloban City Ice Plant, Inc.) agreed to the following terms and conditions respecting the payment of said purchase price, to wit:
P2,000,000.00 to be paid in full on the date of the execution of the contract; and
the balance of P4,500,000.00 shall be fully paid within ninety (90) days thereafter;
"9. That on July 27, 1978, defendants sent a telegram to plaintiff-tenants, through the latter's representative Mr. Yao King Ong, reiterating their acceptance to the agreement referred to in the next preceding paragraph hereof and notifying plaintiffs-tenants to prepare payment by bank drafts; which the latter readily complied with; a copy of which telegram is hereto attached as integral part hereof and marked as Annex 'D’;" (pp. 49-50, Record.)
It was on the basis of the foregoing facts and allegations that
herein petitioners filed their motion to dismiss alleging as main grounds:
"I. That plaintiff, TACLOBAN MERCHANTS' REALTY DEVELOPMENT CORPORATION, amended complaint, does not state a cause of action and the claim on which the action is founded is likewise unenforceable under the provisions of the Statute of Frauds.
II. That as to the rest of the plaintiffs, their amended complaint does not state a cause of action and the claim on which the action is founded is likewise unenforceable under the provisions of the Statute of Frauds." (Page 81, Record.)
With commendable knowledgeability and
industry, respondent judge ruled negatively on the motion to dismiss,
discoursing at length on the personality as real party-in-interest of
respondent corporation, while passing lightly, however, on what to Us are the
more substantial and decisive issues of whether or not the complaint
sufficiently states a cause of action and whether or not the claim alleged
therein is unenforceable under the Statute of Frauds, by holding thus:
"The second ground of the motion to dismiss is that plaintiffs' claim is unenforceable under the Statute of Frauds. The defendants argued against this motion and asked the court to reject the objection for the simple reason that the contract of sale sued upon in this case is supported by letters and telegrams annexed to the complaint and other papers which will be presented during the trial. This contention of the defendants is not well taken. The plaintiffs having alleged that the contract is backed up by letters and telegrams, and the same being a sufficient memorandum, the complaint states a cause of action and they should be given a day in court and allowed to substantiate their allegations (Paredes vs. Espino, 22 SCRA 1000).
To take a contract for the sale of land out of the Statute of Frauds a mere note or memorandum in writing subscribed by the vendor or his agent containing the names of the parties and a summary statement of the terms of the sale either expressly or by reference to something else is all that is required. The statute does not require a formal contract drawn up with technical exactness for the language of Par. 2 of Art. 1403 of the Philippine Civil Code is' x x x x x x x x an agreement x x x x or some note or memorandum thereof,' thus recognizing a difference between the contract itself and the written evidence which the statute requires (Berg vs. Magdalena Estate, Inc., 92 Phil. 110; III Moran, Comments on the Rules of Court, 1952 ed. p. 187). See also Bautista's Monograph on the Statute of Frauds in 21 SCRA p. 250." (Pp. 110-111, Record)
Our first task then is to dwell on the issue of whether or not in
the light of the foregoing circumstances, the complaint in controversy states
sufficiently a cause of action. This
issue necessarily entails the determination of whether or not the plaintiffs
have alleged facts adequately showing the existence of a perfected contract of
sale between herein petitioners and the occupants represented by respondent Yao King Ong.
In this respect, the governing legal provision is, of course,
Article 1319 of the Civil Code which provides:
"ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made."
In the instant case, We can lay aside, for the moment, petitioners'
contention that the letter of July 12, 1978 of Atty. Pedro C. Gamboa to respondents Yao King Ong and his companions constitute an offer that is
"certain", although the petitioners claim that it was a mere
expression of willingness to sell the subject property and not a direct offer
of sale to said respondents. What We consider as more important and truly decisive is what is
the correct juridical significance of the telegram of respondents instructing
Atty. Gamboa to "proceed to Tacloban
to negotiate details." We underline the word "negotiate"
advisedly, because to Our mind it is the key word that negates and makes it
legally impossible for Us to hold that respondents' acceptance of petitioners'
offer, assuming that it was a "certain" offer indeed, was the
"absolute" one that Article 1319 above-quoted requires.
Dictionally, the implication of
"to negotiate" is practically the opposite of the idea that an
agreement has been reached. Webster's
Third International Dictionary, Vol. II (G. & C. Merriam Co., 1971
Philippine copyright) gives the meaning of negotiate as "to communicate
or confer with another so as to arrive at the settlement of some matter; meet
with another so as to arrive through discussion at some kind of agreement or
compromise about something; --- to arrange for or bring about through
conference or discussion; work at or arrive at or settle upon by meetings and
agreements or compromises --".
