Contractors & Development v. Pobocan
REITERATIONFacts
The Antecedents: Respondent Jose A. Pobocan was employed by Specified Contractors & Development, Inc. (Specified Contractors) until his retirement in March 2011, holding the position of president of Specified Contractors and its subsidiary, Starland Properties Inc., among other roles. During his employment, Architect Enrique Olonan, representing Specified Contractors, allegedly agreed to compensate respondent with one unit for every building constructed by the company. Two such projects were the Xavierville Square Condominium and the Sunrise Holiday Mansion Bldg. I, where respondent claims ownership of Unit 708 and Unit 208, respectively, based on this alleged oral agreement. Procedural History: Respondent demanded the execution of deeds of assignment or sale for the subject units in a March 14, 2011 letter. When this demand was not met, respondent filed a complaint for specific performance with damages on November 21, 2011, before the Regional Trial Court (RTC) of Quezon City. Petitioners filed a Motion to Dismiss, arguing the oral agreement was unenforceable due to the statute of frauds and that the cause of action had prescribed. The RTC granted the motion and dismissed the complaint. On appeal, the Court of Appeals (CA) reversed the RTC's order, finding that the statute of frauds did not apply to partially consummated contracts and that a trial on the merits was necessary. Petitioners sought reconsideration, which was denied, leading to the present petition. The Petition: Petitioners seek review on certiorari under Rule 45 of the Rules of Court, asking this Court to reverse the CA's decision and reinstate the RTC's dismissal order. They raise three main issues: (1) whether the RTC had jurisdiction, arguing the claim arose from an employer-employee relationship cognizable by the labor arbiter; (2) whether the respondent's cause of action had prescribed; and (3) whether the action was barred by the statute of frauds. The Court finds merit in the argument that the action has prescribed, holding that the suit for specific performance based on an oral contract is a personal action subject to a six-year prescriptive period, which had elapsed based on the dates of the alleged oral agreements and the issuance of the condominium certificates of title.
Issue(s)
Whether the RTC had jurisdiction over the complaint, considering the claim arose from an alleged employer-employee relationship. Whether the respondent's cause of action had already prescribed. Whether the action was barred by the statute of frauds.
Ruling
The Supreme Court granted the petition, reversed and set aside the Court of Appeals' decision and resolution, and sustained the dismissal of the case, but on the ground that the action for specific performance had already prescribed.
Ratio Decidendi
On Jurisdiction: The Court held that the RTC had jurisdiction. It clarified that the nature of the action is determined by the allegations in the complaint and the relief sought. In this case, the respondent prayed for the execution of written instruments pursuant to an alleged oral contract, which constitutes an action for specific performance, a personal action incapable of pecuniary estimation. Such actions are cognizable by the RTC where the parties reside. The Court also found that the petitioners were estopped from raising the issue of jurisdiction for the first time on appeal after actively participating in the proceedings before the RTC and obtaining a favorable ruling there. On Prescription: The Court ruled that the respondent's action had prescribed. It reiterated that the nature of the action is specific performance, a personal action based on an oral contract. Under Article 1145 of the New Civil Code, such actions must be brought within six years from the time the right of action accrues. The respondent's demand letter dated March 14, 2011, indicated that the alleged oral agreements were entered into in 1994 and December 1, 1999. The complaint was filed on November 21, 2011, which was 17 years from the 1994 agreement and almost 12 years from the 1999 agreement, both exceeding the six-year prescriptive period. Even if the units were not yet completed in 1994 and 1999, the Certificates of Title for the units were issued in 1997 and 1996, respectively, well before the six-year prescriptive period from their issuance would have expired. On Statute of Frauds: The Court found it unnecessary to delve into the applicability of the statute of frauds because the complaint should have been dismissed on the ground of prescription, which was apparent from the complaint and its annexes. However, it noted the CA's reasoning that the statute of frauds applies only to executory contracts and not to completed or partially consummated ones, and that the CA found evidence of partial performance.
Main Doctrine
An action for specific performance based on an oral contract, even if it involves real property, is a personal action governed by the six-year prescriptive period under Article 1145 of the New Civil Code, not the thirty-year period for real actions. The statute of frauds does not apply to partially consummated contracts.