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Digest - REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Petitioners, v. LEGAL HEIRS OF JOSE L. AFRICA, Respondents.

The Supreme Court granted the PCGG's petition and reversed the Sandiganbayan's decision to drop Jose Africa and his heirs as defendants in the case. The Court found that Africa should not benefit from the compromise agreement between the PCGG and Benedicto, as Africa was deliberately excluded from the agreement and there were no stipulations in his favor. As Africa was neither a party to nor intended beneficiary of the agreement, the rule of relativity of contracts applies such that only the actual parties acquire rights under the contract.

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1K views8 pages

Digest - REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Petitioners, v. LEGAL HEIRS OF JOSE L. AFRICA, Respondents.

The Supreme Court granted the PCGG's petition and reversed the Sandiganbayan's decision to drop Jose Africa and his heirs as defendants in the case. The Court found that Africa should not benefit from the compromise agreement between the PCGG and Benedicto, as Africa was deliberately excluded from the agreement and there were no stipulations in his favor. As Africa was neither a party to nor intended beneficiary of the agreement, the rule of relativity of contracts applies such that only the actual parties acquire rights under the contract.

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REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,


Petitioners, v. LEGAL HEIRS OF JOSE L. AFRICA, Respondents.

Ponente: Justice Estela M. Perlas-Bernabe

Statement of facts:

On July 31, 1987, the Republic of the Philippines, through the


Presidential Commission on Good Governance (PCGG) filed a
Complaint1 for reconveyance, reversion, accounting, restitution, and
damages before the Sandiganbayan (SB) against spouses Ferdinand
and Imelda Marcos, and their alleged cronies, among them is
defendants father, Jose Africa. The PCGG alleged that the
defendants, in collaboration with each other, siphoned funds from the
national treasury to unjustly enrich themselves and the Marcoses.
With respect to Jose Africa (Africa), the PCGG alleged that he
collaborated with several other defendants in acting as conduits of
the pilfered funds by laundering the same using the banking facilities
of Traders Royal Bank (TRB), of which Africa was the Chairman of
the Board of Directors, before remitting them to the Marcoses.

On August 20, 1987, the PCGG amended its complaint to


implead Roman Cruz, Jr. as defendant. In a Compromise Agreement
entered into by the PCGG, through Chairman David M. Castro with
Robert Benedicto (Benedicto). On November 3, 1990, Benedicto
ceded to the government the identified ill-gotten properties listed in
the Complaint2 and transferred to the government whatever rights he
may have in the assets of the corporations listed also in the
Complaint3.

1 The Presidential Commission on Good Governance vs Ferdinand and Imelda Marcos, Roberto S.
Benedicto, Hector T. Rivera, Julita Benedicto, Lourdes Rivera, Miguel V. Gonzalez, Pag-Asa San
Agustin, Bennet Thelmo, Exequiel B. Africa, Rocio R. Torres, Marciano Benedicto, Romulo Benedicto,
Zacarias Amante, Francisca C. Benedicto, Jose Montalvo, Jesus Martinez, Nestor Mata, Alberto Velez,
Richard de Leon, Zapiro Tanpinco, Leopoldo Vergara, Dominador Pangilinan, Rodolfo Arambulo,
Rafael Sison, Placido Mapa, Jr., Cesar C. Zalamea, Don M. Ferry, Jose R. Tengco, Jr., Ramon Monzon,
Generosa C. Olazo, Cynthia Cheong, Ma. Luisa E. Nograles, and Jose Africa docketed as Civil Case
No. 0034

2 Ibid.

3 Id.
The PCGG lifted sequestration Orders over the properties listed
in the Compromise Agreement, and other assets such as the other
sequestered assets that belonged to Benedicto and/or his
corporations/nominees which were not listed in Annex 'A' of the
Complaint as ceded, or to be ceded to the government. It also agreed
to extend absolute immunity to Benedicto, members of his family, and
the officers and employees of the listed corporations such that no
criminal investigation or prosecution would be undertaken against
them for acts or omissions prior to February 25, 1986.

