[ G.R. No. L-4659. July 11, 1952 ] 91 Phil. 596
[ G.R. No. L-4659. July 11, 1952 ]
DOMINGA SALAZAR, ET AL., PLAINTIFFS AND APPELLEES VS. FAUSTO JARABE, DEFENDANT AND APPELLANT. D E C I S I O N
TUASON, J.:
This was an action to recover a parcel of land having an area of 17,784 square meters and situated in the municipality of Pinamalayan, province of Mindoro. This land was part of a tract of fourteen hectares covered by a certificate of title in the name of Margarito Afan, and was sold on May 18, 1926, and July 29, 1927, in two separate documents by Afan’s widow to Gregorio Salazar, plaintiffs’ parent. The rest or other portions of Afan’s land, it seems, were acquired by Fausto Jarabe, the defendant, from Afan’s heirs. On a date on which the parties are in disagreement, Jarabe entered upon the possession of Gregorio Salazar’s portion, claiming to have bought it from Salazar, and on August 10, 1946, a complaint for forcible entry and detainer was filed by this deceased heirs, the plaintiffs in the present case, through Attorney Lourdes Paredes-San Diego, against Jarabe. On the date set for trial, plaintiffs’ lawyer asked for the dismissal of the case, stating that the parties had “arrived to an amicable settlement,” and attaching a copy of the compromise agreement, which had been reduced to writing, to the motion to dismiss. On the same date, the justice of the peace entered an order of the following tenor: “It appearing that the parties in the above-entitled case have amicably settled their controversy in such a way that defendant, Fausto Jarabe will give to the plaintiffs, an amount amounting to Seventy Five Pesos (P75.00), as per agreement by the above parties submitted to this Court, and it appearing further that said amicable settlement represents the will of the parties, the same is hereby confirmed.” The case was accordingly dismissed, without pronouncement as to costs. The agreement recited that, “whereas, Gregorio Salazar, the plaintiffs’ father, on April 14, 1932, executed a certain instrument, purporting to be a deed of sale in favor of the defendant,” and “whereas, said plaintiffs recognized the signature of their deceased father in said document, and they desired to settle their claim amicably in order to avoid the trouble, expense and scandal of court litigations and asked of the defendant P75 as an additional sum to the purchase price paid by the defendant to Gregorio Salazar which amount the defendant was willing to pay and actually paid upon the execution of the document, the parties have hereunto set their hands, in the year and date first above written.” This compromise was signed by Fausto Jarabe, the defendant, and Attorney Lourdes Paredes-San Diego, as counsel for the plaintiffs, but not by any of her clients. On February 13, 1948, the present action was commenced in the Court of First Instance by the same plaintiffs through a different attorney and against the same defendant. Among other defenses which need not be stated, the defendant pleaded the compromise agreement, contending that it constitutes a bar to the instant suit. But the plaintiffs impugned the validity of this compromise and were sustained by the trial court. The resolution on this question is decisive of the whole case and to this issue discussion will be confined. Section 21 of Rule 127 provides:
“Authority of attorneys to bind clients.—Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in writing, and in taking appeals, and in all matters of ordinary judicial procedure. But they cannot, without special authority, compromise their clients litigation, or receive anything in discharge of a client’s claim but the full amount in cash.”
