G.R. No. L-46953. September 28, 1987
JOSE N. MAYUGA, SUBSTITUTED BY SIMONA L. MAYUGA, SYLVIA MAYUGA YUSON, JOSE L. MAYUGA, JR., ABELARDO MAYUGA, RAMON MAYUGA, JOSEFINA MAYUGA-FINK, CRISTINA MAYUGA AND ROBERTO MAYUG…
CORTES, J.:
The property involved in this litigation was the subject
of an application for registration of title under the Torrens System filed way back in 1927. Issues relating to
ownership and other rights over the
property have given rise to a number of controversies, the present case being one of them.
This is a petition for
review of a decision of the Court of Appeals in CA-G.R. No. 43846-R
dated May 26, 1977 (Fernandez, J., ponente, concurred in by Bautista and Alampay, JJ.),
and the Resolution in said case denying appellants’ Motion To Set Aside the
Decision on the Ground of Compromise Agreement (Bautista, J., chairman,
and Alampay and Gutierrez, JJ. members).
Narciso Mayuga had six children: Estanislao,
Angel, Nestor, Maura, Amado and Maria. In 1921, Narciso
gave to his son, Angel, a piece of land located in
Las Pinas, Rizal consisting of about 62 hectares. By virtue
of a public instrument, Angel conveyed the property to his brother, Estanislao Mayuga.
On June 24,
1927 Estanislao Mayuga initiated a
registration proceeding docketed as LRC Case No. 657, GLRO Record No. N-29882
in the Court of First Instance of Rizal to confirm
his title to the land described as Lots Nos. 1, 2 and 3 of Plan Psu-47035. On August 19, 1935 the CFI-Rizal
granted Mayuga’s application. The Court of Appeals upheld the decision of
the CFI in its decision dated November 17, 1939.
Estanislao died in 1941 leaving only one son, Dominador Mayuga. He left a last will and testament (Exh. “Q-1”), wherein he
disinherited his son Dominador for being
disrespectful, ungrateful, dishonest and cruel. In
his will, Estanislao grouped his
properties under the following headings:
1. “Lo siguiente
son las propiedades
que mi esposa
y yo hemos
llegado afundar“;
and
2. “Lo siguiente
son las propiedades
que he heredado
de mi padre, Narciso Mayuga, y los
que he adquirido
en compra por medio dinero
de la venta de los terrenos
que he heredado
de mi padre.”
Among
those listed under the second group is a riceland under Tax Declaration No. 6726 with an
assessed value of P11,870.00, and bearing the
notation: “25 hectarias de
este terreno partenecen a mi hermano, Dr. Angel
Mayuga.”
Angel Mayuga
died in 1957.
On September
3, 1957, a document
entitled “Confirmation of Co-ownership” (Exh.
“A”) was executed by and among the children and heirs of Angel Mayuga (namely Jose, Lourdes, Carmen, Consolacion
and Manuel, all surnamed Mayuga) and the testamentary
heirs of Estanislao Mayuga
(namely Agripino, Milagros, Purificacion,
Manuel and Aurora, all surnamed Mayuga), and Dominador Mayuga. Under the deed the parties declared that they
are the owners pro-indiviso of fifty nine (59)
hectares of unregistered land located in Kaypawikan, Almanza, Las Pinas, Rizal valued at P11,870.00 and
declared under Tax Declaration No. 6726 in the name of Angel Mayuga. Dominador confirmed his ownership of only 4/59 of the
entire property.
A month later, on October
5, 1957, Dominador Mayuga sold his undivided 4/59 share in said property to the spouses Hilario and
Lilia Fusilero by virtue of a “Simple Deed of Sale” (Exh.
“B”).
On May 13, 1958 Dominador Mayuga filed a petition
in the land registration court alleging that he is the only heir of the
deceased Estanislao Mayuga
(despite the fact that he had been disinherited) and praying for the issuance
of a decree of registration
over Lots 1, 2 and 3 of Plan Psu-47035 adjudicated in favor of Estanislao.