The Compromise Agreement covered the remaining claims and


cases of the Philippine Government against Benedicto, including his
associates and nominees, namely: Julita C. Benedicto, Hector T.
Rivera, Lourdes V. Rivera, Miguel V. Gonzales, Pag-Asa San Agustin
(Deceased), Rocio B. Torres, Marciano Benedicto (Deceased),
Romulo Benedicto, Francisca C. Benedicto, Richard de Leon, Jose
Montalvo, Jesus Martinez, Nestor Mata, Alberto Velez, Zafiro
Tanpinco, Dominador Pangilinan (Deceased), Mariano del Mundo
and Zacarias Amante. However, Africa and some other defendants in
the Complaint were excluded therein.

On November 22, 1990, the PCGG and Benedicto filed a Joint


Motion to Approve Compromise Agreement, which was opposed by
the Solicitor General and the plaintiff-intervenors, ABS-CBN, CBNI,
and MBS, on the ground that the same was against the interest of the
Filipinos.

The SB, in a Resolution4 approved the Compromise Agreement


and rendered judgment in accordance with its terms. On September
10, 1993, the Supreme Court upheld the validity of the Compromise
Agreement and ordered the parties to comply strictly with the terms
thereof.

On February 23, 1996, the heirs of Jose Africa filed a motion


seeking the dismissal of the case against their father, who had since
died. His heirs asserted that Africa, who was then merely the
Chairman of TRB, should be exonerated since his supposed
conspirators had been exonerated by virtue of the Compromise
Agreement.

4 Sandiganbayan Resolution promulgated on October 2, 1992


Proceedings:

The SB, in a Resolution5 granted respondents' motion and dismissed


the case against Africa and his heirs reasoning that the acts
complained of constituted a quasi-delict or tort and the solidary
obligation therefor had been extinguished when the Compromise
Agreement was executed.

The PCGG moved for Reconsideration, which was granted by


the SB in a Resolution6, which stated that there was no stipulation in
the Compromise Agreement that clearly and deliberately conferred
benefits to Africa, unlike the other defendants who were specifically
named therein. It reasoned that the action is not only for the recovery
of wealth illegally acquired by Benedicto, but also for the
reconveyance of unexplained wealth of the other defendants,
including Africa. Thus, the first resolution dated March 21, 1997 was
set aside and the case against Africa was reinstated.

The heirs of Africa filed a motion for reconsideration seeking the


reinstatement of the March 21, 1997 Resolution. On February 4,
2013, the SB granted the motion and dropped Africa and his heirs, ,
as defendants in the case.

Hence, the PCGG instituted before the Supreme Court a


Petition for review on certiorari assailing the SB Resolution dated
February 4, 2013 which dropped Africa Africa and his heirs as
defendants in the Complaint for reconveyance, reversion, accounting,
restitution, and damages filed by petitioner Republic of the Philippines
(Republic).

Issue:

Whether or not Africa and his heirs may benefit from the
Compromise Agreement entered into between PCGG and Benedicto
being co-defendants of the latter.

5 Sandiganbayan Resolution dated March 21, 1997, penned by Associate Justice and
Chairman Jose S. Balajadia with Associate Justices Roberto M. Lagman and Edilberto G. Sandoval
concurring.

6 Sandiganbayan Resolution dated July 14, 1999, penned by Associate Justice Godofredo L.
Legaspi with Associate Justices Edilberto G. Sandoval and (retired Supreme Court Justice) Minita V.
Chico-Nazario concurring.
Ruling:

The PCGGs petition is GRANTED. The Resolution dated


February 4, 2013 of the Sandiganbayan in Civil Case No. 0034 is
hereby REVERSED and SET ASIDE. The Sandiganbayan is ordered
to REINSTATE Jose L. Africa and/or respondents Legal Heirs of Jose
L. Africa as defendants in Civil Case No. 0034.