Importantly, it must be borne in mind that Yao
King Ong's telegram simply says "we agree to buy
property". It does not necessarily
connote acceptance of the price but instead suggests that the details were to
be subject of negotiation.
Respondents now maintain that what the telegram refers to as
"details" to be "negotiated" are mere "accidental
elements", not the essential elements of the contract. They even invite attention to the fact that
they have alleged in their complaint (Par. 6) that it was as early as "in
the month of October, 1977 (that) negotiations between plaintiffs and
defendants for the purchase and sale (in question) ----- were made, thus
resulting to offers of same defendants and counter-offer of plaintiffs". But to Our mind such alleged facts precisely
indicate the failure of any meeting of the minds of the parties, and it is only
from the letter and telegrams above-quoted that one can determine whether or
not such meeting of the minds did materialize.
As We see it, what such allegations bring out
in bold relief is that it was precisely because of their past failure to arrive
at an agreement that petitioners had to put an end to the uncertainty by
writing the letter of July 12, 1978. On the other hand, that respondents were all
the time agreeable to buy the property may be conceded, but what impresses Us
is that instead of "absolutely" accepting the "certain"
offer - if there was one - of the petitioners, they still insisted on further
negotiation of details. For anyone to
read in the telegram of Yao
that they accepted the price of P6,500,000.00 would be
an inference not necessarily warranted by the words "we agree to buy"
and "proceed Tacloban to negotiate
details". If indeed the details
being left by them for further negotiations were merely accidental or formal
ones, what need was there to say in the telegram that they had still "to
negotiate (such) details", when, being unessential per their contention,
they could have been just easily clarified and agreed upon when Atty. Gamboa would reach Tacloban?
Anent the telegram of Atty. Gamboa of July 27, 1978, also quoted earlier
above, We gather that it was in answer to the telegram
of Yao. Considering that Yao was in Tacloban
then while Atty. Gamboa was in Cebu, it is difficult to surmise that there
was any communication of any kind between them during the intervening period,
and none such is alleged anyway by respondents.
Accordingly, the claim of respondents in paragraph 8 of their complaint
below that there was an agreement of a down payment of P2 M, with the balance
of P4.5M to be paid within 90 days afterwards is rather improbable to imagine
to have actually happened.
Respondents maintain that under existing jurisprudence relative
to a motion to dismiss on the ground of failure of the complaint to state a
cause of action, the movant-defendant is deemed to
admit the factual allegations of the complaint, hence, petitioners cannot deny,
for purposes of their motion, that such terms of
payment had indeed been agreed upon.
While such is the rule, those allegations do not detract from the fact
that under Article 1319 of the Civil Code above-quoted, and judged in the light
of the telegram-reply of Yao to Atty. Gamboa's letter of July 12, 1978, there was not an absolute
acceptance, hence from that point of view, petitioners' contention that the
complaint of respondents state no cause of action is correct.
Nonetheless, the alleged subsequent agreement about the P2 M down
and P4.5 M in 90 days may at best be deemed as a distinct cause of action. And placed against the insistence of
petitioners, as demonstrated in the two deeds of sale taken by Atty. Gamboa to Tacloban, Annexes 9 and
10 of the answer of herein respondents, that there was no agreement about 90
days, an issue of fact arose, which could warrant a trial in order for the
trial court to determine whether or not there was such an agreement about the
balance being payable in 90 days instead of the 30 days stipulated in Annexes 9
and 10 above-referred to. Our
conclusion, therefore, is that although there was no perfected contract of sale
in the light of the letter of Atty. Gamboa of July
12, 1978 and the letter-reply thereto of Yao; it
being doubtful whether or not, under Article 1319 of the Civil Code, the said
letter may be deemed as an offer to sell that is "certain", and more,
the Yao telegram is far from being an
"absolute" acceptance under said article, still there appears to be a
cause of action alleged in Paragraphs 8 to 12 of the respondents' complaint,
considering it is alleged therein that subsequent to the telegram of Yao, it was agreed that the petitioners would sell the
property to respondents for P6.5 M, by paying P2 M down and the balance in 90
days and which agreement was allegedly violated when in the deeds prepared by
Atty. Gamboa and taken to Tacloban,
only 30 days were given to the respondents.