Acting on the petition, the court ordered Dominador
Mayuga “to notify the heirs of the original adjudicatee, Estanislao Mayuga, or his heirs . . . and the Commissioner of Land
Registration.” (Exh.
“C-3”) Only the Commissioner of Land Registration was notified. (Exh.
“C-4”)
On
May 21, 1958 the court granted the petition and directed the
Commissioner of Land Registration to issue a decree of registration over Lots 1, 2 and 3 of Plan Psu-47035,
“substituting therein as registered owner Dominador
Mayuga, in lieu of the original adjudicatee,
Estanislao Mayuga, based on
the affidavit of self-adjudication, subject to the provisions of Sec. 4, Rule
74 of the Rules of Court.” (Exh.
“C-5”.)
On the same day, May 21,
1958, the Land Registration Commissioner issued a decree of
registration in favor of Dominador Mayuga. The decree,
however, did not contain the condition
“subject to the provisions of Sec. 4, Rule 74 of the Rules of Court.”
At the early hour of 7:38 a.m. of May 21, 1958, Original Certificate of Title No. 1609 in
the name of Dominador Mayuga
was issued, again without the aforementioned condition. OCT No. 1609 was transcribed in the
Registration Book of the Registry of Deeds of Rizal
at 12:14
p.m. (Exh.
“E-1”.)
What followed within the
next nineteen days was a series of transfers culminating in the sale of the
registered property to Macondray Farms, Inc., with
the price rising from P25,910.00 to P313,976,50.00.
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On May 14, 1959, or within
one (1) year from issuance of the decree of registration on May 21, 1958, petitioners Jose
Mayuga et al. initiated a proceeding against Dominador Mayuga, the Land Registration Commissioner, Macondray Farms, Inc., Hongkong
and Shanghai Banking Corporation, the Treasurer of the Philippines and other persons to review the decree
of registration in favor of Dominador Mayuga and to cancel Original Certificate of Title No. 1609
issued under such decree and all Transfer Certificates of Title derived therefrom.
Alternatively, plaintiffs prayed that they be paid the value of the
property.
Plaintiffs-Petitioners
alleged that the decree of registration was obtained maliciously and
fraudulently in that Dominador, in obtaining the decree represented himself to be the sole heir of Estanislao Mayuga, when he knew
that he had been disinherited and that Estanislao had
instituted heirs; that Dominador maliciously and
fraudulently omitted to notify the instituted heirs of his petition for the issuance of a decree of registration in his name despite the court order to
do so.
The Commissioner of Land
Registration was impleaded for negligently and
fraudulently not stating that the decree of registration was subject to Sec. 4, Rule 74 of the Rules of Court despite the fact that the order
of the court directing the issuance of a decree stated such condition.
The defendants Donato Ciriaco, Rafael Grey, Jr.,
Claro Y. Sulit, Emilio
Esteban, Macondray Farms, Inc., and Hongkong and Shanghai Bank were being sued for their
participation in an alleged fraudulent scheme to systematically deprive
plaintiffs of their property rights.
The Treasurer of the Philippines was sued in his capacity as custodian of the Assurance Fund.
Dominador Mayuga alleged in
his answer that the registered property in question is not the same property
subject of the deed of “Confirmation of Co-ownership” and
“Simple Deed of Sale”; that he had acquired a valid and indefeasible
title to the property in question; and that the plaintiffs were barred from
reopening the decree of registration as the property had already passed into the hands of innocent purchasers for value.
The Treasurer of the
Philippines denied the liability of the Assurance Fund because the conditions
for such recovery are not present inasmuch as the plaintiffs are not precluded
from bringing an action for recovery of the land or their
interest therein; that the plaintiffs were guilty of negligence or laches; and that the persons guilty of fraudulent
registration can indemnify the plaintiffs.
The Commissioner of Land
Registration alleged that the decree of registration was issued in good
faith and in the strict performance of official duty; and that the omission to
annotate as a condition the liabilities imposed by Section 4, Rule 74 of the
Rules of Court was a mere oversight on his part.
