G.R. No. 211893 , September 09, 2020
Rozel “Alex” F. Mar Santos, doing business under the name and style Total Land Management, Inc., Petitioner, vs. V.C. Development Corporation, et al., Respondents.

FACTS

Sometime in 1990, petitioner Santos and respondent V.C. Development Corporation entered into an agreement for the sale of the latter’s lots. Santos would sell the lots, build homes, and assist buyers in securing mortgages from United Savings Bank. The bank required the submission of the owner’s duplicate titles and construction of houses to release loan proceeds. Santos began constructing houses. However, V.C. Development failed to promptly submit the titles due to a prior mortgage and failed to complete subdivision amenities, causing United Savings to refuse releasing the loans. Buyers withdrew payments and filed complaints. V.C. Development demanded the return of the owner’s duplicate copies of TCT Nos. 309980 and 309985, which had been delivered to Santos for submission to the bank. Santos refused, holding them as security for his advanced construction expenses. V.C. Development filed a complaint for specific performance. The RTC ruled in favor of V.C. Development, ordering Santos to return the titles, finding an implied trust existed for the sole purpose of facilitating the loans and that V.C. Development was not a party to the construction agreement. Santos appealed. During the CA proceedings, the case was referred to mediation. On July 9, 2010, a Compromise Agreement was executed between Santos and V.C. Development, as represented by its Assistant Vice President Beatriz Q. Sayson. The agreement stipulated: 1) V.C. Development would refund amounts to two lot buyers through Santos; 2) V.C. Development would assign its rights in the property covered by TCT No. 309985 to Santos within 30 days; and 3) Santos would return the owner’s duplicate of TCT No. 309980. The parties partially performed: V.C. Development issued refund checks, Santos returned TCT No. 309980, and on August 2, 2010, V.C. Development’s President executed a Deed of Absolute Sale for the property under TCT No. 309985. However, the CA noted that AVP Sayson’s authority was not evidenced by a Secretary’s Certificate and required V.C. Development to manifest its conformity. V.C. Development failed to file the required manifestation. The CA subsequently rendered a Decision affirming the RTC, ordering the return of both titles, disregarding the Compromise Agreement. Santos filed a Manifestation and Motion praying for judgment based on the Compromise Agreement. The CA issued resolutions requiring V.C. Development to comment, but these were unserved or ignored. The CA then issued a Resolution denying Santos’s motion, citing absence of clear proof of AVP Sayson’s authority. Santos filed the instant Petition for Review.

ISSUE

Whether or not the Court of Appeals erred in failing to render a judgment according to the Compromise Agreement.

RULING

Yes. The Supreme Court granted the petition and reversed the assailed CA Decision and Resolution. The Court held that the Compromise Agreement was valid and binding. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. Courts should encourage and approve compromises as they promote amicable settlement. The CA erred in disregarding the agreement based solely on the initial lack of a written authority for AVP Sayson. V.C. Development’s subsequent actions constituted ratification of the agreement. It partially complied by issuing refund checks, accepting the return of one title, and its President executed a Deed of Absolute Sale for the other property. Furthermore, V.C. Development failed to contest the authority despite the CA’s directive, which under the CA’s own resolution, should have been deemed an assent. Most significantly, in its Comment before the Supreme Court, V.C. Development expressly admitted the validity of the Compromise Agreement and stated that its officers had fully complied, agreeing that it created vested rights. This judicial admission conclusively binds V.C. Development. Therefore, the Compromise Agreement, having been voluntarily entered into and partially executed, is valid and should have been the basis for the judgment. The CA decisions are set aside, and a new judgment is rendered approving the Compromise Agreement.