Ildefonso Vs Sibal

G.R. No.
L-12181 September 30, 1959

LUCIO R. ILDEFONSO vs. ERNESTO Y. SIBAL -->
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G.R. No. L-12181 September 30, 1959
LUCIO R. ILDEFONSO, Plaintiff-Appellant, vs. ERNESTO Y. SIBAL, Defendant-

Appellee.
Jose Y. Valenton for appellant.

Manuel O. Chan and V. Ampil for appellee.
GUTIERREZ DAVID, J.: chanrobles virtual law library
This is a direct appeal to this Court taken by plaintiff from a decision of the Court
of First Instance of Manila, dismissing his complaint and ordering him to pay defendant
the sum of P500.00 as attorney's fee, plus costs. chanroblesvirtualawlibrary chanrobles virtual law library
The facts are undisputed. On October 15, 1953 in Civil Case No. 15371 of the
Court of First Instance of Manila, herein appellant Lucio R. Ildefonso and appellee
Ernesto Y. Sibal, plaintiff and defendant therein, respectively, reached a compromise
agreement and thereafter filed a joint motion to dismiss the case. Acting upon the
motion the court granted it and dismissed the case. chanroblesvirtualawlibrary chanrobles virtual law library
The compromise agreement, which was later reduced to writing but was not
presented to the court for approval, reads:
COMPROMISE AGREEMENT
For and consideration of the mutual covenants herein set forth, the parties
hereinabove named agree: chanrobles virtual law library
1. That the plaintiff agrees to dismiss the above-entitled case on the ground of
amicable settlement, this Compromise Agreement, on the consideration of the promise
and covenant of the defendant, to wit: chanrobles virtual law library
2. That the defendant promises and covenants that:

a. That the defendant shall pay the plaintiff this date the amount of ONE THOUSAND
(P1,000.00) PESOS; chanrobles virtual law library
b. That the defendant promises that within two (2) years from the date hereof, he shall
course through the plaintiff as Realtor the former's real estate purchase or transaction
and should he (defendant) fail thereof, that is, to make such real estate purchase and
to course the same to the plaintiff as said Realtor, the defendant is liable further to pay
the plaintiff an additional sum of TWO THOUSAND (P2,000.00) PESOS. chanroblesvirtualawlibrary chanrobles virtual law library
c. That the defendant further agrees to dismiss his Counterclaim in the above-entitled
case on the ground of his amicable settlement.
IN WITNESS WHEREOF, the parties have hereunto set their hands this 15th day
of October, 1953, at the City of Manila.
(Sgd.) ERNESTO Y. SIBAL

(Sgd.) LUCIO R. ILDEFONSO
Pursuant to the agreement, defendant, during the two-year period stipulated,

commissioned plaintiff to sell some of his real properties situated in Sta. Mesa Heights,
Quezon City. The properties, however, were not sold by plaintiff but by defendant
himself sometime after the lapse of the two-years period and at a price much higher
than that quoted to plaintiff. On the other hand, plaintiff, during the period agreed upon
- in line with defendant's expressed intention to purchase real estate worth around
P400,000.00 within the commercial district of Manila for the future expansion of his
business of selling books and school supplies-looked for real properties for sale in
Manila. Apparently successful in his search, he offered to sell to defendant at various
times during the stipulated period the Great Eastern Hotel for P1,300,000.00, the Borja
Building for P1,500,000.00 and a lot along Rizal Avenue with an area of 157 square
meters for P190,000.00. Defendant, however, told plaintiff that he could not buy any of
the properties, the Great Eastern Hotel and the Borja Building being not only beyond
his means to buy but also inappropriate or inadequate to his business, while the lot in
Rizal Avenue was too small to meet the requirements of his plans for expansion. chanroblesvirtualawlibrary chanrobles virtual law library
Claiming that defendant Sibal has failed and neglected to make the purchase of
real estate as promised in the compromise agreement above-quoted within the two-
year period stipulated therein, plaintiff Ildefonso, on April 20, 1956, instituted the
present action for the recovery of the penalty provided for in the paragraph 2 (b)
thereof in the amount of P2,000.00, with legal interests thereon from October 16,
1955, plus attorney's fee and costs. chanroblesvirtualawlibrary chanrobles virtual law library
Answering the complaint, defendant admitted the execution of the compromise