The Hongkong and Shanghai Banking
Corporation admitted having granted two loans to defendant Macondray,
Farms, Inc. accepting as security for said loans a mortgage on the
property in question and that the bank relied solely on the certificate of
title covering the property.
The other defendants invoked their being innocent purchasers for
value of the property in question.
With leave of court, Maria Mayuga
Vda. de Cailles filed a complaint
in intervention alleging that the property in question formed part of the
estate of the late Narciso Mayuga;
that she is a forced heir of said decedent; and that she is a co-owner
of the property as one of the forced heirs of Narciso
Mayuga.
Also with leave of court, the children of Dominador
Mayuga, namely, Agripino, Milagros, Purificacion, Manuel
and Aurora, filed a complaint in intervention alleging that they are the owners
of the property in question as instituted heirs of Estanislao
Mayuga who had bought the
property from Angel Mayuga, the father of the
plaintiffs.
On June 29, 1965
the case was dismissed as to the Hongkong and
Shanghai Banking Corporation because the mortgage constituted in favor of said
defendant bank over the property in litigation had been discharged.
In its decision dated September
23, 1968 the trial court dismissed the complaint and the
complaints’ in intervention. The
plaintiffs and the intervenors appealed to the Court
of Appeals.
In the meantime, under a compromise agreement Maria Mayuga Vda. de Cailles acquired the rights and
interests of the other intervenors in the property
involved. Later Maria died leaving as
her heirs Serafin Cailles, Leon
Cailles and Carmen C. Mayuga. With leave of court, said heirs were ordered
substituted for Maria Mayuga vda.
de Cailles.
Likewise, upon motion, Jose N. Mayuga
who died on June 3, 1971 was
substituted by his heirs Simona Lucero-Mayuga, Sylvia, Jose, Jr., Abelardo,
Ramon, Josefina, Cristina and Roberto, all surnamed Mayuga.
On July 13, 1976, Macondray Farms, Inc. filed a motion stating that it had
sold, transferred and assigned to Realty Sales Enterprise, Inc. the property in
question, and praying that said Realty be substituted as party-defendant-appellee in lieu of Macondray
Farms, Inc. The motion was not acted upon.
Subsequently negotiations
for a settlement were conducted between the parties. On May 18, 1977, counsels for petitioners, Zaida Ruby S. Alberto and Mary Concepcion-Bautista
sent to Mr. Richard Baldwin, representative of both Realty and Macondray the following letter:
May
18, 1977
Mr.
Richard Baldwin
5th Floor, Filipinas
Life Building
Ayala Avenue, Makati, Metro Manila
Dear Mr. Baldwin:
Further to our telephone conversation yesterday, May 17, 1977, we are
pleased to inform you that our clients are willing to accept the amount of FOUR
MILLION TWO HUNDRED FIFTY THOUSAND PESOS (P4,250,000.00)
in settlement of their claims, title,
rights and interest in that property subject of CA-G.R. No. 43846 in the Court of
Appeals, entitled “Jose N. Mayuga, et.al. v. Macondray Farms. Inc., et.al.,” payable as
follows:
a) THREE MILLION PESOS (P3.000,000.00)
within sixty days from the date hereof; and
b) The balance of ONE MILLION TWO HUNDRED FIFTY
THOUSAND PESOS (P1,250,000.00) within one (1) year
from date hereof.
Kindly communicate (to) us your conformity in writing to the above
within three (3) days from receipt of this letter.
Very truly yours,
(Sgd.)
ZAIDA RUBY S. ALBERTO
and
(Sgd.)
MARY CONCEPCION BAUTISTA
Copy
furnished:
Atty. Arturo A. Alafriz
7th Floor
Metropolitan
Bank Building
Ayala Avenue,
Makati, Metro Manila
On May 20,
1977, Realty Sales
Enterprise, Inc. (assignee of Macondray Farms, Inc.),
thru its President, Atty. Arturo Alafriz sent the
following reply letter:
May
20, 1977
Attys.
