PASTOR L. DE GUZMAN, PLAINTIFF-APPELLANT, VS. J.M. TUASON & CO., INC., ET AL., DEFENDANTS-APPELLEES.

Appeal from an order of dismissal of a complaint for lack of cause
of action, upon a preliminary hearing of the defendants’ affirmative defense.^[1]

The complaint, filed on 29 March 1963 in the Court of First
Instance of Rizal, Quezon City Branch (docketed as Civil Case No. Q-7172),
alleged, among other things, that the plaintiff, Pastor L. de Guzman (herein
appel­lant), was the lawyer representing the plaintiffs, called
“Deudors”, in Civil
Cases Nos. Q-135, Q-139, Q-177 and Q-186 of the same court; that the herein defendants-appellees, J.M.
Tuason & Co., Inc., and Gregorio Araneta, Inc., were the defendants in the
said civil cases; that the parties, assisted by their lawyers, eventually
entered into a compromise agreement for the final settlement of the said civil
cases; that among the provisions of the said compromise agreement, which was
approved by the court, are the following:

“C. The sum of P250,000.00 representing the value of the lands
reserved for the residence of Gov. Alejo Santos, Atty. Pastor L. de Guzman and
Capt. C. Cruz (12,200.00 sq. ms.) as here­inafter provided in clause II, shall
be deducted from the amount that may be due the DEUDORS, except
Misericordia.  But it shall be understood
that the certificate of title to the lands reserved for the above persons shall
be issued (1) soon after the delivery to the OWNERS [this designation refers to
the herein appellees] of the lots marked ‘refund’ in Annex ‘C’ shall have been
ef­fected and (2) the subdivision plan approved by the National Planning
Commission and the Bureau of Lands;

                 “xxxxx             
xxxxx              xxxxx               xxxxx

“ELEVENTH.  – That the
OWNERS HEREBY agree to reserve for the DEUDORS, consistent with the subdivision
plan that may finally be approved, the following lots measuring in all TWELVE
THOUSAND (12,000.00) SQUARE METERS which the DEUDORS shall purchase for the sum
of P250,000.00:

“For the residence of Gov.

Alejo Santos                                        5,000.00 sq. m.

For the residence of Atty.

Pastor L. de Guzman                         4,000.00 sq. m.

For the residence of Capt.

C. Cruz:                                              3,000.00
sq. m.

          12,000.00 sq. m.”

The complaint further averred that, despite demands made by plaintiff, the defendants have
refused to convey the lot of 4,000 square meters to him.  Plaintiff prayed for judgment requiring the
defendants to execute a deed of conveyance for the lot.

The defendants set up the affirmative defense that the plaintiff
had no cause of action against them because the Compromise Agreement referred
to in the complaint had been declared rescinded by the Supreme Court in the
cases of Deudor, et. al. vs. J. M. Tuason & Co., Inc., et. al., L-13768, 31
May 1961 (2 SCRA 129); J.M. Tuason & Co., Inc., vs. Sanvictores, L-16836,
30 January 1962 (4 SCRA 123), and other cases.

On motion of the
defendants for a preliminary hearing on their affirmative defense, the court a
quo held one and then issued the appealed order dismissing the suit.

Plaintiff-appellant
contends that it is not true that the Compromise Agreement was declared
rescinded by the Supreme Court because it merely affirmed the orders of the
trial court but that nowhere in the dispositive portion of the orders, or of
the decisions of the Supreme Court affirming the same, is there a declaration
rescinding the Compromise Agreement; that although there was a paragraph in the
order which was quoted in the Supreme Court decision and which reads:

           “………… The equitable, if not the legal solution
of the problem is the setting aside of the compromise agreement of 16 March
1953, in so far as it remains unimplemented or executory.  The failure to deliver and the continued
mushrooming of houses in the area, despite the compromise, justify the release
of J.M. Tuason & Co., Inc. and Gregorio Araneta, Inc., from further
obligations under the agree­ment of 16 March 1953.” —

this paragraph is merely an exposition of
some of the reasons for the issuance of the orders, as the Supreme Court stated
in affirming them,^[2] but that an
exposition is different from a disposition.

