Republic vs CA, 296 SCRA 171 181-182 (1998)


“failure to deny the genuineness and due execution of an actionable document does not bar a party at the trial that there is a mistake or imperfection in the writing, or that it does not express the true agreement of the parties, or that the agreement is invalid or that there is an intrinsic ambiguity in the writing.”

Facts:
Petitioner files an expropriation case against the Quetulio et al for the two parcels of land to be used for constructing the terminal building for international flights in Laoag International Airport. A compromise agreement was entered by the parties setting forth the just compensation for the expropriated property which was adopted by the court. Harold Hernando, representing the respondents as their attorney-in-fact filed a petition for the issuance of a duplicate copy of the said property and sold the same to spouses Abadilla. The petitioner files a complaint for the rescission of the deed of sale and cancellation of the transfer of certificate of title, reconveyance and damages against the respondents contending that the sale was null and void because the property is already owned by the Republic and that the vendees were in bad faith with their prior knowledge of the first sale. Hernando filed an answer beyond the reglementary period but was allowed by the court to present his answer praying for the dismissal of the complaint on the basis of the “affidavit of revocation” cancelling the compromise agreement between the Republic’s counsel in the person of Atty. Pedro who allegedly withheld the 10 checks as part of the consideration of the expropriated property and signed the rescission of the compromise agreement and deed of conveyance in favor of the Abadilla spouses.

Plaintiff failed to reply to the answer of the respondent who was then held by the trial court to have admitted the due execution and genuineness of the instruments presented by respondents in their motion to dismiss. As a result, the court finds that the plaintiff, after having admitted the genuineness of the documents, in effect waived/abandoned its claim to the land in suit. Motion for reconsideration was denied hence the petitioner filed a petition for certiorari to the CA which was dismissed after treating the same as an ordinary appeal filed out of time.



Issue: Whether or not there was an admission on the part of the petitioner as to the genuineness of the document presented by respondent?

Ruling:
The trial court judge committed grave abuse of discretion for dismissing the petitioner’s complain and it was grossly irresponsible for allowing Hernando to represent the respondents because he was then suspended in the practice of law. It also erred for setting the pre-trial without formally ruling on the petitioner’s motion to declare them in default. It further allowed, after the verbal request of Hernando to present annexes which are considered by the trial court as actionable documents despite the fact that the petitioner was not a party thereto. The trial court demonstrated bias and arbitrariness and the SC also found the CA to have erred in dismissing the petitioner’s complaint which should have been given due course.

The SC noted that the compromise agreement entered by the parties was already final and executor even before the affidavit or revocation was executed. It is a well settled doctrine that judicial compromise has the effect of res judicata and is immediately executor and not appealable except a motion to set it aside has been filed due to fraud, mistake and duress. It was an abuse of discretion for the trial court to hold that there was a revocation on such judicial compromise agreement. Considering that the petitioner is not a party to the annexed documents offered by Hernando, the court erred in dismissing the petitioner’s complaint on the ground that it admitted the due execution and genuineness of the document for to do so is without any legal basis. The SC held that failure to deny the genuineness and due execution of the actionable document does not preclude the party from arguing against it by evidence of fraud, mistake, compromise, payment, statute of limitations and estoppels. Neither does it bar a party from raising the defense in his answer or reply and prove at the trial that there is a mistake or imperfection in the writing, or that it does not express the true agreement of the parties, or that the agreement is invalid or that there is an intrinsic ambiguity in the writing. 

SC ordered the decision of the RTC to be reinstated and ordered the CA to proceed with the hearing. 

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