G.R. No. L-7821, December 31, 1913
DOMINADOR GOMEZ, plaintiff-appellant, vs. REMEDIOS SALCEDO, defendant-appellee.

FACTS:
On November 8, 1910, defendant Remedios Salcedo leased a house and lot to one Crary for two years at a monthly rental of ₱200, evidenced by a public document. The lease contained no prohibition against subletting. In the same month, Crary sublet a portion of the property to plaintiff Dominador Gomez for two years at ₱140 per month. In February 1911, Salcedo agreed with Gomez to subrogate the latter in all the rights and obligations of Crary under the original lease, with a reduced rent of ₱110 per month. Gomez repeatedly requested Salcedo to embody this subrogation in a public document, but Salcedo refused, assuring Gomez he could remain in possession under the lease terms as long as he wished. However, in December 1911, after a final judgment in an ejectment suit filed by Salcedo against Gomez, Salcedo notified Gomez that from January 1, 1912, he must pay ₱300 monthly for the portion he occupied. Gomez filed a complaint, but Salcedo demurred on the ground that the complaint failed to state a cause of action. The trial court sustained the demurrer, prompting Gomez’s appeal.

ISSUE:
Whether the complaint states a cause of action, considering that the alleged contract of subrogationa lease of real property for more than one yearfalls under the Statute of Frauds and the complaint does not allege that the agreement was in writing.

RULING:
The Supreme Court reversed the trial court’s judgment and remanded the case for further proceedings.

The Court held that the contract of subrogation, whether it pertained to the entire property or only the portion Gomez occupied, involved a leasehold interest in real property for a term longer than one year. Under Section 335(5) of the Code of Civil Procedure (the Statute of Frauds), such an agreement is unenforceable unless evidenced by a written note or memorandum signed by the party charged.

However, the Court ruled that the Statute of Frauds is a matter of defense, not of pleading. A plaintiff is not required to allege in the complaint that the contract was in writing. The law presumes that parties have obeyed the law; thus, in the absence of allegations showing the contract was oral, it is presumed to be in writing. The defense of the Statute of Frauds must be raised affirmatively in the answer, not by demurrer. Since the complaint alleged a valid contract of subrogation and breach thereof, it stated a prima facie cause of action. The demurrer was therefore improperly sustained.

The case was returned to the trial court for the defendant to file an answer and for further proceedings consistent with the opinion.

DISSENTING OPINION (by Justice Moreland):
Justice Moreland argued that the complaint did not sufficiently allege a contract of subrogation. Instead, it indicated only a promise by Salcedo to allow Gomez to remain in possession under the original lease terms for as long as he wisheda contract with no fixed term, where the duration was left to the will of the lessee. Under the Civil Code, such an agreement is a lease from month to month, terminable at the will of either party. Since the term was uncertain and potentially less than one year, the Statute of Frauds might not apply. Moreover, until a court fixes the term in an appropriate action, specific performance cannot be granted. Thus, the complaint failed to state a cause of action, and the judgment should have been affirmed.