513 Phil. 187
CHICO-NAZARIO, J.:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the defendants and against the plaintiffs and declaring the defendants to be the lawful owners of the land in question.[5]The Court of Appeals reversed the trial court's ruling. It held that the land renounced by petitioners was the subject land and that it was made in favor of Gregorio Valdez, thus:
WHEREFORE, premises considered the decision appealed from is hereby REVERSED and SET ASIDE and another one entered declaring plaintiffs as owner of the land in question, and ordering defendants-appellees to vacate the same. With costs against defendants-appellees.Aggrieved by the aforecited ruling, and their motion for reconsideration having been denied by the Court of Appeals, petitioners assert before us that –
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE TRIAL COURT'S FINDINGS WHICH TOOK INTO ACCOUNT THE INTENTIONS OF THE PARTIES IN THE COMPROMISE AGREEMENT IN QUESTION BY CONSIDERING CIRCUMSTANCES PREVIOUS AND SIMULTANEOUS TO THE EXECUTION OF THE AGREEMENT.In order to get to the bottom of this land dispute, the primary and most basic question that has to be asked is this: Is the absolute deed of sale dated 06 January 1948 between petitioners and private respondents' predecessor-in-interest, Gregorio Valdez, annotated at the back of OCT No. 48824, a cloud on such title that has to be removed under the grounds stated in the Civil Code?II.
WHILE THE HONORABLE COURT OF APPEALS CORRECTLY STATED THE UNDERLYING REASONS BEHIND THE EXECUTION OF THE COMPROMISE AGREEMENT IN QUESTION, IT SERIOUSLY ERRED IN UPHOLDING THE VALIDITY OF THE COMPROMISE AGREEMENT WITH RESPECT TO A THIRD PERSON WHO WAS A STRANGER THERETO AND INVOLVING A PARCEL OF LAND WHICH IS FOREIGN TO THE DISPUTE IN THE LAND REGISTRATION CASE THAT GAVE LIFE TO THE COMPROMISE AGREEMENT.III.
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE TRIAL COURT'S DECISION FINDING NO LEGAL AND FACTUAL BASES TO UPHOLD THE VALIDITY OF THE ALLEGED RENUNCIATION OF PETITIONERS' RIGHTS OVER THE NORTHERN PORTION OF THE TITLED LAND IN QUESTION INSTEAD OF THE INTENDED SOUTHERN PORTION OF AN UNTITILED LAND SUBJECT OF THE LRC.[6]
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.In herein case, private respondents, as plaintiffs in the case for quieting of title, allege that their father's obligation under the deed of absolute sale has been extinguished or has been terminated by virtue of the compromise agreement dated 02 June 1977 whereby petitioners ostensibly renounced their rights over the subject property. Petitioners, on the other hand, claim that the same compromise agreement constitutes a cloud on their title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.
Art. 478. There may also be an action to quiet title or remove a cloud therefrom when the contract, instrument or other obligation has been extinguished or has terminated, or has been barred by extinctive prescription.
SEGUNDO RAMOS, ET AL.,To get a proper grip of the controversial compromise agreement, a narration of the circumstances surrounding its execution is in order.
Applicants. LAND REG. CASE No. U-843
LRC Rec. No. N-48993
- versus -
THE DIRECTOR OF LANDS,
ET AL.,
Oppositors.
x----------------------------------------xCOMPROMISE AGREEMENT
COME NOW, the parties in the above-entitled case duly assisted by their respective counsels and to this Honorable Court submit this compromise agreement, to wit:WHEREFORE, the parties should abide the foregoing compromise agreement and that each of them shall respect the right of the other.
- That the oppositor Felipe Cabero hereby withdraw (sic) his opposition in the above-entitled case;
- That the applicants Segundo Ramos and Felisa Valdez hereby also quitclaim and renounce whatever rights in the document registered under entry No. 377847 annotated at the back of O.C.T. No. 48824 of Gregorio Valdez;
- That the parties hereby waive any claim for and against the other.
IN WITNESS WHEREOF, the parties duly assisted by their respective counsels set their hands this 2nd day of June, 1977, at Urdaneta, Pangasinan.
SEGUNDO RAMOS
Applicant FELISA VALDEZApplicant FELIPE CABERO
OppositorASSISTED BY: ATTY. ELISEO E. VERSOZA
Counsel for the Applicants
Soconi, Bugallon, ATTY. NICANOR CALDITO
Counsel for Oppositor
Pang. Pozorrubio, Pang.
