248 scra 357; G.R. No.

124290; January 16, 1998] Civil Law| Obligation and Contracts

ALLIED BANKING CORPORATION vs. COURT OF APPEALS , HON. JOSE C. DE

GUZMAN, OSCAR D. TAN-QUECO, LUCIA D. TANQUECO-MATIAS, RUBEN D.
TANQUECO and NESTOR D. TANQUECO.

FACTS:
Petitioner Allied Banking Corporation (ALLIED) leased a property owned by Spouses Filemon
and Lucia Tanqueco. The lease contract states that, “the term of the lease shall be fourteen (14)
years commencing from April 1, 1978 and may be renewed for a like term at the option of the
lessee.”

In 1988, the Tanqueco spouses executed a deed of donation over the subject property in favor of
their four (4) children.

In 1991, a year before the expiration of the contract of lease, the heirs of Tanquecos notified
petitioner ALLIED that they were no longer interested in renewing the lease.

ALLIED, on the other hand, replied that it was exercising its option to renew their lease under the
same terms as was agreed with the original lease of contract with additional proposals, however,
petitioner rejected the proposal. When the lease contract expired in 1992, the heirs demanded that
ALLIED vacate the premises. An action for ejectment was commenced before the MeTC of
Quezon City.

ISSUE:

Whether a stipulation in a contract of lease stating “may be renewed for a like term at the option
of the lessee” is violative of the principle of mutuality of contract.

HELD:

No, the lease contract was mutually agreed upon hence valid and binding on both parties, and the
exercise by petitioner of its option to renew the contract was part of their agreement and in
pursuance thereof.

The principle of mutuality of contracts provides that “the contract must bind both the contracting
parties; its validity or compliance cannot be left to the will of one of them.” This binding effect of
a contract on both parties is based on the principle that the obligations arising from the contracts
have the force of law between the contracting parties, and there must be mutuality between them
based essentially on their equality under which it is repugnant to have one party bound by the
contract while leaving the other free therefrom. The ultimate purpose is to render void a contract
containing a condition which makes its fulfillment dependent solely upon the uncontrolled will of
one of the contracting parties.
Javellana v. Ledesma Digest
Javellana vs. Ledesma
G.R. No. L-7179

Facts:
1. The CFI of Iloilo admitted to probate a will and codicil executed by the deceased Apolinaria
Ledesma in July 1953. This testament was deemed executed on May 1950 and May 1952. The
contestant was the sister and nearest surviving relative of the deceased. She appealed from this
decision alleging that the will were not executed in accordance with law.

2. The testament was executed at the house of the testatrix. One the other hand, the codicil was
executed after the enactment of the New Civil Code (NCC), and therefore had to be acknowledged
before a notary public. Now, the contestant, who happens to be one of the instrumental witnesses
asserted that after the codicil was signed and attested at the San Pablo hospital, that Gimotea (the
notary) signed and sealed it on the same occasion. Gimotea, however, said that he did not do so,
and that the act of signing and sealing was done afterwards.

2. One of the allegations was that the certificate of acknowledgement to the codicil was signed
somewhere else or in the office of the notary. The ix and the witnesses at the hospital, was signed
and sealed by the notary only when he brought it in his office.

Issue: Whether or not the signing and sealing of the will or codicil in the absence of the testator
and witnesses affects the validity of the will

RULING: NO. Unlike in the Old Civil Code of 1899, the NCC does not require that the signing of
the testator, the witnesses and the notary be accomplished in one single act. All that is required is
that every will must be acknowledged before a notary public by the testator and witnesses. The
subsequent signing and sealing is not part of the acknowledgement itself nor of the testamentary
act. Their separate execution out of the presence of the testator and the witnesses cannot be a
violation of the rule that testaments should be completed without interruption.

GUTIERREZ HERMANOS vs ORENSE G.R. No. 9188 December 4, 1914

FACTS:

On and before Februaru 14, 1907, Engracio Orense had been the owner of a parcel of land in
Guinobatan, Albay.

