Facts:

The case involves Gloria A. Anacleto as the petitioner and Alexander Van Twest and Euroceanic Rainbow Enterprises Philippines, Inc. as the respondents. The events leading to the case began on February 6, 1995, when a complaint for reconveyance of title was filed by Alexander Van Twest and Euroceanic against Anacleto and Isaias M. Bongar. The complaint was represented by Atty. Ernesto V. Perez, who claimed to represent Van Twest, who had been reported missing since June 16, 1992. On March 31, 1995, Atty. Perez entered into a compromise agreement with Anacleto and Bongar, represented by Atty. Diosdado M. Allado. The agreement stipulated that Anacleto would pay Van Twest a total of P4,800,000.00, with specific payment schedules and conditions, including the involvement of an escrow-trustee.

On April 6, 1995, the trial court rendered judgment based on this compromise agreement. However, Anacleto later filed a motion questioning the validity of the agreement, claiming that Atty....

Facts:

Parties Involved

• Petitioner: Gloria A. Anacleto
• Respondents: Alexander Van Twest and/or Euroceanic Rainbow Enterprises Philippines, Inc. (Euroceanic)

Background of the Case

• On February 6, 1995, a complaint for reconveyance of title was filed by Alexander Van Twest and Euroceanic against Gloria A. Anacleto and Isaias M. Bongar. The complaint was filed by Atty. Ernesto V. Perez, who claimed to represent Van Twest, who had been reported missing since June 16, 1992.

Compromise Agreement

• On March 31, 1995, Atty. Perez, representing Van Twest, entered into a compromise agreement with Anacleto and Bongar, represented by Atty. Diosdado M. Allado. The agreement stipulated that Anacleto and Bongar would pay Van Twest a total of P4,800,000.00 in installments. The agreement also included provisions for the lifting of the notice of lis pendens and the waiver of claims and counterclaims.

Judgment Based on Compromise

• On April 6, 1995, the trial court rendered judgment based on the compromise agreement. However, Anacleto later discovered that Atty. Perez did not have a Special Power of Attorney (SPA) from Van Twest to enter into the compromise agreement.

Petitioner's Motion

• On June 2, 1995, Anacleto, represented by new counsel, Atty. Marvin L. Herrera, filed an urgent omnibus motion asking the court to require Atty. Perez to submit an SPA and to defer her compliance with the compromise agreement. Atty. Perez admitted he had no SPA but claimed that Anacleto's former counsel was aware of this fact.

Trial Court's Decision

• The trial court denied Anacleto's motion, ruling that she was estopped from questioning the validity of the compromise agreement since she knew Atty. Perez had no SPA during the negotiations. Anacleto's subsequent motions to vacate the judgment and for reconsideration were also denied.

Appeal to the Court of Appeals

• Anacleto filed a notice of appeal, but it was denied for being filed 12 days late. She then filed a petition for certiorari in the Court of Appeals, which was dismissed. Anacleto then filed this petition for review on certiorari before the Supreme Court.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Authority of Attorneys: Under Rule 138, §23 of the Rules of Court, an attorney cannot compromise a client's litigation without special authority. Atty. Perez had no such authority, as evidenced by the retainer agreement, which did not grant him the power to compromise.
2. Void Compromise Agreement: A compromise agreement entered into by a person without the necessary authority is void and has no legal effect. This principle is supported by jurisprudence, including Quiban v. Butalid and Alviar v. Court of First Instance of La Union.
3. Estoppel Does Not Apply: Anacleto cannot be estopped from questioning the validity of the compromise agreement because she had the right to rely on the representation that Atty. Perez had the necessary authority. The warranty in the compromise agreement that the signatories were duly authorized was a condition precedent to its validity.
4. Procedural Lapse Excused: The Supreme Court relaxed the procedural rules due to the merits of the case and the unusual circumstances, allowing the appeal to proceed despite the late filing of the notice of appeal.

Conclusion:

The Supreme Court reversed the decision of the Court of Appeals, annulled the judgment based on the compromise agreement, and declared the compromise agreement void. The Court emphasized the importance of proper authority in legal representation and the invalidity of agreements entered into without such authority.