Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
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LAZARO PASCO and LAURO PASCO, |
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G.R.
No. 165554 |
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Petitioners, |
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Present: |
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- versus - |
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CORONA, C. J., Chairperson, |
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VELASCO, JR., |
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HEIRS OF FILOMENA DE GUZMAN, represented by
CRESENCIA DE GUZMAN- PRINCIPE, |
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LEONARDO-DE CASTRO, DEL CASTILLO, and PEREZ, JJ. |
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Respondents. |
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Promulgated: |
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July
26, 2010 |
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D E C I S I
O N
DEL CASTILLO, J.:
No court should shield a party from compliance with valid obligations
based on wholly unsubstantiated claims of mistake or fraud. Having refused to
abide by a compromise agreement, the aggrieved party may either enforce it or
regard it as rescinded and insist upon the original demand.
This Petition for Review on Certiorari[1] assails
the May 13, 2004 Decision[2] of the
Court of Appeals (CA) and its October 5, 2004 Resolution[3] in
CA-G.R. SP No. 81464 which dismissed petitioners’ appeal and affirmed the
validity of the parties’ Compromise Agreement.
Factual Antecedents
The present petition began with a Complaint for Sum of Money and Damages[4] filed on
December 13, 2000 by respondents, the heirs of Filomena de Guzman (Filomena),
represented by Cresencia de Guzman-Principe (Cresencia), against petitioners
Lauro Pasco (Lauro) and Lazaro Pasco (Lazaro).
The case was filed before the Municipal Trial Court (MTC) of Bocaue,
Bulacan, and docketed as Civil Case No. MM-3191.[5]
In their Complaint,[6] herein respondents alleged that on February 7, 1997, petitioners obtained a loan in the amount of P140,000.00
from Filomena (now deceased). To secure
the petitioners’ loan, Lauro executed a chattel mortgage on his Isuzu Jeep in
favor of Filomena. Upon her death, her
heirs sought to collect from the petitioners, to no avail. Despite numerous demands, petitioners refused
to either pay the balance of the loan or surrender the Isuzu Jeep to the
respondents. Thus, respondents were
constrained to file the collection case to compel the petitioners to pay the
principal amount of P140,000.00 plus damages in the amount of 5% monthly
interest from February 7, 1997, 25% attorney’s fees, exemplary damages, and
expenses of litigation.
Filomena’s heirs, consisting of Avelina de Guzman-Cumplido, Cecilia de
Guzman, Rosita de Guzman, Natividad de Guzman, and Cresencia de
Guzman-Principe, authorized Cresencia to act as their attorney-in-fact through
a Special Power of Attorney[7] (SPA)
dated April 6, 1999. The SPA authorized
Cresencia to do the following on behalf of the co-heirs:
1)
To represent
us on all matters concerning the intestate estate of our deceased sister,
Filomena de Guzman;
2)
To file cases
for collection of all accounts due said Filomena de Guzman or her estate, including
the power to file petition for foreclosure of mortgaged properties;
3)
To do and
perform all other acts necessary to carry out the powers hereinabove conferred.
