MOBIL OIL PHILIPPINES, INC., PETITIONER, VS. COURT OF FIRST INSTANCE OF RIZAL, BRANCH VI, GEMINIANO F. YABUT AND AGUEDA ENRIQUEZ YABUT, RESPONDENTS.

This is a petition for review on certiorari filed by
petitioner Mobil Oil Philippines, Inc. questioning (1) the Order of respondent
Court of First Instance, Branch VI, Pasig, Rizal, promulgated on November 20,
1974 declaring its earlier Decision dated July 25, 1974 as null and void
insofar as it concerned private respondents Geminiano F. Yabut and Agueda
Enriquez-Yabut, and (2) the Order promulgated on February 20, 1975 and denying
petitioner’s Motion for the Issuance of a Writ of Execution and Appointment of
Special Sheriff.

The facts of the case are as follows:

On November 8, 1972, petitioner filed a complaint^[1]
in the Court of First Instance of Rizal against the partnership La Mallorca and
its general partners, which included private respondents, for collection of a
sum of money arising from
gasoline purchased on credit but not paid, for damages and attorney’s fees.

On December 22, 1972, petitioner, with leave of court, filed an
Amended Complaint^[2]
impleading the heirs of the deceased partners as defendants. During the hearing held on April 1,
1974, after petitioner had presented its evidence, the parties agreed to submit
the case for decision on the basis of the evidence on record adduced by petitioner
but “to exclude past
interest in the amount of P150,000.00 and to award nominal attorney’s
fees.” Consequently, on July 25, 1974, a Decision^[3] was
rendered in favor of the petitioner and against defendants. Private respondents thereafter filed a
Petition to Modify Decision and/or Petition for Reconsideration,^[4]
which was opposed^[5]
by petitioner.

The Petition to Modify Decision and/or Reconsideration is
predicated on the following grounds:

1. That there was no stipulation or agreement of the parties on
the award of attorney’s fees;

2. That Miguel Enriquez, not being a
general partner, could not bind the partnership in the Sales Agreement he
signed with plaintiff; and

3. That defendant Geminiano Yabut already withdrew as partner and
president of La Mallorca as of September 14, 1972.

On November 20, 1974, respondent court issued its disputed Order^[6]
declaring its decision null and void insofar as private respondents were
concerned on the ground that there was no evidence to show that the counsel for
the defendants had been duly authorized by their respective clients to enter
into a stipulation or facts, a compromise agreement or a confession judgment
with petitioner, a ground never raised by the parties. Petitioner filed a Motion for
Reconsideration and Clarification,^[7]
seeking the reconsideration of said order or, if not reconsidered,
clarification from respondent court as to whether or not there will be further
proceedings for reception of private respondents’ evidence in court. Respondent court denied the motion, as well
as petitioner’s Motion for the Issuance of a Writ of Execution and Appointment
of Special Sheriff, by way of the Order dated February 20, 1975. Hence, this petition.

The issue presented before Us is whether or not public respondent
acted with grave abuse of discretion amounting
to lack of jurisdiction in declaring null and void its earlier decision of July 25, 1974.

We find merit in the instant petition.

In the Order of November 20, 1974,^[8]
respondent Court declared the decision dated July 25, 1974 null and void for the following reason:

“There is no evidence on record to show that the attorneys of record
for the defendants had been duly authorized by their respective clients,
including present movants, to enter into a stipulation of facts or a compromise
agreement or confession of judgment. And any settlement or confession
of judgment which an attorney may enter for his client without any written
authority cannot bind the client. To be
sure, the stipulation of facts which amounts to or approximates a compromise
agreement, or waives a right or practically confesses judgment, entered into by
a lawyer without the consent and conformity of his clients, is an absolute
nullity. This precisely is what appears
to be the stipulation of the movants, as well as the other defendants as the
records show. In view of the conclusion
thus reached, it would appear that there is no necessity to discuss the other
grounds raised by the movants.”

The records show that petitioner had already adduced evidence and
formally offered its evidence in court;
that at the hearing of April 1, 1974, for the presentation of defendants’
evidence, the parties through their counsels,^[9]
mutually agreed to the waiver of the presentation of defendants’ evidence on
one hand, and the waiver of past interest in the amount of P150,000.00 on the
part of plaintiff and the payment of only nominal attorney’s fees, thus the
respondent court issued the following Order:

“Calling this case for hearing today, the parties pray the Court
that they are submitting the case for decision on the basis of the evidence
thus presented but to exclude past interest in the amount of about P150,000.00
and to award nominal attorney’s fees.