Zaida Ruby S. Alberto
and
Mary Concepcion Bautista
212 Rufino Bldg., Ayala Ave.
Makati, Metro Manila
Mesdames:
This is to advise you of our conformity to the conditions set in
your letter of May 18, 1977, addressed to Mr. Richard Baldwin, for the complete
settlement of the claims, title, rights
and interests of your clients in and to the
property subject of CA-G.R. No. 43846 entitled, Jose Mayuga
et.al., vs. Macondray Farms, Inc., before the Court of Appeals,
for and in consideration of the total sum of P4,250,000.00,
payable as follows:
a) P3,000,000.00 within
60 days from May 18, 1977;
and
b) P1,250,000.00 within
one year from said date.
It is, of course, expressly understood that
the aforestated amounts will only be paid if we are
able to sell the property. Furthermore,
we request that all your clients must formally ratify and confirm the foregoing by a public document, delivered to us within seven (7) days from date hereof.
Very truly yours,
REALTY SALES ENTERPRISE, INC.
By: (Sgd.)
ARTURO A. ALAFRIZ
On May 27,
1977, in compliance
with the request for a ratification and confirmation, Attys. Alberto and Concepcion Bautista sent to Realty Sales Enterprise a
Deed of Confirmation and Ratification executed by all their clients.
Unknown to the parties,
the Court of Appeals had earlier promulgated its decision in CA-G.R. No.
43846-R on May 26, 1977.
Petitioners thus filed a Motion
to Set Aside the Decision on the Ground of Compromise Agreement praying that
the decision be set aside and another judgment be rendered based on the
Compromise Agreement of the parties.
In its Resolution dated August 2,
1977, the Court of
Appeals denied the motion. Hence, the
present petition, petitioners alleging that the Court of Appeals erred in not
granting its motion.
The issue before this
Court is whether or not a compromise agreement was perfected, and if so, what are the obligations arising from that agreement.
The law defines a compromise as “a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already
commenced.” (Civil Code Art. 2028.)
Note the characterization
of a compromise as a contract. As
such, it is perfected by mere consent. (Civil Code, Art.
1315.) “Consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute.” (Civil Code, Art. 1319.)
In the case at bar,
Realty Sales
Enterprise, Inc., in its letter
dated May 20, 1977, expressed its “conformity
to the conditions set in (the) letter of May 18, 1977, addressed to Mr. Richard
Baldwin,” with the end in view
of completely settling “the
claims, titles, rights and interests of petitioners in and to the property subject of litigation.” And in the Deed of
Confirmation and Ratification executed by petitioners, they “confirm(ed)
and ratif(ied) the conditions set in the letter of (their) counsel
Attys. Zaida Ruby S. Alberto and Mary Concepcion Bautista dated May 18, 1977 addressed to Mr.
Richard Baldwin, and accepted and confirmed by Realty Sales Enterprise,
Inc. thru Dr. Arturo Alafriz in its letter dated and
received May 20, 1977 addressed to Attys. Zaida Ruby
S. Alberto and Mary Concepcion Bautista.” A
contract of
compromise was therefore perfected.
Both the Land
Registration Commission and Macondray Farms,
Inc. claim otherwise. They argue that no
valid compromise was entered into.
It is alleged that the
lack of judicial approval is fatal to the compromise. A compromise is a consensual contract. As such it is perfected upon the meeting of
the minds of the parties to the contact.
(Hernandez v. Barcelon, 23 Phil 599 [1912];
see also De los Reyes v. de Ugarte,
75 Phil 505 (1945].) And from that moment not only does it become binding upon
the parties (De los Reyes v. De Ugarte,
supra), it also has upon them the effect and authority of res judicata (Civil Code, Art. 2037), even if
not judicially approved (Meneses
v. De la Rosa, 77 Phil. 34 (1946); Vda. de Guilas v. David, 132
Phil. 241, L-24280, 23 SCRA 762 (May 27,
1968); Cochingyan v. Cloribel,
L-27070-71 (April 22, 1977), 76 SCRA 361].
