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G.R. No. L-36821 June 22, 1978

JOSE P. DIZON,petitioner,

vs.

ALFREDO G. GABORRO (Su!"#"u"e$ % PA&I'A DE GZ)AN GABORRO

*! Ju$#+#* A$#n#!"*"#/ o0 "e E!"*"e o0 A0e$o G. G*oo *n$ "e

DEELOP)EN' BAN4 OF '5E P5ILIPPINES, respondents.

Leonardo Abola for petitioner.

Carlos J. Antiporda for respondents.

GERRERO, J.:

Petition for review on certiorari of the decision of the Court Appeals 1in CA-G.R.

No. 4697-R entitled !Jose P. Dizon, Plaintiff-Appellant, vs. Alfredo G.

Gaborro"su#stituted #$ Pacita de Gu%&an Ga#orro as 'udicial Ad&inistratri( of the

)state of Alfredo G, Ga#orro* trial the +evelop&ent an of the Philippines,

+efendants-Appellees,! affir&in with &odification the decision of the Court of

/irst 0nstance of Pa&pana, ranch 00 in Civil Case No. 1234.

he dispositive portion of the decision souht to #e reviewed reads5

0N 0) 8/ ) /8R)G80NG, the :ud&ent appealed

therefro& is here#$ affir&ed with &odification that the plaintiff-

appellant has the riht to refund or reiurse the defendant-

appellees he su& of P2;2,3;2.92 with interest at 3< per annu&fro& 8cto#er 6, 299 until full pa$&ent, said riht to #e e(ercised

within one $ear fro& the date this :ud&ent #eco&es final, with

the understandin that, if he fails to do so within the said period,

then he is dee&ed to have lost his riht over the lands forever. ith

costs aainst the appellant. 2

=8+0/0)+.

he #asic issue to #e resolved in this case is whether the >+eed of ?ale with

Assu&ption of =ortae>, trial 8ption to Purchase Real )state!. two instru&entse(ecuted #$ trial #etween Petitioner 'ose P. +i%on trial Alfredo G. Ga#orro

"defendant #elow* on the sa&e da$, 8cto#er 6, 299 constitute in truth trial in fact an

a#solute sale of the three parcels of land therein descri#ed or &erel$ an e@uita#le

&ortae or conve$ance thereof #$ wa$ of securit$ for reiurse&ent, refund or

repa$&ent #$ petitioner 'ose P. +i%on of an$ trial all su&s which &a$ have #een

paid to the +evelop&ent an of the Philippines trial the Philippine National an

#$ Alfredo G. Ga#orro "later su#stituted herein #$ his wife Pacita de Gu%&an

Ga#orro as ad&inistratri( of the estate of Alfredo G. Ga#orro* who had died durin

the pendenc$ of the case.

A supple&entar$ issue raised is whether or not Ga#orro or the respondent

ad&inistratri( of the estate should account for all the fruits produced trial inco&e

received #$ the& fro& the lands &entioned trial descri#ed in the aforesaid !+eed of

?ale with Assu&ption of =ortae.!

he antecedent facts esta#lished in the record are not disputed. Petitioner 'ose P.

+i%on was the owner of the three ";* parcels of land, su#:ect &atter of this litiation,

situated in =a#alacat, Pa&pana with an areate area of 2;.3 hectares, as

evidenced #$ ransfer Certificate of itle No. 2679. e constituted a first &ortae

lien in favor of the +evelop. &ent an of the Philippines in order to secure a loan in

the su& of P;3,. trial a second &ortae lien in favor of the Philippine

National an to cure his inde#tedness to said #an in the a&ount of P9;,3;2.92.

Petitioner +i%on havin defaulted in the pa$&ent of his de#t, the +evelop&ent an

of the Philippines foreclosed the &ortae e(tra:udiciall$ pursuant to the provisions

of Act No. ;2;. 8n =a$ 16, 299, the hinds were sold to the +P for- P;2,49.12,

which a&ount covered the loan, interest trial e(penses, trial the correspondin

!Certificate of ?ale,! ")(hi#it A-1, )(hi#it 2# was e(ecuted in favor of the said 8n

Noveer 21, 299, +i%on hi&self e(ecuted the deed of sale ")(hi#it Al over the

properties in favor of the +P which deed was recorded in the 8ffice of the Reisterof +eeds on 8cto#er 6, 296.

?o&eti&e prior to 8cto#er 6, 299 Alfredo G. Ga#orro trial 'ose P. +i%on &et.

Ga#orro #eca&e interested in the lands of +i%on. +i%on oriinall$ intended to lease

to Ga#orro the propert$ which had #een l$in idle for so&e ti&e. ut as the

&ortae was alread$ foreclosed #$ the +P trial the #an in fact purchased the

lands at the foreclosure sale on =a$ 16, 299, the$ a#andoned the pro:ected lease.

he$ then entered into the followin contract on 8cto#er 6, 299 captioned trial

@uoted, to wit5

+))+ 8/ ?AB) 0 A??=P08N

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pre:udice at an$ ti&e to the pa$&ent #$ =r. +i%on of an$ partial

a&ount to #e applied to the principal o#liation, without an$ wa$

distur#in the possession andKor ownership of the a#ove properties

since onl$ full pa$&ent can effect the necessar$ chane.

0n the event that =r. 'ose P. +i%on &a$ #e a#le to find a purchaser

for- the foreoin properties on or the fifth $ear fro& the date the

e(ecution of this docu&ent, the GRAN)), =r. '8?) P. +08N,&a$ do so provided that the areate a&ount which was Paid to

+evelop&ent an of the Philippines trial to the Philippine

National an toether with the interests thereon at the rate of 3s initial trial the followin were present5 =r. Beonardo

A#ola, for the plaintiffI =r. Carlos Antiporda, for the defendant

Alfredo Ga#orroI and =r. irillo /uoso, for the +evelop&ent

an of the Philippines5

he parties #rave stipulated on the followin facts5

2. hat Anne( A attached to the co&plaint is &ared )(hi#it

A- ?tipulation. he parties have ad&itted the due e(ecution,authenticit$ and enuineness of said )(hi#it A-?tipulation. his

fact has #een ad&itted #$ all the three parties.

1. hat the defendant Ga#orro e(ecuted Anne( , which is &ared

)(hi#it -?tipulation. his fact has #een ad&itted onl$ #etween

plaintiff and defendant Ga#orro.

;. hat the three parcels of land referred to in pararaph ; of the

co&plaint, on or #efore 8cto#er 6, 299, were su#:ect to a first

&ortae lien in favor of the +evelop&ent an of the

Philippines, for&erl$ Reha#ilitation /inance Corporation, to secure

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pa$&ent of a loan o#tained #$ the plaintiff 'ose P. +i%on in the

oriinal su& of P;3,. plus interest, which has #een assu&ed

#$ defendant Ga#orro #$ virtue of a docu&ent, )(hi#it A-

?tipulation, and also su#:ect to a second &ortae lien in favor of

the Philippine National an to secure the pa$&ent of a loan in the

su& of P9;,3;2.92 plus interest up to Auust ;, 292, which

&ortae liens were dul$ annotated on C 2679. his fact has

#een ad&itted #$ the plaintiff and defendant Ga#orro.

4. 0n respect to the foreclosure of the first &ortae referred to

a#ove, it was ad&it that the sa&e was foreclosed on =a$ 16, 299,

the second &ortae has not #een ad&itted nor foreclosed.

. hat the +evelop&ent an of the Philippines ad&its that the

first &ortae referred to a#ove was foreclosed on =a$ 16, 299

under the provision,,I of Pu#lic Act No- ;2;, as a&ended.

6. hat su#se@uentl$ the +evelop&ent an and the defendant

Ga#orro e(ecuted a docu&ent entitled Conditional ?ale over the

sa&e parcels of land referred to in pararaph ; of the co&plaint,

and cop$ thereof will #e furnished #$ the +evelop&ent an of

the Philippines and &ared )(hi#it C-?tipulation.

7. hat on or #efore 8cto#er 6, 296, C No. 2679 of the

Reister of + of Pa&pana in the na&e of 'ose P. +i%on coverin

the three parcels of land referred to in the co&plaint was cancelled

and in lieu thereof C N8. 14191 of the Reister of +eeds of

Pa&pana was issued in the na&e of the +evelop&ent an of the

Philippines. his fact has #een ad&itted #$ all the parties.

3. hat after the e(ecution of the deed of conditional sale, certain

pa$&ents were &ade #$ the defendant Ga#orro to the

+evelop&ent an, the e(act a&ount to #e deter&ined later and

receipts of pa$&ents to #e also e(hi#ited later. his fact has #een

ad&itted #$ all the three parties.

9. hat since 8cto#er 6, 299, the defendant Ga#orro has &ade

several pa$&ents to the PN in the a&ounts appearin on the

receipts which will #e shown later, such pa$&ents #ein &ade on

account of the su& of P;3,3;2.92. he pa$&ent was assu&ed #$

said - defendant Ga#orro. his fact has #een ad&itted #$ plaintiff

and defendant Ga#orro onl$.

2. hat since the e(ecution of )(hi#its A and -?tipulation, it,,

defendant Ga#orro has #een and still is in the actual possession f

the three parcels of land in @uestion and he is actuall$ cultivatin

the sa&e and that the land ta(es thereon have #een paid #$ said

defendant Ga#orro, the a&ounts of said ta(es appearin on theofficial receipts to #e shown later. his fact has #een ad&itted #$

plaintiff and defendant Ga#orro onl$.

22. hat since defendant Ga#orro too possession of the lands in

@uestion, he has #een appropriatin all the fruits produced and

inco&e of said lands without ivin to the plaintiff an$ share

hereof. his fact has #een ad&itted #$ plaintiff and defendant

Ga#orro onl$.

Bet a cop$ of this order #e served upon the plaintiff, defendant

Ga#orro and the +evelop&ent an of the Philippines with the

understandin that, if, within fifteen "2* da$s, none of the parties

@uestions the correctness of he facts set forth a#ove. this

stipulation of facts shall #e conclusive upon the parties interested

in this case.

?et the trial on the controversial facts on April 23, 296; at 2;5

cloc in the &ornin.

