G.R. No. 105567November 25, 1993GSIS v. CA AND SPS.

RAUL AND ESPERANZA LEUTERIOFacts:

GSIS increased the purchase price stipulated in the Deed of ConditionalSale with the Sps., involving one
of its house and lots in its village after the finalconstruction costs. Because the Deed did not subject the
price to change, wherethe marginal notation of such effect was only inserted, the agreement was onlyto
pay the original price, which obligation the Sps had already complied withand which necessitates the
execution of a Final Deed of Sale.> Deed of Conditional Sale (1965) between GSIS and Sps. Raul and
EsperanzaLeuterio where the former would sell a house and lot to the latter ~ by virtue of alottery for
lots and housing units of GSIS’ Village on December 18, 1963 whereSps. Leuterios won > Certificate of
Acknowledgement to purchase were issuedto the Sps. (December 27, 1963) > CONDITIONS: Sps. to pay
P19,740 within15y, in 180 equal monthly installments (P168.53); Par. 11: “Upon full payment by the
Vendee of the purchase price…the Vendor agrees to execute in favor of the Vendee a final Deed of Sale
> Deed of Conditional Sale notarized after 3y >Completion of the Village ~ Board of Trustees increased
the purchase price(allegedly due to the final costs of the construction) in accordance with (1) the

marginal notation

“subject to adjustment pending approval of the Board of Trustees” on the face of the Deed; (2) the
recommendation of an ad hoccommittee created by President Marcos to investigate the price increase
which itfound to be justified ~ pursuant to the petition of a group of vendees > SUIT for Specific
Performance with Damages (May 20, 1984), after the Sps’ completionof payment of the original
purchase price (plus taxes) and GSIS’ failure toexecute a final deed of sale > CONTENTION OF THE SPS:
Marginal notationwas not there when they signed it > CONTENTION OF GSIS: Sps. was bound by the Ad
hoc committee’s recommendation of the price increase > RTC Held infavour of Sps: Marginal notation
was inserted without the Sps.’ knowledge or consent (such fact was not questioned during appeal to CA)
> CA Upheld byvirtue of estoppels> FINAL DEED OF SALE SHOULD BE EXECUTED IN FAVOUR OF
THESPOUSES > Parties only agreed on the purchase price of P19,740 ~ theagreement was not made
subject to any posterior event or condition > (A)Marginal Notation was not included in the contract
when signed: Judicialadmission by GSIS in (1) its Answer to the Complaint that it was only an
honestmistake (made by the clerk who typed it) and in (2) its Petition for Review onCertiorari that it was
only inserted >(B) Also, Recommendation by the ad hoc committee was set aside by PresidentMarcos
(May 30, 1970) and GSIS’ reconsideration was denied (December 18,1990) > HENCE, the obligation
mutually agreed upon was the payment ofP19,740 > Art. 1473: GSIS cannot unilaterally adjust the price
without the Sps’knowledge and consent > Obligation was thus completed by the Sps. upon full
payment> Failure of GSIS to foresee the construction costs is due to their own fault > Itcannot excuse
itself from performing > BAD BUSINESS JUDGMENT IS NOTAN EXCUSES
Dizon vs. Gaborro, 83 SCRA 688-691 –
ARTICLE 1359
April 25, 2017cdizonblog

Leonardo Abola for petitioner.

Carlos J. Antiporda for respondents.
Facts:
Petitioner, Jose P. Dizon, was the owner of the three parcels of land, situated in
Mabalacat, Pampanga. He constituted a first mortgage to DBP to secure a loan of
P38,000.00 and a second mortgage to PNB amounting P93,831.91.

Petitioner defaulted in the payment of his debt, therefore, the Development Bank of

the Philippines foreclosed the mortgage extrajudicially. Gaborro became interested in
the lands of Dizon. But since the property was already foreclosed by the DPB. They
then entered into a contract captioned as “Deed of sale with assumption of mortgage”
and the second contract executed the same day, is called “Option to Purchase Real
Estate” After the execution of said contracts, Alfredo G. Gaborro took possession of
the three parcels of land.

After the execution of the contract and its conditions to him, Gaborro made several
payments to the DBP and PNB. He improved, cultivated the kinds raised sugarcane
and other crops produce.