Finding the said motion in order, let judgment be rendered in
accordance with the evidence so far presented.”^[10]

The foregoing Order is not a stipulation of facts nor a
confession of judgment. If at all,
there has been a mutual waiver by the parties of the right to present evidence
in court on the part of the defendants on one hand, and waiver of interest in
the amount of P150,000.00 and the stipulated attorney’s fees of 25% of the
principal amount on the part of the plaintiff, except a nominal one.

The counsels of the parties in this case had the implied
authority to do all acts necessary or incidental to the prosecution and
management of the suit in behalf of their clients who were all present and
never objected to the disputed order of the respondent court. They have the exclusive management of the procedural
aspect of the litigation including the enforcement of the rights and
remedies of their client. Thus, when
the case was submitted for decision on the evidence so far presented, the
counsel for private respondents acted within the scope of his authority as
agent and lawyer in negotiating for favorable terms for his clients. It may be that in waiving the presentation
of defendants’ evidence, counsel believed that petitioner’s evidence was
insufficient to prove its cause of action or knowing the futility of resisting
the claim, defendants opted to waive their right to present evidence in
exchange for the condonation of past interest in the amount of around
P150,000.00 and the award of a nominal attorney’s fees instead of the 25%
stipulated in the Sales Agreement and Invoices. In fact, when counsel secured a waiver of the accumulated interest
of P150,000.00, and the 25% stipulated attorney’s fees, the defendants were
certainly benefited.

Parties are bound by the acts and mistakes of their counsel in
procedural matters. Mistakes of counsel
as to the relevancy or irrelevancy of certain evidence or mistakes in the
proper defense, in the introduction of certain evidence, or in argumentation
are, among others all mistakes of procedure, and they bind the clients, as in
the instant case.^[11]

Having obtained what defendants bargained for and having wrongly
appreciated the sufficiency or insufficiency of petitioner’s evidence, private
respondents are now estopped from assailing the decision dated July 25, 1974.

Records would show that private respondents have not submitted any evidence or pleading to contest the authority of their counsel to waive as he did waive presentation of their
evidence in exchange for and in consideration of petitioner’s waiver of past
interest and the stipulated 25% of attorney’s fees.

Even if We construe the Order of April 1, 1974 to be based on an
oral compromise agreement, the same is valid for as held in the case of Cadano
vs. Cadano^[12] an oral compromise may be the
basis of a judgment although written evidence thereof is not signed. It has been said that the elements necessary
to a valid agreement of compromise are the reality of the claim made and the bona fides of the compromise.^[13]

The validity of a judgment or order of a court cannot be assailed
collaterally unless the ground of attack is lack of jurisdiction or irregularity
in their entry apparent on the face of the record or because it is vitiated by
fraud. If the purported nullity of the
judgment lies on the party’s lack of consent to the compromise agreement, the
remedy of the aggrieved party is to have it reconsidered, and if denied, to
appeal from such judgment, or if final to apply for relief under Rule 38.^[14]
It is well settled that a judgment on compromise is not appealable and is
immediately executory unless a motion is filed to set aside the compromise on
the ground of fraud, mistake or duress, in which case an appeal may be taken
from the order denying the motion.^[15]

Moreover, We do not find the grounds relied upon in private
respondents’ Petition to Modify Decision to be meritorious.

Mr. Miguel Enriquez automatically became a general partner of the
partnership La Mallorca being one of the heirs of the deceased partner Mariano
Enriquez. Article IV of the uncontested
Articles of Co-Partnership of La Mallorca provides:

“IV.
Partners. – The parties above-named,
with their civil status, citizenship and residences set forth after their
respective names, shall be members comprising this partnership, all of whom
shall be general partners.