Africa should not benefit from the Compromise Agreement


merely because other defendants who were similarly alleged to be
officers of TRB benefited from it. The Supreme Court conveyed that
the absence of Africa's name from the list of the added beneficiaries
could only mean that he was deliberately excluded from it.

Perusing through the Compromise Agreement, the Supreme


Court found no stipulation that would even resemble a provision in
favor of Africa or his heirs. The second whereas clause in the
Compromise Agreement specifically identified the other defendants,
who would be additional beneficiaries. Clearly, the said Agreement
deliberately excluded Africa and his heirs from the benefiting from it.

Other related provisions in the Compromise Agreement further


negate the existence of a stipulation pour autrui in Africa's favor. As
earlier adverted to, Item II (b) of the Compromise Agreement shows
that the absolute immunity extends only to the officers and
employees of the Benedicto corporations who were explicitly named
in the said Compromise Agreement.

Considering that Africa was neither a party nor one of the


intended beneficiaries of the Compromise Agreement, and absent
any stipulations pour autrui in his favor, the rule on relativity of
contracts, i.e., that only the parties thereto and their privies acquire
rights and assume obligations thereunder, prevails. No rule is more
settled than that the parties' intent is "embodied in the writing itself,
and when the words are clear and unambiguous the intent is to be
discovered only from the express language of the agreement."

Doctrine:
Obligations and Contracts:

A compromise is a contract whereby the parties, by making


reciprocal concessions, avoid litigation or put an end to one
already commenced. The cardinal rule in the interpretation of
contracts such as compromise agreements is that "if the terms
of a contract are clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of its stipulations
shall control."

For a stipulation pour autrui to be appreciated, it is


indispensable that there be a stipulation deliberately conferring
a benefit or favor to a third person. Article 1311 of the Civil
Code states:

Art. 1311. Contracts take effect only between the


parties, their assigns and heirs, except in case
where the rights and obligations arising from the
contract are not transmissible by their nature, or by
stipulation, or by provision of law. The heir is not
liable beyond the value of the property he received
from the decedent.

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. A mere incidental
benefit or interest of a person is not sufficient. The contracting parties
must have clearly and deliberately conferred a favor upon a third
person.

Digest prepared by:Johanna Faith R. Villar


JD 1B

G.R. No. 206510 September 16, 2014

MOST REV. PEDRO D. ARIGO, Vicar Apostolic of Puerto


Princesa D.D.; MOST REV. DEOGRACIAS S. INIGUEZ, JR.,
Bishop-Emeritus of Caloocan, FRANCES Q. QUIMPO,
CLEMENTE G. BAUTISTA, JR., Kalikasan-PNE, MARIA
CAROLINA P. ARAULLO, RENATO M. REYES, JR., Bagong
Alyansang Makabayan, HON. NERI JAVIER COLMENARES,
Bayan Muna Partylist, ROLAND G. SIMBULAN, PH.D., Junk VF A
Movement, TERESITA R. PEREZ, PH.D., HON. RAYMOND V.
PALATINO, Kabataan Party-list, PETER SJ. GONZALES,
Pamalakaya, GIOVANNI A. TAPANG, PH. D., Agham, ELMER C.
LABOG, Kilusang Mayo Uno, JOAN MAY E. SALVADOR,
Gabriela, JOSE ENRIQUE A. AFRICA, THERESA A.
CONCEPCION, MARY JOAN A. GUAN, NESTOR T. BAGUINON,
PH.D., A. EDSEL F. TUPAZ, Petitioners,
vs.
SCOTT H. SWIFT in his capacity as Commander of the US. 7th
Fleet, MARK A. RICE in his capacity as Commanding Officer of
the USS Guardian, PRESIDENT BENIGNO S. AQUINO III in his
capacity as Commander-in-Chief of the Armed Forces of the
Philippines, HON. ALBERT F. DEL ROSARIO, Secretary,
Department of Foreign Affairs, HON. PAQUITO OCHOA, JR.,
Executive Secretary, Office of the President, . HON. VOLTAIRE T.
GAZMIN, Secretary, Department of National Defense, HON.
RAMON JESUS P. P AJE, Secretary, Department of Environment
and Natural Resources, VICE ADMIRAL JOSE LUIS M. ALANO,
Philippine Navy Flag Officer in Command, Armed Forces of the
Philippines, ADMIRAL RODOLFO D. ISO RENA, Commandant,
Philippine Coast Guard, COMMODORE ENRICO EFREN
EVANGELISTA, Philippine Coast Guard Palawan, MAJOR GEN.
VIRGILIO 0. DOMINGO, Commandant of Armed Forces of the
Philippines Command and LT. GEN. TERRY G. ROBLING, US
Marine Corps Forces. Pacific and Balikatan 2013 Exercise Co-
Director, Respondents.

