GR 97795; (February, 2004) (Digest)
G.R. No. 97795 ; February 16, 2004
ATTY. ROLANDO S. JAVIER, et al., petitioners, vs. HON. COURT OF APPEALS, et al., respondents.
FACTS
The case involves the Gonzales Estate in Caloocan City, expropriated by the government for resale to its tenant-occupants, including Gregorio Bajamonde. In 1960, the President ordered the Philippine Housing and Homesite Corporation (PHHC) to limit sales to 1,000 sqm per tenant and sell the remainder to other low-income families. The original tenants, including Bajamonde, sued to compel exclusive sale to them (Civil Case No. C-760). During this suit, the Araneta Institute of Agriculture (AIA) intervened, presenting a 1961 “Kasunduan” where some tenants, including Bajamonde, allegedly conveyed their purchase rights to AIA. The trial court dismissed AIA’s intervention. Separately, in 1961, Bajamonde and others entered a partial compromise with the PHHC to buy their specific lots.
ISSUE
Whether the petitioners, as successors-in-interest of Gregorio Bajamonde, are bound by the 1961 “Kasunduan” which purportedly conveyed his purchase rights to the AIA, thereby precluding them from claiming the subject lots.
RULING
No. The Supreme Court affirmed the Court of Appeals and ruled that the petitioners are not bound by the “Kasunduan.” The legal logic rests on the principle of relativity of contracts under Article 1311 of the Civil Code. A contract is binding only upon the parties and their successors-in-interest who have assumed the obligation. The “Kasunduan” was a private agreement between certain tenants and the AIA to which the PHHC, the government agency holding the property and authorized to execute the sales, was not a party. Critically, the PHHC did not approve or conform to this agreement. Consequently, the “Kasunduan” could not effectively transfer any right to purchase the land from the PHHC to the AIA. The rights of the tenant-occupants, including Bajamonde, to purchase their lots were governed by the expropriation judgment and their subsequent valid compromise agreement with the PHHC, not by the unapproved private “Kasunduan.” Therefore, the petitioners, deriving their rights from the PHHC compromise, have a superior claim over the AIA’s successor, the respondent Gregorio Araneta University Foundation, Inc.