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BLAS V SANTOS

LABRADOR; March 29, 1961

NATURE
Appeal from a judgement of the Court of the First Instance of Rizal

FACTS
- Simeon Blas married twice. His first marriage was with Marta Cruz. They had 3 children only one of whom, Eulalia left children namely
Maria, Marta and Lazaro. Lazaro laft 3 legitimate children. Maria and Lazaro’s children are plaintiffs herein. Simeon Blas contracted another
marriage with Maxima Santos when Marta Cruz died. Ti should be noted that when Marta Cruz died, there was no liquidation of the couple’s
property. A week before the death of Simeon Blas, he executed a will which stated that half of their property (with Maxima) is the share of
his wife.another document (exibit A) was executed by Maxima Santos which states that one-half of her share of the properties left to her by
her husband, she would give to the heirs and legatees or the beneficiaries (plaintiffs) named in the will of her husband.

- This action was instituted by plaintiffs against the administratrix of the estate of Maxima Santos, to secure a judicial declaration that one-
half of the properties left by said Maxima Santos Vda. de Blas and requesting that the said properties so promised be adjudicated to the
plaintiffs.

- Trial court held that said Exhibit "A" has not created any right in favor of plaintiffs which can serve as a basis of the complaint; that neither
can it be considered as a valid and enforceable contract for lack of consideration and because it deals with future inheritance. The court also
declared that Exhibit "A" is not a will because it does not comply with the requisites for the execution of a will; nor could it be considered as
a donation.

- Both the court below in its decision and the appellees in their brief before us, argue vehemently that the heirs of Simeon Blas and his wife
Marta Cruz can no longer make any claim for the unliquidated conjugal properties acquired during said first marriage, because the same were
already included in the mass of properties constituting the estate of the deceased Simeon Blas and in the adjudications made by virtue of his
will, and that the action to recover the same has prescribed.

ISSUES
WON plaintiffs can make a claim for half of the properties received by Maxima Santos after the death of Simeon Blas - YES

HELD

YES


Ratio The principal basis for the plaintiffs' action in the case at bar is the document Exhibit "A". Plaintiffs-appellants argue before the
Court that Exhibit "A" is both a trust agreement and a contract in the nature of a compromise to avoid litigation. Defendants-appellees, in
answer, claim that it is neither a trust agreement nor a compromise agreement. The Court finds that the preparation and execution of Exhibit
"A" was ordered by Simeon Blas evidently to prevent his heirs by his first marriage from contesting his will and demanding liquidation of the
conjugal properties acquired during his -first marriage, and an accounting of the fruits and proceeds thereof from the time of the death of his
first wife.
Exhibit "A", therefore, appears to be the compromise defined in Article 1809 of the Civil Code of Spain, in force at the time of
the execution of Exhibit "A", which provides as follows:
"Compromise is a contract by which each of the parties in interest, by giving,
promising, or retaining something avoids the provocation of a suit or terminates one which has already been instituted."
The agreement or
promise that Maxima Santos makes in Exhibit "A" is to hold one- half of her said share in the conjugal assets in trust for the heirs and
legatees of her husband in his will, with the obligation of conveying, the same to such of his heirs or legatees as she may choose in her last
will and testament. Under Exhibit "A", therefore, Maxima Santos contracted the obligation and promised to give one-half of the above
indicated properties to the heirs and legatees of Simeon Blas
*this case is under future inheritance so this next paragraph is important
-
The Court also rejects the defendant’s contention that Exibit A is a contract on future inheritance. It is an obligation or promise made by the
maker to transmit one-half of her share in the conjugal properties acquired with her husband, which properties are stated or declared to be
conjugal properties in the will of the husband. The conjugal properties were in existence at the time of the execution of Exhibit "A" on
December 26, 1936. The properties mentioned were even included by Maxima in the inventory of her husband’s property. The document
refers to existing properties which she will receive by operation of law on the death of her husband, because it is her share in the conjugal
assets.

- It will be noted that what is prohibited to be the subject matter of a contract under Article 1271 of the Civil Code is "future inheritance." To
us future inheritance is any property or right not in existence or capable of determination at the time of the contract, that a person may in the
future acquire by succession. The properties subject of the contract Exhibit "A" are well-defined properties, existing at the time of the
agreement, which Simeon Blas declares in his testament as belonging to his wife as her share in the conjugal partnership.

- It is also claimed that the case at bar are concluded by the judgment rendered in the proceedings for the settlement of the estate of Simeon
Blas for the reason that the properties left by him be longed to himself and his wife Maxima Santos; that the project of partition in the said
case. But the main ground upon which plaintiffs base their present action is the document Exhibit "A", already fully considered above. As
this private document contains the express promise made by Maxima Santos to convey in her testament, upon her death, one-half of the
conjugal properties she would receive as her share in the conjugal properties, the action to enforce the said promise did not arise until and
after her death when it was found that she did not comply with her above-mentioned promise. It may be added that plaintiffs- appellants did
not question the validity of the project of partition precisely because of the promise made by Maxima Santos in the compromise Exhibit "A".

Disposition The defendant-appellee, administratrix of the estate of Maxima Santos, is ordered to convey and deliver one-half of the
properties adjudicated to Maxima Santos as her share in the conjugal properties to the heirs and the legatees of her husband Simeon Blas.
TANEDO V COURT OF APPEALS
PANGANIBAN; January 22, 1996

NATURE
Petition for review on certiorari under Rule 45 of the Rules of Court to set aside and reverse the Decision of the Court of Appeals on
September 26, 1991 affirming the decision of RTC Tarlac, Tarlac denying reconsideration on May 27, 1992.

FACTS
- October 20, 1962 - Lazardo Tañedo executed a notarized deed of absolute sale in favor of his eldest brother, Ricardo Tañedo, and the
latter’s wife, Teresita Barera (private respondents) whereby in consideration of P1,500.00, “one hectare of whatever share I shall have over
Lot No. 191 of the cadastral survey of Gerona, Province of Tarlac... the said property being his future inheritance from his parents”
- February 28, 1980 - Lazaro executed an “Affidavit of Conformity” upon death of his father Matias to “re-affirm, respect. acknowledge and
validate the sale I made in 1962.”
- January 13, 1981 - Lazaro executed another notarized deed of sale in favor of private respondents
covering his “undivided ONE TWELVE (1/12) of a parcel of land known as Lot 191” where he acknowledged receipt of P 10,000.00 as
consideration

- February 1981 - Ricardo learned that Lazaro sold the same property to his children (petitioners) through a deed of sale dated December 29,
1980 conveying to his ten children his allotted portion under the extrajudicial partition executed by the heirs of Matias

- June 7, 1982 – Sps Ricardo Tanedo recorded the Deed of Sale in their favor in the Registry of Deeds
- July 16, 1982 – Lazaro’s children
filed a complaint for rescission (plus damages) of the deeds of sale executed by Lazaro in favor of Sps Ricardo Lazao covering the property
inherited by Lazaro from his father.

- Petitioners also presented in evidence
(1) a private writing purportedly prepared and signed by Matias dated December 28, 1978, stating
that it was his desire that whatever inheritance Lazaro would receive from him should be given to his (Lazaro’s) children
(2) a typewritten
document dated March 10, 1979 signed by Lazaro in the presence of two witnesses, wherein he confirmed that he would voluntarily abide by
the wishes of his father, Matias, to give to his (Lazaro’s) children all the property he would inherit from the latter
(3) a letter dated January
1, 1980 of Lazaro to his daughter, Carmela, stating that his share in the extrajudicial settlement of the estate of his father was intended for his
children
- Sps Ricardo Tanedo presented “Deed of Revocation of a Deed of Sale” dated March 12, 1981 where Lazaro revoked the sale in
favor of his children for the reason that it was “simulated or fictitious - without any consideration whatsoever.”
- after the case was filed,
Lazaro executed a sworn statement which virtually repudiated the contents of the Deed of Revocation of a Deed of Sale and the Deed of Sale
in favor of the Sps Ricardo Tanedo. However, Lazaro testified that he sold the property to Ricardo, and that it was a lawyer who induced him
to execute a deed of sale in favor of his children after giving him five pesos (P5.00) to buy a “drink”
- TC: decided in favor of Sps Ricardo
Tanedo and that Lazaro’s children failed “to adduce a preponderance of evidence to support (their) claim.”
- CA: affirmed the decision of
the trial court, ruling that the Deed of Sale dated January 13, 1981 was valid and that its registration in good faith

