TOPIC: Rule 16. Motion to Dismiss, (i) That
Before the expiration of the redemption,
the claim on which the action is founded is
enforceable under the provisions of the statute
of frauds
DAO HENG BANK, INC. V. SPOUSES LAIGO
G.R. No. 173856 | November 20, 2008 | Carpio
Morales, J.
Digested By: Encarnacion, Fidea Marie L.
DOCTRINE/S:
MTD based on the ground that the claim is
enforceable under the statute of frauds fails
when there has been partial execution of the
same. The transaction is taken out of the
provisions of the Statute of Frauds so long as
the essential requisites of consent of the
contracting parties, object and cause of the
obligation concur and are clearly established to
be present.
FACTS:
1. Spouses Lilia and Reynaldo Laigo
(respondents) obtained loans from Dao
Heng Bank, Inc. in the total amount of
P11 Million.
2. To secure the payment of which they
forged on October 28, 1996, November
18, 1996 and April 18, 1997 three Real
Estate Mortgages covering two parcels
of land registered under the name of the
respondents.
3. As of 2000, respondents failed to settle
their outstanding obligation, drawing
them to verbally offer to cede to Dao
Heng one of the two mortgaged lots by
way of dacion en pago.
4. Dao Heng later demanded the
settlement of respondents' obligation by
letter; indicated outstanding obligation
of P10,385,109.92. Resp. failed to pay.
5. Dao Heng filed in September 2000 an
application to foreclose the real estate
mortgages executed by respondents.
a. The properties were sold for
P10,776,242 at a public auction.
b. Banco de Oro Universal Bank
(hereafter petitioner) was the
highest bidder
6. Respondents negotiated for the
redemption of the mortgages.
Conditions given by petitioner included
redemption price of P11.5MM + 12% int.
7.
respondents filed a complaint before
RTC-QC, for Annulment, Injunction with
Prayer for TRO, praying for the
annulment of the foreclosure of the
properties subject of the real estate
mortgages and for them to be allowed
"to deliver by way of ‘dacion en pago'
one of the mortgaged properties as full
payment of [their] mortgaged obligation".
By respondents' claim, Dao Heng
verbally agreed to enter into a dacion en
pago
8. Petitioner claimed that there was no
meeting of the minds between the
parties on the settlement of respondents'
loan via dacion en pago.
9. Petitioner thereupon filed a Motion to
Dismiss the complaint on the ground
that the claim on which respondents'
action is founded is unenforceable under
the Statute of Frauds and the complaint
states no cause of action.
10. RTC granted MTD. CA reversed.
ISSUE/S:
WON the motion to dismiss filed based on Rule
16, Sec. 1 (i) applies
HELD:
NO. Being likened to that of a contract of sale,
dacion en pago is governed by the law on sales.
The partial execution of a contract of sale takes
the transaction out of the provisions of the
Statute of Frauds so long as the essential
requisites of consent of the contracting parties,
object and cause of the obligation concur and
are clearly established to be present.
There is no concrete showing that after the
appraisal of the properties, petitioner approved
respondents' proposal to settle their obligation
via dacion en pago. The delivery to petitioner of
the titles to the properties is a usual condition
sine qua non to the execution of the mortgage,
both for security and registration purposes.
Respondents did not deny proposing to redeem
the mortgages. This defeats their claim of the
existence of a perfected dacion en pago.
PETITION IS GRANTED.
TOPIC: Rule 16. Motion to Dismiss, (i) That
the claim on which the action is founded is
enforceable under the provisions of the statute
of frauds
MUNICIPALITY OF HAGONOY, BULACAN V.
DUMDUM, JR.
G.R. No. 168289 | March 22, 2010 | Peralta, J.
Digested By: Encarnacion, Fidea Marie L.
DOCTRINE/S:
An action shall warrant a dismissal under
Section 1(i), Rule 16 of the Rules of Court,
unless there has been, among others, total or
partial performance of the obligation on the part
of either party.
FACTS:
1. Case stems from a Complaint filed by
herein private respondent Emily Rose
Go Ko Lim Chao against herein
petitioners, the Municipality of Hagonoy,
Bulacan and its chief executive, Felix V.
Ople (Ople) for collection of a sum of
money and damages.
2. That sometime in the middle of the year
2000, respondent (doing business as
KD Surplus and as such engaged in
buying and selling surplus trucks, heavy
equipment, machinery, spare parts and
related supplies) was contacted by
petitioner Ople.
3. Respondent had entered into an
agreement with petitioner municipality
through Ople for the delivery of motor
vehicles, which supposedly were
needed to carry out certain
developmental undertakings in the
municipality.
4. Respondent claimed that because of
Ople’s earnest representation that funds
had already been allocated for the
project, she agreed to deliver 21 motor
vehicles, totalled at ₱5,820,000.00.
5. Despite having made several deliveries,
Ople allegedly did not heed
respondent’s claim for payment.
6. Respondent prayed for full payment of
₱10,026,060.13, with interest at not less
than 2% per month, plus damages.
7. Instead of addressing private
respondent’s allegations, petitioners
filed a Motion to Dismiss on the ground
that the claim on which the action had
been brought was unenforceable under
the statute of frauds, pointing out that
there was no written contract or
document that would evince the
supposed agreement they entered into
with respondent.