Pararaphs ; and 2 of the a#ove @uoted order were deleted in an order dated 'ul$

16, 296;.

he records disclose that durin the pendenc$ of the case in the trial court, &otions

were filed #$ the plaintiff for the appoint&ent of a receiver of the properties #ut all

were denied. plaintiff also reiterated the sa&e &otion #efore the appellate court

which, however, dis&issed the sa&e, reservin to hi& the riht to file in the trial

court. Plaintiff did file #ut with the sa&e result. certiorari proceedins were resorted

to in the Court of Appeals in CA-G.R. No. ?P-24; entitled !Jose P. Dizon vs. $on.

"elipe &enaino, et al.! which the respondent court denied.

After trial the court held that the true aree&ent #etween 'ose P. +i%on, the plaintiff

therein, and the defendant Alfredo G. Ga#orro is that the defendant would assu&e

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and pa$ the inde#tedness of the plaintiff to the +evelop&ent an of the Philippines

and the Philippine National an, and in consideration therefor, the defendant was

iven the possession and en:o$&ent of the properties in @uestion until the plaintiff

shall have reiursed to defendant full$ the a&ount of P2;2,3;2.92 plus 3< interest

per annu&.

Accordinl$, on =arch 24, 297, the lower court rendered :ud&ent, the dispositive

part of which reads5

0N 0) 8/ ) /8R)G80NG, the docu&ents entitled >+eed of

?ale with Assu&ption of =ortae>")(hi#it A-?tipulation* and

>8ption to Purchase Real )state> ")(hi#it -?tipulation* are here#$

refor&ed to the e(tent indicated a#ove. owever, since this action

was filed #efore the period allowed the plaintiff to redee& his

propert$, the pre&aturit$ of this action aside fro& not #ein

principall$ alleed in the co&plaint, deters this Court fro&

orderin further reliefs and re&edies. he counterclai& of the

defendant is dis&issed.

he plaintiff>s &otion for new trial and for reconsideration and &otion for ad&ission

of supple&ental co&plaint havin #een denied for lac of &erit, on 'une 6, 297,

plaintiff appealed to the Court of Appeals, which. however, affir&ed the decision

with the &odification that the plaintiff-appellant has the riht to refund or reiurse

the defendant-appellee the su& of P2;2,3;2.92 with interest at 3< per annu& fro&

8cto#er 6, 299 until full pa$&ent, said riht to #e e(ercised within one "2* $ear

fro& the date the :ud&ent #eco&es final, with the understandin that, if he fails to

do so within the said period, then he is dee&ed to have lost his riht over the lands

forever.

Petitioner>s &otion for reconsideration andKor rehearin havin #een denied #$ the

Court of Appeals, hence the present petition for review on certiorari. he petitioner

assins the followin errors, to wit5

0. he Court of Appeals, lie the lower court, erred in not holdin

that upon esta#lished facts and undisputed docu&entar$ evidence,

the deed of sale with assu&ption of &ortae ")(hi#it A-

?tipulation* constitutes an e@uita#le &ortae or conve$ance to

secure petitioner>s o#liation to reiurse or refund to defendant

Alfredo Ga#orro an$ and all su&s to the e(tent of P2;2,3;2.92,

paid #$ said defendant in total or partial satisfaction of petitioner>s

&ortae de#ts to the +P and the PN. 0n this connection, the

Court of Appeals erred5

"A* 0n not findin that the petitioner was the

lawful owner of the lands in @uestion5

"* 0n not findin that the deed of sale in

@uestion is not a real and unconditional saleI and

"C* 0n not holdin that the option to purchase

real estate ")(hi#it -?tipulation is conclusive

evidence that the transaction in @uestion is in fact

an e@uita#le &ortae.

00. he Court of Appeals also erred in findin that the instru&ent

entitled >Assin&ent of Riht of Rede&ption and Assu&ption of

8#liation> is conclusive evidence that the real transaction

)videnced #$ the >+eed of ?ale with Assu&ption of =ortae> is

not an e@uita#le &ortae. 0n this connection the said court also

erred or at least co&&itted a rave a#use of discretion5

"A* 0n not findin that the said deed of

assin&ent is in fact a &ere reiteration of the

ter&s and condition of the deed of saleI

"* 0n findin that the price or consideration of

he aforesaid assin&ent. of riht of rede&ption

consisted of ; cavans of pala$ delivered #$

=rs. Ga#orro to the petitionerI and

"C* 0n findin that defendant Ga#orro purchased

the lands in @uestion #$ virtue of the

afore&entioned deed of assin&ent.

000. he, Court of Appeals, lie the trial court, also erred in not

findin that the estate of Alfredo G. Ga#orro is under o#liation to

render an accountin of all the produce, fruits and other inco&e of

the lands in @uestion fro& 8cto#er 6, 299, and to reconve$ the

said lands to the herein petitioner. 0n to connection, the said court

also erred5

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"A* 0n not holdin that as a &ortaee in

possession the Ga#orro estate has the o#liation

to either render an accountin of the produce or

fruits of the lands, or to pa$ rentals for the

occupation of said landsI

"* 0n not findin that the Ga#orro estate has the

o#liations to reconve$ the lands in controvers$to the herein petitioner, upon pa$&ent of the

#alance due fro& hi& after deductin either the

net value of the produce or fruits of the ?aid

lands or the rentals thereof,

"C* 0n not findin that further reliefs or re&edies

&a$ #e ranted the herein petitionerI and

"+* 0n not orderin the ad&ission of herein

petitioners >?upple&ental Co&plaint> dated April

;, 297.

0. he Court of Appeals finall$ erred in not reversin the decision

of the trial court, and in not renderin :ud&ent declarin that the

deed of sale with assu&ption of &ortae ")(hi#it A ?tipulation* is

in fact an e@uita#le &ortaeI and in not orderin the Ga#orro

estate either to render an accountin of all the produce or fruits of

the lands in @uestion or to pa$ rentals for the occupation thereof,

fro& 8cto#er 6, 299I and in not orderin the estate of Alfredo G.

Ga#orro to reconve$, transfer and assin unto the petitioner the

afore&entioned lands.

he two instru&ents souht to #e refor&ed in this case ap pear to stipulate rihts and

o#liations #etween the parties thereto Pertainin to and involvin parcels of land

that had alread$ #eer foreclosed and sold e(tra:udiciall$, and purchased #$ the

&ortae creditor, a deree part$. 0t #eco&es, therefore, necessar$ to deter&ine the

lealit$ of said rihts and o#liation arisin fro& the foreclosure and e pro.

proceedins onl$ #etween the two contractin parties to the instru&ents e(ecuted

#etween the& #ut also in the so far a aree&ent affects the rihts of the deree pant$,

the purchase an.

Act ;2;, ?ection 6 as a&ended #$ Act 4223, under which the Properties were

e(tra:udiciall$ foreclosed and sold, provides that5

?ec. 6. 0n all cases in which an e(tra:udicial rule is &ade under the

special power herein#efore referred to, the de#tor, his successors in

interest or an$ :udicial creditor or :ud&ent creditor of e de#tor, or

an$ person havin a lien on the propert$ su#se@uent to the

&ortae or deed of trust under which the propert$ is sold, &a$redee& the sa&e at an$ ti&e within the ter& or one $ear fro& and

after the date of the saleI and such rede&ption shall #e overned #$

the provisions of sections four hundred and si(t$-four to four

hundred and si(t$-si(, inclusive, of the Code of Civil Procedure, in

so far as these are not consistent with the provisions of this Act.

nder the Revised Rules of Court, Rule ;9, ?ection ;;, the :ud&ent de#tor re&ains

in possession of the propert$ foreclosed and sold, durin the period of rede&ption. 0f

the :ud&ent de#tor is in possession of the propert$ sold, he is entitled to retain it

and receive the fruits, the purchaser not #ein entitled to such possession. "Riosa v.

er%osa, 16 Phil. 36I elasco v. Rosen#er>s 0nc., ;1 Phil. 71I Pa#ico v. Pauco 4;

Phil. 71I Power v. PN, 4 Phil. 4I Gorospe v. Gochanco B-217;, 8ct. ;,

299*.

A :ud&ent de#tor, whose propert$ is levied on e(ecution, &a$ transfer his riht of

rede&ption to an$ one who& he &a$ desire. he riht to redee& land sold under

e(ecution within 21 &onths is a propert$ riht and &a$ #e sold voluntaril$ #$ its

owner and &a$ also #e attached and sold under e(ecution "=ano v. iola and ?otto,

62 Phil. 3*.

pon foreclosure and sale, the purchaser is entitled to a certificate of sale e(ecuted#$ the sheriff. "?ection 17, Revised Rules of Court* After the ter&ination of the

period of rede&ption and no rede&ption havin #een &ade, the purchaser is entitled

to a deed of conve$ance and to the possession of the properties. "?ection ;, Revised

Rules of Court*. he weiht of authorit$ is to the effect that the purchaser of land

sold at pu#lic auction under a writ of e(ecution onl$ has an inchoate riht in the

propert$, su#:ect to #e defeated and ter&inated within the period of 21 &onths fro&

the date of sale, #$ a rede&ption on the part of the owner. herefore, the :ud&ent

de#tor in possession of the propert$ is entitled to re&ain therein durin the period

allowed for rede&ption. "Riosa v. er%osa. 16 Phil, 36I 39I Gon%ales v. Calias, 2

Phil. ;.*

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0n the case #efore s, after the e(tra:udicial foreclosure and sale of his properties,

petitioner +i%on retained the riht to redee& the lands, the possession, use and

en:o$&ent of the sa&e durin the period of rede&ption. And these are the onl$ rihts

that +i%on could leall$ transfer, cede and conve$ unto respondent Ga#orro under

the instru&ent captioned +eed of ?ale with Assu&ption of =ortae ")(h. A-

?tipulation*, liewise the sa&e rihts that said respondent could ac@uire in

consideration of the latter>s pro&ise to pa$ and assu&e the loan of petitioner +i%on

with +P and PN.