agreement but denied liability, alleging that under the said agreement his liability may
arise only in the event that he buys or sells real estate without coursing the same
through the plaintiff and that his failure to buy or sell real estate in accordance with the
agreement was entirely due to plaintiff's inability to sell the lands he (defendant)
offered for sale and to obtain real properties which would be profitable for him to
purchase and suitable to his business. chanroblesvirtualawlibrary chanrobles virtual law library
After trial, the lower court, on December 13, 1956, rendered judgment absolving
defendant from the complaint and ordering plaintiff to pay the former the amount of
P500.00 as attorney's fee. From that decision plaintiff has taken the present
appeal.
chanroblesvirtualawlibrary chanrobles virtual law library
The only question for determination is whether or not the defendant has, upon
the undisputed facts above narrated, violated the obligation imposed on him by the
compromise agreement. chanroblesvirtualawlibrary chanrobles virtual law library
It is appellant's contention that under paragraph 2(b) of the compromise

agreement, defendant-appellee was under obligation to make a real estate purchase
through appellant as realtor within a period of two years from October 15, 1953, when
the agreement was signed, and his failure to make any such purchase made him liable
to pay the penalty of P2,000.00 provided therein. The contention cannot be sustained.
There is nothing in the disputed paragraph of the compromise agreement that can be
construed to mean that appellee bound himself to purchase real property and to pay
penalty of P2,000.00 in case he failed to do so. The paragraph of the agreement in
question simply provides, "that the defendant (herein appellee) promises that within
two years from the date hereof, he shall course through the plaintiff (herein appellant)
as Realtor the former's real estate purchase or transaction", and should appellee fail to
fulfill that obligation he becomes liable to pay appellant the sum of P2,000.00 in
accordance with the penal clause. It is evident, therefore, that appellee's principal
undertaking was to "course" or make his real estate purchases and sales through
appellant for a period of two years from the date of the execution of the compromise
agreement. In other words, as aptly stated by appellee in his brief, he has, by
paragraph 2(b) of the compromise agreement, in effect, constituted appellant for two
years as his exclusive agent in the purchase or sale or real property with liability to pay
P2,000.00 in case of breach. This theory is supported by the record. For during the
negotiation for the compromise agreement, appellee, who had earlier expressed his
intention to buy real estate for the expansion of his business, suggested that he "could
course the transaction through appellant", and to that suggestion, appellant, who
wanted some assurance that the transaction would really be coursed through him as
realtor, gave her assent after appellee had agreed to pay damages should he fail to do
so. Indeed, following appellant's contention, it is hard to believe that a man of
appellee's business acumen and stature would give his consent to an agreement
wherein he is under compulsion to buy real estate--which may, as in this case, be not
only in adequate or inappropriate for his business, but, what is worse, also beyond his
means--in order to avoid liability under the penal clause therein stipulated. chanroblesvirtualawlibrary chanrobles virtual law library
There being no dispute that appellee has, in fact, during the two-year period
provided in the compromise agreement, course through appellant his real estate
transactions and that, due to no fault attributable to him, he was not able to purchase
or to sell any real property through appellant (or anybody else, for that matter) which
that period, we cannot say that the trial court has committed any error in dismissing
the complaint. chanroblesvirtualawlibrary chanrobles virtual law library
There is, to be sure, ambiguity in the provision of the compromise agreement in

question as a result of the explanatory clause ("that is, to make such real estate
purchase and to course the same to the plaint off as Realtor") inserted after the phrase
"should he fail thereof" which follows the statement of appellee's obligation. But
following the rule that ambiguities or obscure clauses in contracts cannot favor the one
who has caused them (article 1377, new Civil Code), and it appearing that the
compromise agreement was drawn by appellant through his counsel, with the
paragraph in dispute creating an obligation in his favor, the ambiguity found therein
must be construed in favor of herein appellee. (H.E Heacock Co. vs. Macondray & Co.,
42 Phil., 205; Asturias Sugar Central vs. The Pure Cane Molasses Co., 57 Phil., 519;
Halili vs. Lloret et al., 95 Phil., 776;50 Off. Gaz., 2493.).
chanroblesvirtualawlibrary chanrobles virtual law library
In view of the foregoing, the decision appealed from is hereby affirmed, with
costs against appellant.
Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Conception,

Endencia, and Barrera , JJ., concur.

Ildefonso Vs Sibal

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G.R. No.

L-12181 September 30, 1959

G.R. No. L-12181 September 30, 1959

LUCIO R. ILDEFONSO, Plaintiff-Appellant, vs. ERNESTO Y. SIBAL, Defendant-

Jose Y. Valenton for appellant.

GUTIERREZ DAVID, J.: chanrobles virtual law library

2. That the defendant promises and covenants that:

(Sgd.) ERNESTO Y. SIBAL

Pursuant to the agreement, defendant, during the two-year period stipulated,

Answering the complaint, defendant admitted the execution of the compromise

It is appellant's contention that under paragraph 2(b) of the compromise

There is, to be sure, ambiguity in the provision of the compromise agreement in

Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Conception,

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