During the pre-trial of the case on February 15, 2002, the parties
verbally agreed to settle the case. On February 21, 2002, the parties jointly
filed a Compromise Agreement[8] that was
signed by the parties and their respective counsel. Said Compromise Agreement, approved by the MTC
in an Order[9]
dated April 4, 2002, contained the following salient provisions:
1. That [petitioners] admit their principal loan and obligation to
the [respondents] in the sum of One Hundred Forty Thousand Pesos (P140,000.00)
Philippine currency; in addition to the incidental and other miscellaneous
expenses that they have incurred in the pursuit of this case, in the further
sum of P18,700.00;
2. That, [petitioners] undertake to pay to the [respondents] their
aforementioned obligations, together with attorney’s fees equivalent to ten
percentum (10%) of the total sum thereof, directly at the BULACAN OFFICE of the
[respondents’] counsel, located at No. 24 Hornbill Street, St. Francis
Subdivision, Bo. Pandayan, Meycauayan, Bulacan, WITHOUT NEED OF FURTHER DEMAND
in the following specific manner, to wit:
P60,000.00
– to be paid on or before May 15,
2002
P10,000.00
– monthly payments thereafter,
starting June 15, 2002 up to and until the aforementioned obligations shall
have been fully paid;
3. That, provided that [petitioners] shall truely [sic] comply with
the foregoing specifically agreed manner of payments, [respondents] shall
forego and waive all the interests charges of 5% monthly from February 7, 1998
and the 25% attorney’s fees provided for in Annex “AA” of the Complaint;
4. In the event of failure on the part of the [petitioners] to
comply with any of the specific provisions of this Compromise Agreement, the
[respondents] shall be entitled to the issuance of a “Writ of Execution” to
enforce the satisfaction of [petitioners’] obligations, as mentioned in paragraph
1, together with the 5% monthly interests charges and attorney’s fees mentioned
in paragraph 3 thereof.[10]
Ruling of the Municipal Trial Court
Unfortunately, this was
not the end of litigation. On May 2, 2002, petitioners filed a verified Motion to Set Aside Decision[11]
alleging that the Agreement was written in a language not understood by them,
and the terms and conditions thereof were not fully explained to them. Petitioners further questioned the MTC’s
jurisdiction, arguing that the total amount allegedly covered by the Compromise
Agreement amounted to P588,500.00, which exceeded the MTC’s P200,000.00
jurisdictional limit. In an Order[12] dated
June 28, 2002, the MTC denied the motion; it also granted Cresencia’s prayer
for the issuance of a writ of execution. The writ of execution[13] was
subsequently issued on July 3, 2002. Petitioners’ Motion for Reconsideration and to Quash Writ/Order of Execution[14] dated
August 1, 2002 was denied by the MTC in an Order[15] dated
September 5, 2002.
Undeterred, on October 10, 2002, petitioners filed a Petition for Certiorari and Prohibition with
Application for Temporary Restraining Order/Preliminary Injunction[16] before
the Regional Trial Court (RTC) of Bocaue. The case was raffled to Branch 82,[17] and
docketed as Civil Case No. 764-M-2002. In
their petition, petitioners argued that the MTC gravely abused its discretion
in approving the Compromise Agreement because (1) the amount involved was
beyond the jurisdiction of the MTC; (2) the MTC failed to ascertain that the parties
fully understood the contents of the Agreement; (3) Crescencia had no authority
to represent her co-heirs because Filomena’s estate had a personality of its
own; and (4) the Compromise Agreement was void for failure of the judge and
Cresencia to explain the terms and conditions to the petitioners.
In their Comment[18] dated
October 29, 2002, respondents argued that (1) the principal claim of P140,000.00
was within the MTC’s jurisdiction; and (2) the records reveal that it was the
petitioners themselves, assisted by their counsel, who proposed the terms of
the settlement, which offer of compromise was accepted in open court by the
respondents. Thus, the Compromise
Agreement merely reduced the parties’ agreement into writing.
Ruling of the Regional Trial Court
The RTC initially granted petitioners’ prayer for the issuance of a
Temporary Restraining Order (TRO)[19] on
November 18, 2002, and later issued a preliminary injunction in an Order[20] dated
December 10, 2002, primarily on the ground that the SPA did not specifically
authorize Cresencia to settle the case. However, Presiding Judge Herminia V. Pasamba
later inhibited herself,[21] so the
case was re-raffled to Branch 6, presided over by Judge Manuel D.J. Siayngo.[22] The grant of the preliminary injunction was
thus reconsidered and set aside in an Order[23] dated
May 15, 2003. In the same Order, the RTC
dismissed the petition and held that (1) the MTC had jurisdiction over the
subject matter; (2) Cresencia was authorized to institute the action and enter
into a Compromise Agreement on behalf of her co-heirs; and (3) the MTC’s
approval of the Compromise Agreement was not done in a capricious, whimsical,
or arbitrary manner; thus, petitioners’ resort to certiorari under Rule
65 was improper. Petitioners’ Motion for Reconsideration[24] was
denied,[25] hence
they sought recourse before the CA.
