RP vs CA : 110020 : September 25, 1998 : J. Kapunan : Third Division

THIRD DIVISION

[G.R. No. 110020. September 25, 1998]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, HON. LUIS BELLO, JR., Presiding Judge of RTC, Branch 16, Laoag City, HAROLD M. HERNANDO, and SPOUSES ROLANDO V. ABADILLA And SUSAN SAMONTE, respondents.

D E C I S I O N

KAPUNAN, J.:

For our consideration is a petition for review on certiorari impugning the Decision dated February 8, 1993 and the Resolution dated April 27, 1993 of respondent Court of Appeals in CA-G.R. SP No. 29460.[1]

The relevant antecedents are as follows:

Sometime in December 1991, petitioner filed a complaint for rescission (of a deed of sale), cancellation (of transfer certificates of title), reconveyance and damages with prayer for issuance of a writ of preliminary injunction and of a temporary restraining order, against the spouses Rolando Abadilla and Susan Samonte, Harold M. Hernando, for himself and as attorney-in-fact of Apolinario, Serafin, Dominica and Maria, all surnamed Quetulio,*and the Register of Deeds of Laoag City, before the Regional Trial Court of Laoag City, Branch 16, docketed as Civil Case No. 9934-16. It is alleged in the said complaint that sometime in 1984, the then Ministry of Public Works and Highways, in collaboration with the then Ministry of Transportation and Communication filed an expropriation case against Serafin, Apolinario, Dominica and Maria, all surnamed Quetulio, involving two (2) parcels of land containing an aggregate area of ninety four thousand nine hundred thirteen (94,913) square meters, for the construction of a terminal building for international flights of the Laoag International Airport; that said expropriation case was docketed as Civil Case No. 8396-XV and raffled to RTC, Branch XV, Laoag City; that a compromise agreement was entered into in the said case on January 24, 1985 whereby the parties agreed to fix the amount of just compensation at One Million Four Hundred Fifty Four Thousand Eight Hundred Fifty Nine pesos (P1,454,859.00); that a decision was rendered on January 31, 1985 whereby the trial court approved and adopted in toto the said compromise agreement; that disbursement vouchers in the amount agreed upon were turned over to the Quetulios; that on November 29, 1985, Harold M. Hernando executed an affidavit revoking the compromise agreement he signed as attorney-in-fact of the Quetulios, that sometime in 1989, the Quetulios, again represented by Harold M. Hernando, filed a petition for the issuance of another owners' and co-owner's duplicate copy of TCT-T-1071 and OCT No. 0-145-L before the RTC, Branch XIV of Laoag City; that said petition was granted on April 18, 1989 and pursuant thereto, owner's duplicate copy of TCT No. T-1071 and on April 18, 1989 and pursuant thereto, owner's duplicate copy of TCT No. T-1071 and OCT No. 0-145-L were issued; that Harold M. Hernando, as attorney-in-fact of the Quetulios, sold the property in question to the spouses Rolando V. Abadilla and Susan Samonte for and in consideration of the sum of One Million Three Hundred Pesos (P1,000,300.00); that said second sale is null and void as the lots in question are already owned by petitioner Republic; and that the spouses-vendees acted in bad faith as they already had prior knowledge of the first sale.

Accordingly, petitioner prayed that (1) the deed of sale by Harold M. Hernando in favor of the spouses Abadilla be declared null and void; (2) TCT Nos. T-21484 and T-21485 covering the lots in question issued in the name of the spouses Abadilla be declared null and void; (3) the Register of Deeds of Laoag City be directed to cancel the TCTs and reinstate the old ones; and (4) Harold M. Hernando and the spouses Abadilla be made liable to pay P500,000.00 by way of actual and punitive damages.[2]

The spouses Abadilla filed their Answer in due time on January 28, 1992.

On February 14, 1992, petitioner filed a Reply to the spouses Abadilla's answer.

No answer was filed by respondents Hernando and the Quetulios within the 15-day reglementaty period to file a responsive pleading.