After carefully perusing the records and the evidence adduced, this Court is left to resolve the issues agreed upon by the parties as indicated in the pre-trial order.The Ruling of the Court of Appeals
However, before this Court could arrive at a proper solution of the issues, it is imperative to determine the true intentions of the parties in the controversial compromise agreement (Exh. B) by considering all the surrounding circumstances previous and simultaneous to the execution of the same.
It is not disputed that the property in question with an area of 3,036 square metes on the northern portion of a parcel of land was owned by the plaintiffs' late father Gregorio Valdez covered by TCT No. 48824 (Exh. A). Sometime in the year 1948, the late Gregorio Valdez sold the said property to defendant-spouses Segundo Ramos and Felisa Valdez. That sale was annotated at the back of said title as Entry No. 377847 (Exh. A-1).
Defendant Segundo Ramos also bought an untitled land from Alejandro Alcantara in 1945 evidenced by a deed of absolute sale marked as Exhibit 6. When Segundo Ramos applied for registration of title of the said land, Felipe Cabero opposed the same. During the pendency of the land registration case, a compromise agreement (Exh. B) was concluded by the herein defendants as applicants and oppositor Felipe Cabero.
The Court noted that the portion of land referred to in the said compromise agreement and to have been renounced allegedly is the northern portion. This is clear in the Entry No. 377847 (Exh. A-1). In contrast, what has been relinquished and renounced by Segundo Ramos was the southern portion of the same land being occupied, at that time, by Felipe Cabero. It appears therefore, that there is a different portion of land that was the real subject of renunciation other than that indicated in the compromise agreement. Hence, such agreement expresses wrong intentions of the parties. The mistake in the compromise agreement was recognized and admitted by plaintiff Lilia Valdez when she testified as rebuttal witness, to wit:The renunciation of the southern portion by Segundo Ramos, as he claimed, is inter-related to the conflict of encroachment of ownership of the land between him and Felipe Cabero. It is unthinkable and unusual for defendant-spouses to renounce the very portion of land they bought from late Gregorio Valdez to the latter without any consideration at all.
"Q. According to Segundo Ramos there was no consideration whatsoever in favor of your father Gregorio Valdez that the compromise agreement was executed, what can you say about that?A. That is not true sir.Q. What is the truth?A. That is not true sir actually the compromise agreement was made to correct a mistake which was committed because the deed of sale was executed covering the portion which was titled property when it should pertain to the untitled property of Gregorio Valdez."
(TSN-Felix, 3-11-92, pp. 8-9)
Morever, a scrutiny of the compromise agreement reveals that the alleged renunciation was not expressly made in favor of Gregorio Valdez and worst of all, the latter was never a party in the registration case although his signature was affixed therein (Exh. B-1 and 1-a) without any designation, nor reference to the land registration case. If ever there was a renunciation, it should be in favor of Felipe Cabero because he was the oppositor, but he did not anymore pursue his opposition.
In view of the foregoing findings, it could not be said that defendant-spouses did renounce the property in question which is the northern portion to late Gregorio Valdez from whom they bought it.[9]
We agree with appellants' contention that the identity of the land subject of the compromise agreement vis-à-vis that covered by the Deed of Sale executed between Gregorio Valdez and defendants-appellees is no longer open to question having been made the subject of pre-trial stipulation (Pre-Trial Order dated November 19, 1991, supra). Moreover, the evidence presented supports this contention.To state the obvious, much ado has been made over the compromise agreement. After having reviewed the records of the case, however, it has become even more obvious that private respondents cannot assert any rights under said compromise agreement, thus, it cannot be used by them to defeat petitioners' claim over the subject land.
As can be seen from the decision dated 19 March 1979 of the Court of First Instance of Pangasinan in Land Registration Case No. U-843 Record No. N-48998 entitled Segundo Ramos, et al. vs. The Director of Lands, et al. (Exh. "3", Folder of Exhibits, pp. 15-17) only Felipe Cabero and the Director of Lands opposed defendants-appellees� application for original registration. The subject of this land registration case was that parcel of land previously owned by Alejandro Alcantara, situated at Barrio Maambal, Municipality of Pozorrubio, Province of Pangasinan containing an area of 7,073 square meters, more or less, and more particularly described in Plan Psu-1-002310. As indicated in the aforesaid decision Felipe Cabero withdrew his opposition. The Decision however does not make any reference to the Compromise Agreement executed in the same case two (2) years before, on June 2, 1977 marked as Exhibit "B" (Folder of Exhibits, p. 2).