Petitioners Claim
TC committed errors in


1. concluding that the Contract of Sale of October 20, 1962 is merely voidable or annulable and not void ab initio pursuant to A1347 par2
CC involving ‘future inheritance’


2. holdings Sps Ricardo Tanedo acted in good faith in registering the deed of sale of January 13, 1981 with the Register of Deeds of Tarlac
and therefore ownership of the land passed on to them


3. ignoring and failing to consider the testimonial and documentary evidence of Lazaro’s children which clearly established by
preponderance of evidence that they are indeed the legitimate and lawful owners of the property in question

4. that the decision is contrary to law and the facts of the case and the conclusions drawn from the established facts are illogical and off-
tangent


- Allegations made by petitioners in their basic petition and in their memorandum


1. TC allegedly ignored the claimed fact that Ricardo “by fraud and deceit and with foreknowledge” that the property in question had already
been sold to petitioners, made Lazaro execute the deed of January 13, 1981


2. There is allegedly adequate evidence to show that only 1/2 of the purchase price of P10,000.00 was paid at the time of the execution of the
deed of sale, contrary to the written acknowledgment, thus showing bad faith

3. There is allegedly sufficient evidence showing that the deed of revocation of the sale in favor of petitioners “was tainted with fraud or
deceit.”


4. There is allegedly enough evidence to show that private respondents “took undue advantage over the weakness and unschooled and
pitiful situation of Lazaro Tanedo . . .” and that respondent Ricardo Tañedo “exercised moral ascendancy over his younger brother he being
the eldest brother and who reached fourth year college of law and at one time a former Vice-Governor of Tarlac, while his younger brother
only attained first year high school”

5. TC erred in not giving credence to petitioners’ evidence, especially Lazaro Tañedo’s Sinumpaang Salaysay dated July 27, 1982 stating that
Ricardo Tañedo deceived the former in executing the deed of sale in favor of private respondents.

ISSUES
1. WON sale of a future inheritance is valid - NO

2. WON the subsequent execution on January 13, 1981 (and registration with the Registry of Property) of a deed of sale covering the same
property to the same buyers is valid
 - YES

3. WON this Court may review the findings of the respondent Court in
 (a) holding that the buyers acted in good faith in registering the said
subsequent deed of sale; and (b) failing to consider petitioners’ evidence
; and (c) its conclusions “being illogical and off-tangent” - NO

HELD
* “errors” which are reviewable by this Court in this petition for review on certiorari are only those allegedly committed by the respondent
Court of Appeals and not directly those of the trial court, which is not a party here.
* The “assignment of errors” in the petition quoted
above is therefore totally misplaced, and for that reason, the petition should be dismissed. But in order to give the parties substantial justice
we have decided to delve into the issues as above re-stated.

1. NO - A1347 CC
 no contract may be entered into upon a future inheritance except in cases expressly authorized by law.


TF contract made in 1962 is not valid and cannot be the source of any right nor the creator of any obligation between the parties and also,
“affidavit of conformity” dated February 28, 1980, that validates or ratifies the 1962 sale, is also useless

2. YES - 
In land, an immovable property, ownership shall belong to the buyer who in good faith registers it first in the registry of property

- the documents that are critical to the resolution of this case are:
(a) the deed of sale of January 13, 1981 in favor of private respondents
covering Lazaro’s undivided inheritance of one-twelfth (1/12) share in Lot No. 191, which was subsequently registered on June 7, 1982
(b)
the deed of sale dated December 29, 1980 in favor of petitioners covering the same property.
- These two documents were executed after
the death of Matias (and his spouse) and after a deed of extrajudicial settlement of his (Matias’) estate was executed, thus vesting in Lazaro
actual title over said property. In other words, these dispositions, though conflicting, were no longer infected with the infirmities of the 1962
sale.
- Critical in determining which of these two deeds should be given effect is the registration of the sale in favor of private respondents
with the register of deeds on June 7, 1982.
- A1544 CC governs the preferential rights of vendees in cases of multiple sales, as follows:
If
the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall
pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.
- Also, between two purchasers, the one who registered the sale in his favor has a preferred right over the other
who has not registered his title, even if the latter is in actual possession of the immovable property

3. NO - CA, reviewing TC’s findings, refused to overturn the latter’s assessment of the testimonial evidence, as follows:
“We are not
prepared to set aside the finding of the lower court upholding Ricardo Tanedo’s testimony, as it involves a matter of credibility of witnesses
which the trial judge, who presided at the hearing, was in a better position to resolve.”
- all the above contentions involve questions of fact,
appreciation of evidence and credibility of witnesses, which are not proper in this review. It is well-settled that the Supreme Court is not a
trier of facts.
- In petitions for review under Rule 45 of the Revised Rules of Court, only questions of law may be raised and passed upon.
Absent any whimsical or capricious exercise of judgment, and unless the lack of any basis for the conclusions made by the lower courts be
amply demonstrated, the Supreme Court will not disturb their findings. We are far from convinced that both courts gravely abused their
respective authorities and judicial prerogatives.


Disposition Petition is DENIED and the Decision of the Court of Appeals is AFFIRMED
FLORENTINO V ENCARNACION, SR.
GUERRERO; September 30, 1977

NATURE
APPEAL from the decision of the Court of First Instance of Ilocos Sur. Arciaga, J.

FACTS
- On May 22, 1964, the petitioners-appellants and the petitioners-appelleed filed with CFI an application for the registration under Act 496 of
a parcel of agricultural land located at Cabugao, Ilocos Sur. The application alleged among other things that the applicants are the common
and pro-indiviso owners in fee simple of the said land with the improvements existing thereon; that to the best of the knowledge and belief,
there is no mortgage, hen or encumbrance of any kind whatsoever affecting said land, nor any other person having any estate or interest
thereon, legal or equitable, remainder, reservation at in expectancy; that said applicants had acquired the aforesaid land thru and by
inheritance from their predecessors in interest, their aunt, Doña Encarnacion Florentino, and Angel Encarnacion acquired their respective
shares of the land thru purchase from the original heirs, Jesus, Caridad, Lourdes and Dolores, all surnamed Singson, on one hand and from
Asuncion Florentino on the other.

- After due notice and publication, the Court set the application for hearing. Only the Director of Lands filed an opposition but was later
withdrawn so an order of general default was issued. Upon application of the applicants, the Clerk of Court was commissioned and
authorized to receive the evidence of the applicants and ordered to submit the same for the Court's proper resolution.

- Exhibit O-1 embodied in the deed of extrajudicial partition (Exhibit O), which states that with respect to the land situated in Barrio Lubong,
Dacquel, Cabugao, Ilocos Sur, the fruits thereof shall serve to defray the religious expenses, was the source of contention in this case
(Spanish text). Florentino wanted to include Exhibit O-1 on the title but the Encarnacions opposed and subsequently withdrawn their
application on their shares, which was opposed by the former.

- The Court after hearing the motion for withdrawal and the opposition issued an order and for the purpose of ascertaining and implifying that
the products of the land made subject matter of this land registration case had been used in answering for the payment of expenses for the
religious functions specified in the Deed of Extrajudicial Partition which was no registered in the office of the Register of Deeds from time
immemorial; and that the applicants knew of this arrangement and the Deed of Extrajudicial Partition of August 24, 1947, was not signed by
Angel Encarnacion or Salvador Encarnacion, Jr.
- CFI: The self-imposed arrangement in favor of the Church is a simple donation, but is
void since the donee has not accepted the donation and Salvador Encarnacion, Jr. and Angel Encarnacion had not made any oral or written
grant at all so the court allowed the religious expenses to be made and entered on the undivided shares, interests and participations of all the
applicants in this case, except that of Salvador Encarnacion, Sr., Salvador Encarnacion, Jr. and Angel Encarnacion."

- The petitioners-appellants filed their Reply to the Opposition reiterating their previous arguments, and also attacking the jurisdiction of the
registration court to pass upon the validity or invalidity of the agreement Exhibit O-1, alleging that such is litigable only in an ordinary action
and not proper in a land registration proceeding.

