G.R. No. 211893 - Mar Santos vs. V.C. Development Corp.

Rozel “Alex” F. Mar Santos, doing business as Total Land Management, Inc., and V.C. Development Corporation (V.C. Development) entered into an agreement sometime in 1990 regarding the sale of lots in Violago Homes, Quezon City.
As part of the transaction, Santos was to market housing packages, build houses, and assist prospective buyers in securing a mortgage with United Savings Bank, with the buyers’ loans conditioned on the submission of the owner’s duplicate copies of the titles and the construction of houses on the lots.

Santos solicited buyers, notably Anacleto Quibuyen and Ana Maria Male, and assisted them in obtaining housing loans.
Santos began constructing 10 houses anticipating the smooth processing of the transactions.
V.C. Development, however, delayed submitting the titles due to its previous mortgage with the AFP Retirement and Separation Benefits System, finally releasing TCT Nos. 309980 and 309985 on January 15, 1991—titles intended for the buyers and subsequently to be forwarded to United Savings.
Additionally, V.C. Development failed to complete the subdivision amenities, which led United Savings to withhold the release of loan proceeds.

The delay in completing the necessary documentary and construction requirements prompted the buyers to withdraw their reservations and down payments.
Several buyers also initiated complaints against V.C. Development before the HLURB.
In response, V.C. Development demanded the return of the owner’s duplicate copies of TCT Nos. 309980 and 309985, which Santos retained as security for the construction expenses he had advanced.

The Regional Trial Court (RTC) of Quezon City, Branch 80, rendered a decision on October 4, 2007, in favor of V.C. Development.
The RTC held that an implied trust had been created whereby Santos held the titles solely for facilitating the buyers’ loan processing, and since the transaction did not materialize, he was obligated to return the titles.
The RTC expressly ruled that Santos could not withhold the titles as security against his construction expenses.

After the filing of a Notice of Appeal by Santos and submission of pleadings by both parties, the case was referred to the Philippine Mediation Center (PMC).
On July 9, 2010, mediation resulted in a Compromise Agreement with the following key terms:

V.C. Development would refund specific amounts to buyers Male and Quibuyen through Santos.
V.C. Development would, within 30 days, execute an instrument assigning its rights and interests over the property covered by TCT No. 309985 to Santos.
Santos would return the owner’s duplicate of TCT No. 309980 to V.C. Development.

The parties complied in part: V.C. Development issued checks for the refunds, and Santos returned the duplicate copy of TCT No. 309980.
Subsequently, on August 2, 2010, V.C. Development’s President Oscar I. Violago executed a Deed of Absolute Sale transferring the property (TCT No. 309985) to Santos as payment for construction expenses.

On January 4, 2012, the Court of Appeals (CA) rendered a decision affirming the RTC ruling, ordering Santos to return the title duplicates based on the implied trust doctrine.
The CA based its decision partly on a noted discrepancy: AVP Beatriz Q. Sayson, who executed the Compromise Agreement on behalf of V.C. Development, was not listed as an authorized representative in its Secretary’s Certificate.
Santos, in his Manifestation and Motion, contended that the parties had substantially complied with the Compromise Agreement.
Despite subsequent resolutions ordering V.C. Development to furnish a comment on Santos’ motion (which went unserved), the CA, in its February 11, 2014 Resolution, denied Santos’ motion, effectively disregarding the Compromise Agreement.
Santos then filed the Petition for Review on Certiorari under Rule 45 challenging the CA’s action.

Whether the Court of Appeals erred in failing to render a judgment based on the Compromise Agreement executed on July 9, 2010.

Did the alleged discrepancy regarding AVP Sayson’s authority in the Secretary’s Certificate justify the CA’s disapproval of the Compromise Agreement?
Is it proper for the appellate court to disregard the Compromise Agreement despite the subsequent conduct of the parties which indicated consent and compliance?

Whether the acts performed by both parties after the Compromise Agreement (refund payments, execution of the Deed of Absolute Sale, and return of the title copy) constitute sufficient evidence of mutual assent and compliance thereby vesting rights that must be honored by judicial order.

Should the failure of V.C. Development to file a comment or opposition be construed as its conformity to the terms of the Compromise Agreement?
Does judicial intervention in a settled dispute between the parties under a valid compromise undermine the principle of encouraging amicable settlements?