Domingo Realty v. Acero
REITERATIONFacts
The Antecedents: Domingo Realty, Inc. (Domingo Realty) filed a complaint against Antonio M. Acero and others for the recovery of possession of three parcels of land in Muntinlupa, Metro Manila. Acero, doing business as A.M. Acero Trading, claimed to have leased the land from co-defendant David Victorio. Victorio challenged Domingo Realty's titles, asserting his own ownership and long-standing possession. The core dispute centered on the ownership and possession of these properties. Procedural History: The parties, including Domingo Realty, Acero, and Luis Recato Dy, entered into a Compromise Agreement on December 3, 1987, which was approved by the Pasay City Regional Trial Court (RTC) on December 7, 1987. Acero later sought to nullify this agreement, alleging it was based on a mistake regarding the extent of his encroachment. The RTC denied Acero's motion to nullify and ordered the execution of the compromise judgment. After record loss due to fire and subsequent reconstitution, the RTC reiterated its orders for execution. Acero then filed a Petition for Certiorari and Mandamus with the Court of Appeals (CA), seeking to nullify the RTC's execution orders. The CA granted the petition, setting aside the RTC's orders and, notably, the Compromise Judgment itself, directing the RTC to proceed with the case on the merits. The Petition: Domingo Realty and Ayala Steel Manufacturing Co., Inc. (Ayala Steel), having purchased the properties, filed this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court. They seek to reverse the CA's decision, arguing that the CA erred in nullifying the Compromise Judgment and the underlying Compromise Agreement. Petitioners contend that Acero's petition before the CA was an improper remedy and was filed out of time. They also argue that the CA erred in finding the agreement vague or vitiated by mistake, asserting that the terms were clear and that Acero's alleged mistake was due to his own palpable neglect and failure to exercise ordinary prudence. The petition asks this Court to affirm the RTC's orders and the Compromise Judgment, and to remand the case for further proceedings concerning David Victorio.
Issue(s)
Whether the Court of Appeals erred in nullifying the judgment on the Compromise Agreement and subsequent orders, despite no motion to set aside the judgment on grounds of fraud, mistake, or duress being filed before the trial court, and whether the Court of Appeals erred in entertaining the Petition for Certiorari and Mandamus when it was filed beyond a reasonable time or was barred by laches. Whether the Court of Appeals erred in nullifying the judgment and agreement when the private respondent argued in his Petition for Certiorari and Mandamus that the judgment on the Compromise Agreement is final, executory, immutable, and unalterable. Whether the Court of Appeals erred in nullifying the judgment and agreement based on fraud or mistake when these issues were not raised before the trial court and no evidence was presented to substantiate them, specifically regarding the invocation of mistake by respondent Acero. Whether the Court of Appeals erred in ruling that the non-inclusion of David Victorio is a ground to nullify and set aside the agreement. Whether the Court of Appeals erred in ruling that the alleged vagueness of the Compromise Agreement is a ground to nullify and set aside the agreement.
Ruling
The petition is meritorious. The Supreme Court granted the petition, reversed the Court of Appeals' decision, and affirmed the RTC orders and the Compromise Judgment. The case was remanded to the RTC for further proceedings with respect to the complaint against David Victorio.
Ratio Decidendi
On the timeliness and propriety of the remedy: The Supreme Court held that a petition for certiorari is not a substitute for a lost appeal. Respondent Acero received the denial of his Motion to Nullify the Compromise Agreement on December 11, 1991. The 15-day period to appeal to the CA expired on December 26, 1991. Instead of filing an appeal, Acero filed a petition for certiorari on April 4, 1994, which was filed out of time and was an improper remedy. The Court noted that even a petition for relief from judgment would have been filed beyond the prescribed periods. The CA should have rejected the certiorari petition outright. The Court did not directly address this issue in the provided text. On the ground of mistake: The Court held that respondent Acero could not invoke mistake to nullify the Compromise Agreement. Article 1333 of the Civil Code states that there is no mistake if the party alleging it knew the doubt, contingency, or risk affecting the object of the contract. Acero was aware of the technical descriptions of Domingo Realty's lots and the boundaries of his leased property. He could have, through ordinary diligence, hired a geodetic engineer to determine the extent of the encroachment before signing the agreement. His failure to do so, constituting palpable neglect, meant the mistake was not excusable and could not be used to abrogate the agreement. The Court emphasized that parties are bound by the consequences of their acts, and financial disadvantage does not relieve them of their obligations. On the non-inclusion of David Victorio: The Court found merit in the petitioners' position that the non-inclusion of David Victorio, Acero's alleged lessor, in the Compromise Agreement does not nullify the agreement as between Domingo Realty and Acero. The legal effect is merely that Victorio cannot be bound by the agreement. The issue of ownership between petitioners and Victorio can be threshed out in the original civil case. Remanding the case for proceedings against Victorio is proper, but annulling the partial judgment between petitioners and Acero is not. On the alleged vagueness of the Compromise Agreement: The Court ruled that the Compromise Agreement is not vague. The object of a contract need not be specified with absolute certainty; it is enough that it is determinable. The technical descriptions in the Transfer Certificates of Title (TCTs) of Domingo Realty provide the metes and bounds of the property, making the area determinable. The Bureau of Lands' determination that Verification Survey Plan No. Vs-13-000135 was the correct plan was controlling. The term "portion" in paragraph 3 refers to petitioners' lot that is encroached upon, not necessarily a portion of Acero's leased area. The agreement clearly stipulated that Acero would vacate and clear any structures erected inside petitioners' property.
Main Doctrine
A petition for certiorari is not a substitute for a lost appeal. Furthermore, a mistake that could have been averted by ordinary prudence, arising from a party's failure to exercise due diligence in verifying facts and terms of a contract, cannot be a ground to nullify a compromise agreement.