Abesamis v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Jerome Solco filed an action for damages against respondents DAE Sugar Milling Co., Inc., Azucar Management & Development Corporation, Eduardo R. Lopingco, Teody Lopingco, and Rosita Lopingco, claiming that sugar quedans he purchased were worthless. The respondents contended the quedans belonged to Eduardo R. Lopingco. Subsequently, Solco and Eduardo R. Lopingco entered into a Compromise Agreement, approved by the trial court, wherein Lopingco acknowledged a liability of P68,421,050.00 and agreed to pay in installments, with his attached personal properties serving as security. Upon Lopingco's default, Solco sought a writ of execution. The trial court issued the writ, leading to the levy and garnishment of personal and real properties belonging to Lopingco, Azucar, and DAE Sugar, as well as properties of Talisay-Silay and Ma-ao, who were not parties to the case. Talisay-Silay filed a third-party claim and motion for cancellation of the levy on its property covered by TCT No. 115609. Procedural History: The trial court issued a writ of execution and subsequently an alias writ, which included properties not belonging to the judgment debtor, Eduardo R. Lopingco. DAE Sugar Milling Co., Inc., et al. filed a petition for certiorari with the Court of Appeals, assailing the compromise agreement and the writs of execution. The Court of Appeals set aside the writ of execution insofar as DASUMICO, AZUCAR, and Rosita Lopingco were concerned, declaring the compromise agreement binding only between Solco and Eduardo R. Lopingco. Solco and Eduardo R. Lopingco filed separate petitions for review with the Supreme Court. Later, Solco and DAE Sugar filed a joint motion to approve a Memorandum of Agreement. Ma-ao Sugar Central Co., Inc. and Talisay Silang Sugar Milling Co. Inc. filed a motion for intervention, claiming the memorandum of agreement was fraudulent. The trial court eventually lifted the levy and sale on execution of Talisay-Silay's properties. The Petition: The Supreme Court consolidated the cases. The primary issues revolved around whether DAE Sugar and Azucar were bound by the compromise agreement and whether the compromise agreement could be set aside. However, the Court's focus shifted to the validity of the Memorandum of Agreement subsequently filed by Solco and DAE Sugar.
Issue(s)
Whether respondents DAE Sugar Milling Co., Inc. and Azucar Management & Development Corporation were bound by the compromise agreement entered into by petitioner Jerome Solco and respondent Eduardo R. Lopingco without express board resolution authorizing Lopingco. Whether the judicial compromise agreement could be set aside due to alleged flaws, considering the subsequent filing of a Memorandum of Agreement. Whether the Supreme Court may approve the Memorandum of Agreement executed by petitioner Jerome Solco and respondent DAE Sugar Milling Co., Inc., and the implications of DAE Sugar's title and ownership of the property involved.
Ruling
The Supreme Court denied the joint motion for the approval of the Memorandum of Agreement, declaring it void. The petitions in both G.R. Nos. 109559 and 109581 were denied, and the decision of the Court of Appeals was affirmed. The Register of Deeds of the Province of Negros Occidental was ordered to cancel Entry No. 350179 and all annotations on TCT No. T-115609. The complaint and counterclaims in Civil Case No. Q-91-9906 were dismissed.
Ratio Decidendi
On the issue of whether respondents DAE Sugar Milling Co., Inc. and Azucar Management & Development Corporation were bound by the compromise agreement: The Court held that a compromise agreement cannot be extended to parties who did not participate in the agreement or give proper authority to their co-defendants to bind them. The Court of Appeals correctly ruled that the compromise agreement was binding only as against petitioner Solco and respondent Eduardo R. Lopingco, and thus set aside the writ of execution insofar as DASUMICO, AZUCAR, and Rosita Lopingco were concerned. Even if Dae Sugar and Azucar were considered mere alter egos of Eduardo R. Lopingco, the levy and sale on execution of properties not owned by Eduardo R. Lopingco would remain void. On the issue of whether the judicial compromise agreement could be set aside: While the initial petitions raised this, the subsequent filing of a Memorandum of Agreement superseded this issue. However, the Court's reasoning regarding the void Memorandum of Agreement implicitly addresses the integrity of the underlying proceedings. The Court found the Memorandum of Agreement void for several reasons, including that the levy and sale on execution had been nullified, that DAE Sugar falsely warranted its title to TCT No. 115609 which did not belong to it, and that DAE Sugar illegally attempted to cede property it did not own. On the issue of whether the Supreme Court may approve the Memorandum of Agreement: The Court found the Memorandum of Agreement void. Solco and DAE Sugar had nothing to ratify because the levy and sale on execution of TCT No. 115609 had already been nullified by both the Court of Appeals and the Regional Trial Court, rendering the levy and sale nonexistent. Furthermore, TCT No. 115609 is registered in the name of Talisay-Silay, not DAE Sugar. DAE Sugar falsely warranted its title and ownership of the property, which it did not possess. The agreement to sell between Talisay-Silay and DAE Sugar did not transfer ownership because it was a contract to sell, not a contract of sale, and the conditions for consummating the sale had not been met. DAE Sugar could not satisfy its obligation by assigning property it did not own. The Court reiterated that the power of the court in execution extends only to properties unquestionably owned by the judgment debtor, and a levy on property not belonging to the judgment debtor is null and void.
Main Doctrine
A compromise agreement and its subsequent writ of execution cannot bind parties who did not participate in the agreement or authorize their co-defendants to bind them. Furthermore, a levy on execution is void if the property levied upon does not belong to the judgment debtor.