Art. 1311 – Contracts take effect only between the parties, their assigns and heirs.
Petitioner – William Uy & Rodel Roxas
Respondents
– CA & National Housing Authority
Facts:
·
Uy and Roxas were
agents authorized to sell eight parcels of land by the owners.
·
They sold the lands
to the National Housing Authority (NHA) to be utilized and developed as a
housing project.
·
The NHA Board
approved the acquisition of said lands, with an area of 31.8231 hectares, at
the cost of P23.867 million. The parties
executed a series of Deeds of Absolute Sale covering the subject lands.
·
But of the eight
parcels of land, only five were paid for by the NHA because the Land
Geosciences Bureau of the DENR reported that the remaining area is located at
an active landslide area and not suitable for a housing project.
·
Then, the NHA
cancelled the sale over the three
parcels of land and offered the amount of P1.225 million to the landowners as
daños perjuicios.
·
Uy and Roxas filed in
RTC Quezon City a Complaint for Damages against NHA and its GM.
·
The RTC rendered a
decision declaring the cancellation of the contract to be justified and awarded
damages to the petirioners the same amount initially offered by NHA.
·
They appealed to the
CA, which reversed the judgment and dismissed the complaint for the reasons:
(a) that
since there was “sufficient justifiable basis” in cancelling the sale, “it saw
no reason” for the award of damages; and
(b) that
petitioners were mere attorneys-in-fact and, therefore, not the real
parties-in-interest in the action before the trial court.
·
But Uy and Roxas
argued that they lodged the complaint not in behalf of their principals but in their
own name as agents directly damaged by the termination of the contract for the
losses of “unearned income” and advances.
Issue:
WoN the
petitioners are the real party-in-interest who stands to be benefited or
injured by the judgment or the party entitled to the avails of the suit.
Held:
No, the Court holds
that Uy and Roxas are not parties to the contract of sale between their
principals and NHA.
Under Article 1311 of
the Civil Code, 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. x x x.
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.
In the case at bar, Uy
and Roxas were mere agents of the owners of the land subject of the sale. they
only render some service or do something in representation or on behalf of their
principals. The rendering of such service did not make them parties to the
contracts of sale executed in behalf of the latter.
Moreover, they were the
heirs of their principals, nor assignees to the rights under the contracts of
sale. While they alleged that they made advances and that they suffered loss of
commissions, they have not established any agreement granting them “the right
to receive payment and out of the proceeds to reimburse [themselves] for
advances and commissions before turning the balance over to the principal.
Finally, it does not
appear that petitioners are beneficiaries of a stipulation pour autrui under
the second paragraph of Article 1311 of the Civil Code. Indeed, there is no
stipulation in any of the Deeds of Absolute Sale “clearly and deliberately”
conferring a favor to any third person.
As petitioners are not
parties, heirs, assignees, or beneficiaries of a stipulation pour autrui under
the contracts of sale, they do not, under substantive law, possess the right
they seek to enforce. Therefore, they are not the real parties-in-interest in
this case.
Thus, the petition is DENIED.
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