Jose P. Dizon through his lawyer, wrote a letter to Gaborro informing him that he is
formally offering reimburse Gaborro of what he paid to the banks. Gaborro did not
agreed to the demands of the petitioner, hence, Jose P. Dizon instituted a complaint in
the Court of First Instance of Pampanga, alleging that the documents Deed of Sale
With Assumption of Mortgage and the Option to Purchase Real Estate did not express
the true intention and agreement between the parties. Petitioner, contended that the
two deeds constitute in fact a single transaction that their real agreement was not an
absolute sale of the land but merely an equitable mortgage or conveyance by way of
security for the reimbursement or refund by Dizon to Gaborro of any and all sums
which the latter may have paid on account of the mortgage debts in favor of the DBP
and the PNB.

Issue:
Whether or not the contract showed the true agreement  between the parties.
Held:
No. The court held that the true agreement between the plaintiff and defendant is that
the defendant would assume and pay the indebtedness of the plaintiff to DBP and
PNB, and in consideration therefore, the defendant was given the possession and
enjoyment of the properties in question until the plaintiff shall have reimbursed to
defendant fully the amount of P131,831.91 plus 8% interest per annum from October
6, 1959 until full payment, said right to be exercised within one year from the date the
judgment becomes final, if he fails to do so within the said period, then he is deemed
to have lost his right over the lands forever.

Sanchez vs. Rigos

45 SCRA 368

June 1972

FACTS:

In an instrument entitled "Option to Purchase," executed on April 3, 1961, defendant-appellant Severina

Rigos "agreed, promised and committed ... to sell" to plaintiff-appellee Nicolas Sanchez for the sum of
P1,510.00 within two (2) years from said date, a parcel of land situated in the barrios of Abar and Sibot,
San Jose, Nueva Ecija. It was agreed that said option shall be deemed "terminated and elapsed," if
“Sanchez shall fail to exercise his right to buy the property" within the stipulated period. On March 12,
1963, Sanchez deposited the sum of Pl,510.00 with the CFI of Nueva Ecija and filed an action for specific
performance and damages against Rigos for the latter’s refusal to accept several tenders of payment
that Sanchez made to purchase the subject land.

Defendant Rigos contended that the contract between them was only “a unilateral promise to sell, and
the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and
void." Plaintiff Sanchez, on the other hand, alleged in his compliant that, by virtue of the option under
consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to
buy" the land described in the option. The lower court rendered judgment in favor of Sanchez and
ordered Rigos to accept the sum Sanchez judicially consigned, and to execute in his favor the requisite
deed of conveyance. The Court of Appeals certified the case at bar to the Supreme Court for it involves a
question purely of law.
ISSUE:

Was there a contract to buy and sell between the parties or only a unilateral promise to sell?

COURT RULING:

The Supreme Court affirmed the lower court’s decision. The instrument executed in 1961 is not a
"contract to buy and sell," but merely granted plaintiff an "option" to buy, as indicated by its own title
"Option to Purchase." The option did not impose upon plaintiff Sanchez the obligation to purchase
defendant Rigos' property. Rigos "agreed, promised and committed" herself to sell the land to Sanchez
for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement,
promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale
of the land. The lower court relied upon Article 1354 of the Civil Code when it presumed the existence of
said consideration, but the said Article only applies to contracts in general.

However, it is not Article 1354 but the Article 1479 of the same Code which is controlling in the case at
bar because the latter’s 2nd paragraph refers to "sales" in particular, and, more specifically, to "an
accepted unilateral promise to buy or to sell." Since there may be no valid contract without a cause or
consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending
notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which,
if accepted, results in a perfected contract of sale. Upon mature deliberation, the Court reiterates the
doctrine laid down in the Atkins case and deemed abandoned or modified the view adhered to in the
Southwestern Company case.

Blas vs. Santos

March 20, 2016
Case Digest

G.R. No. L-14070     March 29, 1961

MARIA GERVACIO BLAS, MANUEL GERVACIO BLAS, LEONCIO GERVACIO
BLAS and LOIDA GERVACIO BLAS, Plaintiffs-Appellants,

vs.

