“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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