In the Compromise Agreement (supra), the applicants in the land registration case, Segundo Ramos and Felisa Valdez had expressed their renunciation of their rights "in the document registered under Entry No. 377847 annotated at the back of O.C.T. No. 48824 of Gregorio Valdez". This entry is a Deed of Absolute Sale (Exhibit "7") executed by Gregorio Valdez married to Maria Soriano in favor of Segundo Ramos married to Felisa Valdez, the subject of which is a parcel of land consisting of 3,036 square meters of the northern portion of the land covered by OCT No. 48824 (Exhibit "A").
It is manifest from the foregoing that while the land registration case covered that parcel of land purchased by appellees from Alejandro Alcantara, which was ultimately decreed in favor of appellees in the Decision of the LRC marked Exhibit "3"; the Compromise Agreement wherein appellees declared their renunciation/quitclaim of their rights referred to another parcel of land consisting of 3,036 sq. m. that was the subject of a Deed of Absolute Sale executed by Gregorio Valdez that was a part of, hence annotated on OCT No. 48824 registered in Valdez name, which property had been earlier sold to the Spouses Ramos by Gregorio Valdez. The Spouses Ramos renounced their rights over the latter property in the Compromise Agreement marked as Exhibit "B"/"1" to effect the withdrawal of the opposition of Felipe Cabero to their application for registration in the aforesaid LRC No. U-843 (TSN, February 17, 1992, pp. 9-11). Cabero's opposition was predicated on his perceived ownership of the southern portion of the land which was formerly owned by Alejandro Alcantara that was the subject of the land registration proceedings. This southern portion adjoins another (untitled) property of Gregorio Valdez (Exhibit "E", Folder of Exhibits p. 13). This had been mistakenly sold by Valdez to Cabero in the belief that it belonged to him (Valdez). When Valdez recognized his error, and by way of disentangling a conflict that he had caused, Valdez persuaded Ramos to renounce his rights over the 3,036 sq. m. portion of his titled property, and at the same time for Cabero to withdraw his opposition to the application by Spouses Ramos for the registration in their name of the entire lot formerly belonging to Alejandro Alcantara. Conceivably, Cabero's withdrawal of his opposition along with his occupied southern portion of Alejandro Alcantara's property, was to be exchanged with the 3,036 sq. m. portion renounced by Spouses Ramos. In his testimony Segundo Ramos spoke of accommodating the entreaties of Gregorio Valdez whom he called his "father – in – law" (TSN, February 17, 1992, p. 11).
As a consequence, applicants Spouses Segundo and Felisa Ramos in the LRC case, executed a Compromise Agreement with Felipe Cabero witnessed by Gregorio Valdez that was meant to renounce their (Ramos') claim or rights over that portion of the land which they had purchased from Gregorio Valdez in exchange for the southern portion of the land that was being occupied by Felipe Cabero. To repeat, Felipe Cabero had occupied the southern portion by virtue of a deed of sale from Gregorio Valdez but Valdez actually had no right to sell this portion, it being owned by the adjoining owner Alejandro Alcantara. This is shown by the fact that although the "Absolute Deed of Sale" executed by Alejandro Alcantara in favor of Spouses Segundo Valdez conveyed only an area of 3,000 sq. m. (Exhibit "6", Folder of Exhibits, p. 37) the total area applied for and decreed by the Land Registration Court in LRC No. U-843 in favor of applicant Spouses Segundo Ramos (Exhibit "3", Folder of Exhibits, p. 15) had a total area of 7,073 sq. m. which fact was admitted by appellee Segundo Ramos on re-cross (TSN, March 11, 1992, p. 3). On this point, Natalia Alcantara dela Cruz, daughter of Alejandro Alcantara testified on rebuttal.
. . .