- The Motion for Reconsideration and of New Trial was denied for lack of merit, but the court modified in highlighting that the donee Church
has not showed its clear acceptance of the donation, and is the real party of this case, not the petitioners- appellants

ISSUES

1. WON the lower own erred in concluding that the stipulation embodied in Exhibit O on religious expenses is just an arrangement
stipulation, or grant revocable at the unilateral option of the co-owners
- YES

1.1 WON the lower court erred in finding and concluding that the encumbrance or religious expenses embodied in Exhibit O, the
extrajudicial partition between the co-heirs, is binding only on the applicants Miguel Florentino, Rosario Encarnacion de Florentino,
Manuel Arce, Jose Florentino, Antonio Florentino, Victorino Florentino, Remedios Encarnacion and Severina Encarnacion - YES

2. WON the lower court erred in holding that rule that the petitioners-appellants are not the real parties in interest, but the Church
 - YES

3. WON the lower court as a registration court erred in passing upon the merits of the encumbrance (Exhibit O-1) as the same was never put
to issue and as the question involved is an adjudication of rights of the parties - NO

HELD

1. YES

The court erred in concluding that the stipulation is just an arrangement stipulation. It cannot be revoked unilaterally.


Ratio The contract must bind both parties, based on the principles (1) that obligation wising from contracts have the force of law between the
contracting parties; and (2) that them must be mutuality between the parties band on their essential equality, to which is repugnant to have
one party bound by the contract leaving the other free therefrom.

Reasoning The stipulation (Exhibit O-1) is part of an extrajudicial partition (Exh. O) duly agreed and signed by the parties, hence the same
must bind the contracting parties thereto and its validity or compliance cannot be left to the will of one of them

- The said stipulation is a stipulation pour autrui. A stipulation pour autrui is a stipulation in favor of a third person conferring a clear and
deliberate favor upon him, and which stipulation is merely a part of a contract entered into by the parties, neither of whom acted as agent of
the third person, and such third person may demand its fulfillment provided that he communicates his acceptance to the obligor before it is
revoked.
-Requisites: (1) that the stipulation in favor of a third person should be a part, not the whole, of the contract, (2) that the favorable
stipulation should not be conditioned or compensated by any kind of obligation whatever; and (3) neither of the contracting parties bears the
legal representation or authorization of third party. -Valid stipulation pour autrui: it must be the purpose and intent of the stipulating parties
to benefit the third person, and it is not sufficient that the third person may be incidentally benefited by the stipulation. The intention of the
parties may be disclosed by their contract. It matters not whether the stipulation is in the nature of a gift or whether there is an obligation
owing from the promise to the third person. That no such obligation exists may in some degree assist in determining whether the parties
intended to benefit a third person.

-The evidence on record shows that the true intent of the parties is to confer a direct and material benefit upon the Church.
- While a
stipulation in favor of a third person has no binding effect in itself before its acceptance by the party favored, the law does not provide when
the third person must make his acceptance. As a rule, there is no time limit; such third person has all the time until the stipulation is revoked.
Here, We find that the Church accepted (implicitly) the stipulation in its favor before it is sought to be revoked by some of the coowners.

1.1 YES
The court should have found the other co-owners to be bound by the extrajudicial partition.

Ratio Being subsequent purchasers, they are privies or successors in interest; it is axiomatic that contracts are enforceable against the parties
and their privies.
Reasoning The co-owners are shown to have given their conformity to such agreement when they kept their peace in 1962 and 1963, having
already bought their respective shares of the subject land but did not question the enforcement of the agreement as against them. They are
also shown to have knowledge of Exhibit O-1 as they had admitted in a Deed of Real Mortgage executed by them.

2. YES


Ratio That one of the parties to a contract pour autrui is entitled to bring an action for its enforcement or to prevent its breach is too clear to
need any extensive discussion. Upon the other hand, that the contract involved contained a stipulation pour autrui amplifies this settled rule
only in the sense that the third person for whose benefit the contract was entered into may also demand its fulfillment provided he had
communicated his acceptance thereof to the obligor before the stipulation in his favor is revoked.


Reasoning The annotation of Exhibit O-1 on the face of the title to be issued in this case is merely a guarantee of the continued enforcement
and fulfillment of the beneficial stipulation.


3. NO


Ratio The otherwise rigid rule that the jurisdiction of the Land Registration Court, being special and limited in character and proceedings
thereon summary in nature, does not extend to cases involving issues properly litigable in other independent suits or ordinary civil actions


Reasoning The peculiarity of the exceptions is based not alone on the fact that Land Registration Courts are likewise the same Courts of First
Instance, but also the following premises: (1) Mutual consent of the parties or their acquiescence in submitting the aforesaid issues for
determination by the court in the registration proceedings; (2) Full opportunity given to the parties in the presentation of their respective sides
of the issues and of the evidence in support thereto; (3) Consideration by the court that the evidence already of record is sufficient and
adequate for rendering a decision upon these issues.
-Also, the case has been languishing in our courts for thirteen long years. To require
that it be remanded to the lower own for another proceeding under its general jurisdiction is not in consonance with our avowed policy of
speedy justice.

Disposition IN VIEW OF THE FOREGOING, the decision of the Court of First Instance of Ilocos Sur in Land Registration Case No. N-310
is affirmed but modified to allow the annotation of Exhibit O-1 as an encumbrance on the face of the title to be finally issued in favor of all
the applicants (herein appellants and herein appellees) in the registration proceedings below.
COQUIA V FIELDMEN’S INSURANCE CO., INC.
CONCEPCION; November 29, 1968

NATURE
Appeal from a decision of the Court of First Instance of Manila

FACTS

- On Dec. 1, 1961, The Fieldmen’s Insurance Co. issued in favor of the Manila Yellow Taxicab Co. a common carrier accident insurance
policy, covering the period from Dec. 1, 1961 to Dec. 1, 1962. It was stipulated in said policy that the “Company will indemnify the Insured
in the event of accident against all sums which the Insured will become legally liable to pay for the death or bodily injury to any fare-paying
passenger including the driver, conductor and/or inspector who is riding in the motor vehicle insured at the time of accident or injury.” On
Feb. 10, 1962, as a result of a vehicular accident in Pangasinan, Carlito Coquia, driver of one of the taxi cabs covered by said policy, was
killed. The Insured filed therefor a claim for P5,000.00 to which the Company replied with an offer to pay P2,000.00, by way of compromise.
The Insured rejected the same and made a counter-offer for P4,000.00, but the Company did not accept it. Because of the failure of the
Company and the Insured to agree with respect to the amount to be paid to the heirs of the driver, the Insured and the parents of Carlito, the
Coquias, finally brought this action against the Company to collect the proceeds of the aforementioned policy. The trial court rendered a
decision sentencing the Company to pay to the plaintiffs the sum of P4,000.00 and the costs. Hence, this appeal by the Company, which
contends that plaintiffs have no cause of action because: 1) the Coquias have no contractual relation with the Company; and 2) the Insured
has not complied with the provisions of the policy concerning arbitration based on Sec 17 of the policy reading: “If any difference or dispute
shall arise with respect to the amount of the Company's liability under this Policy, the same shall be referred to the decision of a single
arbitrator to be agreed upon by both parties or failing such agreement of a single arbitrator, to the decision of two arbitrators, one to be
appointed in writing by each of the parties within one calendar month after having respective sides of the issues and of the evidence in
support thereto; (3) Consideration by the court that the evidence already of record is sufficient and adequate for rendering a decision upon
these issues.
-Also, the case has been languishing in our courts for thirteen long years. To require that it be remanded to the lower own for
another proceeding under its general jurisdiction is not in consonance with our avowed policy of speedy justice. Disposition IN VIEW OF
THE FOREGOING, the decision of the Court of First Instance of Ilocos Sur in Land Registration Case No. N-310 is affirmed but modified to
allow the annotation of Exhibit O-1 as an encumbrance on the face of the title to be finally issued in favor of all the applicants (herein
appellants and herein appellees) in the registration proceedings below.

been required in writing so to do by either of the parties and in case of disagreement between the arbitrators, to the decision of an umpire who
shall have been appointed in writing by the arbitrators before entering on the reference and the costs of and incident to the reference shall be
dealt with in the Award. And it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit
upon this Policy that the award by such arbitrator, arbitrators or umpire of the amount of the Company's liability hereunder if disputed shall
be first obtained.”

