J. M. TUASON & CO. INC., PLAINTIFF AND APPELLEE, VS. ENRIQUE TONGOL, DEFENDANT AND APPELLANT.

J. M. Tuason and Company versus Tongol

The Case

This is an ejectment case. J. M. Tuason and Company, a corporation and the registered owner of the Santa Mesa Heights Subdivision in Quezon City, sued Enrique Tongol for illegally entering a one hundred square meter portion of its land. Tongol defended on the strength of a compromise agreement that the corporation had earlier entered into with the Deudors, the persons who used to claim ownership of portions of the land, and which contained a reservation in favor of third parties to whom the Deudors had sold possessory rights. The case matters because it fixes the reach of that reservation: a person occupying land under a seller who is not himself a party covered by the reservation acquires no right to remain, and possession without the owner's consent is the possession of an intruder.

Procedural History

The corporation filed the action for ejectment in the Court of First Instance of Rizal. The trial court gave judgment for the plaintiff. It ordered the defendant and all persons claiming under him to vacate the premises, to remove the house and other improvements he had placed thereon, and to pay thirty pesos monthly until possession is finally restored to the plaintiff. Tongol appealed to the Court of Appeals. That court did not decide the appeal on the merits but certified the case to the Supreme Court, because the lone assignment of error raised a question of a legal character. The assignment was that the lower court erred in finding that the compromise agreement did not legalize the occupation and enjoyment of possession of the premises by the parties thereto and their transferees and assigns like the defendant.

Facts

The corporation is the registered owner of the Santa Mesa Heights Subdivision in Quezon City, covered by transfer certificate of title number 42774. On the fifth of December 1957, according to the complaint, Tongol entered into the possession of a one hundred square meter portion of that land without the corporation's consent or authority.

Earlier, the corporation had entered into a compromise agreement with the Deudors, who used to claim ownership of certain areas covered by its title. In that agreement the Deudors relinquished their claim for certain considerations, but a reservation was made in favor of third parties to whom the Deudors had sold possessory rights in different portions of the land, allowing those third parties to purchase the same from the corporation.

The parties stipulated below that the lot in controversy formed part of an area of some twelve and one half hectares covered by a deed of sale executed in 1949 by Agustin de Torres, one of the Deudors, in favor of Julian Lagman and Toribia Lagman Vda. de Pacia, and that these vendees gave Tongol permission to occupy the lot and construct a house thereon. There was no proof that the Lagmans were among the third parties whose right to purchase was reserved, and neither allegation nor evidence that they ever claimed that right. Tongol himself never showed any desire to buy the lot.

Issues

• Whether or not the compromise agreement between the corporation and the Deudors legalized the occupation and possession of the premises by the defendant Tongol.
• Whether or not Tongol may invoke the reservation in favor of third parties to whom the Deudors had sold possessory rights, so as to entitle him to remain on the lot.

Applicable Provisions

The decision does not quote any statutory provision. It turns on the terms of the compromise agreement itself, and on the rule that a compromise has the force of res judicata between the parties, so that only those covered by its stipulations may claim the benefits it reserves. The reservation in the agreement was, by its own terms, in favor of third parties to whom the Deudors had sold possessory rights, and the Court measured Tongol against that language.

Ruling

On the first issue, the Court found no error in the trial court's pronouncement that Tongol was a mere intruder on the land and that the compromise agreement had not legalized his occupation. The agreement binds and benefits only those within its terms, and Tongol was not one of them.

On the second issue, the Court held that Tongol is not one of the third parties for whom the reservation of the right to purchase was made. Even assuming that the Lagmans were among those whose right to purchase was reserved, although no proof on the point was submitted, it is they who could claim that right with respect to the lot in question. Yet there was neither allegation nor evidence that they had ever done so. And according to the corporation's uncontradicted statement, even Tongol had not shown any desire to buy the lot for himself.

These circumstances, the Court said, remove the case from the ruling in Evangelista versus Deudor, which the appellant relied upon. In that case the petitioner was a purchaser from the Deudors who had made partial payments to them and had later signified her desire to buy the lot occupied by her from the corporation. Tongol, by contrast, was a mere permittee of the Lagmans, who themselves never claimed the reserved right to purchase.

Doctrine

A compromise agreement is binding only upon the parties to it and upon those for whose benefit a stipulation is expressly made. A reservation in favor of third parties to whom the Deudors had sold possessory rights may be invoked only by those third parties, and only if they actually claim the reserved right to purchase. One who occupies the land by mere permission of such a third party, without more, acquires no right of possession as against the registered owner and is a mere intruder. The registered owner may therefore recover possession, and the occupant may be ordered to vacate and to remove the improvements he placed on the land.

Disposition

The Supreme Court affirmed the judgment of the trial court, with costs, so that the corporation prevailed and Tongol was ordered to vacate the premises, remove his improvements, and pay thirty pesos monthly until possession is restored.

Remember This

Memorize this line: a reservation in a compromise in favor of third parties who bought possessory rights belongs only to those third parties, and one who occupies under them without claiming the reserved right to purchase is a mere intruder. Examiners use this case to test the binding effect of compromises on non-parties and to distinguish it from Evangelista versus Deudor, where the occupant had actually signified a desire to buy.