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relitigated.

Xxx The second rule refers to "conclusiveness of


1) GADRINAB VS. SALAMANCA, TALAO AND LOPEZ GR 194560 judgment."58 This means that facts already tried and determined
(2014) in another action involving a different claim or cause of action
cannot anymore be relitigated3
Facts:
In a compromise agreement, the parties freely enter into
1) Respondents, together with Adoracion Gadrinab stipulations. "[A] judgment based on a compromise agreement is
(represented by heirs) and Arsenia Talao (waived her a judgment on the merits" of the case. It has the effect of res
right to the property), are sibling and heirs of the late judicata. These principles are impressed both in our law and
Spouses Nicolas and Aurelia Talao who died intestate, jurisprudence.
leaving a parcel of land (subject property) in Manila.
2) Subsequently, respondent Salamanca filed a complaint Thus, Article 2037 of the Civil Code provides:
for partition of the (co-owned) subject property against
her siblings before the RTC where they were referred to Article 2037. A compromise has upon the parties the effect and
mediation where they entered into a compromise authority of res judicata; but there shall be no execution except
agreement stipulating, among others, that the (a) in compliance with a judicial compromise.
subject property (land with all improvements) will be
subject for sale and the amount will be divided among In Spouses Romero v. Tan, this court said:
them, (b) the rental collection of the duplex apartment
will be collected and divided among them, and (c) upon It is well settled that a judicial compromise has the effect of res
payment of appraised value to Petitioner Gadrinab, he judicata and is immediately executory and not appealable unless
will leave the unit of the duplex apartment which he is set aside [by mistake, fraud, violence, intimidation, undue
currently occupying within 45 days. influence, or falsity of documents that vitiated the compromise
3) Thereafter, the RTC approved the compromise agreement].
agreement which became final and executory.
4) However, in subsequent proceedings, parties still xxxx
disagreed as to how rentals should be divided and as to
the appraisal value of the property, prompting This case involves "bar by prior judgment." Respondents cannot
respondent Salamanca to move for the physical file another action for partition after final judgment on
partition of the property instead of having it sold. compromise had already been rendered in a previous action for
5) The RTC granted the motion of Salamanca, and when partition involving the same parties and property.
petitioner appealed to the Court of Appeals, CA
dismissed the appeal ruling that the exception to the This court explained in FGU Insurance Corporation v. Regional
immutability of judgments, that is, "whenever Trial Court the doctrine of finality of judgment:
circumstances (in this case, the disagreements)
transpire after the finality of the decision rendering its Under the doctrine of finality of judgment or immutability of
execution unjust and inequitable,” applies in this case. judgment, a decision that has acquired finality becomes
immutable and unalterable, and may no longer be modified in
Issue: WON the court can grant the motion of physical partition any respect, even if the modification is meant to correct
after judgment based on a compromise agreement became final erroneous conclusions of fact and law, and whether it be made
and executory. by the court that rendered it or by the Highest Court of the land.
Any act which violates this principle must immediately be struck
Ruling: No. down.

There is res judicata when the following concur: This doctrine admits a few exceptions, usually applied to serve
substantial justice:
1. Previous final judgment;
1. "The correction of clerical errors;
2. By a court having jurisdiction over the parties and the
subject matter; 2. the so-called nunc pro tunc entries which cause no
prejudice to any party;
3. On the merits of the case;
3. void judgments; and
4. Between identical parties, on the same subject matter, and
cause of action55 4. whenever circumstances transpire after the finality of the
decision rendering its execution unjust and inequitable."
There are two rules that embody the principle of res judicata.