?uch an instru&ent cannot #e leall$ considered a real and unconditional sale of the

parcels of land, firstl$, #ecause there was a#solutel$ no &one$ consideration

therefor, as ad&ittedl$ stipulated the su& of P2;2,3;2.92 &entioned in the docu&ent

as the consideration !receipt of which was acnowleded! was not actuall$ paidI and

secondl$, #ecause the properties had alread$ #een previousl$ sold #$ the sheriff at

the foreclosure sale, there#$ divestin the petitioner of his full riht as owner thereof

to dispose and sell the lands.

0n leal conse@uence there#$, respondent Ga#orro as transferee of these certain

li&ited rihts or interests under )(h. A-?tipulation, cannot rant to petitioner +i%on&ore that said rihts, such ac the option Co purchase the lands as stipulated in the

docu&ent called 8ption to Purchase Real )state ")(hi#it -?tipulation*, his is

necessaril$ so for the reason that respondent Ga#orro did not purchase or ac@uire the

full title and ownership of the properties #$ virtue of the +eed of ?ale ith

Assu&ption of =ortae ")(h. A ?tipulation*, earlier e(ecuted #etween the& which

e have ruled out as an a#solute sale. he onl$ leal effect of this 8ption +eed is

the rant to petitioner the riht to recover the properties upon reiursin

respondent Ga#orro of the total su&s of &one$ that the latter &a$ have paid to +P

and PN on account of the &ortae de#ts, the said riht to #e e(ercised within the

stipulated $ears period.

0n the liht of the foreclosure proceedins and sale of the properties, a leal point of

pri&ar$ i&portance here, as well as other relevant facts and circu&stances, e aree

with the findins of the trial and appellate courts that the true intention of the parties

is that respondent Ga#orro would assu&e and pa$ the inde#tedness of petitioner

+i%on to +P and PN, and in consideration therefor, respondent Ga#orro was

iven the possession, the en:o$&ent and use of the lands until petitioner can

reiurse full$ the respondent the a&ounts paid #$ the latter to +P and PN, to

acco&plish the followin ends5 "a* pa$&ent of the #an o#liationsI "#* &ae the

lands productive for the #enefit of the possessor, respondent Ga#orro, "c* assure the

return of the land to the oriinal owner, petitioner +i%on, thus renderin e@uit$ and

fairness to all parties concerned.

0n view of all these considerations, the law and 'urisprudence, and the facts

esta#lished. e find that the aree&ent #etween petitioner +i%on and respondent

Ga#orro is one of those inani&ate contracts under Art. 2;7 of the New Civil Code

where#$ petitioner and respondent areed !to ive and to do! certain rihts and

o#liations respectin the lands and the &ortae de#ts of petitioner which would #eaccepta#le to the #an. #ut partain of the nature of the antichresis insofar as the

principal parties, petitioner +i%on and respondent Ga#orro, are concerned.

=istae is a round for the refor&ation of an instru&ent which there havin #een a

&eetin of the &inds of he parties o a contract, their true intention is not e(pressed

in the instru&ent purportin to eod$ the aree&ent, and one of the parries &a$

as for such refor&ation to the end that such true intention &a$ #e e(pressed. "Art.

2;9, New Civil code*. hen a &utual &istae of the parties causes the failure of

the instru&ent to disclose their real aree&ent, said instru&ent &a$ #e refor&ed.

"Art. 2;62, New Civil Code.* 0t was a &istae for the parties to e(ecute the +eed of

?ale ith Assu&ption of =ortae and the 8ption to Purchase Real )state and standon the literal &eanin of the file and stipulations used therein.

he instru&ents &ust, therefore, #e refor&ed in accordance with the intention and

leal rihts and o#liations of the parties F the petitioner, the respondent and the

ans. e aree with the refor&ation decreed #$ the trial and appellate courts, #ut in

the sense that petitioner 'ose P. +i%on has the riht to reac@uire the three parcels of

land within the one-$ear period indicated #elow #$ refundin or reiursin to

respondent Alfredo G. Ga#orro or the 'udicial Ad&inistratri( of his )state whatever

a&ount the latter has actuall$ paid on account of theprinipalonl$, of the loans of

+i%on with the +P and PN, e/ldin0 the interests and land ta(es that &a$ have#een paid or &a$ have accrued, on dul$ certified financial state&ents issued #$ the

said #ans.

8n the issue of the accountin of the fruits, harvests and other inco&e received fro&

the three parcels of land fro& 8cto#er 6, 299 up to the present, pra$ed and

de&anded #$ +i%on of Ga#orro or the 'udicial Ad&inistratri( of the latter>s estate,

e hold that in fairness and e@uit$ and in the interests of :ustice that since e have

ruled out the o#liation of petitioner +i%on to reiurse respondent Ga#orro of an$

interests and land ta(es that have accrued or #een paid #$ the latter on the loans of

+i%on with +P and PN, petitioner +i%on in turn is not entitled to an accountin of

the fruits, harvests and other inco&e received #$ respondent Ga#orro fro& the lands,

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for certainl$, petitioner cannot have #oth #enefits and the two &a$ #e said to offset

each other.

$ virtue of the 8ption to Purchase Real )state ")(h. ?tipulation* which on its

face ranted +i%on the option to purchase the properties which &ust #e e(ercise

within the period fro& 'anuar$, 296 to +eceer ;2, 296 #ut which e held to #e

si&pl$ the rant of the riht to petitioner +i%on to recover his properties within the

said period, althouh alread$ e(pired #$ reasons and circu&stances #e$ond hiscontrol, petitioner is entitled to a reconve$ance of the properties within a reasona#le

period he period of one $ear fro& the date of the finalit$ of this :ud&ent as laid

down #$ the Court of Appeals for the e(ercise of such riht #$ petitioner +i%on

appears fair and reasona#le and e approve the sa&e.

?ince e are not infor&ed of the status of +i%on>s loan of P9;,3;2.92 with the

Philippine National an which appears to #e on a su#sistin #asis, it is proper to

indicate here how petitioner +i%on &a$ e(ercise the riht to a reconve$ance of the

properties as herein affir&ed, as follows5

"a* +i%on is ranted the riht to a reconve$ance of the properties

#$ reiursin Ga#orro "or his estate* whatever a&ounts* the

latter has actuall$ paid on account of the prinipal onl$, of +i%on>s

loans of P;3,. and P9;,3;2.92 which the +P and PN,

respectivel$, e/lsive of the interests that &a$ have accrued

thereon or &a$ have #een paid #$ Ga#orro, on the #asis of dul$

certified state&ents issued #$ said #ansI

"#* An$ outstandin #alance due on +i%on>s oriinal principal loan

of P;3,. with the +evelop&ent an of the Philippines

assu&ed #$ Ga#orro and on +i%on>s oriinal principal loan of9;,3;2.92 with the PN sha #e deducted fro& the a#ove-fi(ed

reconve$ance price pa$a#le to Ga#orro, in order to ena#le +i%on to

pa$ off the said &ortae loans directl$ to the said #ans, in

accordance with file &utuall$ areed upon with the& #$ +i%onI

"c* 0n other words, the &a(i&u& reconve$ance price that +i%on is

o#liated to pa$ is the total su& of L2;2,3;2.92 "the su& total of

the principals of his two oriinal loans with the +P and PN*,

and should the a&ounts due to the said #ans e(ceed this total of

P2;2,3;2.92 "#ecause of delin@uent interests and other chares*,

nothin shall #e due Ga#orro #$ wa$ of reiurse&ent and +i%on

will thereupon step into the shoes of Ga#orro as owner-&ortaor

of the properties and directl$ arrane with the #ans for the

settle&ent of the a&ounts still due and pa$a#le to the&, su#:ect to

the riht of +i%on to recover such a&ounts in e(cess of

P2;2,3;2.92 fro& Ga#orro #$ writ of e(ecution in this caseI and

"d* As alread$ stated, +i%on is not entitled to an accountin of the

fruits, harvests and other inco&e received #$ Ga#orro fro& theland while Ga#orro in turn is not entitled to the pa$&ent of an$

interests on an$ a&ounts paid #$ hi& on account of the principal

loans to the #ans nor reiurse&ent of an$ interests paid #$ hi&

to the #ans.

)R)/8R), the :ud&ent appealed fro& is here#$ affir&ed with the

&odification that petitioner +i%on is ranted the riht within one $ear fro& finalit$

of this decision to a reconve$ance of the properties in litiation upon pa$&ent and

reiurse&ent to respondent estate of o G. Ga#orro of the a&ounts actuall$ paid #$

Ga#orro or his estate on account of the principal onl$ of +i%on>s oriinal loans with

the +evelop&ent an of the Philippines and Philippine National an in and up tothe total a&ount of P2;2,3;2.92, under the ter&s and conditions set forth in the

precedin pararaph with su#pararaphs "a* to "d*, which are here#$ incorporated #$

reference as an interal part of this :ud&ent, and upon the e(ercise of such riht,

respondent estate shall forthwith e(ecute the correspondin deed of reconve$ance in

favor of petitioner +i%on and deliver possession of the properties to hi&. ithout

pronounce&ent as to costs.

ee1an2ee 3C1airan4, Ma2asiar, M5oz Pala and "ernandez, JJ., onr.

G.R. No. L-27696 Se"ee 3, 1977

)IGEL FLOREN'INO, ROSARIO EN&ARNA&ION $e FLOREN'INO,

)ANEL AR&E, JOSE FLOREN'INO, I&'ORINO FLOREN'INO,

AN'ONIO FLOREN'INO, RE)EDION EN&ARNA&ION *n$ SEERINA

EN&ARNA&ION,petitioners-appellants,

vs.

SALADOR EN&ARNA&ION, SR., SALADOR EN&ARNA&ION, JR., *n$

ANGEL EN&ARNA&ION, oppositors to encurance-petitioners-appelles.

Jose ". Sin0son and Mi0el "lorentino for appellants.

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Pedro Sin0son for appellees.

GERRERO, J.:

Appeal fro& the decision of the Court of /irst 0nstance of 0locos ?ur, actin as a land

reistration court, in Band Reistration case No. N-;2.