On February 14, 1907, Jose Duran, a nephew of Orense, sold the property for P1,500 to Gutierrez
Hermanos, with Orense’s knowledge and consent, executed before a notary a public instrument.
The said public instrument contained a provision giving Duran the right to repurchase it for the
same price within a period of four years from the date of the said instrument.
Orense continued occupying the land by virtue of a contract of lease.

After the lapse of four years, Gutierrez asked Orense to deliver the property to the company and to
pay rentals for the use of the property.

Orense refused to do so. He claimed that the sale was void because it was done without his
authority and that he did not authorize his nephew to enter into such contract.

During trial, Orense was presented as witness of the defense. He states that the sale was done with
his knowledge and consent. Because of such testimony, it was ascertained that he did give his
nephew, Duran, authority to convey the land. Duran was acquitted of criminal charges and the
company demanded that Orense execute the proper deed of conveyance of the property.

ISSUE: Whether or not Orense is bound by Duran’s act of selling the former’s property

HELD: Yes. It was proven during trial that he gave his consent to the sale. Such act of Orense
impliedly conferred to Duran the power of agency. The principal must therefore fulfill all the
obligations contracted by the agent, who acted within the scope of his jurisdiction.

AMOR vs. FLORENTINO ET AL.,

G.R. No. L-48384

October 11, 1943

FACTS: Maria Florentino owned a house and a camarin or warehouse in Vigan, Ilocos Sur. The
house had and still has, on the north side, three windows on the upper story, and a fourth one on
the ground floor. Through these windows the house receives light and air from the lot where the
camarin stands. Maria Florentino made a will, devising the house and the land on which it is
situated to Gabriel,one of the respondents herein, and to Jose, father of the other respondents. In
said will, the testatrix also devised the warehouse and the lot where it is situated to Maria
Encarnancion. Upon the death of the testatrix in 1882, nothing was said or done by the devisees in
regard to the windows in question.

Maria Encarnacion sold her lot and the warehouse thereon to the petitioner Amor, the deed of sale
stating that the vendor had inherited the property from her aunt, Maria Florentino. Later, petitioner
destroyed the old warehouse and started to build instead a two-story house.

Respondents filed an action to prohibit petitioner herein from building higher than the original
structure and from executing any work which would shut off the light and air that had for many
years been received through the four windows referred to.

The trial court declared that an easement of light and view had been established in favor of the
property of the plaintiffs (respondents herein) and ordered Amor to remove within 30 days all
obstruction to the windows of respondents’ house, to abstain from constructing within three meters
from the boundary line, and to pay for damages.

The CA affirmed the judgment of the CFI, hence this petition asking for the setting aside of said
decision.

ISSUE:

1. WON the easement of light and view under review has been established in favor of the property
of respondents through prescription

2. WON Art 541 of the civil code is applicable in this case, especially regarding the correct time of
death of Maria Florentino

3. WON the Yu-tibo case applies in the case at bar

4. WON Amor is an innocent purchaser for value

HELD: the judgment appealed from should be and is hereby affirmed

1. YES; The easement involved in this case is of two aspects: light and view and altius non
tollendi. These two aspects necessarily go together because an easement of light and view prevents
the owner of the sevient estate from building to a height that will obstruct the windows. This court
in Cortes vs. Yu-Tibo, supra, held that the easement concerned when there is an apparent sign
established by the owner of two estates is positive. This being so, and inasmuch as the original
heirs of Maria succeeded to these two estates either in 1885 or in 1892 and as petitioner bought
one of the lots in 1911, the prescriptive period under any legislation that may be applied — the
Partidas, Civil Code or Code of Civil Procedure — has elapsed without the necessity of formal
prohibition on the owner of the servient estate. The respondent’s action was brought in 1938. The
persons who were present, and 20 years between absentees. According to article 537 of the Civil
Code, continous and apparent easements may be acquired by prescription for 20 years. Under
sections 40 and 41 of the Code of Civil Procedure, the period is 10 years.

