G.R. No. 33646, December 29, 1930
PHILIPPINE LAND IMPROVEMENT CO., plaintiff-appellant, vs. SIMEON BLAS, defendant-appellant.

FACTS

The Philippine Land Improvement Co. (plaintiff) filed an action for recovery of possession and payment of rentals against Simeon Blas (defendant) over a parcel of land originally part of the Maysilo Estate. During registration proceedings for the estate, Blas filed an opposition claiming the land. To settle the opposition, court-appointed commissioners in the partition case (No. 391) entered into a compromise agreement (Exhibits 1 and 1-A) with Blas, promising to sell him the land for a specified price payable in installments, conditioned upon the issuance of a Torrens title. Blas withdrew his opposition in reliance on this agreement. The land was later registered under the Torrens system in the name of the estate of Gonzalo Tuason, and subsequently transferred to the plaintiff corporation, which was formed by Tuason’s heirs. The corporation refused to honor the compromise agreement and sought to eject Blas, who had been in possession and made improvements on the land. The trial court ruled in favor of the plaintiff’s ownership but applied Article 361 of the Civil Code, giving the plaintiff the option to appropriate Blas’s improvements or compel him to buy the land. Both parties appealed.

ISSUE

1. Whether the compromise agreement (promise to sell) executed by the court-appointed commissioners is binding upon the plaintiff corporation, the successor-in-interest of the heirs of Gonzalo Tuason.
2. Whether the defendant Blas may compel specific performance of the agreement.

RULING

1. Yes. The Supreme Court held that the promise to sell made by the commissioners, who were authorized by the court in the partition case, is binding upon the co-owners (heirs of Tuason) and their successor, the plaintiff corporation. The corporation was essentially formed by the same heirs, with the estate’s properties converted into corporate shares. The registration of the land under the Torrens system in the name of the corporation, without annotation of the agreement, does not negate the binding effect of the compromise, as the corporation took the property subject to existing equities and obligations.
2. Yes. Blas is entitled to specific performance. He fulfilled his obligation under the agreement by withdrawing his opposition to the registration, which benefited the estate. The plaintiff corporation, as successor, is obligated to execute a final deed of sale and deliver the corresponding transfer certificate of title to Blas upon payment of the agreed price. The Court reversed the trial court’s judgment, dismissed the complaint, and upheld Blas’s cross-complaint for specific performance.