ISSUE
WON the Coquias have cause of action - YES

HELD
YES


Ratio If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his
acceptance to the obligor before its revocation.


Reasoning Although in general, only parties to a contract may bring an action based thereon, this rule is subject to exceptions, one of which
is found in the second paragraph of Art. 1311 of the Civil Code of the Philippines. This is but a restatement of a well-known principle
concerning contracts pour autrui, the enforcement of which may be demanded by a third party for whose benefit it was made, although not a
party to the contract, before the stipulation in his favor has been revoked by the contracting parties. The policy in question provides, inter
alia, that the Company ‘will indemnify any authorized driver who is driving the motor vehicle’ of the Insured and, in the event of death of
said driver, the Company shall, likewise, ‘indemnify his personal representatives.’ Thus, the policy is typical of contracts pour autrui, this
characteristic being made more manifest by the fact that the deceased driver, paid fifty percent of the premiums, which were deducted from
his weekly commissions. Under these conditions, the Coquias – who, admittedly are the sole heirs of the deceased – have a direct cause of
action against the Company, and, since they could have maintained this action themselves, without the assistance of the Insured, it goes
without saying that they could and did properly join the latter in filing the complaint hereon. The second defense cannot stand because none
of the parties invoked this section, or made any reference to arbitration, during the negotiations preceding the institution of the present case.
Their aforementioned acts or omissions had the effect of a waiver of their respective right to demand an arbitration. The test for determining
whether there has been a waiver in a particular case is as follows: "Any conduct of the parties inconsistent with the notion that they treated
the arbitration provision as in effect, or any conduct which might be reasonably construed as showing that they did not intend to avail
themselves of such provision, may amount to a waiver thereof and estop the party charged with such conduct from claiming its benefits".


Disposition Decision appealed from is affirmed.


CONSTANTINO V ESPIRITU
DIZON; May 31, 1971

NATURE
Direct appeal on a question of law taken by Pastor B. Constantino from an order of the Court of First Instance of Rizal denying his motion for
the admission of his amended complaint in Civil Case No. 5924, entitled "Pastor B. Constantino vs. Herminia Espiritu."

FACTS
- Constantino had by a fictitious deed of absolute sale conveyed to Espiritu for a consideration of P8,000.00, the two-storey house and four
(4) subdivision lots in the name of Pastor B. Constantino, married to Honorata Geukeko, with the understanding that Espiritu would hold the
properties in trust for their illegitimate son, Pastor Constantino, Jr., still unborn at the time of the conveyance
- Espiritu mortgaged said properties to the Republic Savings Bank of Manila twice to secure payment of two loans, one of P3,000.00 and the
other of P2,000.00, and that thereafter she offered them for sale.
- The complaint then prayed for the issuance of a writ of preliminary
injunction restraining Espiritu and her agents or representatives from further alienating or disposing of the properties, and for judgment
ordering her to execute a deed of absolute sale of said properties in favor of Pastor B. Constantino, Jr., the beneficiary (who, at the filing of
said complaint, was about five years of age), and to pay attorney's fees in the sum of P2,000.00.

- TCT No, 20714 in the name of plaintiff was partially cancelled and in lieu thereof, TCT No. 32744 was issued by the Register of Deeds of
Rizal in the name of appellee Herminia Espiritu.
- Espiritu moved to dismiss the complaint on the ground that it stated no cause of action
because Pastor Constantino, Jr., the beneficiary of the alleged trust, was not included as party-plaintiff, and on the further ground that cause
of action was unenforceable under the Statute of Frauds.

- Constantino argued that the Statute of Frauds does not apply to trustee - The trial court dismissed the complaint, with costs.

ISSUES
1. WON the contract of sale entered into between appellant and appellee was subject to the agreement that appellee would hold the properties
in trust for their unborn child


2. WON the contract in question is not enforceable by action by reason of the provisions of the Statute of Frauds - YES

HELD
1. This is a question of fact that appellee may raise in her answer for the lower court to determine after trial.
- The contract between him and
appellee was a contract pour autrui, although couched in the form of a deed of absolute sale, and that appellant's action was, in effect, one for
specific performance.
- That one of the parties to a contract is entitled to bring an action for its enforcement or to prevent its breach is too clear to need any
extensive discussion.


- The contract contained a stipulation pour autrui amplifies this settled rule only in the sense that the third person for whose benefit the
contract was entered into may also demand its fulfillment provided he had communicated his acceptance thereof to the obligor before the
stipulation in his favor is revoked.

- It appearing that the amended complaint submitted by appellant to the tower court impleaded the beneficiary under the contract as a party
co-plaintiff, it seems clear that the three parties concerned therewith would, as a result, be before the court and the latter's adjudication would
be complete and binding upon them.


2. YES
The contention that the contract in question is not enforceable by action by reason of the provisions of the Statute of Frauds does
not appear to be unquestionable, it being clear upon the facts alleged in the amended complaint that the contract between the parties had
already been partially performed by the execution of the deed of sale, the action brought below being only for the enforcement of another
phase thereof, namely, the execution by appellee of a deed of conveyance in favor of the beneficiary thereunder.
INTEGRATED PACKAGING CORP V CA, FIL-ANCHOR PAPER CO, INC.


QUISUMBING; June 8, 2000

NATURE
Petition to review the CA decision of April 20, 1994, reversing the judgment of the RTC in an action for recovery of sum of money filed by
private respondent against petitioner

FACTS
- May 5, 1978: Petitioner and private respondent executed an order agreement: respondent bound itself to deliver 3,450 reams of printing
paper (coated, 2 sides basis, 80 lbs, short grain) under the following schedule:

May and June 1978: 450 reams at P290/ream August and September: 450 reams at P290/ream January 1979: 575 reams at P307.20/ream
March: 575 reams at P307.20/ream
July: 575 reams at P307.20/ream
October: 575 at P307.20/ream

S.O.P. of parties: materials were to be paid w/in 30-90 days from delivery

- June 7, 1978: petitioner entered into contract with Philacor to print 3 volumes of books, 1 volume by November, 1978; another by
November, 1979, and the last one by November, 1980.
- July 30, 1979: respondent had delivered to petitioner 1,097 reams out of the 3,450.

- Petitioner alleged it wrote private respondent that further delay in delivering the balance would greatly prejudice petitioner
- June, 1980 –
July, 1981: respondent delivered various quantities amounting to P766,101.70.

- Petitioner had difficulties paying
- Respondent made a formal demand for petitioner to settle the outstanding account
- Petitioner made
partial payments of P97,200.00 applied to its back accounts -Petitioner entered into additional printing contract with Philacor but
unfortunately failed to comply with its contract
- Thus, Philacor demanded compensation from petitioner for the delay and damage suffered
- August 14, 1981: respondent filed with RTC a collection suit against petitioner for the sum of P766,101.70, the unpaid purchase price of
printing paper bought by petitioner on credit
- Petitioner denied the allegations of complaint. Counterclaim: that private respondent was
able to deliver only 1,097 reams, which was short of 2,875 reams, in total disregard of their agreement; that private respondent failed to
deliver despite demand therefore, hence petitioner suffered damages and failed to realize expected profits; and that their complaint was
prematurely filed

- respondent submitted a supplemental complaint, alleging that petitioner made additional purchases of printing paper on credit amounting to
P94,200; and that petitioner refused to pay its outstanding obligation.
- July 5, 1990: Trial court:

1. petitioner should pay respondent P763,101.70.

2. petitioner’s claim meritorious: if not for the delay of private respondent to deliver printing paper, petitioner could have sold books to
Philacor and realized a profit of P790,324.30 from the sale

3. petitioner suffered dislocation of contracts as a result of respondent’s failure: awarded moral damages

- CA reversed and set aside decision.
1. Ordered petitioner to pay respondent P763,101.70
2. deleted the P790,324.30 compensatory
damages and moral damages

Petitioners' Claim
[I] the court of appeals erred in concluding that private respondent did not violate the order agreement.
[ii] the court of appeals erred in
concluding that respondent is not liable for petitioner’s breach of contract with philacor.

[iii] the court of appeals erred in concluding that petitioner is not entitled to damages against private respondent.

