Calero v. Carrion
REITERATIONFacts
The Antecedents: Plaintiff Federico Calero proposed to Enrique Carrion the joint acquisition of a property in Plaza Santa Cruz for P250,000.00, with a P25,000.00 down payment. Carrion accepted and authorized the transaction in the name of his daughters, the defendants. Due to Carrion's absence, his administrator, Santiago Carrion, negotiated with the plaintiff. To avoid complications of co-ownership, Santiago proposed that the property be bought exclusively in the defendants' names, with an obligation to pay the plaintiff 20% of the profits upon sale. The plaintiff agreed, understanding the property would be sold as soon as a buyer was found for not less than P300,000.00. A formal contract was executed on May 28, 1937, stipulating that upon sale, the defendants would pay the plaintiff 20% of any amount obtained from the sale after deducting the total paid amount, representing 20% of the net profit. Procedural History: Plaintiff filed a complaint on December 20, 1956, seeking an accounting and payment of his share of the profits, and an order for the defendants to sell the property. Defendants moved to dismiss, alleging no cause of action and prescription. The court ordered the plaintiff to amend his complaint to ask the court to fix a period for the sale, as the obligation was without a fixed term. Plaintiff amended his complaint, requesting the court to set a three-month period for the sale and for the defendants to pay 20% of the profits. Defendants renewed their motion to dismiss, reiterating grounds of no cause of action and prescription, arguing the cause of action accrued in 1937. The court initially denied the motion to dismiss but later granted defendants' motion for reconsideration, dismissing the complaint on the ground of prescription, citing Article 1197 of the New Civil Code and jurisprudence. Plaintiff's motion for reconsideration was denied. Hence, this appeal. The Petition: Plaintiff-appellant contends that the lower court erred in dismissing his complaint, arguing that the agreement created an implied trust which is not subject to prescription, and that even if the obligation had an undetermined period, the action to fix such a period had not yet prescribed.
Issue(s)
Whether the agreement created an implied trust that is not subject to prescription. Whether the action to have a period fixed for the sale of the property under Article 1197 of the New Civil Code has prescribed.
Ruling
The Supreme Court affirmed the order of dismissal. The Court ruled that the action to have a period fixed for the fulfillment of an obligation under Article 1197 of the New Civil Code has prescribed.
Ratio Decidendi
On the issue of implied trust: The Court held that the agreement did not create an implied trust under Articles 1452 or 1453 of the New Civil Code. Article 1452 is inapplicable because there was no stipulation for a joint purchase with legal title taken in one name for the benefit of all. Article 1453 is also inapplicable as there was no conveyance of property in reliance upon a declared intention to hold it for another or the grantor. The contract clearly shows that the plaintiff acted as a broker who negotiated the sale, and the defendants agreed to compensate him with 20% of the net profits from the sale of the property, which was purchased exclusively in their name and for their own account. The obligation of the defendants was to pay the plaintiff a share of the profits derived from the sale of the property, not to hold the property in trust for him. On the issue of prescription of the action to fix a period: The Court ruled that the action to ask the court to fix the period for the fulfillment of an obligation under Article 1197 of the New Civil Code is not imprescriptible. The prescriptive period for such an action is ten (10) years, commencing from the date of the execution of the agreement which contains the undetermined period. In this case, the agreement was executed on May 28, 1937, and the complaint to have the period fixed was filed on December 21, 1956. Therefore, the plaintiff's action, filed almost twenty years after the agreement, was clearly barred by the Statute of Limitations. The Court clarified that the cause of action to have the period fixed arises from the execution of the agreement itself, and not from a demand or refusal to sell, as extrajudicial demand is not essential for the creation of this cause of action.
Main Doctrine
The action to ask the court to fix the period for the fulfillment of an obligation under Article 1197 of the New Civil Code is subject to prescription, with the prescriptive period commencing from the date of the execution of the agreement containing the undetermined period.