8n =a$ 11, 2964, the petitioners-appellants =iuel /lorentino, Re&edios

)ncarnacion de /lorentino, =anuel Arce, 'ose /lorentino, ictorino /lorentino,

Antonio /lorentino, Re&edior, )ncarnacion and ?everina )nca&acion, and the

Petitiners-appellees ?alvador )nca&acion, ?r., ?alvador )nca&acion, 'r. and Anel

)ncarnacion filed with the Court of /irst 0nstance of ilocos ?ur an application for the

reistration under Act 496 of a parcel of aricultural land located at arrio Bu#on

+ac@uel Ca#uao 0locos ?ur.

he application alleed a&on other thins that the applicants are the co&&on and

pro-indiviso owners in fee si&ple of the said land with the i&prove&ents e(istin

thereonI that to the #est of their nowlede and #elief, there is no &ortae, lien or

encurance of an$ ind whatever affectin said land, nor an$ other person havin

an$ estate or interest thereon, leal or e@uita#le, re&ainder, reservation or in

e(pectanc$I that said applicants had ac@uired the aforesaid land thru and #$

inheritance fro& their predecessors in interest, latel$ fro& their aunt, +oMa

)ncarnacion /lorentino who died in ian, 0locos ?ur in 2942, and for which the

said land was ad:udicated to the& #$ virtue of the deed of e(tra:udicial partition

dated Auust 14, 2947I that applicants ?alvador )ncarnacion, 'r. and Anel

)ncarnacion ac@uired their respective shares of the land thru purchase fro& the

oriinal heirs, 'esus, Caridad, Bourdes and +olores surna&ed ?inson one hand andfro& Asuncion /lorentino on the other.

After due notice and pu#lication, the Court set the application for hearin. No

8pposition whatsoever was filed e(cept that of the +irector of Bands which was later

withdrawn, there#$ leavin the option unopposed. hereupon, an order of eneral

default was withdrawn aainst the whole world. pon application of the asets the

Cler 8f court was co&&ission will and to have the evidence of the aents and or to

su#&it the for the Court>s for resolution.

he crucial point in controvers$ in this reistration case is centered in the stipulation

&ared )(hi#it 8-2 eodied in the deed of e(tra:udicial partition ")(hi#it 8* dated

Auust 14, 2947 which states5

Bos productos de esta parcela de terreno situada en el arrio

Bu#on +ac@uel Ca#uao 0locos ?ur, se destination para costear

los tos de procesio de la ercera Caida cele#ration $ ser&on de

?iete Pal#ras ?eis )staciones de Cuares&a, procesion del Nino

'esus, tilaracion $ conservacion de los &is&os, construction le

union ca&arin en conde se depositan los carros &esas $ otras cosas

@ue seven para lot leiracion de ?iete Pala#ras $ otras cosas &as Bo

@ue so#ra de lihos productos despues de descontados todos los

astos se repartira nosotros los herederos.

0n his testi&on$ durin the trial, applicant =iuel /lorentino ased the court to

include the said stipulation ")(hi#it 8-2* as an encurance on the land souht to #e

reistered, and cause the entr$ of the sa&e on the face of the title that will finall$ #e

issued. 8pposin its entr$ on the title as an encurance, petitionersappellee

?alvador )nca&acion, ?r., ?alvador )ncarnaciori, 'r. and Anel )ncarriacion filed on8cto#er ;, 2966 a &anifestation seein to withdraw their application on their

respective shares of the land souht to #e reistered. he withdrawal was opposed #$

the petitioners-appellants.

he Court after hearin the &otion for withdrawal and the opposition thereto issued

on Noveer 27, 2966 an order and for the purpose of ascertainin and i&plif$in

the issues therein stated that all the applicants ad&it the truth of the followinI

"2* hat :ust after the death of )ncarnacion /0orentino in 2942 up

to last $ear and as had alwa$s #een the case since ti&e i&&o&orialthe products of the land &ade su#iect &atter of this land has #een

used in answerin for the pa$&ent for the reliious functions

specified in the +eed )(tra:udicial Partition #elated Auust 14,

29475

"1* hat this arrane&ent a#out the products answerin for the

co&&ent of e(perisence for reliions functions as &entioned

a#ove was not reistered in the office of the Reister of +eeds

under Act No ;;44, Act 496 or and, other s$ste& of reistrationI

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";* hat all the herein applicants now of the e(istence of his

arrane&ent as specified in the +eed of )(tra :udicial Partition of

A ad:ust 14, 2947I

"4* hat the +eed of )(tra:udicial Partition of Auust 14, 294-, not

sined #$ Anel )ncarnacion or ?alvador )ncarnacion, 'r,.

he court denied the petitioners-appellee &otion to withdraw forlac of &erit, and rendered a decision under date of Noveer 19,

2966 confir&in the title of the propert$ in favor of the f appoints

with their respective shares as follows5

?pouses =iuel /lorentino and Rosario )ncarnacion de /lorentino,

#oth of leal ae, /ilipinos, and residents of ian, 0locos ?ur,

consistin of an undivided ;2K197 and 3.1K197 portions,

respectivel$I

=anuel Arce, of leal ae, /ilipino, &arried to Re&edios Picha$

and resident of ian, 0locos ?ur, consistin of an undivided

66K197 portionI

?alvador )ncarnacion, 'r., of leal ae, /ilipino, &arried to

Anelita Naar and resident of ian, 0locos ?ur, consistin of an

undivided 66K197I 'ose /lorentino, of leal ae, /ilipino, &arried

to ?alvacion /lorendo and resident of 26 ?outh Ninth +ili&an,

Hue%on Cit$, consistin of an undivided ;;K197 portionI

Anel )ncarnacion, of leal ae, /ilipino, sinle and resident of

224 =ilaros ?t., ?ta. Cru%, =anila, consistin of an undivided;;K197 portionI

ictorino /lorentino, of leal ae, /ilipino, &arried to =ercedes B.

)ncarnacion and resident of ian, 0locos ?ur, consistin of an

undivided 27.K197 portionI

Antonio /lorentino, of leal ae, /ilipino, sinle and resident of

ian, 0locos ?ur, consistin of an undivided 27.K197I

?alvador )ncarnacion, ?r., of leal ae, /ilipino, &arried to

+olores ?inson, consistin of an undivided 3.1K197I

Re&edios )ncarnacion, of leal ae, /ilipino, sinle and resident

of ian, 0locos ?ur, consistin of an undivided 3.1K197 portionI

and

?everina )ncarnacion, of leal ae, /ilipino, sinle and resident of

ian, 0locos ?ur, consistin of 3.1K197 undivided portion.

he court, after rulin !that the contention of the proponents of encurance iswithout &erit #e&use, tain the self-i&posed arrane&ent in favor of the Church as

a pure and si&ple donation, the sa&e is void for the that the donee here has riot

accepted the donation "Art. 74, Civil Code* and for the further that, in the case of

?alvador )ncarnacion, 'r. and Anel )ncarnacion, the$ had &ade no oral or written

rant at all "Art. 743* as in fact the$ are even opposed to it,! 1held in the Positive

portion, as follows5

0n view of all these, therefore, and insofar as the @uestion of

encurance is concerned, let the reliious e(penses as herein

specified #e &ade and entered on the undivided shares, interests

and participations of all the applicants in this case, e(cept that of

?alvador )ncarnacion, ?r., ?alvador )ncarnacion, 'r. and Anel

)ncarnacion.

8n 'anuar$ ;, 2967, petitioners-appellants filed their Repl$ to the 8pposition

reiteratin their previous aru&ents, and also attacin the :unction of the

reistration court to pass upon the validit$ or invalidit$ of the aree&ent )(hi#it 8-

2, allein that such is specified onl$ in an ordinar$ action and not proper in a land

reistration proceedin.

he =otion for Reconsideration and of New rial was denied on 'anuar$ 24, 2967for lac of &erit, #ut the court &odified its earlier decision of Noveer 19, 2966, to

wit5

his Court #elieves, and so holds, that the contention of the

&ovants "proponents of the encurance* is without &erit #ecause

the arrane&ent, stipulation or rant as eodied in )(hi#it 8

")scritura de Particion )(tra:udicial*, #$ whatever na&e it &a$ #e

"called, whether donation, usufruct or elle&os$nar$ ift, can #e

revoed as in fact the oppositors ?alvador )ncarnacion, ?r., who is

the onl$ one of the three oppositors who is a part$ to said )(hi#it

8 "the two others, ?alvador )ncarnacion, 'r. and Anel

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0f a contract should contain a stipulation in favor of a third person,

he &a$ de&and its fulfill&ent provided he co&&unicated his

acceptance to the o#lior #efore its revocation. A &ere incidental

#enefit or interest of a person is not sufficient. he contractin

parties &ust have clearl$ and deli#eratel$ conferred a favor upon a

third person.

he second pararaph of Article 2;22 a#ove-@uoted states the law on

stipulationspor atri. Consent the nature and purpose of the &otion ")(h. 8-2*,

e hold that said stipulation is a stationpor atri. A stipulation pour atri is a

stipulation in favor of a third person conferrin a clear and deli#erate favor upon

hi&, and which stipulation is &erel$ a part of a contract entered into #$ the parties,

neither of who& acted as aent of the third person, and such third person and

de&and its fulfill&ent provoed that he co&&unicates his to the o#lior #efore it is

revoed. 3he re@uisites are5 "2* that the stipulation in favor of a third person should

#e a part, not the whole, of the contractI "1* that the favora#le stipulation should not

#e conditioned or co&pensated #$ an$ ind of o#liation whateverI and ";* neither

of the contractin #ears the leal represented or authori%ation of third person.

o constitute a valid stipulation pour autrui it &ust #e the purpose and intent of the

stipulatin parties to #enefit the third and it is not sufficient that the third person &a$

#e incidentall$ #enefited #$ the stipulation. he fairest test to deter&ine whether the

interest of third person in a contract is a stipulationpor atri or &erel$ an

incidental interest, is to rel$ upon the intention of the parties as disclosed #$ their

contract. 0n appl$in this test, it &eters not whether the stipulation is in the nature of

a ift or whether there is an o#liation owin fro& the pro&isee to the third person.

hat no such o#sorption e(ists &a$ in so&e deree assist in deter&inin whether the

parties intended to #enefit a third person.