ISSUES

Substantive
1. WON private respondent violated the order agreement


2. WON private respondent is liable for petitioner’s breach of contract with Philacor

HELD


1. NO


Ratio When there is a contract of sale of goods to be delivered by stated installments, which are to be separately paid for, and the seller
makes defective deliveries in respect of one or more installments, or the buyer neglects or refuses without just cause to take delivery of or pay
for one or more installments, it depends in each case on the terms of the contract and the circumstances of the case, whether the breach of
contract is so material as to justify the injured party in refusing to proceed further and suing for damages for breach of the entire contract, or
whether the breach is severable, giving rise to a claim for compensation but not to a right to treat the whole contract as broken. (art. 1583)


Reasoning In this case, as found a quo petitioner’s evidence failed to establish that it had paid for the printing paper covered by the delivery
invoices on time. Consequently, private respondent has the right to cease making further delivery, hence the private respondent did not
violate the order agreement. On the contrary, it was petitioner which breached the agreement as it failed to pay on time the materials
delivered by private respondent. Respondent appellate court correctly ruled that private respondent did not violate the order agreement.

2. NO

Ratio Aforesaid contracts could not affect third persons like private respondent because of the basic civil law principle of relativity of
contracts which provides that contracts can only bind the parties who entered into it, and it cannot favor or prejudice a third person, even if he
is aware of such contract and has acted with knowledge thereof.


Reasoning The order agreement entered into by petitioner and private respondent has not been shown as having a direct bearing on the
contracts of petitioner with Philacor. The paper specified in the order agreement between petitioner and private respondent are markedly
different from the paper involved in the contracts of petitioner with Philacor. The demand made by Philacor upon petitioner for the latter to
comply with its printing contract is dated February 15, 1984, which is clearly made long after private respondent had filed its complaint on
August 14, 1981. This demand relates to contracts with Philacor dated April 12, 1983 and May 13, 1983, which were entered into by
petitioner after private respondent filed the instant case.


Disposition The instant petition is DENIED. The decision of the Court of Appeals is AFFIRMED. Costs against petitioner.
DAYWALT V LA CORP DE LOS PADRES AGUSTINOS RECOLETOS

STREET; February 4, 1919

NATURE
Appeal from judgment of CFI Manila
FACTS
- In 1902, Teodorica Endencia, an unmarried woman Mindoro, executed a contract where she obligated herself to convey to Geo. W.
Daywalt, a tract of land situated in the barrio of Mangarin, Bulalacaoose, MIndoro
- It was agreed that a deed should be executed as soon as
the title is perfected in the proceedings of the Court of Land Registration and a Torrens title procured therefore in Endencia’s name
- A decree recognizing the right of Endencia as owner was entered in said court in August 1906, but the Torrens certificate was not issued
until later
- The parties made a new contract with a view to carrying their original agreement into effect; this new contract was executed in
the form of deed of conveyance and is dated 16 Aug 1906
- The price is P4,000 and the area of the land enclosed in the boundaries is 452 hectares and a fraction
- The second contract was not
immediately carried into effect for the reason that the Torrens certificate was not yet obtainable
- On Oct 3 1908, the parties entered into another agreement, replacing the old; said agreement bound Endencia to deliver the land, upon
receiving the Torrens title, to the Hongkong and Shanghai Bank in Manila, to be forwarded to the Crocker National Bank in San Francisco,
where it was to be delivered to the plaintiff upon payment of a balance of P3,100
- The Torrens certificate was in time issued to Teodorica Endencia, but in the course of the proceedings in the registration of the land, it was
found by official survey that the area of the tract inclosed in the boundaries stated in the contract was about 1,248 hectares instead of 452
hectares as stated in the contract. Due to this, Endencia became reluctant to transfer the whole tract to the purchaser Daywalt; this led to
litigation which upon appeal to the SC, Daywalt obtained a decree for specific performance; such decree appears to have become finally
effective in early 1914
- The defendant, La Corporacion de los Padres Recoletos, is a religious corporation. The corporation was was at this time the owner of an
estate in Mindoro known as the San Jose Estate and also of a property immediately adjacent to the land which Endencia had sold to Daywalt
- Its representative, Fr. Sanz, had long been well acquainted with Endencia and exerted over her an influence and ascendency due to his
religious character as well as to the personal friendship which existed between them; and Endencia was accustomed to seek, and was given
the advice of Father Sanz and other members of his order
- Fr Sanz was aware of the contract of 1902 (1st contract to sell); Sanz and the other members also knew about the 2nd contract executed in
1903
- When the Torrens certificate was finally issued in 1909 in favor of Endencia, she delivered it for safekeeping to the defendant
corporation, and it was then taken to Manila where it remained in the custody and under the control of P. Juan Labarga
- When La Corporation sold the San Jose Estate in 1909, some 2,368 head of cattle were removed to the estate of the corporation immediately
adjacent to the property which the plaintiff had purchased from Teodorica Endencia
- As Teodorica still retained possession of said
property Father Sanz entered into an arrangement with her where large numbers of cattle belonging to the defendant corporation were
pastured upon said land during a period extending from June 1, 1909, to May 1, 1914
- Daywalt sought to recover from corporation P24,000 as damages for the use and occupation of the land by reason of pasturing the cattle
during the said period
- TC fixed damages at P2,497
- Plaintiff appealed for higher damages; defendant did not question the fact of
awarding damages per se in the first cause of action
- Plaintiff, in a 2nd cause of action, also sought to recover from defendant P500,000, as damages on the ground that said corporation, for its
own selfish purposes, unlawfully induced Endencia to refrain from the performance of her contract for the sale of the land in question and to
withhold delivery to the plaintiff of the Torrens title, and further, maliciously and without reasonable cause, maintained her in her defense to
the action of specific performance which was finally decided in favor of the plaintiff in this court
- Plaintiff claimed that in 1911, he, as the owner of the land which he bought from Endencia entered into a contract with S. B. Wakefield, of
San Francisco, for the sale and disposal of said lands to a sugar growing and milling enterprise, the successful launching of which depended
on the ability of Daywalt to get possession of the land and the Torrens certificate of title, however, the Torrens title was still in Labarga’s
hands, the latter having refused to turn said title over to Endencia; thus, the contract could not be consummated
- Plaintiff alleged that, by interfering in the performance of the contract in question and obstructing the plaintiff in his efforts to secure the
certificate of title to the land, the defendant corporation made itself a co-participant with Teodorica Endencia in the breach of said contract

ISSUES
1. WON damages in the 1st cause of action should be increased - NO

2. WON La Corporation who is not a party to the contract of sale of land will be liable for the damages by colluding with the vendor and
maintaining her in the effort to resist an action for specific performance - NO

HELD
1. NO
-The trial court estimated the rental value of the land for grazing purposes at 50 centavos per hectare per annum, and roughly adopted
the period of four years as the time for which compensation at that rate should be made.

-The SC is of the opinion that the damages assessed are sufficient to compensate the plaintiff for the use and occupation of the land during
the whole time it was used

-There is evidence in the record strongly tending to show that the wrongful use of the land by the defendant was not continuous throughout
the year but was confined mostly to the season when the forage obtainable on the land of the defendant was not sufficient to maintain its
cattle, for which reason it became necessary to allow them to go over to pasture on the land in question

2. NO
-To our mind a fair conclusion on this feature of the case is that Fr Juan Labarga and his associates believed in good faith that the
contract could not be enforced and that Endencia would be wronged if it should be carried into effect

-Whatever may be the character of the liability which a stranger to a contract may incur by advising or assisting one of the parties to evade
performance, there is one proposition upon which all must agree. This is that the stranger cannot become more extensively liable in damages
for the nonperformance of the contract than the party in whose behalf he intermeddles. To hold the stranger liable for damages in excess of
those that could be recovered against the immediate party to the contract would lead to results at once grotesque and unjust.

