G.R. No. 94284 - Silverio vs. Court of Appeals

Engineering Geoscience, Inc. (EGI) filed a petition for review (G.R. No. 187262) against Philippine Savings Bank (PSBank), challenging the Court of Appeals’ (CA) decision and resolution which had annulled earlier Regional Trial Court (RTC) orders.
The CA had reinstated the RTC’s Decision dated January 12, 1993, which approved a compromise agreement between the parties.
The case history involves multiple proceedings before the CA and RTC, including petitions for certiorari, motions for execution, and motions for reconsideration.

EGI obtained a loan from PSBank in the principal amount of Php24,064,000.00 evidenced by a Promissory Note dated February 14, 1990.
To secure the loan, EGI executed a Real Estate Mortgage on February 13, 1990 in favor of PSBank over two parcels of land covered by Transfer Certificate of Title Nos. 292874 and 249866.
The payment schedule provided for periodic interest and principal-amortization payments, of which EGI made only partial payments, eventually ceasing payment after November 29, 1990.
PSBank invoked the acceleration clause following default and subsequently filed a petition for extra-judicial foreclosure under Act No. 135.

EGI initially instituted a Complaint with Prayer for a Writ of Preliminary Injunction and Restraining Order challenging the annulment of its loan contract with PSBank.
The RTC granted a preliminary injunction on August 26, 1991, enjoining PSBank from proceeding with the foreclosure sale and thus delaying the full-blown trial.

Before the case fully materialized, PSBank and EGI submitted a Joint Motion for Approval of a Compromise Agreement, approved by the RTC in a Decision dated January 12, 1993.
Key stipulations of the compromise agreement included:

EGI’s acknowledgment of its loan obligation and the secured mortgage.
The agreed full settlement amount of P38,002,182.56 payable under specified deadlines and installments.
Provisions for a Deed of Absolute Sale in case partial payments did not meet a set threshold.
Conditions for additional execution measures, such as the issuance of a writ of execution and writ of possession in the event of default.
Waiver of claims and counterclaims between the parties upon complete payment and full compliance.

Despite the court-approved compromise, EGI failed to comply with its terms, prompting PSBank to file motions for execution and subsequent orders for the issuance of a writ of execution and later a writ of possession.

PSBank moved for execution based on the RTC’s decision, and an Order reinstated the writ of execution after PSBank set aside an earlier RTC order by failing to comply with EGI’s motion to delay.
EGI’s counsel later raised, for the first time, the alleged lack of authority of its former president, Jose Rolando Santos, to enter into the compromise agreement, challenging its validity.
Multiple motions were filed by both parties including:

EGI’s petition for annulment of the RTC Decision and the compromise agreement, asserting that Santos acted without proper authorization.
PSBank’s opposition to such motions, arguing that EGI’s own actions (including partial payments and prior representations) estopped it from later denying the authority of Santos.
Allegations of forum shopping were raised by PSBank when EGI simultaneously sought relief in different fora.

The contested issue centered on whether Santos had the proper authority (expressed or apparent) to bind EGI in litigating and entering into the compromise agreement.

PSBank was unable to produce evidence of a Board Resolution, special power of attorney, or secretary’s certificate authorizing Santos.
Conversely, EGI failed to substantiate when and how Santos lost his status as company president or compel the Board to clarify his authority.
The record showed that EGI benefited from transactions executed by Santos, including the signing of promissory notes and the mortgage, which raised issues regarding estoppel and apparent authority.

The CA, in its ruling, annulled RTC orders dated August 24, 2007, and January 23, 2008, holding that these orders were issued with grave abuse of discretion amounting to lack or excess of jurisdiction.
The CA emphasized that laches had set in against EGI since 12 years had passed since the execution of the compromise agreement.
The CA’s decision reinstated the RTC Decision dated January 12, 1993, effectively confirming the enforceability of the compromise agreement despite the alleged lack of authority.

Whether the CA erred in annulling and setting aside the RTC Orders dated August 24, 2007 and January 23, 2008, thereby reinstating the Decision dated January 12, 1993 that approved the compromise agreement.

Whether Jose Rolando Santos acted with the requisite authority to represent EGI in filing the complaint and entering into the compromise agreement.
Whether EGI’s subsequent allegations regarding lack of proper authorization and claims of fraud are sufficient to set aside the prior determination.
The effect of laches and estoppel on EGI’s ability to repudiate the compromise agreement after having benefited from it.