ROSALINA SANTOS, in her capacity as Special Administratrix of the Estate of the

deceased MAXIMA SANTOS VDA. DE BLAS, in Sp. Proc. No. 2524, Court of First
Instance of Rizal, defendants-appellants. MARTA GERVACIO BLAS and DR. JOSE
CHIVI, Defendants-Appellants.

LABRADOR, J.:

FACTS: This action was instituted by plaintiffs against the administration of the estate of
Maxima Santos, to secure a judicial declaration that one-half of the properties left by
Maxima Santos Vda. de Blas, the greater bulk of which are set forth and described in
the project of partition presented in the proceedings for the administration of the estate
of the deceased Simeon Blas, had been promised by the deceased Maxima Santos to
be delivered upon her death and in her will to the plaintiffs, and requesting that the said
properties so promised be adjudicated to the plaintiffs. The complaint also prays for
actual damages in the amount of P50,000. The alleged promise of the deceased
Maxima Santos is contained in a document executed by Maxima Santos on December
26, 1936 attached to the complaint as Annex “H” and introduced at the trial as Exhibit
“A”. The complaint also alleges that the plaintiffs are entitled to inherit certain properties
enumerated in paragraph 3 thereof, situated in Malabon, Rizal and Obando, Bulacan,
but which properties have already been included in the inventory of the estate of the
deceased Simeon Blas and evidently partitioned and conveyed to his heirs in the
proceedings for the administration of his estate. Spouses Simeon Blas and Marta Cruz
have three children they also have grandchildren. One year after Marta Cruz died, Blas
married Maxima Santos but they don’t have children and the properties that he and his
former wife acquired during the first marriage were not liquidated. Simeon Blas
executed a will disposing half of his properties in favor of Maxima the other half for
payment of debts, Blas also named a few devisees and legatees therein. In lieu of this,
Maxima executed a document whereby she intimated that she understands the will of
her husband; that she promises that she’ll be giving, upon her death, one-half of the
properties she’ll be acquiring to the heirs and legatees named in the will of his husband;
that she can select or choose any of them depending upon the respect, service, and
treatment accorded to her by said heirs. On 1937 Simeon Blas died while Maxima died
on 1956 and Rosalina Santos became administrator of her estate. In the same year,
Maria Gervacio Blas, child of Simeon Blas in his first marriage, together with three other
grandchildren of Simeon Blas (heirs of Simeon Blas), learned that Maxima did not fulfill
her promise as it was learned that Maxima only disposed not even one-tenth of the
properties she acquired from Simeon Blas. The heirs are now contending that they did
not partition Simeon Blas’ property precisely because Maxima promised that they’ll be
receiving properties upon her death.
ISSUE: Whether or not the heirs can acquire the properties that Maxima promised with
them.

HELD: Yes, they can acquire the properties that Maxima promised with them because it
was stated in Art. 1347 that “No contract may be entered into upon future inheritance
except in cases expressly authorized by law.”. In this case the contract was authorized
by law because the promised made by Maxima to their heirs before she died is a valid
reason and it should be enforceable upon her death and her heirs can now acquire the
succession of the properties in issue.

Maria Gervacio Blas v. Rosalina Santos

G.R. No. L-14070 March 29, 1961

FACTS:

Simeon Blas contracted a first marriage with Marta Cruz sometime before 1898. They
had three children, only one of whom, Eulalio, left children, namely, Maria Gervacio
Blas, one of the plaintiffs, Marta Gervacio Blas, one of the defendants, and
LazaroGervacio Blas. Lazaro died in 1950, and is survived by three legitimate children
who are plaintiffs herein, namely, Manuel Gervacio Blas, Leoncio Gervacio Blas and
Loida Gervacio Blas. Marta Cruz died in 1898, and the following year, Simeon Blas
contracted a second marriage with Maxima Santos. At the time of this second marriage,
no liquidation of the properties required by Simeon Blas and Marta Cruz was made.
Three of the properties left are fishponds located in Obando, Bulacan. Maxima Santos
does not appear to have apported properties to her marriage with Simeon Blas.

