G.R. No. 88954 October 29, 1992
DATU SAMAD MANGELEN, petitioner, vs. THE HONORABLE COURT OF APPEALS, PEDRO HABALAYUS and HABALAYUS ENTERPRISES, INC., respondents.

FACTS

Petitioner Datu Samad Mangelen had a logging concession under O.T.L. No. 463-123165 located in Datalblao, Columbia, Sultan Kudarat. This concession was included within the area of a larger concession under T.L.A. 229 granted to respondent Habalayus Enterprises, Inc. Petitioner requested the segregation of his area. The Bureau of Forest Development directed the parties to settle. On February 2, 1983, they executed a Compromise Agreement, approved by the Bureau’s Assistant Director. Under the Agreement, Habalayus Enterprises, Inc., represented by its President Pedro Habalayus, agreed to pay petitioner P600,000.00 in installments. In return, petitioner agreed to relinquish his rights over the area. Respondent later issued two post-dated checks for P150,000.00 each, but both were dishonored for insufficiency of funds. Petitioner made a formal demand and filed criminal cases for violation of B.P. 22. He also filed Civil Case No. 84-22306 in the RTC of Manila to recover the P600,000.00. Private respondents filed motions to dismiss on grounds of improper venue and litis pendentia, which were denied. They failed to file an Answer and were declared in default. Petitioner presented evidence ex-parte. The RTC rendered a decision ordering defendants to pay jointly and severally the P600,000.00 plus 12% interest, moral damages, exemplary damages, and attorney’s fees. Private respondents appealed to the Court of Appeals (CA). The CA initially affirmed the RTC decision in toto but later granted a motion for reconsideration, setting aside its own decision and dismissing the case on the ground that the action was premature because the Compromise Agreement was subject to the approval of the Bureau of Forest Development. Petitioner filed this petition for review.

ISSUE

Whether the Court of Appeals erred in ruling that the action for enforcement of the Compromise Agreement was premature.

RULING

Yes. The Supreme Court granted the petition. It held that the approval requirement in the Compromise Agreement was a condition imposed for the benefit of the parties, which they could waive. By executing the Agreement and partially performing it through the issuance of checks (though dishonored), the parties, especially private respondents, were deemed to have waived the condition. The Agreement was binding. The Court set aside the CA’s resolution of July 12, 1989, and reinstated the CA’s initial decision of January 30, 1989, which affirmed the RTC decision, subject to modifications. The modifications deleted the award of moral and exemplary damages for lack of sufficient basis, reduced the attorney’s fees to P25,000.00, and set aside the joint and several liability of Pedro Habalayus, holding only the corporation (Habalayus Enterprises, Inc.) liable under the Agreement.