G.R. No. 7821 - Gomez vs. Salcedo

In November 1910, the defendant, Salcedo, as owner of a house and lot, executed a lease in favor of L. M. Crary for a term of two years at a monthly rental of P200.
The lease was evidenced by a public document notarized by a notary public and did not include any clause prohibiting subletting.

During the same month (November 1910), Crary sublet a portion of the premises—the upper part of the house—to the plaintiff, Dominador Gomez, for a period of two years at a monthly rental of P140; it was not specified whether this sublease was written.
In February 1911, the defendant entered into an agreement with the plaintiff whereby the plaintiff was to be subrogated into all the rights and obligations of Crary under the original lease.
In connection with the subrogation, the defendant agreed to reduce the monthly rental from P200 to P110 for the portion occupied by Gomez.
Plaintiff repeatedly requested that the defendant execute a public document evidencing the subrogation, but the defendant consistently refused, maintaining that the plaintiff could remain in possession as long as he desired.

In December 1911, a final judgment was rendered in an ejectment action involving the same parties, whereby the defendant, having obtained possession initially, later notified the plaintiff that from January 1, 1912, the monthly rental for the occupied part would be raised to P300.
The complaint did not indicate how Crary’s rights or his knowledge of the transaction were affected or disposed of by the subsequent dealings between the parties.

The controversy centers on the fact that the contract of subrogation, being essentially a lease (or sublease) for a period longer than one year, falls within the provisions of the statute of frauds (Sec. 335, Civil Code).
The statute mandates that any lease of real property for longer than one year must be evidenced by a written document subscribed by the party to be charged, and secondary evidence is not admissible in lieu of such writing.

Whether the agreement between Gomez and Salcedo conferred on the plaintiff the leasehold rights of Crary for the entire property or only for that portion of the premises previously occupied by Gomez as a subtenant.
The implications of either interpretation on the application of the statute of frauds.

Whether the contract of subrogation, being a lease exceeding one year, is legally required to be in writing under Sec. 335 of the Civil Code, and if so, whether its absence in writing renders the contract unenforceable.
Whether the presumption under Section 334 of the Code of Civil Procedure, stating that in the ordinary course of business a writing is presumed to have been executed, applies in this case.

Whether the defense invoking the statute of frauds is properly raised by a demurrer in view of the facts alleged in the complaint.
Whether the failure of the pleading to specify that the alleged contract is in writing invalidates the plaintiff’s cause of action, given that the writing is a matter of proof and not of allegation.