The first rule refers to "bar by prior judgment," 56which means Doctrines on bar by prior judgment and immutability of
that actions on the same claim or cause of action cannot be judgment apply whether judgment is rendered after a full-blown
trial or after the parties voluntarily execute a compromise Judges "have the ministerial and mandatory duty to implement
agreement duly approved by the court. and enforce [a compromise agreement]." Absent appeal or
motion to set aside the judgment, courts cannot modify, impose
Because a judicial compromise agreement is in the nature of terms different from the terms of a compromise agreement, or
both an agreement between the parties and a judgment on the set aside the compromises and reciprocal concessions made in
merits, it is covered by the Civil Code provisions on contracts. It good faith by the parties without gravely abusing their discretion.
can be avoided on grounds that may avoid an ordinary contract,
e.g., it is not in accord with the law; lack of consent by a party; "[They cannot] relieve parties from [their] obligations . . . simply
and existence of fraud or duress. Further, the pertinent Civil because [the agreements are] . . . unwise." Further, "[t]he mere
Code provisions on compromise agreements provide: fact that the Compromise Agreement favors one party does not
render it invalid." Courts do not have power to "alter contracts in
Article 2038. A compromise in which there is mistake, fraud, order to save [one party] from [the effects of] adverse
violence, intimidation, undue influence, or falsity of documents is stipulations. . . ."
subject to the provisions of Article 1330 of this Code.
Respondents have remedies if parties to the compromise
Article 1330. A contract where consent is given through mistake, agreement refuse to abide by its terms
violence, intimidation, undue influence, or fraud is voidable.
The issue in this case involves the non-compliance of some of the
Therefore, courts cannot entertain actions involving the same parties with the terms of the compromise agreement. The law
cause of action, parties, and subject matter without violating the affords complying parties with remedies in case one of the
doctrines on bar by prior judgment and immutability of parties to an agreement fails to abide by its terms.
judgments, unless there is evidence that the agreement was
void, obtained through fraud, mistake or any vice of consent, or A party may file a motion for execution of judgment. Execution is
would disrupt substantial justice. a matter of right on final judgments. Section 1, Rule 39 of the
Rules of Court provides:
In this case, there was no issue as to the fact that the parties
freely entered into the compromise agreement. There was also Section 1. Execution upon judgments or final orders. —
no dispute about the clarity of its terms. Some of the parties Execution shall issue as a matter of right, on motion, upon a
simply do not wish to abide by the compromise agreement’s judgment or order that disposes of the action or proceeding
terms. upon the expiration of the period to appeal therefrom if no
appeal has been duly perfected. (1a)
xxxx
If the appeal has been duly perfected and finally resolved, the
Likewise, respondents’ argument that a supervening event, i.e. execution may forthwith be applied for in the court of origin, on
disagreement among the parties, was present to justify motion of the judgment obligee, submitting therewith certified
disturbance of the final judgment on compromise fails to true copies of the judgment or judgments or final order or orders
persuade. A supervening event may justify the disturbance of a sought to be enforced and of the entry thereof, with notice to
final judgment on compromise if it "brought about a material the adverse party.
change in [the] situation" between the parties. The material
change contemplated must render the execution of the final The appellate court may, on motion in the same case, when the
judgment unjust and inequitable. Otherwise, a party to the interest of justice so requires, direct the court of origin to issue
compromise agreement has a "right to have the compromise the writ of execution. (n)
agreement executed, according to its terms."
If a party refuses to comply with the terms of the judgment or
The subsequent disagreement among the parties did not cause resists the enforcement of a lawful writ issued, an action for
any material change in the situation or in the relations among indirect contempt may be filed in accordance with Rule 71 of the
the parties. The situation and relations among the parties Rules of Court:
remained the same as the situation and their relations prior to
the compromise agreement. They remained co-owners of the Section 3. Indirect contempt to be punished after charge and
property, which they desired to partition. hearing. — After a charge in writing has been filed, and an
opportunity given to the respondent to comment thereon within
Moreover, the parties voluntarily agreed to the compromise such period as may be fixed by the court and to be heard by
agreement, which was already stamped with judicial approval. himself or counsel, a person guilty of any of the following acts
The agreement’s execution would bring about the effects desired may be punished for indirect contempt;…..
by all parties and the most just and equitable situation for all. On
the other hand, the judgment granting the second action for (b) Disobedience of or resistance to a lawful writ, process, order,
partition filed by respondent Salamanca was obtained with or judgment of a court, including the act of a person who, after
opposition. being dispossessed or ejected from any real property by the
judgment or process of any court of competent jurisdiction,
enters or attempts or induces another to enter into or upon such Issues:
real property, for the purpose of executing acts of ownership or
possession, or in any manner disturbs the possession given to the 1) WON petitioner breached the compromise agreement
person adjudged to be entitled thereto[.]