Ponente: Justice MARTIN S. VILLARAMA, JR.

Statement of facts:
In December 2012, the US Embassy in the Philippines
requested diplomatic clearance for USS Guardian, an Avenger-class
mine countermeasures ship of the US Navy, "to enter and exit the
territorial waters of the Philippines and to arrive at the port of Subic
Bay for the purpose of routine ship replenishment, maintenance, and
crew liberty."

On January 6, 2013, the ship left Sasebo, Japan for Subic Bay,
arriving on January 13, 2013 after a brief stop for fuel in Okinawa,
Japan. On January 15, 2013, the USS Guardian departed Subic Bay
for its next port of call in Makassar, Indonesia. At 2:20 a.m on January
17, 2013, while transiting the Sulu Sea, the ship ran aground on the
northwest side of South Shoal of the Tubbataha Reefs 7, about 80
miles east-southeast of Palawan. No cine was injured in the incident,
and there have been no reports of leaking fuel or oil.

In a press statement on January 20, 2013, U.S. 7 th Fleet


Commander, Vice Admiral Scott Swift, expressed regret for the
incident. On February 4, 2013 Likewise, US Ambassador to the
Philippines Harry K. Thomas, Jr., in a meeting at the Department of
Foreign Affairs (DFA) "reiterated his regrets over the grounding
incident and assured Foreign Affairs Secretary Albert F. del Rosario
that the United States would provide appropriate compensation for
damage to the reef caused by the ship."6 By March 30, 2013, the US
Navy-led salvage team had finished removing the last piece of the
grounded ship from the coral reef.

On April 1 7, 2013, the above-named petitioners on their behalf and in


representation of their respective sector/organization and others,
including minors or generations yet unborn, filed the present petition
agairtst Scott H. Swift in his capacity as Commander of the US 7th
Fleet, Mark A. Rice in his capacity as Commanding Officer of the
USS Guardian and Lt. Gen. Terry G. Robling, US Marine Corps
Forces, Pacific and Balikatan 2013 Exercises Co-Director ("US
respondents"); President Benigno S. Aquino III in his capacity as
Commander-in-Chief of the Armed Forces of the Philippines (AFP),
DF A Secretary Albert F. Del Rosario, Executive Secretary Paquito
Ochoa, Jr., Secretary Voltaire T. Gazmin (Department of National
Defense), Secretary Jesus P. Paje (Department of Environment and
Natural Resources), Vice-Admiral Jose Luis M. Alano (Philippine

7
Navy Flag Officer in Command, AFP), Admiral Rodolfo D. Isorena
(Philippine Coast Guard Commandant), Commodore Enrico Efren
Evangelista (Philippine Coast Guard-Palawan), and Major General
Virgilio 0. Domingo (AFP Commandant), collectively the "Philippine
respondents."
Proceedings:

Issues:

Rulings:

Doctrine:

Significant Dissent:

Separate Opinion:

Common questions

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The Supreme Court reinstated Jose Africa and his heirs because the Compromise Agreement did not contain any stipulation conferring a benefit on Africa or his heirs. The Court noted that Africa was not included in the list of defendants who would benefit from the Agreement, indicating a deliberate exclusion. Therefore, the rule on the relativity of contracts applied, which means the contract affects only the parties involved unless there is a stipulation extending benefits to third parties .

