Title
Florentino vs. Encarnacion, Sr.
Case
G.R. No. L-27696
Decision Date
Sep 30, 1977
A 1964 land registration case involving heirs disputing a stipulation in an extrajudicial partition allocating land proceeds for religious activities; SC ruled the stipulation binding, enforceable, and annotatable on the title.
land registration
extrajudicial partition agreement
religious expenses
A

Case Summary (G.R. No. 174105)

Key Dates and Procedural Posture

Application for registration filed May 22, 1964, under Act No. 496. After publication and notice, general order of default was issued. The Clerk of Court took applicants’ evidence. Oppositors later sought to withdraw their application as to their respective shares (manifestation filed October 3, 1966). The trial court denied the withdrawal and rendered a decision on November 29, 1966 confirming title allocation among co-heirs; a motion for new trial/reconsideration was denied with modification on January 14, 1967. The petitioners-appellants appealed directly to the Supreme Court pursuant to Rule 41, Rules of Court.

Applicable Law and Constitutional Context

Applicable procedural and substantive law cited and applied in the decision includes Act No. 496 (land registration), Act No. 3344, the New Civil Code (notably Arts. 1257, 1308, 1309, 1311), rules on stipulation pour autrui, and pertinent principles on contracts and succession. Because the decision date precedes 1987, the relevant constitutional framework in force at the time was the 1973 Constitution (as the historical constitutional context for judicial procedure and authority).

Nature and Content of the Disputed Stipulation (Exhibit O‑1)

Exhibit O-1 is a clause in an extrajudicial partition (dated August 24, 1947) providing that the products (fruits) of the specified parcel shall be used to defray certain religious expenses (processions and Holy Week functions, repair and preservation of religious items, and construction of a camarin), with any surplus thereafter to be distributed among the heirs. The proponents sought that this stipulation be entered as an encumbrance on the title to be issued.

Trial Court’s Initial Ruling on the Stipulation

The Court of First Instance (acting as a land registration court) found the arrangement to be a donation or similar grant and held that it was void or unenforceable against certain parties for lack of acceptance by the donee and because some co-heirs had not made any grant. The trial court therefore ordered the religious expenses to be entered as an encumbrance on the undivided shares of all applicants except Salvador Encarnacion, Sr., Salvador Encarnacion, Jr., and Angel Encarnacion. The court also relied on procedural pleading considerations, including the applicants’ prior allegation in the registration petition that the land was free of encumbrances.

Trial Court’s Modification and Reasoning on Reconsideration

On reconsideration the trial court emphasized that (1) a stipulation in favor of a third person (stipulation pour autrui) requires acceptance by the third person before revocation (citing Art. 1311 N.C.C.); (2) the Church had not manifested acceptance on the record; (3) the Church was the proper party to enforce the stipulation and had not appeared; (4) the movants (proponents of the encumbrance) were not the real parties in interest under procedural rules; and (5) the applicants’ earlier pleading that the land was unencumbered estopped them from asserting otherwise. These considerations led the trial court to disallow entry of the encumbrance as against the three oppositors.

Assignments of Error on Appeal

The petitioners-appellants raised, inter alia, that (1) the trial court erred in treating Exhibit O-1 as revocable at the unilateral option of the co-owners; (2) the court erred in limiting the binding effect of Exhibit O-1 to certain applicants only; and (3) the registration court exceeded or misapplied its jurisdiction by deciding the merits of the contention regarding Exhibit O-1 within the land registration proceeding.

Supreme Court’s Analysis: Characterization as Stipulation Pour Autrui

The Supreme Court held Exhibit O-1 to be a stipulation pour autrui, i.e., a contractual provision conferring a direct, deliberate benefit on a third person (the Church). It applied Art. 1311 N.C.C. and established the requisites: (1) the stipulation must be part of a contract, not the entire contract; (2) the favorable stipulation must not be conditional or compensated by obligations of the beneficiary; and (3) neither contracting party acts as legal representative of the third person. The Court found that the parties’ intention, as evidenced by the Partition, was to benefit the Church materially and directly.

Supreme Court’s Analysis: Acceptance by the Third Person

Addressing the trial court’s view that the Church had not formally accepted the stipulation, the Supreme Court held that acceptance may be implied and need not be formal or in a particular mode. The long and uninterrupted enjoyment by the Church of the fruits of the land from 1941 until shortly before the 1964 registration—approximately seventeen years—constituted implied acceptance prior to any attempted revocation. The Court relied on Civil Code principles and authorities recognizing implied acceptance or acquiescence where benefits have been enjoyed by the beneficiary.

Binding Effect on Parties, Heirs, and Subsequent Purchasers

The Supreme Court held that, under Art. 1308 and Art. 1311 N.C.C., the stipulation binds the contracting parties and their assigns and heirs. Consequently, signatories to the extrajudicial partition (including Salvador Encarnacion, Sr.) cannot unilaterally revoke the stipulation. Purchasers who acquired shares with knowledge of the stipulation are in privity or successors in interest and are similarly bound. The Court noted contemporaneous evidence (a 1962 deed of real mortgage) acknowledging the partition and the encumbrance, and observed that subsequent purchasers kept silent while enjoying the benefits, supporting their binding status.

Standing of the Proponents and Annotation as Encumbrance

The Court rejected the trial court’s conclusion that only the Church could enforce the stipulation and that the proponents were not the real

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