2) WON MeTC’s execution of judgment ordering petitioner
Since a judgment on compromise agreement is effectively a to vacate the premises is valid despite the court’s
judgment on the case, proper remedies against ordinary approval of the compromise agreement binding
judgments may be used against judgments on a compromise petitioner to pay.
agreement. Provided these are availed on time and the
appropriate grounds exist, remedies may include the following: a) Ruling:
motion for reconsideration; b) motion for new trial; c) appeal; d)
petition for relief from judgment; e) petition for certiorari; and f) 1). Yes
petition for annulment of judgment.
A compromise agreement is a contract between the parties, which
2) ABINUJAR AND LANA VS. COURT OF APPEALS. GR 104133. if not contrary to law, morals or public policy, is valid and
(1995) enforceable between them (Municipal Board of Cabanatuan City
v. Samahang Magsasaka, Inc., 62 SCRA 435 [1975]). There are
Facts: two kinds of compromise agreements, the judicial, which puts an
end to a pending litigation, and the extrajudicial, which is to avoid
1) Petitioners Abinujar and Lana executed a Deed of Sale a litigation (Civil Code of the Philippines, Art. 2028; Caguioa, VI
with Right to Repurchase in favor of private Commentaries and Cases, on Civil Law 292 [1970]).
respondents Spouses Ramiro and Florentina Ramiro,
involving a residential house which he failed to redeem As a contract, a compromise agreement is perfected by mutual
within period stipulated. consent (Rovero v. Amparo, 91 Phil. 228 [1952]). A judicial
compromise, however, while binding between the parties upon its
2) Private respondents filed a complaint for ejectment execution, is not executory until it is approved by the court and
against petitioners before MeTC which later on reduced to a judgment.
approved the compromise agreement executed by the
parties stipulating, among others, (a) the payment of Article 2037 of the Civil Code of the Philippines provides:
certain amounts on the specific dates indicated, and (b)
in case of failure on the part of the petitioners to pay 3 A compromise has upon the parties the effect and authority
consecutive payments, private respondents will be of res judicata; but there shall be no execution except in
entitled to a writ of execution , unless the parties agree compliance with a judicial compromise.
to extend the period.
The non-fulfillment of the terms and conditions of a compromise
3) Subsequently, private respondents filed a motion for agreement approved by the court justifies execution thereof and
execution on the ground that petitioner failed to pay the issuance of the writ for said purpose is the court's ministerial
the first three installments stipulated in the duty enforceable by mandamus (Maceda, Jr. v. Moreman
compromise agreement, to wit: P50,000 on Jan 31, Builders Co., Inc., 203 SCRA 293 [1991]).
1990; P10,000.00 on Feb 28, 1990; and P10,000.00 on
March 31, 1990. In the compromise agreement, petitioners obligated themselves
to pay private respondents the amount of P50,000.00 on January
4) After the court’s grant of petitioner’s motion to correct 31, 1990, P10,000.00 on February 28, 1990, and P10,000.00 on
typographical error in the order of the compromise March 31, 1990.
agreement, petitioners filed a motion, that the check
payments previously deposited by them with the court Petitioners received a copy of the decision of the Metropolitan
be accepted and be given to private respondents, which Trial Court approving the compromise agreement on March 26,
was opposed by private respondents who stated that 1990. Clearly, there was a breach, for it was only on August 17,
they would not renew the compromise agreement with 1990 that petitioners attempted to pay by means of nine
petitioner and later filed a petition for mandamus to postdated checks the amounts agreed upon. In effect, the first
compel execution of the compromise agreement. installment payment of P50,000.00 due on January 31, 1990 was
moved to August 31, 1990, the second installment of P10,000.00
5) The case was later referred to the RTC who issued the due on February 28, 1990 was moved to September 30, 1990
resolution commanding the MeTC to issue a writ of and so forth, thereby making the last installment of P5,000.00
execution of the decision approving the compromise due on September 30, 1990 moved to April 30, 1991. This is
agreement which was obeyed by MeTC, leading to the tantamount to novating the original agreement entered into by
service of “Sheriffs’ Notice to Voluntarily Vacate the the parties without the consent of private respondents.