-The defendant’s liability cannot exceed Endencia’s (the principal of the contract) (Court proceeds to determine Endencia’s liability-- the
damages laid under the second cause of action in the complaint could not be recovered from her, first, because the damages in question are
special damages which were not within contemplation of the parties when the contract was made, and secondly, because said damages are too
remote to be the subject of recovery)

-Plaintiff relies on English and US decisions which have ruled that a person who is a stranger to a contract may, by an unjustifiable
interference in the performance thereof, render himself liable for the damages consequent upon non-performance, as recognized in Gilchrist v
Cuddy

-Upon the said authorities it is enough if the wrongdoer having knowledge of the existence of the contract relation in bad faith sets about to
break it up. Whether his motive is to benefit himself or gratify his spite by working mischief to the employer is immaterial

-If a party enters into contract to go for another upon a journey to a remote and unhealthful climate, and a third person with a bona fide
purpose of benefiting the one who is under contract to go dissuades him from the step, no action will lie. But if the advice is not disinterested
and the persuasion is used for "the indirect purpose of benefiting the defendant at the expense of the plaintiff," the intermedler is liable if his
advice is taken and the contract broken

-No question can be made as to the liability of one who interferes with a contract existing between others by means which under known legal
canons can be denominated an unlawful means. Thus, if performance is prevented by force, intimidation, coercion, or threats, or by false or
defamatory statements, or by nuisance or riot, the person using such unlawful means is under all the authorities liable for the damage which
ensues
-Article 1902 of the Civil Code declares that any person who by an act or omission characterized by fault or negligence, causes damage to
another shall be liable for the damage so done. The SC takes the rule to mean that a person is liable for damage done to another by any
culpable act; and by "culpable act" we mean any act which is blameworthy when judged by accepted legal standards. Nevertheless, it must be
admitted that the codes and jurisprudence of the civil law furnish a somewhat uncongenial field in which to propagate the idea that a stranger
to a contract may be sued for the breach thereof
-Article 1257 of the Civil Code declares that contracts are binding only between the parties and their privies. In conformity with this it has
been held that a stranger to a contract has no right of action for the nonfulfillment of the contract except in the case especially contemplated
in the second paragraph of the same article
-If the two antagonistic ideas which we have just brought into juxtaposition are capable of reconciliation, the process must be accomplished
by distinguishing clearly between the right of action arising from the improper interference with the contract by a stranger thereto, considered
as an independent act generative of civil liability, and the right of action ex- contractu against a party to the contract resulting from the breach
thereof
SO PING BUN V CA
QUISUMBING; September 21, 1999

NATURE
Petition for review on certiorari of a decision of the Court of Appeals

FACTS

- In 1963, Tek Hua Trading Co, through its managing partner, So Pek Giok, entered into lease agreements with lessor Dee C. Chuan & Sons
Inc. (DCCSI)
- Subjects of four (4) lease contracts were premises located at Nos. 930, 930-Int., 924-B and 924-C, Soler Street, Binondo,
Manila which Tek Hua used as storage space for its textiles

-The contracts each had a one-year term. They provided that should the lessee continue to occupy the premises after the term, the lease shall
be on a month-to- month basis.
- When the contracts expired, the parties did not renew the contracts, but Tek Hua continued to occupy the
premises

-In 1976, Tek Hua Trading Co. was dissolved. Later, the original members of Tek Hua Trading Co. including Manuel C. Tiong, formed Tek
Hua Enterprising Corp., herein respondent corporation.
- When So Pek Giok, managing partner of Tek Hua Trading, died in 1986, So Pek
Giok’s grandson, petitioner So Ping Bun, occupied the warehouse for his own textile business, Trendsetter Marketing

-On March 1, 1991, private respondent Tiong, president of Tek Hua Enterprising Corp sent a letter to petitioner So Ping Bun asking him to
vacate the premises -Petitioner refused to vacate and instead, on March 4, 1992, petitioner requested formal contracts of lease with DCCSI in
favor of Trendsetter Marketing

-DCCSI acceded to petitioner’s request


-Private respondents filed a petition for injunction, pressing for the nullification of the lease contracts between DCCSI and petitioner. They
also claimed damages.

-Trial Court ruled in favor of respondents


-CA affirmed

ISSUES
1. WON So Ping Bun is guilty of tortuous interference of contract - YES

2. WON So Ping Bun should be liable for attorney’s fees - YES

HELD
1. YES


Ratio There is tort interference when during the existence of a valid contract, a third person, to whom the existence of such contract is
known, interferes without legal justification or excuse.

Reasoning A duty which the law of torts is concerned with is respect for the property of others, and a cause of action ex delicto may be
predicated upon an unlawful interference by one person of the enjoyment by the other of his private property.

-This may pertain to a situation where a third person induces a party to renege on or violate his undertaking under a contract.
-In the case at
bar, petitioner’s Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as a result petitioner deprived respondent
corporation of the latter’s property right. Clearly, and as correctly viewed by the appellate court, the three elements of tort interference, (1)
existence of a valid contract; (2) knowledge on the part of the third person of the existence of contract; and (3) interference of the third person
is without legal justification or excuse, are present in the instant case.

-In Gilchrist vs. Cuddy, the court held that where there was no malice in the interference of a contract, and the impulse behind one’s conduct
lies in a proper business interest rather than in wrongful motives, a party cannot be a malicious interferer.

-In the instant case, though petitioner took interest in the property of respondent corporation and benefited from it, nothing on record imputes
deliberate wrongful motives or malice on him.
-Section 1314 of the Civil Code categorically provides that, “Any third person who induces
another to violate his contract shall be liable for damages to the other contracting party”

-Lack of malice, however, precludes damages. But it does not relieve petitioner of the legal liability for entering into contracts and causing
breach of existing ones. The respondent appellate court correctly confirmed the permanent injunction and nullification of the lease contracts
between DCCSI and Trendsetter Marketing, without awarding damages.

2. YES


Ratio When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his
interest, the recovery of attorney’s fees is allowed.


Reasoning Art. 2208 of the Civil Code reads:
In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his
interest
-The court has consistently held that the award of considerable damages should have clear factual and legal bases

- Considering that the respondent corporation’s lease contract, at the time when the cause of action accrued, ran only on a month-to-month
basis whence before it was on a yearly basis, the reduced amount of attorney’s fees ordered by the Court of Appeals is still exorbitant in the
light of prevailing jurisprudence. Consequently, the amount of two hundred thousand (P200,000.00) awarded by respondent appellate court
should be reduced to one hundred thousand (P100,000.00) pesos as the reasonable award for attorney’s fees in favor of private respondent
corporation.

Disposition The petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are hereby AFFIRMED, with
MODIFICATION that the award of attorney’s fees is reduced from two hundred thousand (P200,000.00) to one hundred thousand
(P100,000.00) pesos.
MANILA RAILROAD CO. V COMPANIA TRANSATLANTICA
STREET; October 26, 1918

NATURE
Appeal from a judgment of the Court of the First Instance of Manila

FACTS
-The Manila Railroad Company purchased two locomotive boilers in Europe and contracted with the Compañia Trasatlántica to transport the
same to Manila by its steamship named Alicante. The tackle and equipment of the steamship Alicante being insufficient to discharge said
locomotive boilers from the ship to the shore, the Compañia Trasatlántica. entered into a contract with the Atlantic, Gulf & Pacific Company
by virtue of the terms of which the latter company agreed to discharge the said locomotive boilers from the said steamship Alicante by using
its (Atlantiic) tackle and equipment for that purpose. In the effort of the Atlantic, Gulf & Pacific Company to discharge the said locomotive
boilers from the said steamship. The Atlantic Company sent out its crane in charge of foreman Leyden. In preparing to hoist the first boiler
the sling was unfortunately adjusted near the middle of the boiler, and it was thus raised nearly in a horizontal position. The boiler was too
long to clear the hatch in this position, and after one end of the boiler had emerged on one side of the hatch, the other still remained below on
the other side. When the boiler had been gotten into this position and was being hoisted still further, a rivet near the head of the boiler was
caught under the edge of the hatch. The weight on the crane was thus increased by a strain estimated at fifteen tons with the result that the
cable of the sling parted and the boiler fell to the bottom of the ship's hold. The sling was again adjusted to the boiler but instead of being
placed near the middle it was now slung nearer one of the ends, as should have been done at first. The boiler was again lifted; but as it was
being brought up, the bolt at the end of the derrick boom broke, and again the boiler fell. The boiler was damaged and brought back to
Europe for repair which cost P22, 343.29.

- The judge of the Court of First Instance gave judgment in favor of the plaintiff against the Atlantic Company, but absolved the Steamship
Company from the complaint. The plaintiff has appealed from the action of the court in failing to give judgment against the Steamship
Company, while the Atlantic Company has appealed from the judgment against it.