Respondents cite the case
of Heirs of Gabriel Zari v. Santos [L-21213-14 (March 28, 1969), 27 SCRA
651] as authority for the
doctrine that a compromise agreement, to be valid, must be with judicial
approval. A perusal of the case reveals
that no such doctrine was enunciated.
The supposed doctrine is found only in the syllabus of the case report prepared by the editors which is not an
independent authority, and cannot prevail over the text of the decision.
It is also contended that it is indispensable that the compromise
agreement must have the conformity of all the parties to the case. It is claimed that “no new judgment on the
basis of compromise may be validly rendered without such conformity
since the judgment of the court in any case is
not only valid and effective as against one but as against all the parties thereto.” (Comment,
p. 22.)
Against the factual backdrop of this case, this argument is more sophistic than real. It is to be recalled that Macondray
filed with the Court of Appeals a motion stating that it had sold, transferred
and assigned to Realty the property in question, and praying that the latter be
substituted as party-defendant-appellee. The motion, however, was not acted upon.
Note that the transfer
was made pendente lite,
and with notice of lis pendens. Hence, Realty, the transferee, is bound by any judgment which
may be rendered for or against Macondray, the
transferor. (See Fetalino v. Sanz, 44 Phil 691
[1923]. As the new owner of the
property, Realty was the party with a substantial interest in the land, and hence, would naturally be the most
interested in terminating the
case. Hence, it was the one negotiating for the settlement. It must also be pointed out that both of the
companies, Realty and Macondray, were represented by
only one person, Mr. Baldwin, and by the same counsel, Atty. Alafriz.
With the perfection of
the agreement between petitioners and Realty, the next step would have been the
submission of the contract to the Court of Appeals with notice to all the
party-litigants. However, the Court of
Appeals decision “caught up” with the compromise.
It can be said, however,
that the conformity of respondents would have been a mere formality, and not
indispensable, as alleged, if we consider their position as party–defendants. If the compromise, upon its
perfection, has the effect of res judicata with respect to petitioners (See
Civil Code, Art. 2037), then it operates as a bar to their pursuing further
their claim against respondents. There was
no necessity, therefore, to require the consent of respondents (who at the time
no longer retained any interest in the property) since with petitioners
estopped
by the contract, there would be no more claimants against whom the respondents
would have to defend themselves.
It is alleged that the consent of Macondray which had a mortgage
lien over the property is indispensable.
Note, however, that the compromise settlement is silent as to the
mortgage. Since a compromise embraces
only those objects which are definitely stated therein (Civil Code, Art.
2036), the mortgage is not affected by the compromise agreement.
At this point, it may be well to point out that even as Realty is
not a formal
party to the case, the motion for substitution not having been acted upon, it is nonetheless bound by it, being one of the
contracting parties. Persons who are not
formal parties to a civil case but who willingly and voluntarily enter into a
compromise agreement are bound thereby [Rodriguez v. Alikpala,
G.R. No. L-38314 (June 25, 1974), 57 SCRA 455].
Note also that the Motion for Substitution of the Defendant-Appellee Macondray Farms, Inc.
(Annex “F” to the Petition)
was jointly signed by both the Presidents of Macondray
and of Realty Sales Enterprise, Inc. By
its voluntary appearance before the Court, Realty submitted itself to the
jurisdiction of the court.
The Civil Code states that “there shall be no execution
except in compliance with a judicial compromise.” (Civil Code, Art. 2037)
which is one which seeks to put an end to a litigation already commenced (Civil Code, Art. 2028). Apparently, the reason behind this rule is
that only if the court has already acquired jurisdiction over the person of a party may court processes, e.g. writ of execution, issue against him (See Rodriguez v. Alikpala, supra).
In the case at bar, there
can be no doubt that Realty has submitted itself to the jurisdiction of the Court.
Hence, execution may issue against it.
Another ground relied
upon by respondents is the alleged refusal of
petitioners of Mayuga lift their notice of lis pendens until
they are paid.
