[ G.R. No. 11904. October 09, 1917 ]

[ G.R. No. 11904. October 09, 1917 ] 36 Phil. 960

[ G.R. No. 11904. October 09, 1917 ]

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, PLAINTIFF AND APPELLEE V. DERHAM BROTHERS AND THE INTERNATIONAL BANKING CORPORATION, DEFENDANTS AND APPELLANTS. D E C I S I O N

STREET, J.:

In the year 1910, Derham Brothers, of Manila, entered into negotiations with the Director of Lands for the purpose of securing from the Government of the Philippine Islands a lease covering block 49 of Reclamation No. 1, Government of the Philippine Islands vs. Derham Brothers. Manila Harbor, commonly known as the Luneta Fill, an area reclaimed from the sea by the process of dredging the harbor and filling in the reclaimed territory. A notice was accordingly published by the Executive Secretary, setting forth some of the conditions on which the land would be leased. Thereafter Derham Brothers addressed to the Director of Lands, under date of May 17, 1910, a communication stating the terms under which said firm would take the property. The only specification which is material to this controversy is contained in paragraph 4 of said communication, which is as follows:

“4th. The rental and taxes to commence upon the grading to the official line and grade and metalling thereof of the roadway of the streets of the three blocks on the south, east and the west, contiguous to said property, and the grading to the official line and grade and metalling the roadway thereof of the street on the north of said property to its entire length.

“This provision is made as it is absolutely necessary that we have a direct outlet for our proposed building.”

Upon July 26, 1910, the Director of Lands replying to this communication of Derham Brothers, said:

“I have the honor to enclose herewith form of lease which you will be expected to execute upon the completion of the four streets surrounding said block, together with an outlet to street already constructed or to be constructed. It is understood, of course, that you will fulfill all the conditions as set forth in said offer of May 17th.”