Ruling of the Court of Appeals
In its Decision[26] dated May
13, 2004 and Resolution[27] dated October 5,
2004, the CA dismissed petitioners’ appeal, and held that:
1)
the MTC had jurisdiction, since
the principal amount of the loan only amounted to P140,000.00;
2)
Cresencia was duly authorized by
her co-heirs to enter into the Compromise Agreement;
3)
Petitioners improperly sought
recourse before the RTC through a Petition for Certiorari under Rule 65,
when the proper remedy was a Petition for Relief from Judgment under Rule 38.
Issues
Before us, petitioners claim that, first,
they correctly resorted to the remedy of certiorari under Rule 65; second, the RTC gravely erred in dismissing
their Petition for Certiorari and Prohibition, when the matter under
consideration was merely the propriety of the grant of the preliminary
injunction; and third, that the SPA
did not validly authorize Cresencia to enter into the Compromise Agreement on
behalf of her co-heirs.
Our Ruling
We deny the petition.
The MTC had jurisdiction over the case.
It bears stressing that the question of the MTC’s jurisdiction has not
been raised before this Court; hence, petitioners appear to have admitted that
the MTC had jurisdiction to approve the Compromise Agreement. In any event, it
is beyond dispute that the
Judiciary Reorganization Act of 1980, or Batas Pambansa (BP) Blg. 129,[28] as
amended by Republic Act No. 7691,[29] fixes
the MTC’s jurisdiction over cases where “the demand does not exceed Two hundred
thousand pesos (P200,000.00) exclusive
of interest, damages of whatever kind, attorney's fees, litigation expenses,
and costs.”[30]
Thus, respondents’ initiatory complaint,
covering the principal amount of P140,000.00, falls squarely within the
MTC’s jurisdiction.
Petitioners properly
resorted to the special civil action of certiorari.
On the first question,
the CA held that the proper remedy from the MTC’s Order approving the
Compromise Agreement was a Petition for Relief from Judgment under Rule 38 and
not a Petition for Certiorari under Rule 65. We recall that petitioners filed a verified Motion to Set Aside Decision on May 2,
2002,[31] which
was denied by the MTC on June 28, 2002. This Order of denial was properly the subject
of a petition for certiorari, pursuant to Rule 41, Section 1, of the
Rules of Court:
Section 1. Subject of Appeal – An appeal may
be taken from a judgment or final order that completely disposes of the case,
or of a particular matter therein when declared by these Rules to be
appealable.
No appeal may be taken
from:
x x x x
(e) an order denying a motion to set aside a
judgment by consent, confession or compromise on the ground of fraud, mistake
or duress, or any other ground vitiating consent.
x x x x
In
all the above instances where the judgment or final order is not appealable,
the aggrieved party may file an appropriate special civil action under Rule 65.
From
the express language of Rule 41, therefore, the MTC’s denial of petitioners’
Motion to Set Aside Decision could not have been appealed. Indeed, a decision
based on a compromise agreement is immediately final and executory and cannot
be the subject of appeal,[32] for
when parties enter into a compromise agreement and request a court to render a
decision on the basis of their agreement, it is presumed that such action
constitutes a waiver of the right to appeal said decision.[33] While there may have been other remedies
available to assail the decision,[34]
petitioners were well within their rights to institute a special civil action
under Rule 65.
The Regional Trial Court
rightly dismissed the petition for certiorari.
On the second issue, petitioners argue that the RTC, in reconsidering
the order granting the application for writ of preliminary injunction, should
not have gone so far as dismissing the main case filed by the petitioners. They claim that the issue in their application
for writ of preliminary injunction was different from the issues in the main
case for certiorari, and that the dissolution of the preliminary
injunction should have been without prejudice to the conduct of further
proceedings in the main case. They also claim that the RTC did not have the
power to dismiss the case without requiring the parties to file memoranda.
