GR 149665; (January, 2006) (Digest)
G.R. No. 149665; January 25, 2006
REYNALDO C. TOLENTINO, SPS. FELIXBERTO & HIGINIA FRANCISCO, Petitioners, vs. FLORDELIZA RIVERA, ATTY. RONEY JONE GANDEZA, HON. ANTONIO M. ESTEVES, Presiding Judge, RTC, Branch 5, Baguio City, EX-OFFICIO SHERIFF and/or DEPUTY, in his capacity as Deputy Sheriff of the Office of the Clerk of Court, THE COURT OF APPEALS, Respondents.
FACTS
Petitioners-spouses Felixberto and Higinia Francisco obtained a P2,000,000.00 loan from respondent Flordeliza Rivera, secured by a mortgage. Due to business reverses, they failed to pay. Rivera extrajudicially foreclosed the properties. The spouses, discovering the foreclosure and an allegedly inflated P10 million obligation, filed a complaint for redemption and annulment of foreclosure. During the pendency of the case, the parties negotiated a compromise agreement. An amended compromise agreement was submitted to and approved by the trial court on October 30, 1996. However, petitioner Reynaldo Tolentino, who had acquired an interest in the property from the spouses, later moved to intervene, arguing the attorneys who signed the compromise lacked proper authority. Higinia Francisco also repudiated the agreement.
ISSUE
Whether the trial court committed grave abuse of discretion in nullifying its order approving the amended compromise agreement and in granting Tolentino’s motion for intervention.
RULING
No, the trial court did not commit grave abuse of discretion. A compromise agreement is a contract that requires the express consent of the parties. The Court found that the attorneys who signed the amended compromise agreement on behalf of the petitioners-spouses did so pursuant to a Special Power of Attorney that only authorized them to appear and negotiate, but not to finally settle or compromise the case. The lack of express authority to enter into a binding compromise rendered the agreement voidable. Consequently, when Higinia Francisco, a principal party, expressly repudiated the agreement during the hearing on the motion to intervene, the trial court correctly acted in nullifying its prior approval. Furthermore, the grant of intervention to Tolentino was proper as he had a legal interest in the property by virtue of a prior agreement with the spouses, and the disposition of the case would directly affect that interest. The trial court’s orders were thus grounded on established jurisprudence requiring express authority for compromises and allowing intervention by those with a direct legal stake in the litigation.