Premises” to the petitioner.
Inasmuch as a judicial compromise becomes binding between Board (NCMB), claiming that PJI was guilty of unfair
the parties upon its execution, petitioners should have paid the labor practice for implementing a retrenchment
installments falling due even before the approval thereof by the program, and thereby, causing the Secretary of the
trial court. But assuming that a judicial compromise is not Department of Labor and Employment (DOLE) to certify
perfected until it is approved by the court, still petitioner should the labor dispute to the National Labor Relations
have paid the compromise agreement installments due on Commission (NLRC) for compulsory arbitration pursuant
March 31, 1990, together with the installments due on January to Article 263 (g) of the Labor Code.
31 and February 28, 1990 on or before March 31, 1990.
3) Subsequently, in its resolution dated May 31, 2001,
2) No NLRC declared that (a) there was no basis for the
implementation of petitioner's retrenchment program,
When the parties entered into a compromise agreement, the (b) the 31 complainants were illegally dismissed and
original action for ejectment was set aside and the action was thus their reinstatement is ordered, with payment of
changed to a monetary obligation. unpaid salaries, bonuses and backwages from the date
of dismissal up to the actual date of reinstatement plus
A perusal of the compromise agreement signed by the parties 10% of the total monetary award as attorney's fees.
and approved by the inferior court merely provided that in case
the defendants (petitioners herein) failed to pay three monthly 4) Thereafter, the parties executed a Compromise
installments, the plaintiffs (private respondents herein) would be Agreement (where PJI undertook to reinstate the 31
entitled to a writ of execution, without specifying what the complainants) signed by all employees mentioned in the
subject of execution would be. Said agreement did not state that agreement and submitted and approved by NLRC, with
petitioners would be evicted from the premises subject of the the case deemed closed and terminated.
suit in case of any default in complying with their obligation
thereunder. This was the result of the careless drafting thereof 5) Subsequently however, the Union filed another Notice
for which only private respondents were to be blamed. of Strike, claiming, among others, that (1) 29 [other]
employees were illegally dismissed from employment,
xxxxx (2) that the salaries and benefits of 50 others had been
illegally reduced, (3) that after the retrenchment
An execution must conform to and be warranted by the program was implemented, [another] 200 Union
judgment on which it was issued. There should not be a members-employees who continued working for
substantial variance between the judgment and the writ of petitioner had been made to sign five-month contracts,
execution. Thus, an execution is fatally defective if the judgment with (d) 29 of which dismissed for not acceding to the
was for a sum of money and the writ of execution was for the employer’s demands.
sale of mortgaged property.
6) In its Resolution dated July 1, 2003, the NLRC ruled that
As petitioners' obligation under the compromise agreement as the complainants were not illegally dismissed
approved by the court was monetary in nature, private considering (A) that the May 31, 2001 Resolution
respondents can avail only of the writ of execution provided in declaring the retrenchment program illegal did not
Section 15, Rule 39 of the Revised Rules of Court, and not that attain finality as "it had been academically mooted by
provided in Section 13. the compromise agreement entered into between both
parties and (B) that pursuant to Article 223 of the Labor
WHEREFORE, the decision of the Court of Appeals is AFFIRMED Code, this resolution attained finality upon the
with the MODIFICATION that the Sheriff is directed to enforce expiration of ten days from both parties' receipt thereof
the execution only of the money judgment in accordance with thus it could not be made the basis to justify the alleged
Section 15, Rule 39 of the Revised Rules of Court. continued employment regularity of the 29
complainants subsequent to their retrenchment
3) PHIL. JOURNALISTS INC. VS. NLRC. GR 166421. (2006) 7) The Union assailed the ruling of the NLRC before the CA
which ruled in favor of the Union, holding that the
Facts: compromise agreement referred only to the award
given by the NLRC to the complainants in the said case,
1) One of the petitioners is Philippine Journalists, Inc. (PJI), that is, the obligation of the employer to the
a domestic corporation engaged in the publication and complainants, and that the NLRC’s May 31, 2001
sale of newspapers and magazines, whereas the private Resolution which declares that respondent failed to
respondent is the exclusive bargaining agent of all the prove the validity of its retrenchment program still
rank-and-file employees in the company is the Journal stands even after the compromise agreement was
Employees Union (Union for brevity). executed.