These assertions are belied, however, by petitioners’ own submissions.
Their arguments were exactly the same, whether relating to the
preliminary or permanent injunction. Identical matters were at issue – the
MTC’s jurisdiction, petitioners’ alleged vitiated consent, and the propriety of
enforcing the Compromise Agreement. The
reliefs sought, too, were the same, that is, the grant of an injunction against
the enforcement of the compromise:[35]
WHEREFORE,
it is most respectfully prayed that:
1)
A Temporary
Restraining Order and/or Preliminary Injunction issue ex parte directing the
respondents to cease and desist from enforcing, executing, or implementing in
any manner the Decision dated April 4, 2002 and acting in Civil Case No. MM-3191
until further orders from this Honorable Court.
2)
After
hearing, the temporary restraining order/ex parte injunction be replaced by a
writ of preliminary injunction.
3)
After hearing
on the merits, judgment be rendered:
a. Making the injunction permanent.
In addition, nothing in
the Rules of Court commands the RTC to require the parties to file Memoranda.
Indeed, Rule 65, Sec. 8 is explicit in that the court “may dismiss the
petition if it finds the same to be patently without merit, prosecuted
manifestly for delay, or that the questions raised therein are too
unsubstantial to require consideration.”[36]
Cresencia was authorized
to enter into the Compromise Agreement.
As regards the third issue, petitioners maintain that the SPA was
fatally defective because Cresencia was not specifically authorized to enter
into a compromise agreement. Here, we fully concur with the findings of the CA
that:
x
x x It is undisputed that Cresencia’s co-heirs executed a Special Power
of Attorney, dated 6 April 1999, designating the former as their
attorney-in-fact and empowering her to file cases for collection of all the
accounts due to Filomena or her estate. Consequently, Cresencia entered into
the subject Compromise Agreement in order to collect the overdue loan obtained
by Pasco from Filomena. In so doing, Cresencia was merely performing her duty
as attorney-in-fact of her co-heirs pursuant to the Special Power of Attorney
given to her.[37]
Our ruling in Trinidad
v. Court of Appeals[38] is illuminating. In Trinidad,
the heirs of Vicente Trinidad executed a SPA in favor of Nenita Trinidad (Nenita)
to be their representative in litigation involving the sale of real property
covered by the decedent’s estate. As
here, there was no specific authority to enter into a Compromise Agreement. When a compromise agreement was finally
reached, the heirs later sought to invalidate it, claiming that Nenita was not
specifically authorized to enter into the compromise agreement. We held then, as we do now, that the SPA
necessarily included the power of the attorney-in-fact to compromise the case,
and that Nenita’s co-heirs could not belatedly disavow their original
authorization.[39]
This ruling is even more significant
here, where the co-heirs have not taken any action to invalidate the Compromise
Agreement or assail their SPA.
Moreover,
we note that petitioners never assailed the validity of the SPA
during the pre-trial stage prior to entering the
Compromise Agreement. This matter was never even raised as a ground in
petitioners’ Motion to Set Aside the compromise, or in the initial Petition
before the RTC. It was only months
later, in December 2002, that petitioners – rather self-servingly - claimed
that the SPA was insufficient.
The stated interest rate should be reduced.
Although the petition is unmeritorious, we find the 5% monthly interest
rate stipulated in Clause 4 of the Compromise Agreement to be iniquitous and
unconscionable. Accordingly, the legal interest of 12% per annum must be
imposed in lieu of the excessive interest stipulated in the agreement. As we
held in Castro v. Tan:[40]
In
several cases, we have ruled that stipulations authorizing iniquitous or
unconscionable interests are contrary to morals, if not against the law. In Medel v. Court of Appeals, we
annulled a stipulated 5.5% per month or 66% per annum interest on a P500,000.00
loan and a 6% per month or 72% per annum interest on a P60,000.00
loan, respectively, for being excessive, iniquitous, unconscionable and
exorbitant. In Ruiz v. Court of
Appeals, we declared a 3% monthly interest imposed on four separate loans
to be excessive. In both cases, the
interest rates were reduced to 12% per annum.
