FACTS:

The petitioner filed a complaint for annulment of contracts and recovery of possession against the respondents, alleging that she is the common-law wife of Augusto Chong and that she bought a parcel of land from respondent corporation. She claimed that Augusto sold the subject lot to the respondent-spouses under a Transfer of Rights and Assumption of Obligation, but she never received the proceeds from the sale. The petitioner also denied selling the house on the lot to the respondents, as she was working in Hong Kong at the time it was allegedly notarized. She further claimed that the respondents rented out a house in Singalong, Manila without her knowledge and consent. The petitioner sought the nullification of the contracts, recovery of possession, and indemnification.

The respondents moved to dismiss the complaint, but their motion was denied. They then filed their answer, while the respondent corporation was declared in default for failing to file an answer. During the pre-trial, the respondents orally moved to file an amended answer, which was granted. They filed their amended answer with counterclaim, asserting that the Transfer of Rights and Assumption of Obligation was supported by sufficient consideration and denying the petitioner's allegations. After trial, the trial court ruled in favor of the respondents, finding the contracts valid and ordering the petitioner to pay damages, attorney's fees, and costs.

The petitioner appealed the decision to the Court of Appeals (CA), arguing various issues, including the admissibility of the amended answer, denial of due process during pre-trial, and the validity of the Transfer of Rights and Assumption of Obligation. The CA upheld the trial court's decision, finding no error in allowing the amended answer, no denial of due process, and the transfer agreement valid and supported by valuable consideration.

ISSUES:

1. Whether the Transfer of Rights and Assumption of Obligation lacked valuable consideration.

2. Whether petitioner's rights over the subject lot were validly transferred to respondent-spouses.

3. Whether the Transfer of Rights and Assumption of Obligations is valid and binding between the parties.

4. Whether the judgment based on the compromise agreement is valid.

5. Whether the petitioner's claim to annul the transfer of the subject lot and sale of the house thereon is valid.

6. Whether the petitioner's claim that the Deed of Sale is a forgery is credible.

7. Whether the defective notarization of the Deed of Sale affects the validity of the sale of the house.

8. Whether the petitioner's claim to ownership of another house is proven.

9. Whether or not the Court of Appeals erred in finding that the petitioner has no legal capability to sue as a juridical person.

10. Whether or not the Court of Appeals erred in ruling that the petitioner cannot avail of the doctrine of piercing the corporate veil.

RULING:

1. The Supreme Court ruled in favor of respondent-spouses. The Transfer of Rights and Assumption of Obligation was not found to lack valuable consideration. The evidence on record sufficiently established that petitioner's rights over the subject lot were validly transferred to respondent-spouses in consideration of their payment of petitioner's debts to Rosario. The Transfer of Rights and Assumption of Obligations was executed by Augusto, acting within his powers under the Special Power of Attorney, for valuable consideration.

2. The Transfer of Rights and Assumption of Obligations is valid and binding between the parties. In a contract of agency, the agent acts on behalf of the principal with the latter's consent, and the principal is bound by the acts of the agent as long as the agent acts within the scope of authority.

3. The judgment based on the compromise agreement is valid. A judgment based on a compromise agreement is immediately executory and not appealable unless set aside on grounds of nullity. A party may attack the validity of a final and executory judgment through three ways: (a) by petition for relief from judgment, (b) by direct action to annul and enjoin the enforcement of the judgment, or (c) by a collateral attack against the challenged judgment. In this case, the jurisdiction of the Pasay City RTC and the validity of the judgment based on the compromise agreement were not established as being void upon its face or through competent proof.

4. The transfer of the subject lot and sale of the house thereon is valid. The petitioner failed to immediately challenge the transfer and sale, and subsequently sold the house to the respondents, which shows her consent and ratification of the transactions.

5. The claim that the Deed of Sale is a forgery is not credible. The trial court and the Court of Appeals found that the petitioner signed the Deed of Sale and received consideration for it, and the signatures on the Deed of Sale match the petitioner's previous signature.

6. The defective notarization of the Deed of Sale does not affect the validity of the sale of the house. While the notarization was done after the petitioner had signed the deed and was already in Hong Kong, it does not invalidate the sale as the formalities required by law are not essential for the validity of the contract.

7. The petitioner's claim to ownership of another house is not proven. She only provided documents that showed her residency in the house but failed to establish her rightful ownership.

8. The Court of Appeals did not err in finding that the petitioner has no legal capability to sue as a juridical person. The petitioner failed to establish its personality as a juridical entity and presented inadequate and unsubstantiated pieces of evidence to show its existence and legal capacity to sue.

9. The Court of Appeals did not err in ruling that the petitioner cannot avail of the doctrine of piercing the corporate veil. The petitioner failed to show that there was fraud or misuse of the corporate personality to justify the piercing of the corporate veil.

PRINCIPLES:

• The clear and unmistakable tenor of a duly notarized Special Power of Attorney is entitled to full faith and credit upon its face, unless impugned by strong, complete and conclusive proof.

• In a contract of agency, the agent acts in representation or in behalf of another with the consent of the principal.

• In a contract of agency, the agent acts on behalf of the principal with the latter's consent, and the principal is bound by the acts of the agent within the scope of authority.

• A judgment based on a compromise agreement is immediately executory and not appealable unless set aside on grounds of nullity.

• A party may attack the validity of a final and executory judgment through three ways: petition for relief from judgment, direct action to annul and enjoin the enforcement of the judgment, or collateral attack against the challenged judgment.

• Ratification of a contract can be shown through the acceptance and retention of benefits or the failure to immediately challenge the contract.

• Forgery must be proven by clear and convincing evidence.

• Defective notarization does not invalidate a contract, as the formalities required by law are not essential for the validity of the contract but only for its greater efficacy or convenience, or to bind third persons.

• The burden of proof lies on the plaintiff to establish her case by a preponderance of evidence in civil cases.

• A party seeking to avail of the doctrine of piercing the corporate veil must establish that there was fraud or misuse of the corporate personality.

• To establish legal capacity to sue as a juridical person, there must be sufficient and valid evidence presented to show the existence and legal personality of the entity.