G.R. No. 139532 . August 9, 2001.
REGAL FILMS, INC., petitioner, vs. GABRIEL CONCEPCION, respondent.

FACTS

In 1991, respondent Gabriel “Gabby” Conception, through his manager Lolita Solis, entered into a contract with petitioner Regal Films, Inc., for his services in motion pictures. Petitioner undertook to give respondent two parcels of land in addition to talent fees. The contract was renewed in 1993 with the same undertaking. Petitioner failed to convey the lots. On 30 May 1994, respondent and his manager filed an action for rescission of contract with damages before the Regional Trial Court (RTC) of Quezon City. Petitioner moved to dismiss the complaint, alleging the parties had amicably settled via an addendum agreement dated 17 June 1994, signed by petitioner’s representative and Solis purportedly for respondent. Respondent opposed the motion, contending the addendum was executed without his knowledge and consent, contained grossly disadvantageous provisions, and Solis had ceased to be his manager. During a preliminary conference on 23 June 1995, petitioner intimated its willingness to release respondent from his contracts rather than pursue the challenged addendum. On 03 July 1995, respondent filed a manifestation expressing his willingness to honor the addendum and have it considered as a compromise agreement. Petitioner and Solis commented that the relationship had become strained but petitioner was still willing to release respondent. On 24 October 1995, the RTC issued an order rendering judgment on compromise based on the addendum. Petitioner’s motion for reconsideration was denied. The Court of Appeals affirmed the RTC order. Petitioner appealed to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s judgment on compromise based on the addendum agreement.

RULING

Yes, the petition is meritorious. The Supreme Court granted the petition, set aside the judgments of the Court of Appeals and the RTC, and remanded the case to the trial court for further proceedings. The Court held that the addendum could not be the basis for a compromise judgment. A compromise requires consent manifested by a meeting of the offer and acceptance. Here, respondent initially flatly rejected the addendum, stating he did not consent and it was disadvantageous. This rejection ended the offer. When petitioner, during the 23 June 1995 conference, expressed willingness to release respondent from the contracts and forego the addendum, it revoked the offer. Respondent’s subsequent manifestation on 03 July 1995, attempting to ratify the addendum, came too late after petitioner’s revocation. The addendum, initially unenforceable due to lack of authority (Solis acting beyond her powers), could only be ratified before revocation by the other party. Therefore, no valid compromise agreement existed.