Meanwhile, the initial hearing for the instant case was set for February 27, 1992. Said hearing was, however, postponed for no apparent reason. Nonetheless, respondent Harold M. Hernando, who was then present in court, moved that (a) he be granted the opportunity to formally appear as counsel for himself and his codefendants as he was then still serving a five (5) month suspension from the practice of law for malpractice pursuant to the Resolution of this Court dated October 17, 1991 in Administrative Case No. 1359 entitled Buted v. Hernando and[3] (b) he be allowed to file an answer despite petitioner's oral manifestation that he be declared in default for failure to file his answer within the reglementary period. Both motions were granted by the trial court.

On February 28, 1992, respondent Hernando filed a pleading denominated as "Comment/Answer/Motion to Dismiss"[4] praying for the dismissal of the complaint on the basis of the "Affidavit of Revocation" executed by him on November 29, 1985 canceling the Compromise Agreement because Atty. Sixto S. Pedro allegedly withheld ten (10) checks in the amount of P500,000.00 which were supposed to be part of the consideration for the property expropriated; and that Atty. Sixto S. Pedro, in his capacity as "Special Attorney" for the Ministry of Public Works and. Highways, Ilocos Norte, and representing the Republic of the Philippines, had signed a Rescission of Compromise Agreement and the Deed of Conveyance dated December 2, 1985 (in favor of the Abadilla spouses).

On May 5, 1992, the trial court issued an order dismissing the complaint ratiocinating that:

As the plaintiff has not filed any reply/opposition or comment to the comment/answer/motion to dismiss, said party is deemed to have admitted the due execution and genuiness (sic) of the instruments which are exhibits 3 and 4 of the motion to dismiss, Sec. 8, Rule 8 of the Rules of Court. This is so as said instruments which are exhibits 3 and 4 are copied verbatim as part of the pleading of defendants Atty. Harold Hernando and Dominica Quetolio, Sec. 7, Rule 8 of the New Rules of Court. Plaintiff having admitted the execution and genuiness (sic) of the instruments, said party has already abandoned itsns claim to the land in suit or the claim of said party plaintiff has been extinguished.[5]

Petitioner received a copy of the above-stated order on May 13, 1992.

On May 25, 1992, petitioner filed, a Motion for Reconsideration of the order of dismissal.

The motion was denied in an Order received by petitioner on September 14, 1992.

On October 8, 1992, twenty-four (24) days after it received a copy of the order denying its motion for reconsideration, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court before this Court, docketed as G.R. No. 107229.

Per our Resolution dated October 12, 1992, G.R. No. 107229 was referred to the Court of Appeals for appropriate action. Therein, G.R. No. 107229 was docketed anew as CA-G.R. SP No. 29460.

On February 8, 1993, the Court of Appeals dismissed the said petition for certiorari after treating the same as an ordinary appeal filed out of time. According to the appellate court:

Considering that petitioner admittedly received a copy of the Order dated 04 September 1992 denying its Motion For Reconsideration on 14 September 1992, the reglementary period within which to file an appeal therefrom expired on 29 September 1992.

The record discloses that the instant petition was filed on 08 October 1992. Consequently, the questioned Order had attained finality at the time the petition was filed.[6]

A motion for reconsideration of said decision was denied on April 27, 1993.

Hence, the present petition for review on certiorari grounded on the following issues, viz:

Whether or not respondent Honorable Court of Appeals has decided a question of substance, not theretofore determined by the Honorable Supreme Court or that it has decided it in a way not in accord, with law or with applicable decisions of this Honorable Court, in denying due course to the petition in G.R. SP No. 29460, purportedly on the ground that the 15-day reglementary period had already elapsed despite patent showing on the face of the petition that it was filed pursuant to Rule 65 of the Revised Rules of Court.

Whether or not respondent Honorable Court of Appeals has patently sanctioned such departure by respondent Hon. Luis B. Bello, Jr., from the usual and accepted course of judicial proceeding as he (Judge Bello) considered a mere affidavit as an actionable document such that petitioner's failure to file an opposition or comment to herein private respondent-Harold Hernando's pleading wherein said affidavit was attached and copied, amounted to an admission of its due execution and genuineness, being allegedly an actionable document, pursuant to Sec. 8, Rule 8 of the Revised Rules of Court.[7]

We grant the petition.

