G.R. No. 163959 , August 1, 2018
MARCELINO E. LOPEZ, FELIZA LOPEZ, ZOILO LOPEZ, LEONARDO LOPEZ, and SERGIO F. ANGELES, Petitioners, vs. THE HON. COURT OF APPEALS and PRIMEX CORPORATION, Respondents.

FACTS

The case originated from a dispute over a Deed of Conditional Sale for a 14-hectare property in Antipolo City between the petitioners (the Lopez family and their counsel, Atty. Sergio Angeles) and respondent Primex Corporation. Primex filed a complaint for specific performance and injunction, alleging the Lopezes failed to deliver a valid title. The Lopezes counterclaimed for rescission, arguing Primex breached the contract by refusing payments. During litigation, the parties executed a Deed of Absolute Sale in 1992, and Primex made substantial payments.
The case reached the Supreme Court, which on March 7, 2012, issued a Resolution noting a Compromise Agreement entered into by the parties, granting a Joint Motion to Dismiss, and denying the petitions on grounds of mootness. Subsequently, the heirs of the deceased petitioner Marcelino E. Lopez filed an Urgent Motion to recall this Resolution. They argued that Atty. Sergio Angeles, who signed the Compromise Agreement on behalf of the petitioners, had no valid authority to do so following Marcelino’s death. They contended the agreement was void, as the agency relationship between the deceased principal and his attorney-agent was extinguished by death.

ISSUE

Whether the Compromise Agreement is valid and binding upon the heirs of Marcelino E. Lopez, considering it was executed by their counsel, Atty. Sergio Angeles, after the principal’s death.

RULING

The Supreme Court denied the Urgent Motion and upheld the validity of the Compromise Agreement. The legal logic rests on the principles of agency and the exceptions to its extinguishment. While Article 1919 of the Civil Code states that agency is extinguished by the death of the principal, Articles 1930 and 1931 provide critical exceptions. The Court found the exception under Article 1931 applicable. This article stipulates that acts done by the agent without knowledge of the principal’s death are valid and effective with respect to third persons who contracted in good faith.
The record showed that Primex Corporation, the third party, had no knowledge of Marcelino Lopez’s death at the time the Compromise Agreement was negotiated and signed. Primex acted in good faith, dealing with Atty. Angeles as the apparent authorized representative. Furthermore, the Court emphasized that a compromise agreement, once approved by final order, has the force of res judicata between the parties and should not be disturbed. The March 7, 2012 Resolution, based on that agreement, had already attained finality. The motion filed by the heirs, which sought to nullify a final and executed resolution, constituted a collateral attack that is impermissible. The finality of judgments is a fundamental doctrine intended to end litigation. Therefore, the Court ruled that the Compromise Agreement was validly executed and binding, and the Urgent Motion to recall the final Resolution was without merit.