ISSUES

1. WON the Steamship Company is liable to the plaintiff by reason of having delivered the boiler in question in a damaged
condition - YES

2. WON the Atlantic Company is liable to be made to respond to the steamship company for the amount the latter may be required to pay to
the plaintiff for the damage done
- YES
3. WON the Atlantic Company is directly liable to the plaintiff, as the trial court held. - NO

HELD
1. YES
- Under the contract for transportation from England to Manila, the Steamship Company is liable to the plaintiff for the injury done
to the boiler while it was being discharged from the ship. The obligation to transport the boiler necessarily involves the duty to convey and
deliver it in a proper condition according to its nature, and conformably with good faith, custom, and the law (art. 1258, Civ. Code). The
contract to convey imports the duty to convey and deliver safely and securely with reference to the degree of care which, under the
circumstances, are required by law and custom applicable to the case. The duty to carry and to carry safely is all one. Such being the contract
of the Steamship Company, said company is necessarily liable, under articles 1103 and 1104 of the Civil Code, for the consequences of the
omission of the care necessary to the, proper performance of its obligation. Nor does the Steamship Company escape liability by reason of the
fact that it employed a competent independent contractor to discharge the boilers. in the performance of this service the Atlantic Company
was no more than a servant or employee of the Steamship Company, and it has never yet been held that the failure to comply with a
contractual obligation can be excused by showing that such delinquency was due to the negligence of, one to whom the contracting party had
committed the performance of the contract.

2. YES
- The defense of the Atlantic Company comprises two contentions, to-wit, first, that by the terms of the engagement in accordance
with which the Atlantic Company agreed to render the service, all risk incident to the discharge of the boilers was assumed by the Steamship
Company; and secondly, that the AtIantic Company should be absolved under the last paragraph of article 1903 of the Civil Code, inasmuch
as it had used due care in the selection of the employee whose negligent act caused the damage in question.
- Atlantic agreed to lift the
boilers out of the Alicante, as upon other later occasions, but the Steamship Company was notified that the service would only be rendered
upon the distinct understanding that the, Atlantic Company would not be responsible for damage
- As to the first defense, Court held that
every contract for the prestation of service has an inseparable implicit obligation, the duty to exercise due care in the accomplishment of the
work; and no reservation whereby the person rendering the services seeks to escape from the consequences of a violation of this obligation
can be viewed with favor.
- As to the second defense, the Court held that the obligation of the Atlantic Company was created by contract,
and the defense of due diligence of a father could only be used in cases where negligence arises in the absence of an agreement.
- The
Atlantic Company is liable to the Steamship Company for the damages brought upon the latter by the failure of the Atlantic Company to use
due care in discharging the boiler, regardless of the fact that the damage was caused by the negligence of an employee who was qualified for
the work and who had been chosen by the Atlantic Company with due care.


3. NO
- If there had been no contract of any sort between the Atlantic Company and the Steamship Company, an action could have been
maintained by the Railroad Company, as owner, against the Atlantic Company to recover the damages sustained by the former. But there was
a contract.
- The Railroad Company can have no right of action to recover damages from the Atlantic Company for the wrongful act which
constituted the violation of said contract. The rights of the plaintiff can only be made effective through the Compañia Trasatlántica de
Barcelona with whom the contract of affreightment was made.
DKC HOLDINGS CORP. V CA
YNARES-SANTIAGO; April 5, 2000

NATURE
- Petition for review on certiorari seeking reversal of December 5, 1994 Decision of the CA entitled "DKC Holdings Corporation vs. Victor
U. Bartolome, et al.", affirming in toto the January 4, 1993 Decision of RTC Valenzuela which dismissed the civil case and ordered petitioner
to pay P30,000.00 as attorney’s fees.

FACTS

- March 16, 1988 – a 14,021 sq mtr parcel of land in Malinta, Valenzuela originally owned by Victor Bartolome’s deceased mother,
Encarnacion Bartolome, a lot in front of one of the textile plants of DKC Holdings Corp. and a potential warehouse site, was subject to a
Contract of Lease with Option to Buy between DKC and Encarnacion Bartolome which option must be exercised within a period of two
years counted from the signing of the Contract

> DKC to pay P3,000.00 a month as consideration for the reservation of its option and within the two-year period
> DKC shall serve formal
written notice upon Encarnacion Bartolome of its desire to exercise its option. > in case DKC chose to lease the property, it may take actual
possession of the premises

> the lease shall be for a period of six years, renewable for another six years, and the monthly rental fee shall be P15,000.00 for the first six
years and P18,000.00 for the next six years, in case of renewal
- DKC regularly paid the monthly P3,000.00 provided for by the Contract to
Encarnacion until her death in January 1990 and thereafter, coursed its payment to Victor Bartolome, being the sole heir of Encarnacion,
however, he refused to accept these payments

- January 10, 1990 - Victor executed an Affidavit of Self-Adjudication over all the properties of Encarnacion, including the subject lot.
-
March 14, 1990 – DKC served upon Victor, via registered mail, notice that it was exercising its option to lease the property, tendering the
amount of P15,000.00 as rent for the month of March but Victor refused to accept the tendered rental fee and to surrender possession of the
property to DKC

- DKC thus opened a savings account with the China Banking Corporation, Cubao, in the name of Victor Bartolome and deposited therein the
P15,000.00 rental fee for March as well as P6,000.00 reservation fees for February and March
- DKC also tried to register and annotate the
Contract on the title of Victor to the property but the Register of Deeds, only accepting the required fees, refused to register or annotate or
even enter it in the day book or primary register

- April 23, 1990 – DKC filed complaint for specific performance and damages against Victor and the Register of Deeds and prayed for
>
surrender and delivery of possession of the subject land in accordance with the Contract terms

> surrender of title for registration and annotation thereon of the Contract
> payment of P500,000.00 as actual damages, P500,000.00 as
moral damages, P500,000.00 as exemplary damages and P300,000.00 as attorney’s fees.
- May 8, 1990 - Andres Lanozo claimed that he is
a tenant-tiller of the subject property, which was agricultural riceland, for forty-five years and questioned the jurisdiction of the lower court
over the property and invoked the Comprehensive Agrarian Reform Law to protect his rights that would be affected by the dispute between
the original parties to the case
- January 4, 1993 - RTC Valenzuela dismissed the complaint and ordered petitioner to pay Victor P30,000.00
as attorney’s fees
- CA affirmed the decision in toto
- Petitioner’s Claim
CA erred in Ruling that:
1. provision on the notice to
exercise option was not transmissible
2. notice of option must be served by DKC upon Encarnacion Bartolome personally 3. contract was
one-sided and onerous in favor of DKC 4. existence of a registered tenancy was fatal to the validity of the contract 5. Victor Bartolome was
liable to DKC Holdings for attorney’s fees

ISSUES
1. WON Contract of Lease with Option to Buy entered into by the late Encarnacion Bartolome with DKC Holdings was terminated upon her
death
- NO

2. WON DKC Holdings had complied with its obligations under the contract and with the requisites to exercise its option - YES

HELD
1. NO, It binds her sole heir, Victor, even after her demise.


- A1311 CC provides
Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations
arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the
value of the property he received from the decedent.


- General Rule: heirs are bound by contracts entered into by their predecessors-in- interest


Exception: when the rights and obligations arising therefrom are not transmissible by
(1) their nature
(2) stipulation or
(3) provision of
law


- there is neither contractual stipulation nor legal provision making the rights and obligations under the contract intransmissible; moreover,
the nature of the rights and obligations are, by their nature, transmissible.


- Nature of Intransmissible Rights as explained by Arturo Tolentino


Among contracts which are intransmissible are those which are purely personal, either by provision of law, such as in cases of
partnerships and agency, or by the very nature of the obligations arising therefrom, such as those requiring special personal qualifications of
the obligor. It may also be stated that contracts for the payment of money debts are not transmitted to the heirs of a party, but constitute a
charge against his estate. Thus, where the client in a contract for professional services of a lawyer died, leaving minor heirs, and the lawyer,
instead of presenting his claim for professional services under the contract to the probate court, substituted the minors as parties for his
client, it was held that the contract could not be enforced against the minors; the lawyer was limited to a recovery on the basis of quantum
meruit.


