129. Leal v.

IAC
G.R. No. L065425 RULING: NO. The present controversy specifically pertained to paragraph (b) of the
November 5, 1987 "Compraventa," to wit: “(b) En caso de venta, no podran vender a otros dichos tres lotes de
By: Gayares terreno sino al aqui vendedor Vicente Santiago, o los herederos o sucesores de este por el
Topic: Autonomy of Contracts niismo precio de CINCO MIL SEISCIENTOS PESOS (P5,600.00) siempre y cuando estos ultimos
Petitioner: Ireneo Leal, et. al. pueden hacer la compra” which is now the subject of varying and conflicting interpretations.
Respondent: IAC, Vicente Santiago
Ponente: Sarmiento, J. It is admitted by both parties that the phrase "they shall not sell to others these three lots
but only to the seller Vicente Santiago or to his heirs or successors" is an express prohibition
DOCTRINE: One such condition which is contrary to public policy is the present prohibition to against the sale of the lots described in the "Compraventa" to third persons or strangers to
self to third parties, because the same virtually amounts to a perpetual restriction to the right the contract.
of ownership, specifically the owner's right to freely dispose of his properties.
Contracts are generally binding between the parties, their assigns and heirs; however, under
FACTS: Art. 1255 of the Civil Code of Spain, which is applicable in this instance, pacts, clauses, and
 On March 21, 1941, Vicente and his brother Luis Santiago executed a document, conditions which are contrary to public order are null and void, thus, without any binding
“Compraventa” (written entirely in Spanish) in favor of Cirilio Leal, father of some effect.
of the petitioners.
 Pursuant to such document, the title over three parcels of land in the name of the Parenthetically, the equivalent provision in the Civil Code of the Philippines is that of Art.
Santiagos was cancelled and a new one was issued in favor of Cirilo who 1306, which states: "That contracting parties may establish such stipulations, clauses, terms
immediately took possession an exercised ownership said lands. Cirilo died in 1959. and conditions as they may deem convenient, provided they are not contrary to law, morals,
Said lands were inherited by his 6 children who are among the petitioners. good customs, public order, or public policy. Public order signifies the public weal — public
 The six caused the consolidation and subdivision of the properties among policy. Essentially, therefore, public order and public policy mean one and the same thing.
themselves. Between 1960 and 1965, the lands were either mortgaged or leased by Public policy is simply the English equivalent of "order publico" in Art. 1255 of the Civil Code
the petitioners to their co-petitioners. of Spain.
 Sometime before the agricultural year 1966-1967, Vicente approached the
One such condition which is contrary to public policy is the present prohibition to self to third
petitioners and offered to repurchase the subject properties. Petitioners, however,
parties, because the same virtually amounts to a perpetual restriction to the right of
refused the offer. Consequently, Vicente instituted a specific performance case
ownership, specifically the owner's right to freely dispose of his properties. This, we hold that
before CFI Quezon City in 1967.
any such prohibition, indefinite and stated as to time, so much so that it shall continue to be
 CFI dismissed the complaint on the ground that the same was still premature
applicable even beyond the lifetime of the original parties to the contract, is, without doubt,
considering that there was, as yet, no sale nor any alienation equivalent to a sale.
a nullity. In the light of this pronouncement, we grant the petitioners' prayer for the
Vicente appealed to CA.
cancellation of the annotations of this prohibition at the back of their Transfer Certificates
 In 1987, CA affirmed the decision of CFI. Leal, et a. filed a motion to amend the
'Title. It will be noted, moreover, that the petitioners have never sold, or even attempted to
dispositive portion of the decision so as to include an order for the cancellation of
sell, the properties subject of the "Compraventa. "
the annotations at the back of the Transfer certificates of Title issued in their favor.
Vicente filed a MfR and opposed the motion to amend. The motions were
DISPOSITIVE: WHEREFORE, in view of the foregoing, the Resolution dated September 27,
remained unresolved until after CA was reorganized and IAC was established in lieu
1983, of the respondent court is SET ASIDE and the Decision promulgated on June 28, 1978 is
of CA.
hereby REINSTATED.
 In 1983, IAC, resolving the motions, promulgated a resolution which ordered, in
part, the petitioners to accept the sum of P5,600.00 from Vicente as repurchase
price of the lots described in the "Compraventa" and, thereafter, to execute a Deed
of Repurchase to effect transfer over ownership over the same properties to
Vicente. Also, IAC ordered Register of Deeds of Rizal to cancel TCT in the names of
Vicente Santiago and Luis Santiago upon presentation of the deed of sale herein
ordered to be executed by the petitioners in favor of Salud and to issue thereof
another TCT in the name alone of Salud.

ISSUE: W/N the prohibition under the “Compraventa” is a valid prohibition?