0n the case at #ar, the deter&inin point is whether the co-owners intended to #enefit

the Church when in their e(tra:udicial partition of several parcels of land inherited #$

the& fro& +oMa )ncarnacion /lorendo the$ areed that with respect to the land

situated in arrio Bu#on +ac@uel Ca#uao 0locos ?ur, the fruits thereof shall serve

to defra$ the reliious e(penses specified in )(hi#it 8-2. he evidence on record

shows that the true intent of the parties is to confer a direct and &aterial #enefit upon

the Church. he fruits of the aforesaid land were used thenceforth to defra$ the

e(penses of the Church in the preparation and cele#ration of the ol$ ee, an

annual Church function. ?uffice it to sa$ that were it not for )(hi#it 8-2, the Church

would have necessaril$ e(pended for this reliious occasion, the annual relisious

procession durin the ol$ oc and also for the repair and preservation of all the

statutes, for the cele#ration of the ?even Bast ord.

e find that the trial court erred in holdin that the stipulation, arrane&ent or rant

")(hi#it 8-2* is revoca#le at the option of the co-owners. hile a stipulation in favor

of a third person has no #indin effect in itself #efore its acceptance #$ the part$

favored, the law does not provide when the third person &ust &ae his acceptance.

As a rule, there is no ti&e at such third person has after the ti&e until the stipulation

is revoed. ere, e find that the Church accepted the stipulation in its favor #efore

it is souht to #e revoed #$ so&e of the co-owners, na&el$ the petitioners-

appellants herein. 0t is not disputed that fro& the ti&e of the with of +oMa

)ncarnacion /lorentino in 2942, as had alwa$s #een the case since ti&e i&&e&orial

up to a $ear #efore the firin of their application in =a$ 2964, the Church had #een

en:o$in the #enefits of the stipulation. he en:o$&ent of #enefits flowin therefro&

for al&ost seventeen $ears without @uestion fro& an$ @uarters can onl$ #e construed

as an i&plied acceptance #$ the Church of the stipulation por atri#efore its

revocation.

he acceptance does not have to #e in an$ particular for&, evenwhen the stipulation is for the third person an act of li#eralit$ or

enerosit$ on the part of the pro&isor or pro&ise.

0t need not #e &ade e(pressl$ and for&all$. Notification of

acceptance, other than such as is involved in the &ain of

de&and, is unnecessar$. 6

A trust constituted #etween two contractin parties for the #enefit

of a third person is not su#:ect to the rules overnin donation of

real propert$. he #eneficiar$ of a trust &a$ de&and perfor&anceof the o#liation without havin for&all$ accepted the #enefit of

the this in a pu#lic docu&ent, upon &ere ac@uiescence in the

for&ation of the trust and acceptance under the second pararaph

of Art. 217 of the Civil Code. 7

ence, the stipulation ")(hi#it 8-2* cannot now #e revoed #$ an$ of the stipulators

at their own option. his &ust #e so #ecause of Article 217, Civil Code and the

cardinal rule of contracts that it has the force of law #etween the parties. 8hus, this

Court ruled in Garia v. #ita Le0arda, In., 9!Article 2;9 is a virtual reproduction

of Article 216 of the Civil Code, so phrased to e&phasi%e that the contract &ust

#ind #oth parties, #ased on the principles "2* that o#liation arisin fro& contracts

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have the force of law #etween the contractin partiesI and "1* that there &ust #e

&utualit$ #etween the parties #ased on their principle e@ualit$, to which is repunant

to have one part$ #ound #$ the contract leavin the other free therefro&.!

Conse@uentl$, ?alvador )ncarnacion, ?r. &ust #ear with )(hi#it 8-2, #ein a

sinator$ to the +eed of )(tra:udicial Partition eod$in such #eneficial

stipualtion. Biewise, with reards to ?alvador, 'r. and Anel )ncarnacion, the$ too

are #ound to the aree&ent. ein su#se@uent purchasers, the$ are privies or

successors in interestI it is a(io&atic that contracts are enforcea#le aainst the parties

and their privies. 1/urther&ore, the$ are shown to have iven their confor&it$ to

such aree&ent when the$ ept their peace in 2961 and 296;, havin alread$ #ouht

their respective shares of the su#:ect land #ut did not @uestion the enforce&ent of the

aree&ent as aainst the&. he$ are also shown to have nowlede of )(hi#it 8-2

as the$ had ad&itted in a +eed of Real =ortae e(ecuted #$ the& on =arch 3,

2961 involvin their shares of the su#:ect land that, !his parcel of land is

encuered as evidenced #$ the docu&ent No. 41, pae 94, oo 2, series 2947,

e(ecuted #$ the heirs of the late )ncarnacion /lorentino, on Auust 16, 2947, #efore

=. /rancisco Ante, Notw$ Pu#lic of ian, 0locos ?ur, in its pae 2 of the said

docu&ent of partition, and also #$ other docu&ents.!

he annotation of )(hi#it 8-2 on the face of the title to #e issued in this case is

&erel$ a uarantee of the continued enforce&ent and fulfill&ent of the #eneficial

stipulation. 0t is error for the lower court to rule that the petitioners-appellants are not

the real parties in interest, #ut the Church. hat one of the parties to a contract por

atri is entitled to #rin an action for its enforce&ent or to prevent its #reach is too

clear to need an$ e(tensive discussion. pon the other hand, that the contract

involved contained a stipulation pour autrui a&plifies this settled rule onl$ in the

sense that the third person for whose #enefit the contract was entered into &a$ also

de&and its fulfill&ent provoed he had co&&unicated his acceptance thereof to the

o#lior #efore the stipulation in his favor is revoed. 11

Petitioners-appellants> third assin&ent of error is not well-taen. /irstl$, the

otherwise riid rule that the :urisdiction of the Band Reistration Court, #ein special

and li&ited in character and proceedins thereon su&&ar$ in nature, does not e(tend

to cases involvin issues properl$ litia#le in other independent suits or ordinar$

civil actions, has ti&e and aain #een rela(ed in special and e(ceptional

circu&stances. "?ee Govern&ent of the Phil. 0slands v. ?erafica, 62 Phil. 9; "29;4*I

Caoi#es v. ?ison, 21 Phil. 29 "297*I Buna v. ?antos, 21 Phil. 33 "297*I Cru% v.

an, 9; Phil. ;43 "29;*I Gur#a( ?inh Pa#la J Co. v. Re$es, 91 Phil. 277 "291*.

/ro& these cases, it &a$ #e leaned and athered that the peculiarit$ of the

e(ceptions is #ased not onl$ on the fact that Band Reistration Courts are liewise

the sa&e Courts of /irst 0nstance, #ut also the followin pre&ises "2* =utual consent

of the parties or their ac@uired in su#&ittin the at aforesaid deter&ination #$ the

court in the reistrationI "1* /ull opportunit$ iven to the parties in the presentation

of their respective sies of the issues and of the evidence in support theretoI ";*

Consideration #$ the court that the evidence alread$ of record is sufficient and

ade@uate for renderin a decision upon these issues. 120n the case at #ar, the records

clearl$ show that the second and third pre&is& enu&erated a#ow are full$ &t. ith

reards to first pre&ise, the petioners-appellants cannot clai& that the issues anent

)(hi#it 8-2 were not put in issue #ecause this is contrar$ to their stand #efore the

lower court where the$ too the initial step in pra$in for the court>s deter&ination of

the &erits of )(hi#it 8-2 as an encurance to #e annotated on the title to #e issued

#$ such court. 8n the other hand, the petitioners-appellees who had the riht to

invoe the li&ited :urisdiction of the reistration court failed to do so #ut &et the

issues head-on.

?econdl$, for this ver$ special reason, e win uphold the actuation of the lower

court in deter&inin the conflictin interests of the parties in the reistration

proceedins #efore it. his case has #een lanuishin in our courts for thirteen ton$ears. o re@uire that it #e re&anded to the lower court for another proceedin under

its eneral :urisdiction is not in consonance with our avowed polic$ of speed$

:ustice. 0t would not #e a&iss to note that if this case #e re&anded to the lower court,

and should appeal aain #e &ade, the na&e issues will once &ore #e raised #efore us

hence, 8ur decision to resolve at once the issues in the instant petition.

0N 0) 8/ ) /8R)G80NG, the decision of the Court of /irst 0nstance of

0locos ?ur in Band Reistration Case No. N-;2 is affir&ed #ut &odified to allow

the annotation of )(hi#it 8-2 as an encurance on the face of the title to #e finall$

issued in favor of all the applications "herein appellants and herein appellees* in the

reistration proceedins #elow.

No pronounce&ent as to cost.

?8 8R+)R)+.

G.R. No. L-23276 No:ee 29, 1968

)ELE&IO &O;IA, )ARIA ESPANEA *n$ )ANILA

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vs.

FIELD)EN?S INSRAN&E &O., IN&.,defendant-appellant.

Antonio de +eneia for plaintiffs-appellees.

#fino Javier for defendant-appellant.

&ON&EP&ION, C.J.:

his is an appeal fro& a decision of the Court of /irst 0nstance of =anila, certified to

us #$ the Court of Appeals, onl$ @uestions of law #ein involved therein. 0ndeed, the

pertinent facts have #een stipulated andKor, ad&itted #$ the parties at the hearin of

the case in the trial court, to dispense with the presentation of evidence therein.

0t appears that on +eceer 2, 2962, appellant /ield&en>s 0nsurance Co&pan$, 0nc.