At the time the devisees took possession of their respective portions of the inheritance, neither the
respondents nor Maria Encarnacion said or did anything with respect to the four windows of the
respondents’ house. The respondents did not renounce the use of the windows, either by
stipulation or by actually closing them permanently. On the contrary, they exercised the right of
receiving light and air through those windows. Neither did the petitioner’s predecessor in interest,
Maria Encarnacion, object to them or demand that they be closed. The easement was therefore
created from the time of the death of the original owner of both estates, so when petitioner bought
the land and the camarin thereon from Maria Encarnancion, the burden of this easement continued
on the real property so acquired because according to Article 534, “easements are inseparable
from the estate to which they actively or passively pertain.”
It is well known that easements are established, among other cases, by the will of the owners.
(Article 536 of the Code.) It was an act which was, in fact, respected and acquiesced in by the new
owner of the servient estate, since he purchased it without making any stipulation against the
easement existing thereon, but, on the contrary, acquiesced in the continuance of the apparent sign
thereof. As is stated in the decision itself, “It is a principle of law that upon a division of a
tenement among various persons — in the absence of any mention in the contract of a mode of
enjoyment different from that to which the former owner was accustomed — such easements as
may be necessary for the continuation of such enjoyment are understood to subsist.” It will be
seen, then, that the phrase “active enjoyment” involves an idea directly opposed to the enjoyment
which is the result of a mere tolerance on the part of the adjacent owner, and which, as it is not
based upon an absolute, enforceable right, may be considered as of a merely passive character

2. YES; Art. 541 provides:

The existence of an apparent sign of easement between two estates, established by the proprietor
of both, shall be considered, if one of them is alienated, as a title so that the easement will
continue actively and passively, unless at the time the ownership of the two estates is divided, the
contrary is stated in the deed of alienation of either of them, or the sign is made to disappear
before the instrument is executed

Petitioner assigns as an error of the CA the supposed failure of that tribunal to pass upon his
motion to consider certain allegedly new evidence to prove that Maria Florentino, the original
owner of the properties, died in 1885. Petitioner alleges that Maria Florentino died in 1885 and,
therefore, the Law of the Partidas should be followed in this case and not the Civil Code.

Granting, arguendo, that Maria Florentino died in 1885, as contended by petitioner, nevertheless
the same principle enunciated in article 541 of the Spanish Civil Code was already an integral part
of the Spanish law prior to the Civil Code, the easement in question would also have to be upheld.
The law before the Civil Code was the same as at present.

3. NO; petitioner contends that the doctrine in that case is controlling in the present one, but the
facts and theories of both cases are fundamentally dissimilar. In that case, Cortes sought an
injunction to restrain Yu-Tibo from continuing the construction of certain buildings. Cortes’ wife
owned a house in Manila which had windows that had been in existence since 1843. The
defendant, who occupied a house on the adjoining lot, commenced to raise the roof of the house in
such a manner that one-half of the windows in the house owned by plaintiff’s wife had been
covered. This Court, in affirming the judgment of the lower court which dissolved the preliminary
injunction, held that the opening of windows through one’s own wall does not in itself create an
easement, because it is merely tolerated by the owner of the adjoining lot, who may freely build
upon his land to the extent of covering the windows, under article 581, and that his kind of
easement is negative which can be acquired through prescription by counting the time from the
date when the owner of the dominant estate in a formal manner forbids the owner of the servient
estate from obstructing the light, which had not been done by the plaintiff in this case.
It will thus be clear that one of the essential differences between that case and the present is that
while the Yu-Tibo case involved acquisition of easement by prescription, in the present action the
question is the acquisition of easement by title, or its equivalent, under article 541. Therefore,
while a formal prohibition was necessary in the former case in order to start the period of
prescription, no such act is necessary here because the existence of the apparent sign when Maria
Florentino died was sufficient title in itself to created the easement.

