Title
Cruz vs. J. M. Tuason and Co., Inc.
Case
G.R. No. L-23749
Decision Date
Apr 29, 1977
Cruz sought reimbursement for land improvements and enforcement of an oral agreement for 3,000 sqm. Court dismissed due to lack of cause of action, Statute of Frauds inapplicability, and pro-forma motion.
cause of action
reimbursement
improvements

Case Summary (G.R. No. L-23749)

Factual Background

The complaint alleged two distinct causes of action. First, that at the request of the Deudors, with whom plaintiff had an express agreement, plaintiff improved and subdivided a tract of land comprising some fifty quinones, making permanent improvements valued at P30,400.00 and incurring expenses of P7,781.74. Plaintiff alleged that defendants were in possession of and were benefitting from those improvements, and thus defendants were liable to reimburse him. Second, plaintiff alleged that in 1952 defendants engaged him as intermediary to procure an amicable settlement in Civil Case No. Q-135 between the Deudors and the defendants. Plaintiff asserted that defendants promised to convey to him 3,000 square meters (Lots 16-B, 17 and 18) as consideration for his services, with the deliverable documents to be executed and delivered within ten years from the date of the compromise agreement. Plaintiff alleged that he performed his obligations and that the compromise was entered on March 16, 1953 and approved April 11, 1953, but that defendants refused to execute and deliver the deed of conveyance.

Procedural History in the Court Below

Defendants filed motions to dismiss within the reglementary period. The motions asserted three principal grounds: that the complaint failed to state a cause of action insofar as it sought reimbursement for improvements because the contract was between plaintiff and the Deudors and not with defendants; that the alleged agreement to convey 3,000 square meters was unenforceable under the Statute of Frauds for lack of a writing; and that plaintiff’s action to compel conveyance had prescribed. The trial court granted the motions and dismissed the complaint by order of August 13, 1964. Plaintiff filed a motion for reconsideration on August 20, 1964, which the trial court denied on September 7, 1964. Plaintiff filed a record on appeal on September 24, 1964.

Trial Court’s Findings and Rulings

The trial court held that defendants were not parties to the express contract between plaintiff and the Deudors; therefore plaintiff stated no cause of action against defendants for reimbursement of services and expenses. The court added that an improvement could constitute a lien or charge only if made in good faith under mistake as to title, and the court took judicial notice that the land had been registered in 1914 in the name of predecessors-in-interest of J. M. Tuason & Co., Inc., citing the decision in G.R. No. L-5079. On the 3,000-square-meter claim, the trial court applied Art. 1403, Sec. 2(e), Civil Code, and ruled that the alleged agreement involved an interest in real property and was unenforceable for want of a written memorandum subscribed by the party charged. On prescription, the trial court found that the negotiations began in 1952 and that the compromise was effected in March–April 1953; the court therefore concluded the action was already prescribed when instituted on January 24, 1964.

Plaintiff’s Contentions on Appeal

Plaintiff contended before the trial court and renewed the arguments on appeal that (1) Art. 2142, Civil Code applied to impose liability on defendants for unjust enrichment because defendants used and enjoyed the improvements; (2) the Statute of Frauds did not apply to the promise to convey the 3,000 square meters because Art. 1403 referred to “sale of real property or of an interest therein” and not to a promise to convey in consideration of services, and, in any event, plaintiff had partially executed the agreement so the contract was not merely executory; and (3) his action had not prescribed because defendants had ten years from the compromise date before they were bound to deliver the documents, and plaintiff instituted suit within six years from the date his cause of action accrued.

Defendants’ Contentions on Appeal

Defendants maintained that the complaint stated no cause of action because the improvements resulted from an agreement between plaintiff and the Deudors alone and that any remedy of plaintiff lay against the Deudors. Defendants asserted that the alleged promise to convey 3,000 square meters implicated the Statute of Frauds and was unenforceable for lack of a subscribed writing. Defendants also reiterated that plaintiff’s action was barred by prescription in view of plaintiff’s own allegations that negotiations began in 1952 and that the compromise was effected in 1953.

Supreme Court’s Legal Analysis on the Statute of Frauds

The Supreme Court agreed with appellant that the trial court erred in applying the Statute of Frauds to bar the claim for the 3,000 square meters. The Court explained that the Statute enumerates specific categories of agreements that must be in writing and that not every agreement touching real property falls within its scope. The Court further observed that the complaint alleged that plaintiff had performed his part of the bargain by securing the compromise and by discharging the other obligations imposed upon him, so that the contract was at least partially executed on plaintiff’s part. The Court reiterated the established principle that the Statute of Frauds applies only to executory contracts and does not operate to defeat rights where a contract has been totally or partially performed. On these bases, the Court held that the trial court had erred in applying Art. 1403 to dismiss the 3,000-square-meter claim.

Supreme Court’s Legal Analysis on Quasi-Contract (Art. 2142) and Cause of Action for Reimbursement

The Supreme Court held that appellant’s reliance on Art. 2142, Civil Code was misplaced. The Court explained that the juridical relation created by that article presupposes the absence of an actual contract between the parties and arises to prevent unjust enrichment where the act was voluntary and unilateral. When the alleged enrichment results from performance pursuant to a contract with a third person, the proper remedy of the performer lies against that contracting party. The Court found that plaintiff’s claim for reimbursement sprang from an express agreement with the Deudors an

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