Was there a refusal? Other
than the mere allegation of respondent, there is nothing in the record to
indicate that there was indeed a refusal.
But granting arguendo that the Mayugas
did refuse to lift their notice of lis pendens, the Court does not see how a refusal could affect the validity of the compromise agreement.
Neither has respondent shown how.
If the refusal must affect the validity of the
agreement, then it must relate to one of the three essential requisites of a contract, to wit: (1) consent, (2) object, and (3) cause. As stated above, with the exchange of documents, there was a meeting of the minds between the parties as to
the object of the contract which is the settlement of the dispute, and as to
the cause thereof, which, as to petitioners, is the payment of P4,250,000.00 and, as to respondents, the relinquishment by
petitioners of the latter’s claim, title and interest in the land. Clearly, therefore, the alleged refusal does
not affect the validity of the contract.
If at all, the alleged refusal to lift the notice of lis pendens may
only affect the performance of obligations under the agreement, but not
the validity thereof. We need not, however, dwell on this since the
theory of the respondents is
anchored on the alleged absence/invalidity of the contract.
Reliance is also made on that portion of Realty’s reply-letter
which states: “It is, of course, expressly, understood that the aforestated amounts will only be
paid if we are able to sell the property.”
Reduced to their barest essentials, the arguments of the parties
raise this issue: What is the legal import of the aforequoted portion of the letter?
Respondents argue that the above statement in effect qualified
the acceptance by Realty of petitioner’s offer of compromise. Be that as it may, the legal significance of qualified acceptance is that
it constitutes a counter-offer (Civil Code, Art. 1319), which needs to be accepted if a contract were to be perfected. With the Deed of Confirmation and Ratification,
the counter-offer was accepted. Hence, a
compromise was perfected.
Yet, the question
remains.
It is basic that in the construction of contracts, where there
are several provisions or particulars, such a construction as will give effect
to all provisions will be adopted. (Rule
130, Sec. 9) Likewise, if some stipulations of any contract should admit of
several meanings, it shall be understood as bearing that import which is most
adequate to render it effectual (Civil Code, Art. 1373), and the various
stipulations of a contract should be interpreted together, attributing to the
doubtful ones that sense which may result from all of them taken jointly (Civil
Code, Art. 1374).
Applying the above principles to the case at bar, the controversial portion of the
reply-letter can only be construed to mean that Realty would pay the stated
amounts on the specified dates only if it is able
to to sell the property within such period. In other words, it is the compliance of the
obligation on a given date that is subjected to the condition of
ability to sell, and not the obligation itself.
That is, if the property is not sold within the period, the obligation
may be discharged at some later time without the obligor incurring in
delay. But the obligation of Realty, the
debtor, to pay subsists, if the petitioners are to relinquish their title and
interest in the disputed property — which title and interest Realty even expressly admitted in its
reply-letter.
This
construction
is bolstered by a comparison of the negotiations between the parties that culminated in the
exchange of instruments quoted above, and the negotiations previously had between the same parties.
Earlier,
on December 15, 1976, Attys. Zaida Ruby
S.
Alberto and Mary Concepcion
Bautista, counsels for petitioners, sent the following communication to Mr. Richard Baldwin:
Mr.
Richard Baldwin
Macondray
Farms, Inc.
5th Floor, Filipinas
Life Building
Ayala
Avenue, Makati,
Rizal
Dear Mr. Baldwin:
Pursuant to our conversation yesterday afternoon, we make formal
the counter-offer of our clients to waive all their rights and interests in the property subject
of CA-G.R. No. 31887-R entitled “Macondray Farms v. Mayuga” for and in consideration of the amount of FOUR
MILLION (P4M) PESOS.
This
counter-offer however, is good only up to December 27, 1976.
Very
truly yours,
(Sgd.)
ZAIDA RUBY S. ALBERTO
(Sgd.)