Jose Africa's heirs argued for dismissal based on Africa's role as merely the Chairman of Traders Royal Bank and cited the exoneration of his alleged conspirators under the Compromise Agreement. They contended that Africa should similarly benefit. However, the court responded by clarifying that Africa was explicitly excluded from the Agreement's benefits. There was no intent or stipulation conferring any legal benefits or exoneration upon him or his heirs, thus not warranting dismissal .

The Supreme Court's decision emphasized the principle of relativity of contracts, which restricts contract effects to the contracting parties unless explicitly stated otherwise. Since Jose Africa was neither named nor implied as a beneficiary in the Compromise Agreement between the PCGG and Benedicto, the court ruled that Africa could not derive any benefits from it. The deliberate exclusion of his name reinforced the court's stance that legal and contractual obligations or benefits are non-transmissible without explicit provisions or stipulations to that effect .

The PCGG moved for the inclusion of Jose Africa and his heirs because there was no explicit stipulation or naming of Africa in the Compromise Agreement as a beneficiary, unlike other defendants. The PCGG argued that the Agreement was primarily for recovering wealth illegally acquired by Benedicto and that Africa's involvement as a conduit of funds through Traders Royal Bank needed legal examination and accountability, thereby justifying their reinstatement as defendants .

For a stipulation pour autrui to apply, there must be an explicit contract provision deliberately conferring a benefit to a third party. The third party must be named or the benefit must be clearly intended for them. In this case, the absence of any provision in the Compromise Agreement explicitly naming Jose Africa or describing benefits conferred upon him indicated that such a stipulation did not exist. Consequently, the contract's effects pursuant to the relativity principle did not extend beyond the explicitly named parties and beneficiaries .

Heirs are generally not liable beyond the value of the property they receive from the decedent unless there is an existence of a clear stipulation or provision of law stating otherwise. In contexts where a contract encompasses stipulations that deliberately confer obligations upon heirs, these must be explicitly indicated to extend any liabilities or benefits beyond the standard inheritances. Without such provisions, heirs' liabilities remain limited to the value of what they inherit .

The Supreme Court's interpretation underscores the importance of explicitly naming third-party beneficiaries in Compromise Agreements for them to benefit legally. This decision sets a precedent that without a clear stipulation confering benefits to third parties like Jose Africa, even if their role is tangential, they cannot be assumed to be included. This promotes clarity and precision in crafting contract terms, impacting future legal proceedings by emphasizing the necessity for explicit third-party benefit clauses for any obligations to extend beyond the primary contracting parties .

The significant legal doctrine reiterated by the Supreme Court is that the terms of a contract, particularly compromise agreements, should be clear and unambiguous to reflect the intention of the contracting parties. Only the express language of the agreement should guide its interpretation, especially regarding third-party benefits. Such statements must be explicit to confer any tangentially related benefits, adhering to Article 1311 of the Civil Code, which establishes that contracts take effect only among the parties involved unless otherwise stipulated .

The Compromise Agreement did not legally affect Jose Africa and his heirs because he was explicitly excluded from its benefits. The PCGG moved for reconsideration of an initial Sandiganbayan resolution that dismissed the case against Africa, arguing successfully that there was no stipulation in the Compromise Agreement conferring benefits on Africa or his heirs. The Supreme Court ruled that Africa should not benefit from the Agreement because he was not named as a beneficiary, reinforcing the rule on the relativity of contracts which limits contract effects to the parties directly involved unless expressly stated otherwise .

'Stipulation pour autrui' refers to a provision in a contract deliberately conferring a benefit or favor to a third person not party to the contract. For it to apply, the third party must be named as a beneficiary. In the case of the Compromise Agreement with Benedicto, the Supreme Court found no such stipulation for Africa or his heirs. Therefore, since there was no provision intended to benefit Africa, the rule of the relativity of contracts prevailed, meaning only those expressly named in the Agreement could benefit .

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