G.R. No. L-16449; August 31, 1962
PAUL SCHENKER, plaintiff-appellant, vs. WILLIAM F. GEMPERLE, defendant-appellee.

FACTS

Plaintiff Paul Schenker and defendant William F. Gemperle verbally agreed in Zurich, Switzerland, to organize a Philippine corporation, the Philippine Swiss Trading Co., Inc., and to equally divide its capital stock. This agreement was later confirmed in a letter from Gemperle, which explained that the Articles of Incorporation temporarily listed Schenker with only 24% of the shares and Gemperle and his relatives with 76%. This discrepancy was purportedly to comply with a local law requiring Filipino majority ownership for government contracts, with Gemperle assuring Schenker he would later give him “exactly the same share holding as I have.” Schenker paid his subscription of P7,000. Upon Gemperle’s consistent refusal to honor their agreement despite demands, Schenker filed a complaint for specific performance, among other reliefs, to compel the transfer of shares to achieve a 50-50 split.
The defendant filed a motion to dismiss the first cause of action for specific performance, arguing the complaint stated no cause of action because the obligation to transfer the shares had no fixed period for performance and was therefore not yet due. The trial court granted the motion, ruling the obligation was not pure and was dependent on a future event, that the oral agreement had been novated, and that a separate action to fix the period was necessary before an action for specific performance could proceed. Schenker appealed.

ISSUE

Whether the trial court erred in dismissing the first cause of action for specific performance on the ground that the obligation, having no fixed period, was not yet due and demandable.

RULING

Yes, the trial court erred. The Supreme Court reversed the dismissal order and remanded the case. The legal logic is twofold. First, under Article 1197 of the Civil Code, if an obligation does not fix a period but one can be inferred from its nature and circumstances, the courts are empowered to fix its duration. The amended complaint’s essential allegations—detailing the agreement, the defendant’s acknowledgment, the plaintiff’s performance in paying his subscription, and the defendant’s refusal—sufficiently pleaded a cause of action under this article. The prayer for “such other and further relief as may appear just and equitable” is broad enough to encompass the remedy of the court fixing the period, even if not explicitly demanded. The cited case of Barreto v. City of Manila supports this, as it involved a similar indefinite period and the Court allowed the fixing of the term within the same action.
Second, and alternatively, the obligation itself is a pure obligation under Article 1179 of the Civil Code, demandable at once. The defendant’s promise to give the plaintiff an equal shareholding was unconditional. The plaintiff’s immediate payment of his subscription after incorporation indicated the parties intended immediate fulfillment, with the defendant only needing a reasonable time to perform the mechanics of the share transfer. The trial court’s view that a separate action was required to fix the period is incompatible with these provisions and the integrated nature of the relief sought. Therefore, the complaint validly states a cause of action.