As already stated, the LRC Decision dated 19 March 1979 (Exhibit "3") did not take cognizance of the Compromise Agreement dated 2 June 1977 although it noted that oppositor Felipe Cabero had withdrawn his opposition to the application of Spouses Ramos in the LRC case (Exhibits 3-a-1, Folder of Exhibits, p. 16). The simple explanation is that the Compromise Agreement referred to another parcel of land that was not the subject of the land registration case. In withdrawing his opposition, Felipe Cabero paved the way for Spouses Segundo Ramos to have the entire property of Alejandro Alcantara registered in their names, and not just the 3,000 sq. m. that was the subject of the deed of sale signed by Alcantara in their favor, marked Exhibit "6". Thus, Gregorio Valdez was able to effect the solution to the imbroglio he had caused by selling to Felipe Cabero land that did not belong to him but to the adjoining owner Alejandro Alcantara. This is shown by the testimony of Lilia Valdez.
. . .
On the part of appellees, the loss of the 3,036 sq. m. portion was amply compensated by approximately 4,000 sq. m. of the southern portion that had been occupied by Felipe Cabero but which had been included in their land registration application. The evidence of the defendants-appellees shows that "(b)ecause of his mistake, vendor Gregorio Valdez intervened and pleaded to appellees to just relinquish the area he mistakenly sold to Cabero who in exchange was to withdraw his opposition, hence the compromise agreement in question was drawn" (TSN, February 17, 1999, p. 11; January 29 1992, pp. 8-10; Appellees' Brief, p. 7). It is to be noted that Gregorio Valdez and Felipe Cabero were closely associated and even shared the same counsel Atty. Nicanor Caldito who notarized the Deed of Sale executed by Gregorio Valdez in favor of Segundo Ramos (Exhibits "B"/"1" and "2"; Folder of Exhibits, pp. 2 and 14) and who later appeared as counsel for oppositor Felipe Cabero in the land registration case. Although the withdrawal of opposition of Felipe Cabero along with his occupation of the southern portion was successfully effected by the Compromise Agreement, later events showed that Cabero was eventually removed from the picture of both parcels of land. Evidence shows that Gregorio Valdez continued to occupy the renounced portion until his death in 1991 (TSN, January 6, 1991, pp. 3-4; Pre-Trial Order, Record, p. 58). His occupation evidences his continued dominion and exercise of ownership over the entire land covered by OCT No. 48824.[10]
SEGUNDO RAMOS Applicant | FELISA VALDEZ Applicant | |
FELIPE CABERO Oppositor | ||
ASSISTED BY: | ||
ATTY. ELISEO E. VERSOZA Counsel for the Applicants Soconi, Bugallon, | ATTY. NICANOR CALDITO Counsel for Oppositor Pang. Pozorrubio, Pang. |
The main issue in this case is whether or not petitioner can enforce a compromise agreement to which she was not a party.Consequently, Gregorio Valdez not being a party to the compromise agreement, his heirs (private respondents) cannot sue for its performance.
This issue has already been squarely settled by this Court in the negative in J.M. Tuason & Co., Inc. v. Cadampog (7 SCRA 808 [1963]) where it was ruled that appellant is not entitled to enforce a compromise agreement to which he was not a party and that as to its effect and scope, it has been determined in the sense that its effectivity if at all, is limited to the parties thereto and those mentioned in the exhibits (J.M. Tuason & Co., Inc. v. Aguirre, 7 SCRA 112 [1963]). It was reiterated later that a compromise agreement cannot bind persons who are not parties thereto (Guerrero v. C.A., 29 SCRA 791 [1969]).
Contrary to the position taken by private respondents, the reference to their father, Gregorio Valdez, seems to us to be a mere description of the land being renounced. Nothing in the compromise agreement would suggest that the renunciation of the subject land was to be made in Gregorio Valdez's favor. Verily, for this Court to interpret the stipulation as conferring some right to a third person (i.e., stipulation pour autrui), the following requisites must concur:
- That the applicants Segundo Ramos and Felisa Valdez hereby also quitclaim and renounce whatever rights in the document registered under entry No. 377847 annotated at the back of O.C.T. No. 48824 of Gregorio Valdez;
To constitute a valid stipulation pour autrie, 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.[19] In herein case, from the testimony of petitioner Segundo Ramos who is undoubtedly a party to the compromise agreement, and from the rest of the evidence on hand, any benefit which accrued to private respondents' father was merely incidental.
- There must be a stipulation in favor of a third person;
- The stipulation in favor of a third person should be a part, not the whole, of the contract;
- The contracting parties must have clearly and deliberately conferred a favor upon a third person, not a mere incidental benefit or interest;
- The third person must have communicated his acceptance to the obligor before its revocation; and
- Neither of the contracting parties bears the legal representation or authorization of the third party.[18]