1042 Schenker vs.

Gemperle

No. L-16449. August 31, 1962.

PAUL SCHENKER, plaintiff-appellant, vs. WILLIAM F. GEMPERLE, defendant-appellee.

Obligations and Contracts; Obligations without a period; Ultimate facts to be alleged in complaint.—The ultimate
facts to be alleged in a complaint to properly and adequately plead the right of action granted by Article 1197 of
the Civil Code, which relates to the fixing by the court of the duration of the period, 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; and (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.

Pleading and practice; Complaints; What determines nature of an action.—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).

Same; Same; Same; Grant of remedy under a general prayer.—Theusual prayer in a complaint which states that
the plaintiff "prays for x x x such other and further relief as the Court may appear just and equitable", is broad and
comprehensive enough to justify the extension of a remedy different from or together with the specific remedy
sought.

APPEAL from an order of the Court of First Instance of Manila.

The facts are stated in the opinion of the Court.

     Campos, Mendoza & Hernandez, Jose C. Zulueta and A. R. Narvasa for plaintiff-appellant.

     Angel S. Gamboa for defendant-appellee.

PAREDES, J.:

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 P7,000.00 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 P25,000.00, 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 P100,000.00, Philippine Currency, x x
x.
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, defendant 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."

xx                xx                xx                xx

In bis 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 v. 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 allege 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 to that effect 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 law 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 v. Barrios, 77
Phil. 120). The amended complaint in question moreover, "prays for x x x 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 v. 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 comply 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 York 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., Barrera, Dizon, Regala and Makalintal, JJ.,
concur.

Order reversed and case remanded to court of origin for further and appropriate proceedings.

Note.—As to when the Court should fix or should not fix the period for performing an obligation, see G. Araneta,
Inc. vs. Phil. Sugar Estates Development Co., Ltd., L-22558, May 31, 1967, 20 SCRA 330. See also Deudor vs. J.M.
Tuason & Co., Inc., L-13768, May 30, 1961, 2 SCRA 129.

____________

© Copyright 2019 Central Book Supply, Inc. All rights reserved. Schenker vs. Gemperle, 5 SCRA 1042, No. L-16449
August 31, 1962