GR 131411; (August, 2000) (Digest)
G.R. No. 131411 ; August 29, 2000
GLORIA A. ANACLETO, petitioner, vs. ALEXANDER VAN TWEST and/or EUROCEANIC RAINBOW ENTERPRISES PHILIPPINES, INC., respondents.
FACTS
A complaint for reconveyance was filed in the name of Alexander Van Twest and Euroceanic, represented by Atty. Ernesto Perez, who stated Van Twest was missing but was duly represented by him as agent/general counsel. On March 31, 1995, Atty. Perez, representing Van Twest, entered into a compromise agreement with petitioner Gloria Anacleto, represented by her counsel Atty. Diosdado Allado. The trial court approved the agreement and rendered judgment based on it on April 6, 1995.
Subsequently, petitioner, through new counsel, filed an urgent omnibus motion asking the court to order Atty. Perez to submit a special power of attorney (SPA) authorizing him to compromise, and to defer her compliance. Atty. Perez admitted he had no SPA from Van Twest but claimed petitioner’s former counsel had been informed. The trial court denied petitioner’s motion, ruling she was estopped from questioning the agreement. Her motion to vacate the judgment and subsequent notice of appeal were also denied. The Court of Appeals dismissed her petition for certiorari.
ISSUE
Whether a party who enters into a compromise agreement with another allegedly represented by a lawyer without authority is estopped from questioning the validity of such agreement.
RULING
No, petitioner is not estopped. A compromise is a contract requiring consent of the parties. Under Article 2033 of the Civil Code, compromise requires special authority; a lawyer generally cannot compromise without such client authority. Atty. Perez admitted he had no SPA from Van Twest, the purported principal. Thus, there was no valid consent from Van Twest, rendering the compromise agreement void. The principle of estoppel does not apply because the requirement of a special power of attorney is mandatory for validity, not merely for the benefit of the party invoking it. Petitioner’s participation in the agreement, while knowing of the lack of authority, does not cure this jurisdictional defect or bind the absent principal.
Furthermore, the Court relaxed procedural rules, overlooking the late notice of appeal due to the merits and unusual circumstances—specifically, litigation pursued with one party unrepresented by authorized counsel. The decision of the Court of Appeals was reversed, and the trial court’s judgment based on the compromise agreement was annulled.