Derham Brothers thereupon took possession of the premises, and upon August 10, 1910, they executed an assignment to the International Banking Corporation whereby they transferred to the latter their right to receive from the Government of the Philippine Islands the lease to the premises in question when the same should be formally executed. This assignment was accepted by the bank, and the assignment was approved by the Director of Lands. The assignment to the bank and the memorandum of the Director of Lands approving said assignment contain nothing Government of the Philippine Islands vs. Derham Brothers. which has the legal effect of varying the obligation of the parties as it had existed up to that time, and it is clear that the International Banking Corporation, with respect to its obligation to accept the lease, is merely in the same position that Derham Brothers would have been in if the assignment had not been made. The present action was instituted on behalf of the Government with the two-fold purpose of recovering a judgment against Derham Brothers for the use and occupation of the premises since July 31, 1912, and to compel the defendant bank to execute the lease of the premises in question. From a judgment of the Court of First Instance in favor of the plaintiff the defendants have appealed. The question presented for this court is whether the conditions upon which the liability of the lessee for rent depended had been complied with upon the date mentioned. It appears from the proof in this case that the block in question fronts on Muelle San Francisco, a street which runs along the waterfront of Manila Harbor in a direction from north to south. The property is bounded on the north by Aduana Street, on the east by Boston Street, on the south by Fourteenth Street. Aduana Street has been prepared and opened for use from Muelle San Francisco to Boston Street, that is to say, along the length of the north side of the block in question. In the plans submitted as proof in this case it appears that Aduana Street was originally projected to run from Muelle San Francisco eastward to the Malecon, or about three blocks eastward from block 49; but, as stated, this street has been opened only. to Boston Street. Boston Street has been prepared and opened for use from Twelfth to Sixteenth Streets, running across four blocks. Fourteenth Street, on the south side of the block in question, has been prepared and opened for use from Muelle San Francisco to Boston Street. From what has been stated it appears that the block in question is surrounded on all four sides by streets which have been prepared and opened for use. The building erected by Derham Brothers on block 49 has its frontage upon Muelle Government of the Philippine Islands vs. Derham Brothers, San Francisco, and the south side of said building abuts upon Fourteenth Street. There is a considerable open space between the rear of said building and Boston Street, since the building does not cover the entire block. For the same reason an open space of less extent is found between the north side of the building and Aduana Street. As regards the condition of these streets, it appears from the blue-print plan exhibited in this case (Exhibit A) and from other proof that Muelle San Francisco has been properly ballasted with crushed rock over a width of eighteen and thirty-hundredths meters. This street is designed to be 40 meters wide when completely surfaced and ready for use in its entire breadth. The ballasted portion, the part now in use, runs along immediately in front of block 49. Aduana Street is all ballasted with crushed rock throughout the part opened for use that is, from Muelle San Francisco to Boston Street. Boston Street, with a projected width of 16 meters, has a roadway dressed with crushed rock, of 8 meters. Fourteenth Street, with a projected width of 10.68 meters, has a roadway, dressed with crushed rock, of 10 meters in the part which runs alongside of the defendant’s building, and of 8 meters from the end of the building to Boston Street. None of these streets are supplied with sidewalks or curbing. Referring to the specification contained in paragraph 4 of the original offer of Derham Brothers it appears that the two principal matters there specified are (1) that the streets shall be granted to the official line and grade and (2) that the roadway shall be metalled (i. e. dressed with crushed stone.) With reference to the grading, it may be stated that a plan in blue print (Exhibit B) is exhibited with the testimony of F. D. Jones, witness for the Government in this cause, from which it appears that no criticism can be made with respect to the grade of any part of the streets surrounding the property in question. The term grade has reference to the level, or regular inclination, of a roadbed; and grading refers to the altering of the1 level of ground in order to make it conform to a prescribed grade. The exhibit just mentioned shows the cross-section of each of the four streets surrounding the block in question; and these cross-sections show clearly that the streets are properly graded not only in respect to the part covered by crushed stone but also with respect to the portions which have not been thus finished. Paragraph 4, referred to above, contains no specification as to the width of the roadway, which should be metalled, or dressed with crushed rock; but it is obvious from the use of the expression “roadway of the street” that it was not contemplated that the roadway should necessarily cover the width of the entire street. The “roadway” was evidently thought of as something different from the whole street, and therefore as something less extensive. The width of the roadway was, in our opinion, something that was clearly left to be determined by the conditions of traffic in the neighborhood of this property. In the New Standard Dictionary we find “roadway” defined as “a road, especially that part of the road over which vehicles pass.” Practically the same definition is given in Webster*s International. As a part is less than the whole, it follows from this definition that the roadway of a street is less extensive than the entire street. In Joplin vs. Freeman (125 Mo. App., 717), it was held that the use of the term “roadway of any street” in a certain statute indicated the intention of the legislature to discriminate between that part of the street used as a highway for general travel and that part used exclusively as a sidewalk for pedestrians. To understand the meaning of the term “roadway” as used in the contract now under consideration, it is necessary to bear in mind that the specifications do not call for the construction of sidewalks and curbs, and in conformity with a custom extensively prevailing in the Orient none have been constructed in any of these streets. Now it must be conceded, though the fact is often forgotten in these days of rushing automobiles, that pedestrians, as well as vehicles, have the right to travel upon roads and streets, whether there be any sidewalks or not. By customary rule of the road, pedestrians are expected to keep to one side. The distinction between the part of the street given up to vehicular traffic and the part intended for the use of pedestrians is therefore perfectly intelligible; and it seems clear that the term “roadway” as used in the specifications applies to the portion given up to vehicular traffic, leaving a space available for pedestrians if it should be required for their use. The contention of the defendants that the roadway of the street covers the entire breadth of the street is untenable because it takes no account of that part of the street which is, or might be, assigned for pedestrian use. It is true that the Government is not bound by this contract to build paved sidewalks protected by curbing, but if this should ever be done such sidewalks would fall within the official lines of the streets as already established, unless a new strip of land should be condemned or appropriated for the purpose; and it cannot be insisted that the Government is in any event bound thus to extend the official lines. As fully appears from the authorities the term “street,” in its widest and most correct sense, includes both roadway and sidewalk; and if the sidewalk is omitted as a feature of construction there still remains the space that is, or might be, devoted to pedestrian use. In Boston Street, which contains the largest proportion of unmetalled surface we have a total surveyed width of 16 meters. In the center is a metalled roadway of 8 meters, and on either side is a strip 4 meters wide which would, if needed, be available for pedestrian travel. Can it be seriously insisted that this street is incomplete, within the meaning of the contract under consideration, because of the failure of the Government to cover the entire width of these streets with crushed rock? We think not. It may be admitted that where paved sidewalks are constructed this has the effect of defining the boundaries between the roadway and the part of the street devoted to pedestrian use. The word street, as used in America, includes the roadway, the gutters, and the sidewalks. (Knapp, Stout & Co.vs. Transfer Ry. Co., 126 Mo., 35; Gallaher vs. City of Jefferson, 125 Iowa, 324, 330; Taber vs. Grafmiller, 109 Ind., 206, 209; Allegheny County Light Co. vs. Booth, 216 Pa., 564; Heath vs. Manson, 147 Cal., 694, 699. See also 27 Am. and Eng. Encyc. Law, 2d ed., p. 103.)

“The side walk is simply a part of the street which the town authorities have set apart for the use of pedestrians.” (Hester vs. Traction Co., 138 N. C, 288.)