F hereinafter referred to as the Co&pan$ F issued, in favor of the =anila Eellow

a(ica# Co., 0nc. F hereinafter referred to as the 0nsured F a co&&on carrier

accident insurance polic$, coverin the period fro& +eceer 2, 2962 to +eceer

2, 2961. 0t was stipulated in said polic$ that5

he Co&pan$ will, su#:ect to the Bi&its of Bia#ilit$ and under the er&s of

this Polic$, inde&nif$ the 0nsured in the event of accident caused #$ or

arisin out of the use of =otor ehicle aainst all su&s which the 0nsured

will #eco&e leall$ lia#le to pa$ in respect of5 +eath or #odil$ in:ur$ to an$

fare-pa$in passenerinldin0 t1e Driver, Conductor andKor 0nspector who

is ridin in the =otor ehicle insured at the ti&e of accident or in:ur$. 2

hile the polic$ was in force, or on /e#ruar$ 2, 2961, a ta(ica# of the 0nsured,

driven #$ Carlito Co@uia, &et a vehicular accident at =analdan, Panasinan, in

conse@uence of which Carlito died. he 0nsured filed therefor a clai& for P,.to which the Co&pan$ replied with an offer to pa$ P1,., #$ wa$ of

co&pro&ise. he 0nsured re:ected the sa&e and &ade a counter-offer for P4,.,

#ut the Co&pan$ did not accept it. ence, on ?epteer 23, 2961, the 0nsured and

Carlito>s parents, na&el$, =elecio Co@uia and =aria )spanueva F hereinafter

referred to as the Co@uias F filed a co&plaint aainst the Co&pan$ to collect the

proceeds of the afore&entioned polic$. 0n its answer, the Co&pan$ ad&itted the

e(istence thereof, #ut pleaded lac of cause of action on the part of the plaintiffs.

After appropriate proceedins, the trial court rendered a decision sentencin the

Co&pan$ to pa$ to the plaintiffs the su& of P4,. and the costs. ence, this

appeal #$ the Co&pan$, which contends that plaintiffs have no cause of action

#ecause5 2* the Co@uias have no contractual relation with the Co&pan$I and 1* the

0nsured has not co&plied with the provisions of the polic$ concernin ar#itration.

As reards the first defense, it should #e noted that, althouh, in eneral, onl$ parties

to a contract &a$ #rin an action #ased thereon, this rule is su#:ect to e(ceptions, one

of which is found in the second pararaph of Article 2;22 of the Civil Code of the

Philippines, readin5

If a ontrat s1old ontain soe stiplation in favor of a t1ird person, 1e

a6 deand its flfillent provided 1e oniated 1is aeptane to t1e

obli0or before its revoation. A &ere incidental #enefit or interest of a

person is not sufficient. he contractin parties &ust have clearl$ and

deli#eratel$ conferred a favor upon a third person.1

his is #ut the restate&ent of a well-nown principle concernin contracts por

atri, the enforce&ent of which &a$ #e de&anded #$ a third part$ for whose

#enefit it was &ade, althouh not a part$ to the contract, #efore the stipulation in his

favor has #een revoed #$ the contractin parties. +oes the polic$ in @uestion #elon

to such class of contractspor atriL

0n this connection, said polic$ provides, inter alia5

Setion I 7 Liabilit6 to Passen0ers. 2. he Co&pan$ will, su#:ect to the

Bi&its of Bia#ilit$ and under the er&s of this Polic$, inde&nif$ the

0nsured in the event of accident caused #$ or arisin out of the use of =otor

ehicle aainst all su&s which the 0nsured will #eco&e leall$ lia#le to pa$

in respect of5 +eath or #odil$ in:ur$ to an$ fare-pa$in passener includin

the +river ... who is ridin in the =otor ehicle insured at the ti&e of

accident or in:ur$.

Setion II 7 Liabilit6 to t1e Pbli

((( ((( (((

;. 0n ter&s of and su#:ect to the li&itations of and for the purposes of this

?ection, the Co&pan$ will inde&nif$ an$ authori%ed +river who is drivin

the =otor ehicle....

Conditions

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((( ((( (((

7. 0n the event of death of an$ person entitled to inde&nit$ under this

Polic$, the Co&pan$ will, in respect of the lia#ilit$ incurred #$ such person,

inde&nif$ his personal representatives in ter&s of and su#:ect to the

li&itations of this Polic$, provided, that such representatives shall, as

thouh the$ were the 0nsured, o#serve, fulfill and #e su#:ect to the er&s of

this Polic$ insofar as the$ can appl$.

3. he Co&pan$ &a$, at its option, &ae inde&nit$ pa$a#le directl$ to the

clai&ants or heirs of clai&ants, with or without securin the consent of or

prior notification to the 0nsured, it #ein the true intention of this Polic$ to

protect, to the e(tent herein specified and su#:ect alwa$s to the er&s 8f

this Polic$, the lia#ilities of the 0nsured towards the passeners of the =otor

ehicle and the Pu#lic.

Pursuant to these stipulations, the Co&pan$ !will inde&nif$ an6 at1orized

Driver who is drivin the =otor ehicle! of the 0nsured and, in the event of death of

said driver, the Co&pan$ shall, liewise, !inde&nif$ his personal representatives.! 0nfact, the Co&pan$ !&a$, at its option, &ae inde&nit$ pa$a#le diretl6 to

thelaiants or 1eirs of laiants ... it bein0 t1e tre intention of t1is Poli6 to

protet ... t1e liabilities of t1e Insredtowards the passeners of the =otor ehicle

and the Pu#lic! F in other words, third parties.

hus, the polic$ under consideration is t$pical of contractspor atri, this character

#ein &ade &ore &anifest #$ the fact that the deceased driver paid fift$ percent

"s lia#ilit$ under this Polic$, the sa&e shall #e referred to the

decision of a sinle ar#itrator to #e areed upon #$ #oth parties or failin

such aree&ent of a sinle ar#itrator, to the decision of two ar#itrators, one

to #e appointed in writin #$ each of the parties within one calendar &onth

after havin #een re@uired in writin so to do #$ either of the parties and in

case of disaree&ent #etween the ar#itrators, to the decision of an u&pire

who shall have #een appointed in writin #$ the ar#itrators #efore enterin

on the reference and the costs of and incident to the reference shall #e dealt

with in the Award. And it is here#$ e(pressl$ stipulated and declared that it

shall #e a condition precedent to an$ riht of action or suit upon this Polic$

that the award #$ such ar#itrator, ar#itrators or u&pire of the a&ount of the

Co&pan$>s lia#ilit$ hereunder if disputed shall #e first o#tained.

he record shows, however, that none of the parties to the contract invoed this

section, or &ade an$ reference to ar#itration, durin the neotiations precedin the

institution of the present case. 0n fact, counsel for #oth parties stipulated, in the trial

court, that none of the& had, at an$ ti&e durin said neotiations, even suested the

settle&ent of the issue #etween the& #$ ar#itration, as provided in said section. heir

afore&entioned acts or o&issions had the effect of a waiver of their respective riht

to de&and an ar#itration. hus, in Dahnweiler vs. Pheni( 0ns. Co. of rool$n, it

was held5

Another well-settled rule for interpretation of all contracts is that the court

will lean to that interpretation of a contract which will &ae it reasona#le

and :ust. ish. Cont. ?ec. 4. Appl$in these rules to the tenth clause of

this polic$, its proper interpretation see&s @uite clear. hen there is a

difference #etween the co&pan$ and the insured as to the a&ount of the loss

the polic$ declares5 !he sa&e shall then #e su#&itted to co&petent and

i&partial ar#itrators, one to #e selected #$ each part$ ...!. 0t will #e

o#served that the o#liation to procure or de&and an ar#itration is not, #$

this clause, in ter&s i&posed on either part$. 0t is not said that either the

co&pan$ or the insured shall tae the initiative in settin the ar#itration on

foot. he co&pan$ has no &ore riht to sa$ the insured &ust do it than the

insured has to sa$ the co&pan$ &ust do it. he contract in this respect is

neither unilateral nor self-e(ecutin. o procure a reference to ar#itrators,

the :oint and concurrent action of #oth parties to the contract is

indispensa#le. he riht it ives and the o#liation it creates to refer the

differences #etween the parties to ar#itrators are &utual. 8ne part$ to the

contract cannot #rin a#out an ar#itration. )ach part$ is entitled to de&and

a reference, #ut neither can co&pel it, and neither has the riht to insist that

the other shall first de&and it, and shall forfeit an$ riht #$ not doin so. 0f

the co&pan$ de&ands it, and the insured refuses to ar#itrate, his riht of

action is suspended until he consents to an ar#itrationI and if the insured

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de&ands an ar#itration, and the co&pan$ refuses to accede to the de&and,

the insured &a$ &aintain a suit on the polic$, notwithstandin the lanuae

of the twelfth section of the polic$, and, 81ere neit1er part6 deands an

arbitration, bot1 parties t1ereb6 8aive it.6

o the sa&e effect was the decision of the ?upre&e Court of =innesota in

0ndependent ?chool +ist. No. ;, ?t. Bouis Count$ vs. A. eden#er J Co.,

0nc.7fro& which we @uote5

his rule is not new in our state. 0n =e$er v. erlandi, ; =inn. 9, 4

N.. 9;7, decided in 239;, this court held that the parties to a construction

contract, havin proceeded throuhout the entire course of their dealins

with each other in entire disreard of the provision of the contract reardin

the &ode of deter&inin #$ ar#itration the value of the e(tras, there#$

waived such provision.

((( ((( (((

he test for deter&inin whether there has #een a waiver in a particular caseis stated #$ the author of an e(haustive annotation in 227 A.B.R. p. ;4, as

follows5 !An$ conduct of the parties inconsistent with the notion that the$

treated the ar#itration provision as in effect, or an$ conduct which &iht #e

reasona#l$ construed as showin that the$ did not intend to avail

the&selves of such provision, &a$ a&ount to a waiver thereof and estop the

part$ chared with such conduct fro& clai&in its #enefits!.

((( ((( (((

he decisive facts here are that #oth parties fro& the inception of theirdispute proceeded in entire disreard of the provisions of the contract

relatin to ar#itration and that neither at an$ stae of such dispute, either

#efore or after co&&ence&ent of the action, de&anded ar#itration, either

#$ oral or written de&and, pleadin, or otherwise. heir conduct was as

effective a re:ection of the riht to ar#itrate as if, in the #est Coolide

tradition, the$ had said, !e do not choose to ar#itrate!. As ar#itration

under the e(press provisions of article 4 was !at the choice of either part$,!

and was chosen #$ neither, a waiver #$ #oth of the riht to ar#itration

followed as a &atter of law.

)R)/8R), the decision appealed fro& should #e as it is here#$ affir&ed in toto,

with costs aainst the herein defendant-appellant, /ield&en>s 0nsurance Co., 0nc. 0t is

so ordered.

#e6es, J.&.L., Dizon, Ma2alintal, 9aldivar, San1ez, Castro, "ernando and

Capistrano, JJ.,concur.