2) Sometime in April 2005, the Union filed a notice of Issue:


strike before the National Conciliation and Mediation
WON the execution of the compromise agreement rendered Adjective law governing judicial compromises
May 31, 2001 Resolution moot and academic, barring such annunciate that once approved by the court, a judicial
resolution to be a basis for the lack of validity of the compromise is not appealable and it thereby becomes
implementation of PJI’s retrenchment program. immediately executory but this rule must be understood
to refer and apply only to those who are bound by the
Ruling: No compromise and, on the assumption that they are the
only parties to the case, the litigation comes to an end
The nature of a compromise is spelled out in Article 2028 of the except only as regards to its compliance and the
New Civil Code: it is "a contract whereby the parties, by making fulfillment by the parties of their respective obligations
reciprocal concessions, avoid litigation or put an end to one thereunder. The reason for the rule, said the Court in
already commenced." Parties to a compromise are motivated by Domingo v. Court of Appeals [325 Phil. 469], is
"the hope of gaining, balanced by the dangers of losing. It that when both parties so enter into the agreement to
contemplates mutual concessions and mutual gains to avoid the put a close to a pending litigation between them and ask
expenses of litigation, or, when litigation has already begun, to that a decision be rendered in conformity therewith, it
end it because of the uncertainty of the result. Article 227 of the would only be "natural to presume that such action
Labor Code of the Philippines authorizes compromise agreements constitutes an implicit waiver of the right to appeal"
voluntarily agreed upon by the parties, in conformity with the against that decision. The order approving the
basic policy of the State "to promote and emphasize the primacy compromise agreement thus becomes a final act, and it
of free collective bargaining and negotiations, including voluntary forms part and parcel of the judgment that can be
arbitration, mediation and conciliation, as modes of settling labor enforced by a writ of execution unless otherwise
or industrial disputes." As the Court held in Reformist Union of enjoined by a restraining order.
R.B. Liner, Inc. v. NLRC, the provision "bestows finality to
unvitiated compromise agreements," particularly if there is no Thus, contrary to the allegation of petitioners, the execution and
allegation that either party did not comply with what was subsequent approval by the NLRC of the agreement forged
incumbent upon them under the agreement. The provision between it and the respondent Union did not render the NLRC
reads: resolution ineffectual, nor rendered it "moot and academic." The
agreement becomes part of the judgment of the court or tribunal,
ART. 227 Compromise Agreements. – Any compromise and as a logical consequence, there is an implicit waiver of the
settlement, including those involving labor standard right to appeal.
laws, voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the In any event, the compromise agreement cannot bind a party who
Department of Labor, shall be final and binding upon the did not voluntarily take part in the settlement itself and
parties. The National Labor Relations Commission or any gave specific individual consent. It must be remembered that a
court shall not assume jurisdiction over issues involved compromise agreement is also a contract; it requires the consent
therein except in case of noncompliance thereof or if of the parties, and it is only then that the agreement may be
there is prima facie evidence that the settlement was considered as voluntarily entered into.
obtained through fraud, misrepresentation, or coercion.
xxxx
Thus, a judgment rendered in accordance with a compromise
agreement is not appealable, and is immediately executory unless A careful perusal of the wordings of the compromise agreement
a motion is filed to set aside the agreement on the ground of will show that the parties agreed that the only issue to be
fraud, mistake, or duress, in which case an appeal may be taken resolved was the question of the monetary claim of several
against the order denying the motion. Under Article 2037 of the employees. The prayer of the parties in the compromise
Civil Code, "a compromise has upon the parties the effect and agreement which was submitted to the NLRC reads:
authority of res judicata," even when effected without judicial
approval; and under the principle of res judicata, an issue which
WHEREFORE, premises considered, it is respectfully
had already been laid to rest by the parties themselves can no
prayed that the Compromise Settlement be noted and
longer be relitigated.