MARY CONCEPCION BAUTISTA
While the 1976
counter-offer had a definite lifetime, the 1977 compromise agreement
had no such limitation. If the parties had intended the 1977
contract to last only for a given period, as respondent contends, it
would have been so clearly
provided. But it was not so. Instead, Realty inserted a provision which,
at best, is ambiguous, and hence, must be construed against the one who caused it (Civil Code, Art, 1377).
In its memorandum, Macondray manifested that it was unable to sell the property. Following our
construction of the compromise
agreement as set forth above, the obligation to pay did not mature on the dates
specified. One thing is certain,
however. The parties did not intend the
obligation to be pure; that the obligor was to perform its obligation within a given period. Yet, probably
certain when they were negotiating the compromise that the contemplated
sale would be consummated within the given dates, the parties have not
stipulated as to when the obligation would have to be performed if the sale does not push through. This lacuna in the contract justifies the application
of Art. 1197, Civil Code, which provides:
Art. 1197. If the obligation
does not fix a period, but from its nature and the circumstances it can be
inferred that a period was
intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it
depends upon the will of the debtor.
In every case, the courts shall determine such period as may
under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.
It has been more than ten years since the compromise agreement
was entered into. By entering into a
compromise agreement, the party–litigants could have only intended to
put to end a litigation commenced in 1959 as soon as possible, and not to
prolong it much longer, at least, not for another ten years. This Court deems it equitable for both
parties if the contract price be paid upon finality of judgment.
Lastly, it is argued that
to render judgment against Macondray, Farms, Inc.,
and its assignee, Realty Sales Enterprise, Inc., condemning them to pay the sum
of P4,250,000.00 to Petitioners, would be clearly
unconscionable and illegal, if not immoral, considering that both the CFI and
the Court of Appeals have determined that the property being claimed by
petitioners to be part of their inheritance is distinct from the property
titled in the name of Macondray.
Note that this is not
exactly in accord with the tenor of the reply-letter of
Realty whereby it agreed to pay P4,250,000.00 in “complete settlement of
the claims, title, rights and interests of (petitioners) in and to the property
subject of (litigation),” admitting thereby that the petitioners had
title, rights and interests in the disputed property.
Furthermore, apart from the
merits and validity of the petitioners’ claim to the land, which we deem
unnecessary to dwell on, it must be noted that a compromise is valid and binding on the parties, not
because it is the settlement of a valid claim, but because it is the settlement
of a controversy.” [Hernaez v.
Yan Kao, 123 Phil. 1147, L-22370 (May 27, 1966), 17
SCRA 296]. As stated in McCarthy v. Barber Steamship Lines, Inc. [45 Phil. 488 (1923)]:
It is a general
rule that compromises are to be favored, without regard to the nature of the
controversy compromised, and that they cannot be set aside because the event
shows all the gain to have been on one side, and all the sacrifice on the
other, if the parties have acted in good faith, and with a belief of the actual existence of the
rights which they have respectively waived or abandoned; and if a settlement be
made in regard to such subject,
free from fraud or mistake, whereby there is a surrender or satisfaction, in whole or in part, of a claim upon one side in exchange for
or in consideration of a surrender or satisfaction of a claim in whole in
part, or of something of value, upon the other, however, baseless may be the
claim upon either side or harsh the terms as to either of the parties, the other cannot successfully impeach
the agreement in a court of justice.
Where the compromise is instituted and carried through in good faith,
the fact that there was a mistake
as to the law or as to the
facts, except in certain cases where
the mistake was mutual and correctable as
such in equity, cannot afford a
basis for setting aside or defending against a suit brought thereon.
WHEREFORE, premises considered, the Resolution of the
Court of Appeals dated August 2,
1977 is SET
ASIDE. Realty Development Corporation is
ordered to pay the petitioners the amount of FOUR MILLION TWO HUNDRED FIFTY
THOUSAND (P4,250,000.00) PESOS upon finality of judgment
in complete settlement of the latter’s claims, titles, rights and interests in
the disputed property.
SO ORDERED.
Fernan, (Chairman), and Feliciano, JJ., concur.
Gutierrez, Jr., and Bidin, JJ., no part.