In
this case, the 5% monthly interest rate, or 60% per annum, compounded
monthly, stipulated in the Kasulatan is even higher than the 3% monthly
interest rate imposed in the Ruiz case. Thus, we similarly hold the 5% monthly
interest to be excessive, iniquitous, unconscionable and exorbitant, contrary
to morals, and the law. It is therefore
void ab initio for being violative of Article 1306 of the Civil
Code. x x x (citations
omitted)
The proceeds of the loan
should be released to Filomena’s heirs only upon settlement of her estate.
Finally, it is true that Filomena’s estate has a different juridical
personality than that of the heirs. Nonetheless, her heirs certainly have an
interest in the preservation of the estate and the recovery of its properties,[41]
for at the moment of Filomena’s death, the heirs start to own the property,
subject to the decedent's liabilities. In this connection, Article 777 of the Civil
Code states that “[t]he rights to the succession are transmitted from the
moment of the death of the decedent.”[42]
Unfortunately, the records before us do not show the status of the
proceedings for the settlement of the estate of Filomena, if any. But to allow the release of the funds
directly to the heirs would amount to a distribution of the estate; which
distribution and delivery should be made only after, not before, the payment of
all debts, charges, expenses, and taxes of the estate have been paid.[43] We thus decree that respondent Cresencia
should deposit the amounts received from the petitioners with the MTC of
Bocaue, Bulacan and in turn, the MTC of Bocaue, Bulacan should hold in abeyance
the release of the amounts to Filomena’s heirs until after a showing that the
proper procedure for the settlement of Filomena’s estate has been followed.
WHEREFORE, the petition is DENIED. The May 13, 2004 Decision of the Court of Appeals and its October 5, 2004 Resolution
are AFFIRMED with MODIFICATIONS that the
interest rate of 5% per month (60% per annum) is ordered reduced to 12 % per
annum. Respondent Cresencia De Guzman-Principe is DIRECTED
to deposit with the Municipal Trial Court of Bocaue, Bulacan the amounts
received from the petitioners. The
Municipal Trial Court of Bocaue, Bulacan is likewise DIRECTED to hold in
abeyance the release of any amounts recovered from the petitioners until after
a showing that the procedure for settlement of estates of Filomena de Guzman’s
estate has been followed, and after all charges on the estate have been fully
satisfied.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
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RENATO C. CORONA Chief Justice |
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PRESBITERO J. VELASCO,
JR. Associate Justice |
TERESITA J. LEONARDO-DE
CASTRO Associate Justice |
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JOSE
P. PEREZ Associate Justice |
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C E R T I F I C A T I O N
Pursuant
to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.
RENATO
C. CORONA
Chief Justice
[1] Rollo, pp. 8-27.
[2] Id. at 29-36;
penned by Associate Justice Perlita J. Tria Tirona and concurred in by Associate
Justices B.A. Adefuin-de la Cruz and Arturo D. Brion (now a Member of this
Court).
[3] Id. at 38-40; penned by Associate
Justice Perlita J. Tria Tirona and concurred in by Associate Justices Arturo D.
Brion and Japar B. Dimaampao.
[4] Records,
pp. 89-92.
[5] Presided
over by Judge Lauro G. Bernardo.
[6] Records,
p. 93. See Kasulatan ng Sanglaan ng
Ari-Ariang Natitinag, Annex “A” of the Complaint. The records do not
contain the date of Filomena de Guzman’s death.
[7] Id. at 133.
[8] Id. at 94-95.
[9] Id. at 19-20.
[10] Id.
[11] Id. at 25-29.
[12] Id. at 21-23.
[13] Id. at 37-38.
[14] Id. at 32-36.