considered; that the instant case [be] deemed close[d]
and terminated and that the Decision dated May 31,
In AFP Mutual Benefit Association, Inc. v. Court of Appeals, the 2001 rendered herein by this Honorable Commission be
Court spelled out the distinguishing features of a compromise deemed to be fully implemented insofar as concerns the
agreement that is basically intended to resolve a matter already thirty-one (31) employees mentioned in paragraphs 2c
in litigation, or what is normally termed as a judicial compromise. and 2d hereof; and, that the only issue remaining to be
The Court held that once approved, the agreement becomes more resolved be limited to the question of the monetary
than a mere contract binding upon the parties, considering that it claim raised in the motion for clarification by the seven
has been entered as the court's determination of the controversy employees mentioned in paragraph 2e hereof.42
and has the force and effect of any other judgment. The Court
went on to state:
The agreement was later approved by the NLRC. The case was pursuant to Article 2041 of the New Civil Code and the petitioner
considered closed and terminated and the Resolution dated May can insist on his original demand. Perforce, the complaint for
31, 2001 fully implemented insofar as the employees collection of sum of money is the proper remedy.
"mentioned in paragraphs 2c and 2d of the compromise
agreement" were concerned. Hence, the CA was correct in It is true that an amicable settlement reached at
holding that the compromise agreement pertained only to the the barangay conciliation proceedings, like the Kasunduang Pag-
"monetary obligation" of the employer to the dismissed aayos in this case, is binding between the contracting parties
employees, and in no way affected the Resolution in NCMB-NCR- and, upon its perfection, is immediately executory insofar as it is
NS-03-087-00 dated May 31, 2001 where the NLRC made the not contrary to law, good morals, good customs, public order
pronouncement that there was no basis for the implementation of and public policy. This is in accord with the broad precept of
petitioners' retrenchment program.. Article 2037 of the Civil Code, viz:

To reiterate, the rule is that when judgment is rendered based A compromise has upon the parties
on a compromise agreement, the judgment becomes the effect and authority of res judicata; but
immediately executory, there being an implied waiver of the there shall be no execution except in
parties' right to appeal from the decision. The judgment having compliance with a judicial compromise.
become final, the Court can no longer reverse, much less modify
it. Being a by-product of mutual concessions and good faith of the
parties, an amicable settlement has the force and effect of res
4) MIGUEL VS. MONTANEZ. GR 191336. (2012) judicata even if not judicially approved. It transcends being a
mere contract binding only upon the parties thereto, and is akin
Facts: to a judgment that is subject to execution in accordance with the
Rules. Thus, under Section 417 of the Local Government
1) Respondent Jerry Montanez secured from petitioner a Code, such amicable settlement or arbitration award may be
loan of P143,864.00, payable in 1 year, or until Feb 1, enforced by execution by the Barangay Lupon within six (6)
2002, with the house and lot of respondent as months from the date of settlement, or by filing an action to
collateral. enforce such settlement in the appropriate city or municipal
2) Due to the respondent’s failure to pay the loan, the court, if beyond the six-month period.
petitioner filed a complaint against the respondent
before the Lupong Tagapamayapa where the parties Under the first remedy, the proceedings are covered by the Local
entered into a Kasunduang Pag-aayos wherein the Government Code and the Katarungang
respondent agreed to pay his loan in installments in the Pambarangay Implementing Rules and Regulations. The Punong
amount of P2,000.00 per month. Barangay is called upon during the hearing to determine solely
3) However, the respondent still failed to pay, thereby the the fact of non-compliance of the terms of the settlement and to
Lupong Tagapamayapa issued a certification to file give the defaulting party another chance at voluntarily complying
action in court in favor of the petititoner. with his obligation under the settlement.
4) The petitioner filed before MeTC a complaint for
Collection of Sum of Money, where he secured a Under the second remedy, the proceedings are governed by the
favorable judgment affirmed by RTC. Rules of Court, as amended. The cause of action is the amicable
5) Respondent appealed to the CA which ruled, among settlement itself, which, by operation of law, has the force and
others, that since the parties entered into a Kasunduang effect of a final judgment.
