G.R. No. L-18377. Dec 29, 1962.

Duñgo v. Lopena

MAIN TOPIC – Compromise

FACTS
 Petitioner Duñgo and a certain Gonzales purchased 3 parcels of land from respondents Lopena and Ramos. Of the
total amount, they gave a sum as down payment, leaving an unpaid balance to be paid in 6 monthly installments
 To secure payment of the balance, petitioners executed over the same 3 parcels of land a Deed of Real Estate
Mortgage in favor of the respondents, w/ the condition that failure of the buyers to pay any of the installments on
their maturity dates shall automatically cause the entire unpaid balance to become due and demandable
 They defaulted on the first installment. Hence, respondents filed a complaint for foreclosure of the mortgage w/ the
court of first instance
 Before the case could be tried, a compromise agreement was submitted to the court for approval. The agreement
was signed by the respondents and Gonzales. But it was not signed by petitioner Duñgo.
 The compromise agreement was approved by the court on the same day it was submitted.
 Subsequently, a tri-party agreement was drawn, and the signatories were Duñgo (petitioner) and Gonzales as
debtors, and Lopena and Ramos (respondents) as creditors, and a certain Santos as payor
 Petitioner Duñgo and Gonzales failed again to pay the balance of their debt, so respondents filed a motion for the
sale of the mortgaged property. The lower court granted the motion and ordered the sale of the property
 Petitioner Duñgo filed a motion to set aside all the proceedings on the ground that the compromise agreement was
void w/ respect to him because he did not sign the same. Thus, he argues that all the subsequent proceedings were
also void w/ respect to him
ISSUE
 Whether or not the compromise agreement and all the subsequent proceedings thereto was void
HELD
 NO, the agreement was valid, not void.
 This is so because, the compromise agreement here was ratified by Duñgo even though he did not sign it.
 A compromise agreement in itself is a contract [Art. 2028, Civil Code]. And under Art. 1878, a third person cannot
bind another to a compromise agreement unless he, the third persons, has obtained a special power of attorney for
that purpose from the party intended to be bound [See Art. 1878 par. 3]
 However, although the Civil Code requires a special power of attorney in order that one may compromise the
interest of another, it is not correct to conclude that its absence renders the agreement void
 Art. 1403 provides that the ff. contracts are unenforceable unless they are ratified: (1) those entered into in the
name of another person by one who has been given no authority or legal representation, or who has acted beyond
his powers
 Here, the Court finds that Duñgo did ratify the compromise agreement as conclusively established by the tri-party
agreement. Since Duñgo’s consented to making the court order that approved the compromise agreement an
integral part of the tri-party agreement, he cannot now be allowed to repudiate the compromise agreement and
claim that he did not authorize it
 “When it appears that the client, on becoming aware of the compromise and the judgment thereon, fails to
repudiate promptly the action of his attorney, he will not afterwards be heard to contest its validity”

DISPOSITIVE PORTION
WHEREFORE, the petition for certiorari and mandamus filed by petitioner is hereby dismissed. The order of the
lower court dismissing the appeal of petitioner is hereby affirmed.

DOCTRINE
 “When it appears that the client, on becoming aware of the compromise and the judgment thereon, fails to
repudiate promptly the action of his attorney, he will not afterwards be heard to contest its validity”