On December 26, 1936, only over a week before his death on January 9, 1937, Simeon
Blas executed a last will and testament. In the said testament Simeon Blas gave to
Maxima Santos de Blas one half of all her properties. MAXIMA SANTOS DE BLAS on
the other hand made a document giving one half of all her inheritance to the children of
maximo in the first marriage, labelled as exhibit “A”. The court below held that said
Exhibit “A” has not created any right in favor of plaintiffs which can serve as basis for
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, etc. Both the court
below in its decision and the appellees in their brief, argue 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.

ISSUE:
Is exhibit “A” a contract involving future inheritance, hence should be declared void?

RULING:

No. Exhibit “A” is not 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 conjugalproperties 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. As a matter of fact, Maxima Santos
included these properties in her inventory of her husband’s estate of June 2, 1937. The
promise does not refer to any properties that the maker would inherit upon the death of
her husband, because it is her share in the conjugal assets. That the kind of agreement
or promise contained in Exhibit “A” is not void under Article 1271 of the old Civil Code,
has been decided by the Supreme Court of Spain in its decision of October 8, 19154,
thus: 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 statement as belonging to his wife as her share in
the conjugalpartnership. Certainly his wife’s actual share in the conjugal properties may
not be considered as future inheritance because they were actually in existence at the
time Exhibit “A” was executed.

Liguez v. CA
G.R. No. L-11240, 18 December 1957
FACTS:

Conchita Liguez filed a complaint against the widow and heirs of Salvador Lopez to recover a parcel
of 51.84 hectares of land in Davao. She averred to be its legal owner, pursuant to a deed of donation
executed in her favor by Salvador. At the time the deed was executed, Conchita was 16. She had
also been living with Salvador’s parents for barely a month. The deed of donation recites that the
donor Salvador, “for and in consideration of his love and affection” for Conchita, and “also for the
good and valuable services rendered to [Salvador] by [Conchita], does by these presents, voluntarily
give, grant and donate…”

The donation was made in view of Salvador’s desire to have sexual relations with Conchita.
Furthermore, Conchita’s parents would not allow Conchita to live with him unless he first donated the
subject land. The donated land originally belonged to the conjugal partnership of Salvador and his
wife, Maria Ngo. The deed of donation was inoperative, and null and void because: (a) Lopez had no
right to donate conjugal property to Conchita; and (b) the donation was tainted with illegal  causa or
consideration. 

ISSUE:

Whether or not the conveyance was predicated on illegal causa.

RULING:

Yes. Conchita Liguez entitled to so much of the donated property as may be found, upon proper
liquidation, not to prejudice the share of the widow Maria Ngo in the conjugal partnership or the
legitimes of Salvador’s forced heirs. Under the cited Art. 1274, liberality of the donor is
deemed causa only in contracts that are of “pure” beneficence, or contracts designed solely and
exclusively to procure the welfare of the beneficiary, without any intent of producing any satisfaction
for the donor.

In this case, Salvador was not moved exclusively by the desire to benefit Conchita, but also to
secure her cohabiting with him, and so that he could gratify his sexual impulses. This is clear from
Salvador’s confession to two witnesses that he was in love with her but her parents would not agree
unless he donated the land in question to her. Actually, therefore, the donation was but one part of
an onerous transaction (at least with Conchita’s parents) that must be viewed in its totality. Thus
considered, the conveyance was clearly predicated upon an illicit causa. Lopez would not have
conveyed the property in question had he known that Conchita would refuse to cohabit with him. The
cohabitation was an implied condition to the donation and being unlawful, necessarily tainted the
donation.

Moreover, the CA erred in applying the pari delicto rule. It cannot be said that both parties had equal
guilt. Salvador was a man advanced in years and mature experience, and Conchita was only 16
when the donation was made. Her acceptance of the deed does not imply knowledge of conditions
and terms not set forth therein. Witnesses testified that it was Conchita’s parents who insisted on the
donation. The rule that parties to an illegal contract, if equally guilty, will not be aided by the law but
will both be left where it finds them, has been interpreted by this Court as barring the party from
pleading the illegality of the bargain either as a cause of action or as a defense. But where the
plaintiff can establish a cause of action without exposing its illegality, the vice does not affect the
right to recover.

