Contracts take effect between the parties, their assigns and heirs except in case where the rights and obligations arising from it are not transmissible by nature, by stipulation or by provision of law (Article 1311, Civil Code). This is the rule applied in this case of the spouses Frank and Millie.
The case involved Lot 3, Block 4, Phase II of a subdivision owned and developed by a realty company (SLRD) which was sold by said company to Linda. On August 16, 1989, Linda sold the same lot to Frank and Millie.
Later on however, Lot 3, Block 4 Phase II was subdivided and two separate residential buildings were constructed thereon by RCD, another corporation engaged in build and sell of real properties. Apparently, RCD purchased Lot 3, Block 4 in Phase II-A of the subdivision. SLRD’s agent pointed to the lot in Phase II not Phase II-A and SLRD itself issued a Construction Permit and Certificate of Relocation to RCD over Lot 3, Block 4, Phase II.
After finishing the residential buildings, RCD sold one of the house and lots to Malou and the other, to Marivic. So when the spouse Frank and Millie decided to construct their house on their lot upon issuance of the necessary permit also by SLRD, they discovered that their lot had already been subdivided and occupied by Malou and Marivic.
Thus on January 16, 1996 Frank and Millie filed before the Housing and Land Use Regulatory Board (HLURB) a Complaint against SLRD for Specific Performance, Damages and Attorney’s fees.
SLRD on the other hand contended that it has no privity of contract with Frank and Millie as it did not directly sell the subject property to them but to Linda, so Linda should have been impleaded as an indispensable party to the case. Furthermore SLRD argued that it was not the one but RCD which erroneously erected structures on the lot. Hence they should have sued RCD instead. Was SLRD correct?
No. As assignees or successor-in-interest of Linda to Lot 3, Block 4 Phase II in SLRD’s subdivision project, Frank and Millie succeed to Linda’s rights; and what is valid and binding against Linda is valid and binding against them. In effect, Frank and Millie stepped into the shoes of Linda and such transfer of rights also vests upon them the power to claim ownership and the right to demand the construction of their house on the lot to the same extent as Linda could have enforced them against SLRD. This is in accordance with Article 1311 of the Civil Code which says that contracts take effect between the parties, their successors and assigns.
The only exception to this rule is when the rights are not transmissible. In this case the rights and obligations between SLRD and Linda are transmissible. There is no mention of a contractual stipulation or provision of law that makes such rights and obligations under the original sales contract in-transmissible. Hence SLRD is bound to honor its corresponding obligation to Frank and Millie, the new lot owners in its subdivision project. Linda could no longer be considered as an indispensable party because she has transferred all her rights and obligations to Frank and Millie and therefore no longer has interest on the subject property. An indispensable party is one who has such an interest in the controversy or subject matter that a final adjudication cannot be made in his absence, without injuring or affecting that interest.
SLRD was remiss and negligent in the performance of its obligations towards its buyers, their heirs, assigns and successors-in-interest and this negligence caused the confusion on the identity of the lot which likewise resulted to the erroneous construction done by RCD. SLRD cannot pass the blame to RCD because it is the one which issued the construction permit for Lot 3, Block 4, Phase II (Sta. Lucia Realty etc. vs. Spouses Buenaventura etc., G.R. 177113, October 2, 2009).
Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.
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E-mail at: jcson@pldtdsl.net