8. RTC denied the motion. CA affirmed.
ISSUE/S:
WON the motion to dismiss filed based on Rule
16, Sec. 1 (i) was properly dismissed.
HELD: YES.
Since there exists an indication by way of
allegation that there has been performance of
the obligation on the part of respondent, the
case is excluded from the coverage of the rule
on dismissals based on unenforceability under
the statute of frauds, and either party may then
enforce its claims against the other.
The Statute of Frauds only lays down the
method by which the enumerated contracts may
be proved. But it does not declare them invalid
because they are not reduced to writing.
The effect of noncompliance with this
requirement is simply that no action can be
enforced under the given contracts. If an action
is nevertheless filed in court, it shall warrant a
dismissal under Section 1(i), Rule 16 of the
Rules of Court, unless there has been, among
others, total or partial performance of the
obligation on the part of either party.
By invoking unenforceability under the Statute of
Frauds, petitioners are in effect acknowledging
the existence of a contract between them and
private respondent — only, the said contract
cannot be enforced by action for being non-
compliant with the legal requisite that it be
reduced into writing. Suffice it to say that while
this assertion might be a viable defense against
respondent’s claim, it is principally a matter of
evidence that may be properly ventilated at the
trial of the case on the merits.
Verily, no grave abuse of discretion has been
committed by the trial court in denying
petitioners’ motion to dismiss this case. The
Court of Appeals is thus correct in affirming the
same.
PETITION IS GRANTED IN PART.
TOPIC: Rule 16. Motion to Dismiss, (j) That a
condition precedent for filing the claim has not
been complied with.
SPOUSES YU V. YUKAYGUAN
G.R. No. 177549 | June 18, 2009 | Chico-
Nazario, J.
Digested By: Encarnacion, Fidea Marie L.
DOCTRINE/S: Complaint must be dismissed
under Section 1(j), Rule 16 of the Rules of Court
upon finding of failure to comply with conditions
precedent before its filing. In this case: failed to
exert efforts to settle dispute, exhaust remedies
available, and lacked allegation of previous
demand.
FACTS:
*Only on relevant matters relating to MTD. Full
blown trial ensued after dismissal of complaint.
1. Petitioners and the respondents were all
stockholders of Winchester Industrial
Supply, Inc. (Winchester, Inc.), a
domestic corporation engaged in the
operation of a general hardware and
industrial supply and equipment
business.
2. Respondents filed against petitioners a
verified Complaint for Accounting,
Inspection of Corporate Books and
Damages through Embezzlement and
Falsification of Corporate Records and
Accounts6 before the RTC of Cebu.
a. The said Complaint was filed by
respondents, in their own behalf
and as a derivative suit on
behalf of Winchester, Inc.
3. Among other claims, it was contended
that petitioners were also
misappropriating the funds and
properties of Winchester, Inc. by
understating the sales, charging their
personal and family expenses to the
said corporation, and withdrawing stocks
for their personal use without paying for
the same.
4. Respondents, therefore, prayed that
respondent Joseph be declared the
owner of the 200 shares of stock in
petitioner Anthony’s name. Respondents
also prayed that petitioners be ordered
to: (1) deposit the corporate books and
records of Winchester, Inc. with the
Branch Clerk of Court of the RTC for
respondents’ inspection; (2) render an
accounting of all the funds of
Winchester, Inc. which petitioners
misappropriated; (3) reimburse the
personal and family expenses which
petitioners charged to Winchester, Inc.,
as well as the properties of the
corporation which petitioners withheld
without payment; and (4) pay
respondents’ attorney’s fees and
litigation expenses. In the meantime,
respondents sought the appointment of
a Management Committee and the
freezing of all corporate funds by the
trial court.
5. Petitioners filed an Answer with
Compulsory Counterclaim, attached to
which was petitioner Anthony’s Affidavit.
Petitioners vehemently denied the
allegation that petitioner Anthony was a
mere trustee for respondent Joseph of
the 1,000 shares of stock in Winchester,
Inc. in petitioner Anthony’s name.
6. By way of special and affirmative
defenses, petitioners contended in their
Answer with Compulsory Counterclaim
that respondents had no cause of action
against them.
ISSUE/S:
WON the Complaint should be dismissed under
Section 1(j), Rule 16 of the Rules of Court.
HELD: YES. Respondents’ Complaint was
purely intended for harassment. It should be
dismissed under Section 1(j), Rule 16 of the
Rules of Court for failure to comply with
conditions precedent before its filing.
First, there was no allegation in respondents’
Complaint that earnest efforts were exerted to
settle the dispute between the parties. Second,
since respondents’ Complaint purportedly
constituted a derivative suit, it noticeably failed
to allege that respondents exerted effort to
exhaust all available remedies in the Articles of
Incorporation and By-Laws of Winchester, Inc.,
as well as in the Corporation Code. And third,
given that respondents’ Complaint was also for
inspection of corporate books, it lacked the
allegation that respondents made a previous
demand upon petitioners to inspect the
corporate books but petitioners refused.
PETITION IS GRANTED.