Liguez v CA

G.R. No. L-11240 December 18, 1957

Facts: Petitioner-appellant Conchita Liguez filed a complaint against the widow and heirs of the late
Salvador P. Lopez to recover a parcel of land. Liguez averred to be its legal owner, pursuant to a deed of
donation of said land, executed in her favor by the late owner, Salvador P. Lopez. The defense
interposed was that the donation was null and void for having an illicit causa or consideration, which
was the plaintiff’s entering into marital relations with Salvador P. Lopez, a married man and that the
property had been adjudicated to the appellees as heirs of Lopez by the court of First Instance.

Issue: WON the motive may be regarded as causa when it predetermines the purpose of the contract.
Held: Yes. In the present case, it is scarcely disputable that Lopez would not have conveyed the property
in question had he known that appellant would refuse to cohabit with him; so that the cohabitation was
an implied condition to the donation, and being unlawful, necessarily tainted the donation itself

. 

Gutierrez HermanosVs Orense (Gr. No. L-9188 1914)

Facts:Orense is the owner a parcel of land (with masonry house, and with the
niparooferected) situated in thepueblo of Guinobatan, Albay. This property has
beenrecorded in the new property registry in his name. Feb 14, 1907.Jose DURAN, a
nephew of Orense, executed before a notary apublic instrument that he sold and
conveyed to theplaintiff company the saidproperty for P1,500 and that the vendor
Duran reserved to himself the right torepurchase itfor the same price within a period of
four years.Gutierrez Hermanos had not entered into possession of the purchased
property,because of itscontinued occupancy by ORENSE and DURAN by virtue of a
contractof 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
defendantrefusedto deliver the property to the purchaser. Gutierrez Hermanos then
chargedDURAN with estafa, for havingrepresented himself in the said deed of sale to
be theabsolute 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 acomplaint in the CFI Albay againstEngracioOrense.Petitioner
Claims that The instrument of sale of the property, executed by Jose Duran, was
publiclyandfreely confirmed and ratified by ORENSE. In order to perfect the title to the
saidproperty, all plaintiff had to do wasdemand of Orense to execute in legal form adeed
of conveyance. But Orense refused to do so, without any justifiablecause orreason, and
so he should be compelled to execute the said deed by an expressorder of the court.
JoseDURAN is notoriously insolvent and cannot reimburse the plaintiff companyfor the
price of the sale which hereceived, nor pay any sum for the losses anddamages
occasioned by the sale. Also, Duran had been occupying thesaid propertysince
February 14, 1911, and refused to pay the rental notwithstanding the demandmade
upon him atthe rate of P30 per month. Plaintiff prays that the land and improvements be
declared as belonginglegitimately andexclusively to him, and that defendant be
ordered to execute inthe plaintiff's behalf the said instrument of transfer andconveyance
of the propertyand of all the right, interest, title and share which the defendant
has.Respondent contends that the Facts in the complaint did not constitute a cause of
action and He is thelawful 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 verbalauthorityto Jose DURAN to sell theproperty to Gutierrez Hermanos. His
knowledge of the sale was acquired longafter the execution of the contract ofsale
between Duran and Gutierrez Hermanos, and he did not intentionallyanddeliberately
perform any act such as might have induced the plaintiff company tobelieve that Duran
wasempowered and authorized by the defendant.Issue:
Whether Orense is bound by Duran’s act of selling plaintiff’s property.
 Held:Yes. Ratio It having been proven at the trial that he gave his consent to the said
sale, itfollows that thedefendant conferred verbal, or at least implied, power of
agencyupon his nephew Duran, who accepted it in the sameway by selling the
saidproperty. The principal must therefore fulfill all the obligations contracted by
theagent, whoacted within the scope of his authority. (Civil Code, arts. 1709,
1710 and1727)Article 1259 of the Civil Code prescribes: "No one can contract in
thename of another without being authorizedby him or without his legalrepresentation
according to law. A contract executed in the name of another by onewhohas neither his
authorization nor legal representation shall be void, unless itshould be ratified by the
person in whosename it was executed befo
re beingrevoked by the other contracting party.”
- The sworn statement made by thedefendant, Orense, while testifying as a witnessat
the trial of Duran for estafa, virtually confirms and ratifies the sale of his propertyeffected
by his nephew, Duran,and, pursuant to article 1313 of the Civil Code,remedies all

defects which the contract may have contained from themoment of itsexecution .