- In American jurisprudence


(W)here acts stipulated in a contract require the exercise of special knowledge, genius, skill, taste, ability, experience, judgment, discretion,
integrity, or other personal qualification of one or both parties, the agreement is of a personal nature, and terminates on the death of the
party who is required to render such service
- Contracts to perform personal acts which cannot be as well performed by others are
discharged by the death of the promissor. Conversely, where the service or act is of such a character that it may as well be performed by
another, or where the contract, by its terms, shows that performance by others was contemplated, death does not terminate the contract or
excuse nonperformance. Here, no personal act is required from the late Encarnacion Bartolome and the obligation of Encarnacion in the
contract to deliver possession of the subject property to petitioner upon the exercise by the latter of its option to lease the same may very well
be performed by her heir Victor.


- heirs cannot escape the legal consequence of a transaction entered into by their predecessor-in-interest because they have inherited the
property subject to the liability affecting their common ancestor.

> 1903, it was held that "(H)e who contracts does so for himself and his heirs."

> 1952, predecessor was duty-bound to reconvey land to another, and at his death the reconveyance had not been made, the heirs can be
compelled to execute the proper deed for reconveyance


- In Parañaque Kings Enterprises vs. Court of Appeals where Raymundo alleged that he is not privy to the lease contract, not being the lessor
nor the lessee referred to therein, SC ruled he is nevertheless a proper party because he stepped into the shoes of the owner-lessor of the land
as, by virtue of his purchase. He assumed all the obligations of the lessor under the lease contract. And he received benefits in the form of
rental payments. Here the subject matter is also a lease, which is a property right and death of a party does not excuse nonperformance of a
contract which involves a property right, and the rights and obligations thereunder pass to the personal representatives of the deceased.


2. YES, the payment by DKC of the reservation fees during the two-year period within which it had the option to lease or purchase the
property is not disputed and it was also proper to address notice to exercise option to Victor as heir of Encarnacion.


- payment of such reservation fees, except those for February and March, 1990 were admitted by Victor

- DKC followed the requirements by


> paying the P15,000.00 monthly rental fee on the subject property by depositing the same in China Bank Savings Account in the name of
Victor as the sole heir of Encarnacion Bartolome, for the months of March to July 30, 1990, or a total of 5 months, despite the refusal of
Victor to turn over the subject property


> informed other party of its intention to exercise its option to lease through its letter dated Match 12, 1990, well within the two-year period
for it to exercise its option


Disposition Instant Petition for Review is GRANTED. The Decision of the Court of Appeals and RTC Valenzuela are both SET ASIDE and
a new one rendered ordering private respondent Victor Bartolome to:
(a) surrender and deliver possession of that parcel of land by way of
lease to petitioner and to perform all obligations of his predecessor-in-interest, Encarnacion Bartolome, under the subject Contract of Lease
with Option to Buy;
(b) surrender and deliver his copy of Transfer Certificate of Title to Register of Deeds for registration and annotation
thereon of the subject Contract of Lease with Option to Buy;
(c) pay costs of suit.
Respondent Register of Deeds is ordered to register and
annotate the subject Contract of Lease with Option to Buy at the back of Transfer Certificate of Title upon submission by DKC of a copy
thereof to his office.
GUTIERREZ HERMANOS V ORENSE
TORRES; December 4, 1914

NATURE
Appeal from a judgment of CFI Albay ruling in favor of plaintiff

FACTS

FACTS
- ORENSE is the owner a parcel of land (with masonry house, and with the nipa roof erected) situated in the pueblo of Guinobatan, Albay.
This property has been recorded in the new property registry in his name.
- Feb 14, 1907 - Jose DURAN, a nephew of Orense, executed
before a notary a public instrument that he sold and conveyed to the plaintiff company the said property for P1,500 and that the vendor Duran
reserved to himself the right to repurchase it for the same price within a period of four years.

- Gutierrez Hermanos had not entered into possession of the purchased property, because of its continued occupancy by ORENSE and
DURAN by virtue of a contract of lease executed by the plaintiff to Duran, effective up to February 14, 1911.
- After the lapse of the four
years stipulated for the redemption, the defendant refused to deliver the property to the purchaser. Gutierrez Hermanos then charged DURAN
with estafa, for having represented himself in the said deed of sale to be the absolute owner of the land.

- During that trial, when ORENSE was called as a witness, he admitted that he consented to Duran’s selling of property under right of
redemption. Because of this, the court acquitted DURAN for charge of estafa.
- Mar 5, 1913 – Gutierrez Hermanos then filed a complaint in
the CFI Albay against Engracio ORENSE.

Petitioners' Claim
- The instrument of sale of the property, executed by Jose Duran, was publicly and freely confirmed and ratified by ORENSE. In order to
perfect the title to the said property, all plaintiff had to do was demand of Orense to execute in legal form a deed of conveyance. But Orense
refused to do so, without any justifiable cause or reason, and so he should be compelled to execute the said deed by an express order of the
court.

- Jose DURAN is notoriously insolvent and cannot reimburse the plaintiff company for the price of the sale which he received, nor pay any
sum for the losses and damages occasioned by the sale. Also, Duran had been occupying the said property since February 14, 1911, and
refused to pay the rental notwithstanding the demand made upon him at the rate of P30 per month.

- Plaintiff prays that the land and improvements be declared as belonging legitimately and exclusively to him, and that defendant be ordered
to execute in the plaintiff's behalf the said instrument of transfer and conveyance of the property and of all the right, interest, title and share
which the defendant has.

Respondents' Comments
- Facts in the complaint did not constitute a cause of action.
- He is the lawful owner of the property claimed in the complaint, and since his
ownership was recorded in the property registry, this was conclusive against the plaintiff.
- He had not executed any written power of
attorney nor given any verbal authority to Jose DURAN to sell the property to Gutierrez Hermanos.
- His knowledge of the sale was
acquired long after the execution of the contract of sale between Duran and Gutierrez Hermanos, and he did not intentionally and deliberately
perform any act such as might have induced the plaintiff company to believe that Duran was empowered and authorized by the defendant.

ISSUES
1. WON Orense is bound by Duran’s act of selling plaintiff’s property - YES

2. WON contract of sale is valid - YES

HELD
1. YES


Ratio It having been proven at the trial that he gave his consent to the said sale, it follows that the defendant conferred verbal, or at least
implied, power of agency upon his nephew Duran, who accepted it in the same way by selling the said property. The principal must therefore
fulfill all the obligations contracted by the agent, who acted within the scope of his authority. (Civil Code, arts. 1709, 1710 and 1727)


Reasoning Article 1259 of the Civil Code prescribes: "No one can contract in the name of another without being authorized by him or
without his legal representation according to law. A contract executed in the name of another by one who has neither his authorization nor
legal representation shall be void, unless it should be ratified by the person in whose name it was executed before being revoked by the other
contracting party.”
- The sworn statement made by the defendant, Orense, while testifying as a witness at the trial of Duran for estafa,
virtually confirms and ratifies the sale of his property effected by his nephew, Duran, and, pursuant to article 1313 of the Civil Code,
remedies all defects which the contract may have contained from the moment of its execution.


2. YES


Ratio Even if the sale of the property was null and void in the beginning, it became perfectly valid and cured of the defect of nullity it bore at
its execution by the owner’s confirmation of the said contract of sale and consent to its execution.

Reasoning The contract of sale of the said property contained in the notarial instrument of Feb 14, 1907, is alleged to be invalid, null and
void under the provisions of par 5 of sec 335 of the Code of Civil Procedure, because the authority which Orense may have given to Duran to
make the said contract of sale is not shown to have been in writing and signed by Orense. But record shows that he gave his consent as
proven in his own sworn testimony. This meets the requirements of the law and legally excuses the lack of written authority. As they are a
full ratification of the acts executed by his nephew Jose Duran, they produce the effects of an express power of agency.
- Also, pursuant to
article 1309 of the Code, the right of action for nullification that could have been brought became legally extinguished from the moment the
contract was validly confirmed and ratified.
- If the defendant Orense acknowledged and admitted under oath that he had consented to Jose
Duran's selling the property in litigation to Gutierrez Hermanos, it is not just nor is it permissible for him afterward to deny that admission, to
the prejudice of the purchaser, who gave P1,500 for the said property.

Disposition Judgment appealed from is affirmed.