The threshold issue in this case is whether or not respondent Court of Appeals committed reversible error in denying due course and dismissing CA-GR-SP No. 29460 for having been filed out of time.

Respondent Court of Appeals ruled that an ordinary appeal not a petition for certiorari under Rule 65, was the proper remedy from the trial court's Order of dismissal dated May 5, 1992 which has attained finality.

Our careful study of the facts inevitably yields to the conclusion that the Regional Trial Court presided by Hon. Luis B. Bello, Jr. committed grave abuse of discretion not only in issuing its order dismissing petitioner's complaint in Civil Case No. 9934 on a starkly erroneous ground, but also it committed a grossly irresponsible act of allowing respondent Hernando who was then under suspension from the practice of law, to represent himself and his co-defendants in the case. Also, as appearing from the records, after the lapse of the period to file an answer on the part of respondents Hernando and the Quetulios, the trial court set the case for pre-trial without formally ruling on petitioner's motion to declare them in default. Surprisingly, the trial court thereafter, allowed said defendants to file their answer upon the latter's verbal motion. This enabled respondent Hernando to file his pleading "Comment/Answer/Motion to Dismiss," with certain annexes which were considered by the trial court as actionable documents, despite the fact that petitioner was not a party thereto. All these circumstances clearly demonstrate the trial court's bias and arbitrariness that should have warranted the setting aside of the questioned order of dismissal for grave abuse of discretion under Rule 65 of the Rules of Court. Consequently, petitioner's original action for certiorari filed with respondent Court of Appeals on October 8, 1992 to annul the trial court's Order dated May 5, 1992 dismissing petitioner's complaint should have been given due course.

The Compromise Agreement entered into by the petitioner and the Quetulio spouses in the expropriation case, docketed as Civil Case No. 8396-XV, on January 24, 1985 was approved and adopted in toto by the Regional Trial Court of Laoag City, Branch XV in its decision of January 31, 1985. The compromise agreement fixed the amount of just compensation for the property at P1,454,859.00 which was, as the records show, fully paid by petitioner as evidenced by the disbursement vouchers (Annexes "D-1" to "D-12" to complaint).[8] Said compromise agreement had long become final and executory, before respondent Hernando allegedly executed the "Affidavit of Revocation" unilaterally revoking the same on November 29, 1985. It is well-settled that a judicial compromise has the effect of res judicata and is immediately executory and not appealable unless a motion to set aside the same is filed on the ground of fraud, mistake or duress, in which event an appeal may be filed from an order denying the same.[9] A court cannot set aside a judgment based on compromise without having declared in an incidental hearing that such a compromise is vitiated by any of the grounds for nullity enumerated in Art. 2038 of the Civil Code. Consequently, it was utterly erroneous for the trial court to rule that there was such a revocation of the judicially approved Compromise Agreement.

Moreover, considering that petitioner is not a party to the annexes attached to the Comment/Answer/Motion to Dismiss filed by respondent Hernando and the Quetulios, the trial court had no legal basis in dismissing petitioner's complaint in Civil Case No. 9934-16 on the ground that petitioner had admitted the due execution and genuineness of said annexes consisting of the "Affidavit of Revocation," and "Rescission of Compromise Agreement and Deed of Conveyance,"

Section 8 of Rule 8 of the Rules of Court provides:

Sec. 8. How to contest genuineness of such documents. - When an action or defense is founded upon a written instrument, copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denies them, and sets forth what he claims to be the facts; but this provision does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for an inspection of the original instrument is refused. (Emphasis ours.)

