DUNGO v LOPENA
29 Dec 1962 | Regala, J. | Topic: Compromise
Petitioner: Anastacio Dungo
Respondents: Adriano Lopena, Rosa Ramos
and Hon. Andres Reyes, Judge of CFI Rizal
DOCTRINE:
A compromise is a contract in itself. Under
Art 1878, a third person cannot bind another
to a compromise agreement unless he, the
third person, has obtained a special power of
attorney for that purpose from the party
intended to be bound.
When it appears that the client, on becoming
aware of the compromise and the judgment
thereon, fails to repudiate promptly the
action of his attorney, he will not afterwards
be heard to contest its validity.
FACTS:
(Sept 10, 1959) Petitioner Dungo and one
Rodrigo Gonzales purchased 3 parcels of land
from respondents. Out of the total price,
downpayment was made with the agreement
that the balance would be paid in 6 monthly
installments.
To secure the payment of the balance, Dungo
and Gonzales executed over the same 3
parcels of land Deed of Real Estate Mortgage
in favor of Lopena and Ramos.
Duly registered with the Office of
the Register of Deeds with the
condition that failure of the
vendees to pay any of the
installments on their maturity
dates shall automatically cause the
entire unpaid balance to become
due and demandable.
Vendees defaulted on the first installment
which prompted respondents to file a
complaint for the foreclosure of the
mortgage.
Before trial, a compromise agreement was
submitted to the lower court for approval.
1
Art 2028. A compromise is a contract whereby the parties, by making reciprocal concessions,
avoid a litigation or put an end to one already commenced.
Signed by respondent Lopena and
Rosa Ramos and Gonzales.
It was not signed by herein
petitioner but Gonzales
represented that his signature was
both for himself and for Dungo.
Dungos counsel of record was
present at the preparation of the
compromise agreement and affixed
his own signature.
Compromise agreement states should the
defendants fail to pay the mortgage
indebtedness on the specified date,
judgments of foreclosure shall be entered.
Period of redemption is waived.
Subsequently, a Tri-Party Agreement was
drawn. Signatories were Dungo and Gonzales
as debtors, Lopena and Ramos as creditors
and one Emma Santos as payor.
When Dungo and Gonzales failed to pay the
balance of their indebtedness, Lopena and
Ramos filed a Motion for the Sale of
Mortgaged Property. Lower court granted the
motion and ordered the sale.
The 3 parcels of land were sold at a public
auction. The sheriffs sale was later
confirmed by the lower court (Aug 30, 1960).
Petitioner did not file any opposition.
(Aug 31) Dungo filed a motion to set aside all
the proceedings on the ground that the
compromise agreement was void since he
did not sign it. TC denied.
Dungo filed a notice of appeal from the
approval of the foreclosure sale.
Respondents opposed, saying that the
judgment was not appealable because It was
rendered by virtue of the compromise
agreement.
ISSUE: W/N the compromise agreement and
all the proceedings subsequent thereto void
insofar as the petitioner is concerned NO
RATIO:
A compromise in itself is a contract.1 Under
Art 1878, a third person cannot bind another
to a compromise agreement unless the third
person has obtained a special power of
attorney for that purpose from the party
intended to be bound.
However, although the Civil Code expressly
requires a special power of attorney so that
one may compromise an interest of another,
it is incorrect to conclude that its absence
renders the compromise agreement void. It
is merely unenforceable. Resulting from its
nature as a contract.
Dungo had already ratified the compromise
agreement as established by the Tri-Party
Agreement where it was stipulated that the
PAYOR submits and binds himself to the force
and effect of the order of CFI. When it
appears that the client, on becoming aware
of the compromise and judgment thereon,
fails to repudiate promptly the action of his
attorney, he will not be heard to contest its
validity.
1
Art 2028. A compromise is a contract whereby the parties, by making reciprocal concessions,
avoid a litigation or put an end to one already commenced.
Although Dungo was not a signatory, the
compromise agreement benefited him in that
the agreement extended the date of
maturity.
Petitioner argues that the compromise
agreement could not be enforced because it
had been novated by the Tri-Party
Agreement. Petitioner was mistaken.
Novation by presumption has never been
favored. It needs to be established that the
old and new contracts are incompatible in all
points or that the will to novate is expressly
stated.
The Tri-Party Agreement was an instrument
intended to render effective the compromise
agreement. It merely complemented and
ratified the same. Compromise agreement
was valid and enforceable.
Petition for certiorari and mandamus filed by
petitioner is dismissed.