[15] Id. at 30.
[16] Id. at 3-18.
[17] Presided
over by Judge Herminia V. Pasamba.
[18] Records, pp.
70-77.
[19] Id. at
98-100.
[20] Id. at
141-143.
[21] Order dated
January 24, 2003, id. at 179.
[22] Order dated
February 6, 2003, id. at 183.
[23] Id. at 207-211.
[24] Id. at
214-227.
[25] Order dated
September 5, 2003, id. at 241-244.
[26] Rollo, at 29-36.
[27] Id. at 38-40.
[28] An Act Reorganizing The
Judiciary, Appropriating Funds Therefor, And For Other Purposes.
[29] An Act
Expanding The Jurisdiction Of The Metropolitan Trial Courts, Municipal Trial
Courts, And Municipal Circuit Trial Courts, Amending For The Purpose Batas Pambansa Blg. 129, Otherwise Known As The
"Judiciary Reorganization Act Of 1980" (1994).
[30] Section 33
of BP No. 129, as amended, provides:
Section 33. Jurisdiction of
Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in civil cases. — Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original
jurisdiction over civil actions and probate proceedings, testate and intestate,
including the grant of provisional remedies in proper cases, where the value of
the personal property, estate, or amount of the demand does not exceed One
hundred thousand pesos (P100,000.00) or, in Metro Manila where such
personal property, estate, or amount of the demand does not exceed Two hundred
thousand pesos (P200,000.00) exclusive of interest, damages of whatever
kind, attorney's fees, litigation expenses, and costs, the amount of which must
be specifically alleged: Provided, That where there are several claims or
causes of action between the same or different parties, embodied in the same
complaint, the amount of the demand shall be the totality of the claims in all
the causes of action, irrespective of whether the causes of action arose out of
the same or different transactions;
[31] Records, pp.
25-29.
[32] Hon. Abarintos
v. Court of Appeals, 374
Phil. 157, 169 (1999).
[33] Cadano v. Cadano, 151 Phil. 156, (1973).
[34] For
instance, remedies under Rules 38 or 47 of the Rules of Court.
[35] Records, p.
15.
[36] Rule 65, Sec. 8 of the Rules of Court provides:
Sec. 8. Proceedings after comment is filed.
After the comment or other pleadings required by the
court are filed, or the time for the filing thereof has expired, the court may
hear the case or require the parties to submit memoranda. If after such hearing
or submission of memoranda or the expiration of the period for the filing
thereof the court finds that the allegations of the petition are true, it shall
render judgment for the relief prayed for or to which the petitioner is
entitled.
The court, however, may dismiss the petition
if it finds the same to be patently without merit, prosecuted manifestly for
delay, or that the questions raised therein are too unsubstantial to require
consideration.
[37] Rollo, p. 34.
[38] 411
Phil. 44, 50-51 (2001).
[39] A reading of the special power
of attorney, as well as the concurrent turn of events, would precisely point to
the fact that the special power of attorney was intended to have Nenita
Trinidad help resolve the differences of the parties in the contract to sell.
[40] G.R. No. 168940, November 24, 2009, 605 SCRA
231, 238.
[41] Palicte v. Judge Ramolete, 238 Phil. 128, 134 (1987).
[42] The
possession of hereditary property is deemed transmitted to the heir without
interruption and from the moment of the death of the decedent, in case the
inheritance is accepted (Civil Code of the Philippines, Art. 533). Where there
are two or more heirs, the whole estate of the decedent is, before its
partition, owned in common by such heirs.
See Acebedo v. Abesamis, G.R. No. 102380, January 18, 1993, 217 SCRA
186, 194-195; Mendoza I v. Court
of Appeals, G.R. No. 44664, July 31, 1991, 199 SCRA 778, 787; Civil Code of the Philippines, Art.
1078.
[43] Rules of Court,
Rule 90, Section 1; Lat v. Court of
Appeals and Banzuela, 115 Phil. 205, 209 (1962).