Another difference is that while in the Yu-Tibo case, there were wo different owners of two
separate houses from the beginning, in the present case there was only one original owner of the
two structures. Each proprietor in the Yu-Tibo case was merely exercising his rights of dominion,
while in the instant case, the existence of the apparent sign upon the death of the original owner
ipso facto burdened the land belonging to petitioner’s predecessor in interest, with the easements
of light and view and altius non tollendi in virtue of article 541.

Finally, the Yu-Tibo case was decided upon the theory if the negative easement of altius non
tollendi, while the instant case is predicated on the idea of the positive easement of light and view
under article 541.

4. .The petitioner maintains that he is an innocent purchaser for value of the lot and camarin
thereon, and that he was not bound to know the existence of the easement because the mere
opening of windows on one’s own wall does not ipso facto create an easement of light. Such
contention might perhaps be in point if the estates had not originally belonged to the same owner,
who opened the windows. But the petitioner was in duty bound to inquire into the significance of
the windows, particularly because in the deed of sale, it was stated that the seller had inherited the
property from her aunt, Maria Florentino. Referring to the Sentence of the Supreme Court of
Spain dated February 7, 1896, which applied Article 541, this Court in the case of Cortes vs. Yu-
Tibo already cited, said that the establishment of the easement “was an act which was in fact
respected and acquiesced in by the new owner of the servient estate, since he purchased it without
making any stipulation against the easement existing thereon, but on the contrary acquiesced in
the new owner of the servient estate, since he purchased it without making any stipulation against
the easement existing thereon, but on the contrary, acquiesced in the continuance of the apparent
sign thereof.” (p. 31). Moreover, it has been held that purchasers of lands burdened with apparent
easements do not enjoy the rights of third persons who acquire property, though the burden it not
recorded. (Sentence of the Supreme Tribunal of Spain, April 5, 1898).

When petitioner bought this lot from the original coheir, Maria Encarnacion Florentino, the
windows on respondents’ house were visible. It was petitioner’s duty to inquire into the
significance of those windows. Having failed to do so, he cannot now question the easement
against the property which he purchased.