We do not find it necessary to inquire at this stage
whether or not the compromise
entered into by appellees Tuason and the Deudors was rescinded.  It is enough to observe that the complaint
does not state a cause of action, because it fails to allege that the
conditions precedent to the effectivity of the defendants’ obligation
under the compromise agree­ment, to deliver to the plaintiff a lot of 4,000
square meters, have been complied with. 
The conditions were “that the certificate of title to the lands
reserved for the above persons (one of them the herein plaintiff-appellant)
shall be issued (1) soon after the deliver to the OWNERS of the lots marked
‘refund’ in Annex ‘C’ shall have been effected and  (2) the subdivision plan approved by
the National Planning Commission and the Bureau of Lands” (emphasis
supplied).  Pursuant to the very terms of
the compromise, therefore, the obligation of the defendants to deliver the lot
claimed was not a pure obligation that is immediately demandable, but depended
on the compliance with the two conjunctive conditions stated in the agreement
(See Articles Nos. 1179 & 1181, Civil Code; Wise & Co. vs. Kelly, 37 Phil.
696; Phil. National Bank vs. Phil. Trust Co., 68 Phil. 48).  Hence, unless it is alleged in the complaint
that these conditions were or have been complied with, and the plaintiff’s
complaint in the present case does not so allege, the complaint would state no
cause of action against the defendants.

“If the cause of action of the plaintiff depends upon a
condition precedent, the complaint must allege the fulfillment of the condition
or a legal excuse for its non?fulfillment.  Omission of such allegation will make the
complaint insufficient.” (1 Moran 216-217, citing Gov’t of P.I. vs.
Inchausti & Co., 24 Phil. 315, 318)

The failure to allege the
compliance of the conditions precedent dispenses with the resolution of whether
or not the obligation of the defendants to deliver the lot to the plaintiff is
a pour autrui stipulation because its classification, one way or the
other, will not eliminate the conditions precedent which have first to be
fulfilled before the obligation to deliver the lot is demandable.  Furthermore, even as stipulation pour
autrui, the same could not be enforceable, unless it is first shown that
the beneficiary of such stipulation had notified his acceptance thereof in due
time to the corresponding obligor.^[3] Article 1311 of the Civil Code of the
Philippines, in its second paragraph, prescribes that –

“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.  . . . . .”

And, in this connection,
this Court held in the case of Deudor vs. Tuason & Co., Inc., promulgated
on 30 May 1961 (2 SCRA 129), that the Deudors had been legally given by the
Court four (4) months, from 28 Feb­ruary 1957, to deliver the lands referred to
in clause 8, section (d), of the Compromise Agreement (cas. cit.., page 135);
that said Deudors failed to do so; and that –

“……………
the period of four (4) months, given to the Deudors, in said
decision, for the delivery of the land of 30 “quiñones” ­– to which
their right to collect P614,925.74 was subject as a suspensive condition  constituted a resolutory period.  When the same expired with said
suspensive condition still unfulfilled, appellants’ right to comply with
it was extinguished, and the conditional obligation of the appellees
to pay said sum was terminated (Article 1193, Civil Code of the
Philippines.” (Cas. cit., page 142; emphasis supplied)

In other words, at the expiration
of the four months aforesaid on July, 1957, the Deudors (and consequently, all
persons holding under them) lost all further right to enforce the basic
Compromise Agree­ment, and this loss amounts to a revocation of the uncomplied
portions of said compromise for the purposes of Article 1311 of the Civil
Code.  It is for these reasons that in
various later decisions this Court viewed such compromise as rescinded, i.e.,
prospectively terminated, ex nunc.

There being no showing in
the complaint that the two conditions precedent to appellant’s alleged right
have been complied with, or that plaintiff-appellant notified the appellees in
due time of his adherence to the clause stipulated by the parties in his favor
(which is a third condition precedent in this case), the complaint was
correctly dismissed for lack of a cause of action.

WHEREFORE, the order of dismissal appealed from is
affirmed.  Costs against appellant.

Concepcion, C.J., Dizon, Zaldivar, Sanchez, Castro, Fernando,
Teehankee and Barredo, JJ., concur.

Makalintal, J., did not take
part.

^[1]
“SEC.
5. Pleading grounds as affirmative defenses.
–
Any of the grounds for dismissal provided for in this rule, except improper
venue, may be pleaded as an affirmative defense, and a prelimin­ary hearing may
be had thereon as if a motion to dismiss had been filed.” (Rule 16, Rules
of Court)

^[2] Deudor vs. Tuason & Co., Inc., 2 SCRA
129.

^[3] V. Bank of P. I. vs. V.
Concepcion e Hijos, Inc., 53 Phil. 806; TS of Spain, Sent 11 Nov. 1950; 10 Dec.
1956.