Applying this rule or its counterpart in the Code of Civil Procedure, this Court has held that without a special authority by the client an attorney cannot in his or her behalf, in or out of court, execute any act not necessary or incidental to the prosecution or management of the suit, or for the accomplishment of its purpose, for which he was retained. (Sons of I. de la Rama vs. Estate of Benedicto, 5 Phil., 512; Natividad vs. Natividad, 51 Phil., 613; Tan Lua vs. O’Brien, 55 Phil., 53; Rodriguez vs. Santos, 55 Phil., 721; Monte de Piedad vs. Fernando Rodrigo, 56 Phil., 310; Alviar vs. Court of First Instance of La Union, 64 Phil., 301; and Angeles Rodriguez et al. vs. The Honorable Court of First Instance of Rizal, et al., 88 Phil., 417.) It is conceded that such authority plaintiffs’ former counsel did not have, and that the compromise she entered into was outside the general powers of her retainer or employment. The above rule notwithstanding, laches may operate to validate an agreement invalid at its inception, as when the client on becoming aware of the compromise fails to repudiate promptly the action of his attorney. In such case, lit has been held, ratification of the compromise will be presumed with the burden placed on the client to rebut the presumption. (Rivero vs. Rivero, 59 Phil., 15, citing 6 C. J., 659-661, Banco Español Filipino vs. Palanca, 37 Phil. 921, and Uy Chico vs. Union Life Assurance Society, 29 Phil., 163.) The present case comes within the purview of the exceptions to the general rule. There is no stipulation or evidence to show that the plaintiffs were not apprised of the agreement soon after, if not at the time of, its execution. Their failure for a considerable period to disavow it raises the presumption that they acquiesced in their attorney’s action. What is more, this presumption, which they made no attempt to overcome, attains the stature of moral certainty in the light of their position. It is almost beyond belief that if they were ignorant of the compromise, for nearly two years, the plaintiffs did not, personally or through others, find out from the justice of the peace what became of their suit, living as they did in the same municipality where the action had been instituted. It required no legal training or high intelligence to be curious about the status of a case in which they were so much interested as to have engaged a Manila lawyer to represent them. They could not have been indifferent to or forgotten that case in the face of the fact that the defendant continued in his possession of the land. In invalidating the compromise the court below planted its decision on the theory that the plaintiffs’ attorney had stepped beyond the bounds of the litigation in that, while the suit related to possession, she bargained away the plaintiffs’ title. For the same reason, His Honor would limit the effects of the dismissal of the detainer case to the question of possession in that, while the justice of the peace had jurisdiction to adjudicate possession, he had none to render judgment on the ownership. The latter view is predicated on the assumption that a compromise derives its force from a corresponding judgment, and the first on the other assumption that a compromise must be germain to the controversy. Both assumptions are, in our opinion, erroneous. Article 1809 of the Spanish Civil Code, which was the Code in force in 1946 when the agreement in question was executed, defines compromise as “a contract by which each of the parties in interest, by giving, promising or retaining something avoids the provocation of a suit or terminates one which has already been instituted;” and by article 1816 it is provided that “A compromise shall have, with respect to the parties, the same authority as res adjudicata;” although “only a compromise made in court may be enforced by execution.” These articles with a variation in language have been incorporated into the new Civil Code as Articles 2028 and 2037 respectively. Far from making the rendition of a judgment in accordance with the compromise essential to the validity of a settlement, the foregoing provisions by necessary implication give extrajudicial agreements the force of an adjudication, except that they can not be carried into effect in the manner provided for the enforcement of a judgment—execution. Judgment could not have been contemplated when one of the objects of a settlement is to avoid suits. From the same provisions, any concession not contrary ito law, public policy or moral, is binding. Thus, in Castillo vs. De Gala (Off. Gaz., September 13, 1941, p. 2328) it was ruled that even though a compromise agreement may have gone beyond the issues of the case that is settled, it has, with respect to the parties, the same authority as res judicata, because, as the Court said in another decision, compromise of any matter is not the settlement of a valid claim alone but of the controversy, including all its incidents and ramifications. (McCarthy vs. Barber Steamship Lines, 45 Phil., 488.) In reality, however, the ownership of the land involved in the pending suit in the justice of the peace court was not foreign to the issues. From the allegations of the pleadings the ownership was the heart of the whole case. This resolved itself into who, as between the parties, had better title to the property, and upon this title entirely depended either party’s right of possession. There was no question of one party having the right to the possession while the other held the title; and though the theory of the action was force and intimidation, no violence or stealth could have been used by the defendant if the plaintiffs’ allegations were to be believed, that Jarabe occupied the land when the plaintiffs were out in hiding from Japanese troops. We are of the opinion, therefore, that the present action is concluded by the compromise agreement set up by the defendant. And having arrived at this conclusion, it is unnecessary to go into the other questions extensively discussed in the parties’ briefs. The appealed decision will be reversed and the action dismissed, without costs. Pablo, Bengzon, Montemayor, Bautista Angelo, and Labrador, JJ., concur.