Pag-aayos before the Lupon ng Barangay, or by court
action after the lapse of such time, and that considering It must be emphasized, however, that enforcement by execution
that more than 6 months had elapsed from the date of of the amicable settlement, either under the first or the second
settlement, the remedy of the petitioner was to file an remedy, is only applicable if the contracting parties have not
action for the execution of the Kasunduang Pag-aayos in repudiated such settlement within ten (10) days from the date
court and not for collection of sum of money. thereof in accordance with Section 416 of the Local Government
Code. If the amicable settlement is repudiated by one party,
Issue: either expressly or impliedly, the other party has two options,
namely, to enforce the compromise in accordance with the Local
WON the proper remedy for petitioner is to file an action for the Government Code or Rules of Court as the case may be, or to
execution of the Kasunduang Pag-aayos in court and not for consider it rescinded and insist upon his original demand. This is in
collection of sum of money. accord with Article 2041 of the Civil Code, which qualifies the
broad application of Article 2037, viz:
Ruling: No. Remedy is for collection of sum of money.
If one of the parties fails or refuses
Because the respondent failed to comply with the terms of to abide by the compromise, the other party
the Kasunduag Pag-aayos, said agreement is deemed rescinded may either enforce the compromise or
regard it as rescinded and insist upon his by action in the appropriate city or municipal
original demand. court, if beyond that period. The use of the
word "may" clearly makes the procedure
In the case of Leonor v. Sycip, the Supreme Court (SC) provided in the Revised Katarungang
had the occasion to explain this provision of law. It ruled that Pambarangay Law directory or merely optional
Article 2041 does not require an action for rescission, and the in nature.
aggrieved party, by the breach of compromise agreement, may
just consider it already rescinded, to wit: Thus, although the "Kasunduan"
executed by petitioner and respondent before
It is worthy of notice, in this the Office of the Barangay Captain had the
connection, that, unlike Article 2039 of the force and effect of a final judgment of a court,
same Code, which speaks of "a cause of petitioner's non-compliance paved the way for
annulment or rescission of the compromise" the application of Art. 2041 under which
and provides that "the compromise may be respondent may either enforce the
annulled or rescinded" for the cause therein compromise, following the procedure laid out
specified, thus suggesting an action for in the Revised Katarungang Pambarangay Law,
annulment or rescission, said Article 2041 or regard it as rescinded and insist upon his
confers upon the party concerned, not a original demand. Respondent chose the latter
"cause" for rescission, or the right to "demand" option when he instituted Civil Case No. 5139-
the rescission of a compromise, but the V-97 for recovery of unrealized profits and
authority, not only to "regard it as rescinded", reimbursement of advance rentals, moral and
but, also, to "insist upon his original exemplary damages, and attorney's fees.
demand". The language of this Article 2041, Respondent was not limited to
particularly when contrasted with that of claiming P150,000.00 because although he
Article 2039, denotes that no action for agreed to the amount in the "Kasunduan," it is
rescission is required in said Article 2041, and axiomatic that a compromise settlement is not
that the party aggrieved by the breach of a an admission of liability but merely a
compromise agreement may, if he chooses, recognition that there is a dispute and an
bring the suit contemplated or involved in his impending litigation which the parties hope to
original demand, as if there had never been any prevent by making reciprocal concessions,
compromise agreement, without bringing an adjusting their respective positions in the hope
action for rescission thereof. He need not seek a of gaining balanced by the danger of losing.
judicial declaration of rescission, for he may Under the "Kasunduan," respondent was only
"regard" the compromise agreement already required to execute a waiver of all possible
"rescinded". claims arising from the lease contract if
petitioner fully complies with his obligations
*As so well stated in the case of Chavez v. Court of thereunder. It is undisputed that herein
Appeals, a party's non-compliance with the amicable settlement petitioner did not.
