Compromise After Judgment

When a compromise agreement is given judicial imprimatur, it becomes more than a contract
binding to the parties but a determination of a controversy and becomes immediately executory
and unappealable, except for vices of consent or forgery. Thus, a compromise after final
judgment is unnecessary since the rights of the parties are already settled and there are no more
disputes to compromise.1 However, as upheld by law and jurisprudence, there is no justification
to disallow compromise after final judgment.

Article 2040 of the Civil Code impliedly authorizes that compromise may be effected
notwithstanding final judgment.2 The first paragraph of the said article contemplates a situation
where:

● Litigation has been decided by final judgment

● A compromise has been agreed upon
● Either or both of the parties were unaware of the existence of the final judgment
● The compromise may be rescinded

In this scenario, the law provides a remedy for either parties to impugn the contract through
rescission.

1
Magbanua v Uy, G.R. No. 161003, May 6, 2005
2
Jesalva v Bautista, G.R. Nos. L-11928-11930, March 24, 1959.