If during the existence of this co?partnership,
any of the herein partners should die, the co-partnership shall continue to
exist amongst the surviving partners and the heir or heirs of the deceased
partner or partners; Provided, However, that if the heir or heirs of the
deceased partner or partners elect not to continue in the co-partnership, the
surviving partners shall have the right to acquire the interests of the
deceased partner or partners at their book value based upon the last balance
sheet of the co-­partnership, and in proportion to their respective capital
contributions; And, Provided Further, that should a partner or partners desire
to withdraw from the co?partnership and the remaining partners are not
willing to acquire his or their shares or interest in the co-partnership in
accordance with the foregoing provisions, the co?partnership shall not
thereby be dissolved, but such retiring partner or partners shall only be
entitled to his or their shares in the assets of the co-partnership according
to the latest balance sheet which have been drawn prior to the date of his or
their withdrawal. In such event, the
co-partnership shall continue amongst the remaining partners.”^[16]

As to respondent Geminiano Yabut’s claim that he cannot be liable
as a partner, he having withdrawn as such, does not convince Us. The debt was incurred long before his
withdrawal as partner and his resignation as President of La Mallorca on
September 14, 1972. Respondent
Geminiano Yabut could not just withdraw unilaterally from the partnership to
avoid his liability as a general partner to third persons like the petitioner
in the instant case.

This is likewise true with regard to the alleged non-active
participation of respondent Agueda Yabut in the partnership. Active participation in a partnership is not
a condition precedent for
membership in a partnership so as to be entitled to its profits nor be burdened
with its liabilities.

From the foregoing, it is evident that the court a quo erred in issuing the Orders of
November 20, 1974 and February 20, 1975 nullifying the decision dated July 25,
1974 and dismissing the complaint against private respondents Geminiano Yabut
and Agueda Enriquez-Yabut.

WHEREFORE, the Orders of November 20, 1974 and February
20, 1975 is hereby REVERSED and
SET ASIDE and the Decision dated July 25, 1975 is reinstated and declaring the
same valid and binding against private respondents Geminiano Yabut and Agueda
Enriquez-Yabut. With costs de
officio.

SO ORDERED.

Melencio-Herrera, Paras, and
Regalado, JJ., concur.

Padilla, J., No part, former
counsel of Mobil Oil.

^[1]
Annex “A”, Petition, Rollo, pp. 11-15.

^[2]
Annex “B”, Petition, Rollo,
pp. 23-29.

^[3]
The dispositive portion of which
reads, as follows:

“WHEREFORE, judgment is hereby
rendered in favor of the plaintiff and against the defendants ordering the
defendant La Mallorca Partnership to pay the plaintiff the sum of P337,393.94;
on the second cause of action, ordering La Mallorca Partnership to pay the plaintiff the sum of P401,129.00 with legal
interest at the legal rate from the date of the filing of the complaint until
fully paid, but in default of such payment, ordering all the defendant’s
partners to pay the plaintiff, jointly and subsidiarily, all the said amount,
on the third cause of action, ordering La
Mallorca Partnership to pay the plaintiff by way of attorney’s fees a
sum equivalent to 10% of all the amounts under the first and second cause of
action, and in default of such payment, ordering the defendant’s partners to pay the plaintiff, jointly and
subsidiarily the said amount, and to pay
the costs.

“The Compulsory Counterclaim
interposed by defendants La Mallorca, et. al., represented by Atty. Felipe C.
Magat, is hereby dismissed for lack of merit.

“SO ORDERED.”

Annex “D”, Petition, Rollo, 53-60.

^[4]
Annex “E”, Petition, Rollo, pp. 61-66.

^[5]
Annex “F”, Petition, Rollo, pp. 70-77.

^[6]
Annex “G”, Petition, Rollo, pp. 83-85.

^[7]
Annex “H”, Petition, Rollo, p. 86.

^[8]
Annex “G”, supra.

^[9]
Atty. Cesar Berroya (for Mobil), Atty. Fidel Zosimo Canilao (for partners
Alfredo Balingit and Manuela Enriquez Balingit), Atty. Felipe Magat (for all other partners including Geminiano Yabut
and Agueda E. Yabut, but excluding the heirs of Geronimo T. Enriquez)

^[10]
Annex “A-Mobil”, Rollo, p. 78.

^[11]
Isaac vs. Mendoza,
L-2820, 89 Phil. 279 (1952).

^[12]
L-34998, 49 SCRA 33 (1973).

^[13]
Chaffee vs. Chaffee, 197 Mich. 33, 163 N.W. 879; Grandin vs. Grandin, 49 N.J.L. 508, 9 A. 756, 60 Am. Rep. 642.

^[14]
Vda. de Celis vs. Vda. de la Santa, G.R. No. 5294, 93 Phil. 909, (1953).

^[15]
De los Reyes vs. Ugarte, L-82, 75 Phil. 505, (1945); Enriquez vs.
Padilla, L-782, 77 Phil. 373, (1946).

^[16]
Decision, pp. 4-5, Rollo, pp.
56-57.