G.R. No. L-22 )*% 31, 1971

PAS'OR B. &ONS'AN'INO,plaintiff-appellant,

vs.

5ER)INIA ESPIRI', defendant-appellee.

David Gevara for plaintiff-appellant.

DIZON, J.:

his is a direct appeal on a @uestion of law taen #$ Pastor . Constantino fro& an

order of the Court of /irst 0nstance of Ri%al den$in his &otion for the ad&ission of

his a&ended co&plaint in Civil Case No. 914, entitled !Pastor . Constantine vs.

er&inia )spiritu.!

Appellant>s co&plaint alleed, inter alia, that he had, #$ a fictitious deed of a#solute

sale anne(ed thereto, conve$ed to appellee on 8cto#er ;, 29;, for a consideration

of P3,., the two-store$ house and four "4* su#division lots covered #$ ransfer

Certificate of itle No. 1274 issued #$ the Reister of +eeds of Ri%al, on 8cto#er

1, 29 in the na&e of Pastor . Constantino, &arried to onorata Geueo withthe understandin that appellee would hold the properties in trust for their

illeiti&ate son, Pastor Constantino, 'r., still un#orn at the ti&e of the conve$anceI

that thereafter appellee &ortaed said properties to the Repu#lic ?avins an of

=anila twice to secure pa$&ent of two loans, one of P;,. and the other of

P1,., and that thereafter she offered the& for sale. he co&plaint then pra$ed

for the issuance of a writ of preli&inar$ in:unction restrainin appellee and her

aents or representatives fro& further alienatin or disposin of the properties, and

for :ud&ent orderin her to e(ecute a deed of a#solute sale of said properties in

favor of Pastor . Constantino, 'r., the #eneficiar$ "who, at the filin of said

co&plaint, was a#out five $ears of ae*, and to pa$ attorne$>s fees in the su& of

P1,..

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As a result of the conve$ance &entioned heretofore, C No. 1724 in the na&e of

plaintiff was partiall$ cancelled and in lieu thereof, C No. ;1744 was issued #$

the Reister of +eeds of Ri%al in the na&e of appellee er&inia )spiritu.

8n +eceer 26, 299, appellee &oved to dis&iss the co&plaint on the round that

it stated no cause of action #ecause Pastor Constantino, 'r., the #eneficiar$ of the

alleed trust, was not included as part$-plaintiff, and on the further round that

appellant>s cause of action was unenforcea#le under the ?tatute of /rauds.

0n his opposition to said &otion to dis&iss, appellant arued that the ?tatute of

/rauds does not appl$ to trustee and esti :e trust as in the case of appellee and her

illeiti&ate child, and that for this reason appellant would not #e #arred fro&

provin #$ parol evidence an i&plied trust e(istin under Article 24; of the Civil

Code. 8n the other hand, in her re:oinder to appellant>s opposition, appellee arued

that what the for&er was invoin in his co&plaint "Pararaph , Co&plaint* was an

i&plied trust under Article 24; of the Civil Code and not an e(press trust under

?ection ;, Rule ; of the Revised Rules of Court. /indin the rounds alleed in the

&otion to dis&iss to #e &eritorious, the trial court dis&issed the co&plaint, with

costs.

0&&ediatel$ after receivin notice of said order of dis&issal, appellant filed a &otion

for the ad&ission of an a&ended co&plaint, attachin thereto a cop$ hereof, the

a&end&ent consistin &ainl$ of the inclusion of the &inor, Pastor Constantino, 'r.

as co-plaintiff. he a&ended co&plaint further pra$ed for the appoint&ent of

appellant as said &inor>s uardian ad lite. An opposition thereto was filed on the

round that the a&end&ent aforesaid was not an inclusion #ut a su#stitution of the

part$ plaintiff. As the latter had no interest whatsoever in the su#:ect &atter of the

case, it was arued that the su#stitution was not allowed in this :urisdiction.

Appellant>s answer to appellee>s opposition alleed that, as the round relied upon in

the said opposition was purel$ technical, even the su#stitution of the part$ plaintiff

should #e allowed under ?ection 1, Rule 27 of the Rules of Court. hereafter the

lower court issued the appealed order den$in appellant>s &otion for the ad&ission

of his a&ended co&plaint. ence, the instant direct appeal.

he oriinal as well as the a&ended co&plaint &entioned a#ove allee that the sale

&ade #$ appellant Constantino in favor of appellee of the properties descri#ed in

said pleadins was su#:ect to the aree&ent that the vendee would hold the& in trust

for their at that ti&e alread$ conceived #ut un#orn illeiti&ate childI that the vendee

violated this aree&ent, firstl$, #$ su#:ectin the& to two different contracts of

&ortae, and later #$ tr$in to sell the&, this #ein not onl$ in violation of the

aforesaid aree&ent #ut pre:udicial to the esti :e trustI that the action was

co&&enced to co&pel the vendee to co&pl$ with their aree&ent #$ e(ecutin the

correspondin deed of conve$ance in favor of their &inor son, and to desist fro&

further doin an$ act pre:udicial to the interests of the latter.

0t appears then that, upon the facts alleed #$ appellant, the contract #etween hi&

and appellee was a contractpor atri, althouh couched in the for& of a deed of

a#solute sale, and that appellant>s action was, in effect, one for specific perfor&ance.

hat one of the parties to a contract is entitled to #rin an action for its enforce&ent

or to prevent its #reach is too clear to need an$ e(tensive discussion. pon the other

hand, that the contract involved contained a stipulationpor atri a&plifies this

settled rule onl$ in the sense that the third person for whose #enefit the contract was

entered into &a$ also de&and its fulfill&ent provided he had co&&unicated his

acceptance thereof to the o#lior #efore the stipulation in his favor is revoed.

0t appearin that the a&ended co&plaint su#&itted #$ appellant to the lower court

i&pleaded the #eneficiar$ under the contract as a part$ co-plaintiff, it see&s clear

that the three parties concerned therewith would, as a result, #e #efore the court and

the latter>s ad:udication would #e co&plete and #indin upon the&.

he rulin in the case ofE1as vs. Gan, Phil. 17 involvin facts si&ilar to the

ones #efore us is of o#vious application to the latter. e @uote the followin

pertinent portions of our decision in said case5

his action was instituted in the Court of /irst 0nstance of

8ccidental Neros #$ Adoracion Rosales de )chaus, assisted #$

her hus#and )nri@ue )chaus, for the purpose of o#tainin a

:udicial order re@uirin the defendant =aria Gan, as ad&inistratri(

of the estate of her deceased hus#and, =anuel Ga$ Eulinco, as

well as the heirs of said decedent, to e(ecute in due for& a

contract, with appropriate description of the real propert$ involved,

in confor&it$ with the ter&s of an aree&ent dated ?epteer ;,

2917, e(ecuted #$ the deceased =anuel Ga$ Eulinco, in life, and

)nri@ue )chaus, one of the plaintiffs in the case ")(hi#it A*. o

this action the defendants interposed a eneral answer and cross-

co&plaint, in the latter of which the$ souht a decree annullin the

contract )(hi#it A as e(cessivel$ onerous and illeal. pon

hearin the cause the trial court a#solved the plaintiffs fro& the

cross-co&plaint and ave :ud&ent in favor of the plaintiffs upon

the co&plaint, re@uirin the defendants, within thirt$ da$s fro& the

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date of the finalit$ of the decision, to e(ecute #efore a notar$

pu#lic and deliver to the plaintiffs a contract si&ilar in ter&s to

that indicated in the )(hi#it A #ut containin, in addition, a

description of the real propert$ involved, in such for& as would

ena#le the plaintiffs to procure said contract to #e inscri#ed on the

certificate of title correspondin to said propert$, with costs aainst

the defendants. /ro& this :ud&ent the defendants appealed.

((( ((( (((

he contract in @uestion, )(hi#it A, on which this action is #ased,

was e(ecuted #$ =anuel Ga$ Eulinco and )nri@ue )chaus, and

althouh the contract #inds Eulinco to pa$ to Adoracion Rosales

de )chaus, the wife of )nri@ue )chaus, the su& of fift$ centavos

for each picul of suar that &a$ #e produced upon the two

haciendas covered #$ the contract durin the fourteen $ears

#einnin with the crop for 2917-2913, nevertheless this action is

not instituted #$ the no&inal #eneficiar$, Adoracion Rosales de

)chaus, directl$ for the purpose of o#tainin the #enefit which saidcontract purports to confer upon her. he purpose of the action is

to co&pel the defendants to e(ecute a contract pursuant to the

tenor of the contract )(hi#it A, #ut containin an ade@uate

description of the propert$ contained in the two haciendas, for the

purpose of ena#lin )chaus to procure the annotation of said

contract on the orrens certificates of title. 0t is therefore evident

that, technicall$ speain, the proper person to #rin this action is

)nri@ue )chaus, the person with who& the contract was &ade #$

Eulinco. 0t is, nevertheless, e@uall$ o#vious that the wife of

)nri@ue )chaus is a part$ in interest, and she is certainl$ a proper,

if not an entirel$ necessar$ part$ to the action. 0t results that there

is reall$ no i&proper :oinder of parties plaintiff.

hether the contract of sale entered into #etween appellant and appellee was F as

clai&ed and the a&ended co&plaint F su#:ect to the aree&ent that appellee would

hold the properties in trst for their un#orn child is a @uestion of fact that appellee

&a$ raise in her answer for the lower court to deter&ine after trial. 8n the other

hand, the contention that the contract in @uestion is not enforcea#le #$ action #$

reason of the provisions of the ?tatute of /rauds does not appear to #e indu#ita#le, it

#ein clear upon the facts alleed in the a&ended co&plaint that the contract

#etween the parties had alread$ #een partiall$ perfor&ed #$ the e(ecution of the

deed of sale, the action #rouht #elow #ein onl$ for the enforce&ent of another

phase thereof, na&el$, the e(ecution #$ appellee of a deed of conve$ance in favor of

#eneficiar$ thereunder.

)R)/8R), the appealed order is here#$ set aside and the case is re&anded to

the lower court for further proceedins in accordance with law.

