Del Rosario v. Madayag
REITERATIONFacts
The Antecedents: Private respondent Ma. Cecilia Leviste filed a complaint for Breach of Contract with Damages against petitioner Juliana del Rosario and five others, seeking to recover P303,723.00 for the loss of contents of two "balikbayan boxes" shipped via Road Runner International. Petitioner was impleaded as the owner of Mountain Hi-Way Express, where the boxes were found emptied. Procedural History: The case was archived twice due to the private respondent's failure to prosecute. Upon receiving an alias summons in February 1994, petitioner moved for dismissal on April 11, 1994, citing lack of cause of action, waiver, and abandonment. The trial court denied this motion and a subsequent motion for reconsideration. The Petition: During a pre-trial on October 10, 1994, petitioner and private respondent's counsel, armed with a special power of attorney, filed a joint Motion to Dismiss in the nature of a compromise agreement, stipulating a P7,000.00 settlement. The following day, private respondent's counsel filed an Ex-Parte Motion to Recall Motion to Dismiss, stating private respondent was not amenable to the terms upon her arrival from Japan and that the compromise was invalid due to her absence and the uncashed check. Respondent judge granted this motion to recall and denied the motion to dismiss. Petitioner's motion for reconsideration was denied, leading to the instant petition for certiorari and prohibition, alleging grave abuse of discretion by the respondent judge.
Issue(s)
Whether the respondent judge committed grave abuse of discretion in granting the motion to recall the motion to dismiss and denying the motion to dismiss based on a compromise agreement. Whether the compromise agreement executed by the counsels was binding and had the effect of res judicata.
Ruling
The petition is DISMISSED. The respondent judge did not commit grave abuse of discretion.
Ratio Decidendi
On the issue of whether the respondent judge committed grave abuse of discretion in granting the motion to recall the motion to dismiss and denying the motion to dismiss based on a compromise agreement: The Court held that the respondent judge did not commit grave abuse of discretion. A compromise agreement, while generally binding and having the effect of res judicata, is a contract that requires mutual consent. In this case, the private respondent immediately repudiated her consent to the compromise agreement upon learning of its terms after returning from Japan. Her swift action in filing a motion to recall the joint motion to dismiss demonstrated her non-amenability to the settlement. The Court noted that the trial court was unconvinced that the private respondent would agree to settle a claim exceeding P300,000.00 for a mere P7,000.00. Therefore, the trial court was not bound to ministerially approve the agreement when it appeared that one party's consent was lacking or vitiated. The judge's action was a proper exercise of discretion to ensure that the agreement truly reflected the mutual consent of the parties. On the issue of whether the compromise agreement executed by the counsels was binding and had the effect of res judicata: The Court ruled that the compromise agreement was not binding and did not have the effect of res judicata in this instance. A compromise is perfected by mere consent, which must be manifested by the meeting of offer and acceptance. While a compromise generally has the effect of res judicata, this is subject to the exception that courts may set it aside if it is shown that the consent of one of the contracting parties has been vitiated. In this case, the private respondent's immediate repudiation of the agreement, coupled with her counsel acting beyond the scope of his authority by agreeing to such a disadvantageous settlement without her actual assent, negated the existence of valid consent. The private respondent's counsel's act was effectively nullified by her subsequent actions, and she cannot be bound by acts that she promptly disavowed. Consequently, the principle of res judicata was inapplicable.
Main Doctrine
A compromise agreement, while generally having the effect of res judicata, may be set aside if the consent of one of the parties is vitiated, especially when the party immediately repudiates the agreement and the counsel acts beyond the scope of their authority.