Again, “a street includes the whole width of public way; it is customary in a city to set apart a portion of it for foot passengers; but there is no rule of law absolutely requiring this, and in many parts of an incorporated town it might be needless.” (Brevoort vs. Detroit, 24 Mich., 322, 325.) The authorities just cited show conclusively that the word street, in its correct and ordinary acceptation, includes not only the roadway, which is used for carriages and vehicular traffic generally, but also the portion used for pedestrian travel; and the distinction holds good whether the part designed for pedestrians consists of the paved way which we call a sidewalk, or not. If this idea is kept in mind it is impossible to think of “street” and “roadway of the street” as being coextensive terms, since, properly speaking, the roadway comprises only the central portion of the street. The conclusion is that in metalling the streets around block 49, to the extent shown in this case, the Government complied with its obligation to metal the roadway of said streets, and that consequently these streets are in a state of completion as contemplated in the communication of the Director of Lands, of July 26, 1910. It is, however, urged for the defendants that F. D. Jones, the engineer who had been engaged in making these streets, admitted in his testimony that they were incomplete or unfinished; but he was speaking with reference to the official plans and specification for the improvement of this territory, and he was not giving an opinion on the question whether the streets were complete in the sense prescribed in the contract which is in controversy. No question can be made as to the quality of the finish on that portion of these streets which has been surfaced with stone; and the defendants offered no proof that the roadway so finished was in any respect inadequate for the traffic required of it. Of course the burden of proof is on the Government to show compliance with the conditions which were agreed upon as conditions precedent to the liability of the lessee for rent; but inasmuch as the width of the roadway was not specified in the contract it may be safely inferred, in the absence of proof to the contrary, that the roadways sworn to be in existence on all these streets are ample for the traffic required of them. We are therefore of the opinion that there is no merit in the contention of the defendants so far as regards either the grade, the width of the roadway, or the quality of the finish of these streets. The next question to be considered has reference to the failure to extend Aduana Street on eastward to the Malecon. In this connection it should be noted that the language of paragraph 4 is to the effect that the street on the north of said property shall have a metalled roadway “to its entire length.” This language is not clear because the pronoun “its” might be taken to refer to the word “property” with as much propriety as to the more remote antecedent “street.” If this ambiguity be considered to exist, the proper construction to be given to this expression is determined by article 1288 of the Civil Code, wherein it is declared that the interpretation of obscure clauses in a contract shall not favor the party who caused the obscurity. If, on the other hand, the ambiguity does not exist, we think that this specification is limited by the words contained in the communication of the Director of Lands of July 26,1910, wherein this official uses the expression “the completion of the four streets surrounding said blocks, together with an outlet to street already constructed or to be constructed.” By these words the Director of Lands either expressed his interpretation of the specification referred to or he qualified it by making a new offer in which the obligation as to the making of streets was limited to streets surrounding block 49. In either view Derham Brothers were bound. It is a familiar principle that a contracting party is bound by that interpretation of an ambiguous provision which he knows the other party has adopted; and on the other hand, if it was a counterproposal, Derham Brothers accepted it by taking possession of the property in pursuance of said proposal. In this connection it should be noted that the communication of the Director of Lands dated July 26, 1910, addressed to Derham Brothers, does not purport to be an acceptance of the offer contained in their original communication of May 17, 1910; and the phrase “we accept,” or other equivalent expression indicating acquiescence in the terms of that offer, is not used. On the contrary this communication from the Director of Lands purports to be, and is, a notification to Derham Brothers that they would be expected to execute the lease when the stated conditions should be fulfilled. We think that the meeting of minds which perfected the contract in this case occurred when Derham Brothers accepted the counterproposal of the Director of Lands and went into possession of the property pursuant thereto. The evidence of the terms of the contract are therefore, to be found, not exclusively in the offer of Derham Brothers, but in that offer as qualified by the conditions expressed in the communication of the Director of Lands. We are therefore of the opinion that the Government was not bound to open Aduana Street any farther than to Boston Street. The spirit of all the specifications as to the streets around this property is contained in the statement of Derham Brothers that “it is absolutely necessary to have a direct outlet for our proposed building.” They now have all the possible outlets from their building directly to the street which they could have; and it would not be proper to impose upon the Government the obligation to open another street leading directly from their building to another part of the city; for, as shown above, this term is no part of the contract. Furthermore, it appears from the plans exhibited in this case that the defendants have outlets through two thoroughfares (Twelfth and Sixteenth Streets) leading to the business part of the city. These streets are reached from their building either through Muelle San Francisco or Boston Street. It is thus manifest that the proposal of the Director of Lands to supply them with one outlet to a street already constructed or to be constructed has been more than fulfilled. From the foregoing opinion it follows that, in our opinion, there is no error in the judgment appealed from, and the same is accordingly affirmed, with costs of this instance against the appellants. So ordered. Arellano, C. J., Carson, and Arallo, JJ., concur. Malcolm, J., concur in the dissent of Mr. Justice Johnson