Conepion, C.J., #e6es, J.&.L., 9aldivar, Castro, "ernando, ee1an2ee, +illaor

and Ma2asiar, JJ., onr.

Ma2alintal, J., onrs in t1e reslt.

G.R. No. L-13 Feu*% , 1919

GEO. =. DA

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had notice of the rihts of the plaintiff under this contract of purchase, it can not #e

per&itted that the corporation should escape lia#ilit$ in this action #$ provin

pa$&ent of rent to a person other than the true owner.

ith reference to the rate of which co&pensation should #e esti&ated the trial court

ca&e to the followin conclusion5

As to the rate of the co&pensation, the plaintiff contends that the defendant

corporation &aintained at leas one thousand head of cattle on the land and

that the pasturae was of the value of fort$ centavos per head &onthl$, or

P4,3 annuall$, for the whole tract. he court can not accept this view. 0t is

rather i&pro#a#le that 2,143 hectares of wild =indoro land would furnish

sufficient pasturae for one thousand head of cattle durin the entire $ear,

and, considerin the localit$, the rate of fort$ centavos per head &onthl$

see&s too hih. he evidence shows that after havin recovered possession

of the land the plaintiff rented it to the defendant corporation for fift$

centavos per hectares annuall$, the tenant to pa$ the ta(es on the land, and

this appears to #e a reasona#le rent. here is no reason to suppose that the

land was worth &ore for ra%in purposes durin the period fro& 299 to292;, than it was at the later period. pon this #asis the plaintiff is entitled

to da&aes in the su& of p1,497, and is under no o#liation to reiurse

the defendants for the land ta(es paid #$ either of the& durin the period

the land was occupied #$ the defendant corporation. 0t &a$ #e &entioned in

this connection that the Bonto tract ad:oinin the land in @uestion and

containin over three thousand hectares appears to have #een leased for

onl$ P2, a $ear, plus the ta(es.

/ro& this it will #e seen that the trial court esti&ated the rental value of the land for

ra%in purposes at centavos per hectare per annu&, and rouhl$ adopted the

period of four $ears as the ti&e for which co&pensation at that rate should #e &ade.

As the court had alread$ found that the defendant was lia#le for these da&aes fro&

'une, 2, 299, to =a$ 2, 2924, or a period of four $ears and eleven &onths, there

see&s so&e round for the contention &ade in the appellant>s first assin&ent of

error that the court>s co&putation was erroneous, even acceptin the rule upon which

the da&aes were assessed, as it is &anifest that at the rate of centavos per

hectare per annu&, the da&aes for four $ears and eleven &onths would #e P;,9.

Notwithstandin this circu&stance, we are of the opinion that the da&aes assessed

are sufficient to co&pensate the plaintiff for the use and occupation of the land

durin the whole ti&e it was used. here is evidence in the record stronl$ tendin to

show that the wronful use of the land #$ the defendant was not continuous

throuhout the $ear #ut was confined &ostl$ to the reason when the forae

o#taina#le on the land of the defendant corporation was not sufficient to &aintain its

cattle, for which reason it #eca&e necessar$ to allow the& to o over to pasture on

the land in @uestionI and it is not clear that the whole of the land was used for

pasturae at an$ ti&e. Considerations of this character pro#a#l$ led the trial court to

adopt four $ears as rouhl$ #ein the period durin which co&pensation should #e

allowed. ut whether this was advertentl$ done or not, we see no sufficient reason,

in the uncertaint$ of the record with reference to the nuer of the cattle ra%ed and

the period when the land was used, for su#stitutin our uess for the esti&ate &ade

#$ the trial court.

0n the second cause of action stated in the co&plaint the plaintiff sees to recover

fro& the defendant corporation the su& of P,, as da&aes, on the round that

said corporation, for its own selfish purposes, unlawfull$ induced eodorica

)ndencia to refrain fro& the perfor&ance of her contract for the sale of the land in

@uestion and to withhold deliver$ to the plaintiff of the orrens title, and further,

&aliciousl$ and without reasona#le cause, &aintained her in her defense to the action

of specific perfor&ance which was finall$ decided in favor of the plaintiff in thiscourt. he cause of action here stated is #ased on lia#ilit$ derived fro& the wronful

interference of the defendant in the perfor&ance of the contract #etween the plaintiff

and eodorica )ndenciaI and the lare da&aes laid in the co&plaint were, accordin

to the proof su#&itted #$ the plaintiff, incurred as a result of a coination of

circu&stances of the followin nature5 0n 2922, it appears, the plaintiff, as the owner

of the land which he had #ouht fro& eodorica )ndencia entered into a contract

")(hi#it C* with ?. . aefield, of ?an /rancisco, for the sale and disposal of said

lands to a suar rowin and &illin enterprise, the successful launchin of which

depended on the a#ilit$ of +a$walt to et possession of the land and the orrens

certificate of title. 0n order to acco&plish this end, the plaintiff returned to the

Philippine 0slands, co&&unicated his arrane&ent to the defendant,, and &ade

repeated efforts to secure the reistered title for deliver$ in co&pliance with said

aree&ent with aefield. eodorica )ndencia see&s to have $ielded her consent to

the consu&&ation of her contract, #ut the orrens title was then in the possession of

Padre 'uan Ba#ara in =anila, who refused to deliver the docu&ent. eodorica also

was in the end contract with the plaintiff, with the result that the plaintiff was ept

out of possession until the aefield pro:ect for the esta#lish&ent of a lare suar

rowin and &illin enterprise fell throuh. 0n the liht of what has happened in

recent $ears in the suar industr$, we feel :ustified in sa$in that the pro:ect a#ove

referred to, if carried into effect, &ust inevita#l$ have proved a reat success.

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he deter&ination of the issue presented in this second cause of action re@uires a

consideration of two points. he first is whether a person who is not a part$ to a

contract for the sale of land &aes hi&self lia#le for da&aes to the vendee, #e$ond

the value of the use and occupation, #$ colludin with the vendor and &aintainin

hi& in the effort to resist an action for specific perfor&ance. he second is whether

the da&aes which the plaintiff sees to recover under this head are too re&ote and

speculative to #e the su#:ect of recover$.

As preli&inar$ to a consideration of the first of these @uestions, we dee& it well it

dispose of the contention that the &eers of the defendants corporation, in advisin

and pro&ptin eodorica )ndencia not to co&pl$ with the contract of sale, were

actuated #$ i&proper and &alicious &otives. he trial court found that this

contention was not sustained, o#servin that while it was true that the circu&stances

pointed to an entire s$&path$ on the part of the defendant corporation with the

efforts of eodorica )ndencia to defeat the plaintiff>s clai& to the land, the fact that

its officials &a$ have advised her not to carr$ the contract into effect would not

constitute actiona#le interference with such contract. 0t &a$ #e added that when one

considers the hardship that the ulti&ate perfor&ance of that contract entailed on the

vendor, and the dou#t in which the issue was involved F to the e(tent that thedecision of the Court of the /irst 0nstance was unfavora#le to the plaintiff and the

?upre&e Court itself was divided F the attitude of the defendant corporation, as

e(hi#ited in the conduct of itsprorador, 'uan Ba#ara, and other &eers of the

order of the Recollect /athers, is not difficult to understand. o our &ind a fair

conclusion on this feature of the case is that father 'uan Ba#ara and his associates

#elieved in ood faith that the contract cold not #e enforced and that eodorica

would #e wroned if it should #e carried into effect. An$ advice or assistance which

the$ &a$ have iven was, therefore, pro&pted #$ no &ean or i&proper &otive. 0t is

not, in our opinion, to #e denied that eodorica would have surrendered the

docu&ents of title and iven possession of the land #ut for the influence and

pro&ptins of &eers of the defendants corporation. ut we do not credit the idea

that the$ were in an$ deree influenced to the ivin of such advice #$ the desire to

secure to the&selves the paltr$ privilee of ra%in their cattle upon the land in

@uestion to the pre:udice of the :ust rihts of the plaintiff.

he attorne$ for the plaintiff &aintains that, #$ interferin in the perfor&ance of the

contract in @uestion and o#structin the plaintiff in his efforts to secure the certificate

of tittle to the land, the defendant corporation &ade itself a co-participant with

eodorica )ndencia in the #reach of said contractI and inas&uch as father 'uan

Ba#ara, at the ti&e of said unlawful intervention #etween the contractin parties,

was full$ aware of the e(istence of the contract ")(hi#it C* which the plaintiff had

&ade with ?. . aefield, of ?an /rancisco, it is insisted that the defendant

corporation is lia#le for the loss conse@uent upon the failure of the pro:ect outlined in

said contract.

0n this connection reliance is placed #$ the plaintiff upon certain A&erican and

)nlish decisions in which it is held that a person who is a straner to contract &a$,

#$ an un:ustifia#le interference in the perfor&ance thereof, render hi&self lia#le for

the da&aes conse@uent upon non-perfor&ance. 0t is said that the doctrine of these

cases was reconi%ed #$ this court in Gilchrist vs.Cudd$ "19 Phil. Rep., 41*I and

we have #een earnestl$ pressed to e(tend the rule there enunciated to the situation

here presente.

?o&ewhat &ore than half a centur$ ao the )nlish Court of the Hueen>s ench saw

its wa$ clear to per&it an action for da&aes to #e &aintained aainst a straner to a

contract wronfull$ interferin in its perfor&ance. he leadin case on this su#:ect is

Bu&le$ vs.G$e "23;O, 1 )l. J l., 126*. 0t there appeared that the plaintiff, as

&anaer of a theatre, had entered into a contract with =iss 'ohanna aner, an

opera siner,, where#$ she #ound herself for a period to sin in the plaintiff>s theatre

and nowhere else. he defendant, nowin of the e(istence of this contract, and, asthe declaration alleed, !&aliciousl$ intendin to in:ure the plaintiff,! enticed and

produced =iss aner to leave the plaintiff>s e&plo$&ent. 0t was held that the

plaintiff was entitled to recover da&aes. he riht which was here reconi%ed had

its oriin in a rule, lon fa&iliar to the courts of the co&&on law, to the effect that

an$ person who entices a servant fro& his e&plo$&ent is lia#le in da&aes to the

&aster. he &aster>