Coquia v. Fieldmenâs Insurance Co, Inc. GR L-23276 | November 29, 1968 | Appeal | CJ
Concepcion FACTS: · On December 1, 1961, Fieldmenâs Insurance Company, Inc (Company)
issued, in favor of the Manila Yellow Taxicab Co, Inc (Insured) a common carrier accident
insurance policy, covering the period from December 1, 1961 to December 1, 1962. · While the
policy was in force (Feb 10, 1962), a taxicab of the Insured, driven by Carlito Coquia, met an
accident at Mangaldan, Pangasinan, in consequence of which Carllito died. · The insured filed
for a claim of P5,000 to which the Company replied with an offer to pay P2,000 by way of
compromise. The Insured rejected the same and made a counter-offer of P4,000, but the Company
did not accept it. · On September 18, 1962, the Insured and Carlitoâs parents, Melecio Coquia
and Maria Espanueva (Coquias) filed a complaint against the Company to collect the proceeds of
the policy. In its answer, the Company admitted the existence thereof, but pleaded lack of cause of
action on the part of the plaintiffs. · TC decision sentenced the Company to pay the plaintiffs the
sum of P4,000 and the costs. Hence, this appeal. ISSUES/HELD: · Whtether the Coquias have a
contractual relation with the Company â YES, because of the principle of pour autriu · Whether
the Insured has complied with the provisions of the policy concerning arbitration â YES RATIO:
First issue: · 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 Article 1311 of
the CC, reading: · "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. A mere incidental benefit or interest of a person is not sufficient. The contracting
parties must have clearly and deliberately conferred a favor upon a third person.â · Principle of
pour autrui â the enforcement of a contract may be demended 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, based on its stipulations on Sections 1 and 2,
âwill indemnify any authorized Driver who is driving the Motor Vehicleâ of the Insured and, in the
event of the death of said driver, the Company, shall, likewise, âindemnify his personal
representatives.â In fact, the Company "may, at its option, make indemnity payable directly to the
claimants or heirs of claimants x x x it being the true intention of this Policy to protect x x x the
liabilities of the Insured towards the passengers of the Motor Vehicle and the Public" â in other
words, third parties. · The policy under consideration is typical of contracts pour autriu, this
character being made more manifest by the fact that the deceased driver paid 50% of the
corresponding premiums, which were deducted from his weekly commissions. Under these
consitions, it is clear that the Coquias â who, amdittedly, are the sole heirs of the deceased â have a
direct cause of action against the Company, and, since they could have maintained his his action
by themselves, wihout the assistance of the Insured, it goes without saying they could and did
properly join the latter in filing the complaint herein. Second issue: · Section 17 of the policy
(respecting to dispute with respect to the amount) was not invoked by the Company, or made any
reference to arbitration, during the negotiations proceeding the institution of the present case. ·
Kahnweiler c. Phenix Ins: âAnother well-settled rule for interpretation of all contracts is that the
court will lean to that interpretation of a contract which will make it reasonable and just. Bish.
Cont. Sec. 400. Applying these rules to the tenth clause of this policy, its proper interpretation
seems quite clear. When there is a difference between the company and the insured as to the
amount of the loss the policy declares: 'The same shall then be submitted to competent and
impartial arbitrators, one to be selected by each party x x x'. It will be observed that the obligation
to procure or demand an arbitration is not, by this clause, in terms imposed on either party. It is not
said that either- the company or the insured shall take the initiative in setting the arbitration on
foot. The company has no more right to say the insured must do it than the insured has to say the
company must do it. The contract in this respect is neither unilateral nor self-executing. To procure
a reference to arbitrators, the joint and concurrent action of both parties to the contract is
indispensable. The right it gives and the obligation it creates to refer the differences between the
parties to arbitrators are mutual. One party to the contract cannot bring about arbitration. Each
party is entitled to demand a reference, but neither can compel it, and neither has the right to insist
that the other shall first demand it, and shall forfeit any right by not doing so. If the company
demands it, and the insured refuses to arbitrate, his right of action is suspended until he consents
to an arbitration; and if the insured demands an arbitration, and the company refuses to accede to
the demand, the insured may maintain a suit on the policy, notwithstanding the language of the
twelfth section of the policy, and, where neither party demands an arbitration, both parties thereby
waive it.â

PASTOR B. CONSTANTINO vs.HERMINIA ESPIRITU

Issue: May those who are not parties to a contract be benefited by said contract?

Facts of the case: Pastor Constantino sold two parcels of land to Herminia Espiritu, on the
condition that the land will be held in trust for their already conceived but as yet unborn
illegitimate son. Espiritu took two mortgages on the land and then offered them for sale.
Constantino asked the court to: one, issue a temporary restraining order to stop the sale of the
lands; and two: compel Espiritu to execute a deed of absolute sale to Pastor Constantino Jr., then
two years old.
Espiritu moved to dismiss the case on two grounds: Pastor Jr. was not a party to the suit; and the
Statute on Frauds (which basically says that some contracts, including those involving land,
should be in writing; and signed by all parties bound by the contracts).
Constantino argued that what was involved was an implied trust under Art. 1453. The trial court
dismissed the complaint. Constantino then filed a motion for an amended complaint, to have his
son Pastor Jr. included in the suit. The trial court dismissed the motion, and the case was appealed
to the Supreme Court.

Ratio: The court ruled that the contract appears to be a contract pour autrui, although couched in
the form of a deed of absolute sale, and appellant’s action was, in effect, one for specific
performance.
The court held that that the Statute of Frauds was not a strong defense as it was “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 beneficiary thereunder.” Whether or not the properties were sold to be held
in trust for their child was a matter of fact that should be proved in court.

Decision: Case remanded to the lower court for further trial.