FACTS:

The Fieldmen’s Company (company) issued a common carrier accident insurance policy to Manila Yellow
Taxicab Co. Inc. (insured). In the policy it stipulated that accident arising from a motor vehicle shall be
insured with respect to the death or bodily injured driver, conductor and/or inspector riding in the
motor vehicle.

Carlito Coquia met an accident while driving resulting in his death. The insured asked the company for
the insurance of Carlito. The company refused to give insurance to the said insured, the paaboutts of
Carlito filed a complaint about a sum of money for the insurance of their dead child. The company
contends that parents had no contractual relation with the company, thus they are not the proper
parties in the said case.

ISSUE:
Whether or not the policy in question belong to such class of contracts pour autrui.

RULING:

Yes.Pursuant to these stipulations, 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.” In fact, the Company “may, at its option, make indemnity
payable directly to the claimants or heirs of claimants … it being the true intention of this Policy to
protect … the liabilities of the Insured towards the passengers of the Motor Vehicle and the Public” — in
other words, third parties.

Thus, the policy under consideration is typical of contracts pour autrui, this character being made more
manifest by the fact that the deceased driver paid fifty per cent (50%) of the corresponding premiums,
which were deducted from his weekly commissions. Under these conditions, it is clear that 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 by themselves, without the assistance of
the Insured, it goes without saying that they could and did properly join the latter in filing the complaint
herein.

Coquia v. Fieldmen’s Insurance

26 SCRA 172
Facts:

>  On Dec. 1, 1961, Fieldmen’s Insurance co. Issued in favor of the Manila Yellow
Taxicab a common carrier insurance policy with a stipulation that the company shall
indemnify the insured of the sums which the latter wmy be held liable for with respect
to “death or bodily injury to any faire-paying passenger including the driver and
conductor”.

>  The policy also stated that in “the event of the death of the driver, the Company shall
indemnify his personal representatives and at the Company’s option may make
indemnity payable directly to the claimants or heirs of the claimants.”
>  During the policy’s lifetime, a taxicab of the insured driven by Coquia met an accident
and Coquia died.

>  When the company refused to pay the only heirs of Coquia, his parents, they
institued this complaint.  The company contends that plaintiffs have no cause of action
since the Coquias have no contractual relationship with the company.

Issue:

Whether or not plaintiffs have the right to collect on the policy.

Held:

YES.

Athough, 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 Civil Code of the Philippines, 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." This is but the 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

In the case at bar, the policy under consideration is typical of contracts pour autrui this
character being made more manifest by the fact that the deceased driver paid fifty
percent (50%) of the corresponding premiums, which were deducted from his weekly
commissions. Under these conditions, it is clear that 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 by themselves, without the
assistance of the insured it goes without saying that they could and did properly join the
latter in filing the complaint herein.
nsurance Case Digest: Coquia V. Fieldmen's Insurance Co., Inc. (1968)

G.R. No. L-23276 November 29, 1968

Lessons Applicable: stipulation pour autrui (Insurance)

FACTS:

December 1, 1961: Fieldmen's Insurance Company, Inc. issued in favor of the Manila Yellow Taxicab Co.,
Inc. (Manila) from December 1, 1961 to December 1, 1962

February 10, 1962: A taxicab of Manila driven by Carlito Coquia, met a vehicular accident at Mangaldan,
Pangasinana and died

The insured filed a claim for P5,000 in which Fieldmen's replied with an offer to pay P2,000 by way of
compromise

The insured rejected it and countered with P4,000

September 18, 1962: Carlito's parents filed a complaint against the Company for collection

The company pleaded lack of cause of action

RTC: ordered to pay the parents

ISSUE: W/N there is a stipulation pour autrui that exempts the general rule that the parents are not a
party to the contract

HELD: YES. RTC affirmed.

There is a stipulation 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."

typical of contracts pour autrui, 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

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
both parties from the inception of their dispute proceeded in entire disregard of the provisions of the
contract relating to arbitration

conduct was as effective a rejection of the right to arbitrate

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.
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