G.R. No. 141273 . May 17, 2005.
JOSE RIVERO, JESSIE RIVERO and AMALIA RIVERO, petitioners, vs. COURT OF APPEALS, MARY JANE DY CHIAO-DE GUZMAN, and BENITO DY CHIAO, JR., represented by his uncle HENRY S. DY CHIAO, respondents.

FACTS

Benedick Arevalo, a minor, filed a complaint through his mother Shirley Arevalo as guardian ad litem, seeking compulsory recognition as the illegitimate son of the deceased Benito Dy Chiao, Sr., and for the administration and partition of his estate. The complaint was filed against Benito Sr.’s children, including Mary Jane Dy Chiao-De Guzman and her brothers Benito Jr. and Benson, who were confined in a mental hospital. Mary Jane, through counsel, filed an answer denying the material allegations.
Subsequently, the parties submitted a Compromise Agreement to the Regional Trial Court (RTC). In this agreement, Mary Jane, purportedly acting for herself and as attorney-in-fact for her mentally incapacitated brothers via a Special Power of Attorney (SPA), recognized Benedick as an illegitimate child and agreed to pay him P6,000,000.00 from the estate. The RTC approved the agreement and rendered a judgment based on it. When the defendants failed to pay, the RTC issued a writ of execution, leading to the auction of estate properties, which were purchased by petitioners Jose, Jessie, and Amalia Rivero.

ISSUE

The core issue is whether the Compromise Agreement and the consequent RTC judgment are valid, given that Mary Jane entered into it on behalf of her brothers who were non compos mentis, without judicial appointment as their guardian ad litem.

RULING

The Supreme Court denied the petition, affirming the Court of Appeals’ annulment of the RTC decision. The legal logic is anchored on the rules of representation for incompetent parties. A compromise agreement requires the mutual consent of the parties. For persons who are mentally incompetent, such as Benito Jr. and Benson Dy Chiao, their rights can only be legally represented in judicial proceedings by a duly appointed guardian or guardian ad litem. The Special Power of Attorney (SPA) executed by the brothers was legally ineffectual because individuals who are non compos mentis lack the capacity to grant such an authority. Consequently, Mary Jane had no legal power to represent her brothers or bind their interests in the compromise.
Therefore, the agreement lacked the consent of indispensable parties and was void as to the incompetent brothers. The RTC judgment based on this void agreement was itself null and void. All proceedings emanating from that judgment, including the writ of execution and the auction sale to the Riveros, were also void. The Court emphasized that the protection of rights of incompetent persons is a matter of public policy, and courts must ensure strict compliance with procedural safeguards for their representation.