But the foregoing conclusion is not enough to carry the day for
respondents. It only brings Us to the question of whether or not the claim for specific
performance of respondents is enforceable under the Statute of Frauds. In this respect, We
may view the situation at hand from two angles, namely, (1) that the
allegations contained in paragraphs 8 to 12 of respondents' complaint should be
taken together with the documents already aforementioned and (2) that the said
allegations constitute a separate and distinct cause of action. We hold that either way We
view the situation, the conclusion is inescapable that the claim of respondents
that petitioners have unjustifiably refused to proceed with the sale to them
of the property in question is unenforceable under the Statute of Frauds.
It is nowhere alleged in said paragraphs 8 to 12 of the complaint
that there is any writing or memorandum, much less a duly signed agreement to
the effect that the price of P6,500,000 fixed by petitioners for the real
property herein involved was agreed to be paid not in cash but in installments
as alleged by respondents. The only
documented indication of the non-wholly-cash payment extant in the record is
that stipulated in Annexes 9 and 10 above-referred to, the deeds already signed
by the petitioners and taken to Tacloban by Atty. Gamboa for the signatures of the respondents. In other words, the 90-day term for the
balance of P4.5 M insisted upon by respondents does not appear in any note,
writing or memorandum signed by either the petitioners or any of them, not even
by Atty. Gamboa.
Hence, looking at the pose of respondents that there was a perfected
agreement of purchase and sale between them and petitioners under which they
would pay in installments of P2 M down and P4.5 M within ninety (90) days
afterwards, it is evident that such oral contract involving the "sale of
real property" comes squarely under the Statute of Frauds. (Article 1403, No. 2(e),
Civil Code.)
On the other score of considering the supposed agreement of
paying installments as partly supported by the letter and telegrams earlier
quoted herein, His Honor declared with well studied ratiocination, albeit
legally inaccurate, that:
"The next issue relate to the State of Frauds. It is contended that plaintiffs' action for specific performance to compel the defendants to execute a good and sufficient conveyance of the property in question (Sotto land and building) is unenforceable because there is no other note, memorandum or writing except annexes 'C', 'C-1' and 'D', which by themselves did not give birth to a contract to sell. The argument is not well founded. The rules of pleading limit the statement of the cause of action only to such operative facts as give rise to the right of action of the plaintiff to obtain relief against the wrongdoer. The details of probative matter or particulars of evidence, statements of law, inferences and arguments need not be stated. Thus, Sec. 1 of Rule 8 provides that 'every pleading shall contain in a methodical and logical form, a plain concise and direct statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the statement of mere evidentiary facts.' Exhibits need not be attached. The contract of sale sued upon in this case is supported by letters and telegrams annexed to the complaint and plaintiffs have announced that they will present additional evidences during the trial to prove their cause of action. The plaintiffs having alleged that the contract is backed up by letters and telegrams, and the same being sufficient memorandum, the complaint states a cause of action and they should be given their day in court and allowed to substantiate their allegations (Paredes vs. Espino, 22 SCRA 1000).” (Pp. 165-166, Record.)
The foregoing disquisition of respondent judge misses at least
two (2) juridical substantive aspects of the Statute of Frauds insofar as sale
of real property is concerned. First,
His Honor assumed that the requirement of perfection of such kind of contract
under Article 1475 of the Civil Code which provides that "(t)he contract
of sale is perfected at the moment there is a meeting of the minds upon the
thing which is the object of the contract and upon the price", the Statute
would no longer apply as long as the total price or consideration is mentioned
in some note or memorandum and there is no need of any indication of the manner
in which such total price is to be paid.
We cannot agree. In the
reality of the economic world and the exacting demands of business interests
monetary in character, payment on installments or staggered payment of the
total price is entirely a different matter from cash payment, considering the
unpredictable trends in the sudden fluctuation of the rate of interest. In other words, it is indisputable that the
value of money varies from day to day, hence the indispensability of providing
in any sale of the terms of payment when not expressly or impliedly intended to
be in cash.
Thus, We hold that in any sale of real
property on installments, the Statute of Frauds read together with the
perfection requirements of Article 1475 of the Civil Code must be understood
and applied in the sense that the idea of payment on installments must be in
the requisite of a note or memorandum therein contemplated. Stated otherwise, the "essential
elements" mentioned in the case of Paredes vs. Espino, 22 SCRA 1000, relied upon
by respondent judge must be deemed to include the requirement just discussed
when it comes to installment sales.