While the signature of Atty. Sixto S. Pedro is found in both instruments, he could not have, in any way, bound the petitioner thereto for total lack of authority from the latter to enter into any agreement prejudicial to or in diminution of the rights of the Government. It is to be noted that the "Affidavit of Revocation" executed on November 29, 1985 by respondent Hernando repudiated the judgment by compromise on the ground that Atty. Sixto S. Pedro, alleged Special Attorney of the Ilocos Norte District of the Public Works, had withheld ten (10) checks in the total mount of P500,000.00 which were part of the consideration for the property subject of the Compromise Agreement. The document was signed by Atty. Pedro with the words "acknowledged and my express conformity." Similarly, the "Rescission of Compromise Agreement and Deed of Conveyance" was executed by the Quetulios and signed by Atty. Pedro describing himself as "Special Attorney of the NPWH I.N. Engineering District and representing the Republic of the Philippines." Even granting hypothetically that Atty. Pedro was duly designated as Special Attorney of the Office of the Solicitor General, and was authorized to represent the Solicitor General at the hearings of the expropriation case, it is still the Solicitor General who retains supervision and control of the representation of the case and who has to approve actions involving withdrawal, non-appeal and other matters which appear to compromise the interest of the Government, not to mention that only notices of orders, resolutions and decisions served on him will bind the Government.[10] The authority to enter into any agreement or arrangement adversely affecting the rights and interests of the Government cannot be assumed; it has to be established by him who asserts its existence.

Nonetheless, assuming further that petitioner is a party to the questioned instruments, still, the dismissal of its complaint by respondent trial court was not correct. Petitioner's alleged failure to deny under oath the genuineness and due execution of the said instruments simply means that it impliedly admitted their authenticity and due execution. Failure to deny the genuineness and due execution of an actionable document does not preclude a party from arguing against it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel and want of consideration.[11] 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.[12]

Apart from the aforestated erroneous application of the law, the proceedings conducted by the respondent judge were grievously tainted by the appearance of respondent Hernando in the case despite his suspension at the time from the practice of law.

As explicitly stated in the present petition as well as in the petition previously filed in this case, docketed as G.R. No. 107229 which was referred to the Court of Appeals for disposition, respondent RTC Judge Luis B. Bello, Jr. did not rule on petitioner's oral motion to declare the Quetulios in default for not filing their answer within the reglementary period. Instead, after the case was set for initial hearing on February 27, 1992, the judge admitted the formal appearance of respondent Hernando as counsel for himself and for his co-defendants and allowed him to file an answer to the complaint. Evidently, when respondent Hernando appeared before the trial court at the initial hearing of the case on February 27, 1992, and when he filed the pleading denominated as Comment/Answer/Motion to Dismiss, he was still under suspension from the practice of law. A suspended lawyer, during his suspension, is certainly prohibited from engaging in the practice of law[13] and if he does so, he may be disbarred. The reason is that, his continuing to practice his profession during his suspension constitutes a gross misconduct and a wilful disregard of the suspension order, which should be obeyed though how erroneous it may be until set aside.[14]

While as a general rule, certiorari cannot be a substitute for a lapsed appeal, however, where the rigid application of the rule will result in a manifest failure, or miscarriage of justice, the rule may be relaxed.[15] Technicalities should be disregarded if only to accord to the respective parties that which is due them. Therefore, considering the broader and primordial interests of justice, particularly when there is grave abuse of discretion as in the case at bar, an occasional departure from the general rule that the extraordinary writ of certiorari cannot substitute for a lost appeal is warranted.[16] In the instant case, we rule that respondent court erred in not entertaining the special civil action for certiorari (CA-G.R. SP No. 29460) before it, considering the patent irregularity and grave abuse of discretion committed by the trial court in dismissing petitioner's complaint, such that appeal therefrom was not an adequate remedy in the ordinary Course of law.

However, it has not escaped the attention of the Court that the petition in G.R. No. 107229 was filed by the Office of the Solicitor General nine (9) days beyond the reglementary period. Rules of procedure are intended to insure the orderly administration of justice and the protection of the substantive rights of the parties in judicial proceedings. Needless to state, Government lawyers assigned to the case should have acted more scrupulously and sedulously in seeing to it that their client's interests are protected by observing deadlines in filing of pleadings to avoid situations such as that obtaining in this case which involves a valuable property.

WHEREFORE, the instant petition is hereby GRANTED. Civil Case No. 9934-16 before the Regional Trial Court of Laoag City, Branch 16, is hereby REINSTATED and the court a quo is ORDERED to proceed hearing the case and resolve the same with dispatch.

SO ORDERED.

Narvasa, C.J. (Chairman), and Romero, JJ., concur.

Purisima, J., no part, Atty. Hector P. Corpus for respondents Abadilla and Samonte being my first cousin.