Case Summary (G.R. No. 137174)
Initial Pleadings and Grounds for Dismissal
Appellee moved to dismiss for failure to join the minor beneficiary and unenforceability under the Statute of Frauds. Appellant countered that the Statute did not apply to implied trusts and that parol evidence could establish the agreement. The trial court granted the motion, dismissing the complaint with costs.
Motion to Amend Complaint and Inclusion of Beneficiary
Appellant sought to amend by adding the minor son as co-plaintiff and appointing appellant as guardian ad litem. Appellee opposed, characterizing the change as improper substitution. Relying on Rule 17 § 2’s liberal amendment policy, appellant argued the addition was permitted despite technical objections. The lower court denied the motion.
Contract Nature and Entitlement to Enforcement
The Supreme Court identified the transaction as a contract pour autrui disguised as a sale, with specific performance sought. It reaffirmed the rule that a contracting third-party beneficiary—upon acceptance—may enforce obligations, and that joining all interested parties cures any jurisdictional deficiency.
Precedent on Third-Party Beneficiary Actions
Citing Echaus v. Gan, 55 Phil. 527, the Court held that joinder of the beneficiary does not constitute improper party-plaintiff joinder when the party has a direct interest. All contracting parties and the beneficiary being before the court ensure complete and binding adjudication.
Rejection of Statute of Frauds as a Bar
The Court found that the deed’s execution constituted partial performance, taking the agreement outside the Statute of Frauds. Enforcement of the unexpressed trust provision was merely continuation of the same contract already partly executed by appellant’s conveyance.
Parol Evidence Rule and Implied Trusts
The Court distinguished the Statute of Frauds from the parol evidence rule, noting the latter addresses admissibility, not viability, of claims. Allegations of an implied trust under Article 1453 properly admit parol evidence, especially when pleaders expressly allege additional terms.
Supreme Court’s Disposition and Remand
The Supreme Court set aside the order denying amendment, finding no in
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Facts of the Case
- On October 30, 1953, Pastor B. Constantino (married to Honorata Geukeko) conveyed by a “fictitious deed of absolute sale” a two-storey house and four subdivision lots (covered by TCT No. 20174) to Herminia Espiritu for ₱8,000.
- The conveyance was subject to an oral agreement that appellee would hold the properties in trust for their still-unborn illegitimate son, Pastor Constantino, Jr.
- After the sale, appellee executed two separate mortgages over the same properties to Republic Savings Bank of Manila—one for ₱3,000 and another for ₱2,000—and subsequently offered the properties for sale.
Procedural History
- Pastor Constantino filed Civil Case No. 5924 seeking:
- A writ of preliminary injunction to restrain appellee from further alienating or encumbering the properties.
- An order compelling appellee to execute an absolute sale in favor of the minor beneficiary and to pay ₱2,000 in attorney’s fees.
- The trial court noted the partial cancellation of TCT No. 20174 and the issuance of TCT No. 32744 in appellee’s name.
- December 16, 1959: appellee moved to dismiss for failure to include the minor beneficiary as a plaintiff and for unenforceability under the Statute of Frauds.
- Appellant opposed, invoking implied trust under Article 1453, Civil Code, and parol‐evidence admissibility.
- Appellee’s rejoinder distinguished implied from express trusts under Rule 3, Sec. 3, RRC.
- The trial court granted appellee’s motion, dismissed the complaint with costs.
- Appellant then