There is nothing in the monograph re- the Statute of Frauds appearing in
21 SCRA 250 also cited by His Honor indicative of any
contrary view to this ruling of Ours, for the essence and thrust of the said
monograph refers only to the form of the note or memorandum which would comply
with the Statute, and no doubt, while such note or memorandum need not be in
one single document or writing and it can be in just sufficiently implicit
tenor, imperatively, the separate notes must, when put together, contain all
the requisites of a perfected contract of sale.
To put it the other way, under the Statute of Frauds, the contents of
the note or memorandum, whether in one writing or in separate ones merely
indicative for an adequate understanding of all the essential elements of the
entire agreement, may be said to be the contract itself, except as to the form.
Secondly, We are of the considered opinion that under the rules
on proper pleading, the ruling of the trial court that, even if the allegation
of the existence of a sale of real property in a complaint is challenged as
barred from enforceability by the Statute of Frauds, the plaintiff may simply
say there are documents, notes or memoranda without either quoting them in or
annexing them to the complaint, as if holding an ace in the sleeves is not
correct. To go directly to the point,
for Us to sanction such a procedure is to tolerate and even encourage undue
delay in litigation, for the simple reason that to await the stage of trial for
the showing or presentation of the requisite documentary proof when it already
exists and is asked to be produced by the adverse party would amount to
unnecessarily postponing, with the concomitant waste of time and the
prolongation of the proceedings, something that can immediately be evidenced
and thereby determinable with decisiveness and precision by the court without
further delay.
In this connection, Moran observes that unlike when the ground of
dismissal alleged is failure of the complaint to state a cause of action, a
motion to dismiss invoking the Statute of Frauds may be filed even if the
absence of compliance does not appear on the face of the complaint. Such absence may be the subject of proof in
the motion stage of the proceedings. (Moran, Comment on the Rules of Court, Vol. 1, p. 494, 1979 ed.)
It follows then that when such a motion is filed and all the documents
available to movant are before the court, and they
are insufficient to comply with the Statute, it becomes incumbent upon the
plaintiff, for the reasons of policy We have just indicated regarding speedy
administration of justice, to bring out what note or memorandum still exists in
his possession in order to enable the court to expeditiously determine then and
there the need for further proceedings.
In other words, it would be inimical to the public interests in speedy
justice for plaintiff to play hide and seek at his own convenience,
particularly, when, as is quite apparent as in the instant case that chances
are that there are no more writings, notes or memoranda of the installment
agreement alleged by respondents. We
cannot divine any reason why any such document would be withheld if they
existed, except the unpermissible desire of the
respondents to force the petitioners to undergo the ordeals, time, effort and
expenses of a futile trial.
In the foregoing premises, We find no
alternative than to render judgment in favor of petitioners in this certiorari
and prohibition case. If at all, appeal
could be available if the petitioners subjected themselves to the trial ruled
to be held by the trial court. We forsee even at this point, on the basis of what is both
extant and implicit in the records, that no different result can be
probable. We consider it as sufficiently
a grave abuse of discretion warranting the special civil actions herein the
failure of respondent judge to properly apply the laws on perfection of contracts
in relation to the Statute of Frauds and the pertinent rules of pleading and
practice, as We have discussed above.
ACCORDINGLY, the impugned orders of respondent judge of November 2, 1978 and August 29, 1980 are hereby set aside
and private respondents' amended complaint, Annex A of the petition, is hereby
ordered dismissed and the restraining order heretofore issued by this Court on October 7, 1980 is declared
permanent.
Costs against respondents.
Guerrero*, Abad Santos, and De
Castro, JJ.,
concur.Aquino, J., concurs in the result. Private respondents cannot prove any perfected sale which they can enforce.
Concepcion, Jr., J., on official leave of absence.
[1]
Yao King Ong was recognized
as acting not only on his own behalf but also of his co-tenants. On the other hand, the authority of Pedro C. Gamboa to make this offer is not disputed, regardless of
whether it was in writing or not.
At this point,
it may be mentioned that among the plaintiffs in Civil Case No. 5759 is a corporation
named Tacloban Merchants Realty Development
Corporation which registered its articles of incorporation with the Securities
and Exchange Commission on August 8,
1978 and secured the issuance of the corresponding certificate on August 9, 1978. It appears that said corporation was
purportedly formed in order to carry out the intent of the occupants of
petitioners' property in question, albeit there are stockholders who are not
occupants and vice-versa. The personality
as a real party-in-interest of this corporation to be plaintiff is among the
issues passed upon by His Honor.
Considering the ultimate manner We view this
controversy, We believe it is not essential for the final resolution thereof to
deal with that matter here.
* Member of the First Division, was designated to sit in the Second Division.
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