paved the way for the application of Article 2041 under which
the other party may either enforce the compromise, following In the instant case, the respondent did not comply with
the procedure laid out in the Revised Katarungang Pambarangay the terms and conditions of the Kasunduang Pag-aayos. Such
Law, or consider it as rescinded and insist upon his original non-compliance may be construed as repudiation because it
demand. To quote: denotes that the respondent did not intend to be bound by the
terms thereof, thereby negating the very purpose for which it was
In the case at bar, the Revised executed. Perforce, the petitioner has the option either to enforce
Katarungang Pambarangay Law provides for a the Kasunduang Pag-aayos, or to regard it as rescinded and insist
two-tiered mode of enforcement of an upon his original demand, in accordance with the provision of
amicable settlement, to wit: (a) by execution Article 2041 of the Civil Code. Having instituted an action for
by the Punong Barangay which is quasi-judicial collection of sum of money, the petitioner obviously chose to
and summary in nature on mere motion of the rescind the Kasunduang Pag-aayos. As such, it is error on the part
party entitled thereto; and (b) an action in of the CA to rule that enforcement by execution of said
regular form, which remedy is judicial. agreement is the appropriate remedy under the circumstances.
However, the mode of enforcement does not
rule out the right of rescission under Art. 2041 *I just added this so that we can read the procedure in the
of the Civil Code. The availability of the right of Katarungang Pambarangay Law
rescission is apparent from the wording of Sec.
417 itself which provides that the amicable 5) INUTAN VS. NAPAR CONTRACTING. GR 195654. (2015)
settlement "may" be enforced by execution by
the lupon within six (6) months from its date or Facts:
1) Petitioners were employees of respondent Napar, a Petitioners' right to rescind the Joint Compromise Agreement
recruitment agency, which assigned them at respondent and right to re-file their complaints must prevail.
Jonas, a corporation engaged in the manufacture of
various food products to work as factory workers, Petitioners validly exercised the option of rescinding the Joint
machine operator, etc. Compromise Agreement under Article 2041 of the Civil Code
2) Sometime, petitioners and other co-workers
(complainants) filed before the Arbitration Branch of xxxx Thus, a compromise agreement, once approved, has the
NLRC three separate complaints for wage differentials, effect of res judicata between the parties and should not be
13th month pay, overtime pay, holiday, etc. against disturbed except for vices of consent, forgery, fraud,
respondents, which complaints were consolidated misrepresentation, and coercion.34 A judgment upon
before Labor Arbiter (LA) Reyno. compromise is therefore not appealable, immediately executory,
3) Subsequently, complainants and respondents entered and can be enforced by a writ of execution.35 However, this broad
into a Joint Compromise Agreement (JCA), approved by precept enunciated under Article 203736 of the Civil Code has
LA Reyno, which stipulated, among others, that (a) the been qualified by Article 2041 of the same Code which recognizes
complainants should be considered regular employees the right of an aggrieved party to either (1) enforce the
of Napar reckoned from their date of hire and are compromise by a writ of execution, or (2) regard it as rescinded
entitled to all the benefits under the law due to regular and insist upon his original demand, upon the other party's failure
employees, (b) in case Napar failed to reassign or or refusal to abide by the compromise. In a plethora of
provide them work, complainants shall be reinstated in cases,37 the Court has recognized the option of rescinding a
their payroll or be given their salary equivalent to the compromise agreement due to non-compliance with its terms.
existing minimum wage, and (c) upon signing of JCA and We explained in Chavez v. Court of Appeals:
compliance with the stipulations provided, the cases
shall be deemed and considered fully and completely xxx , in Heirs of Zari, et al v. Santos, we clarified that the broad
satisfied and the respondents shall be forever precept enunciated in Art, 2037 is qualified by Art. 2041 of the
discharged from any and all claims arising from the same Code, which provides:
cases.
4) Thereafter, complainants reported to Napar which If one of the parties fails or refuses to abide by the compromise,
required them (1) to submit their respective bio- the other party may either enforce the compromise or regard it
data/resume and several documents such as Police as rescinded and insist upon his original demand.
Clearance, NBI Clearance, etc.; (2) to attended
orientation seminars; (3) to undergo series of We explained, viz.:
interviews; and (4) to take and pass qualifying
examinations, before they could be posted to their new [B]efore the onset of the new Civil Code, there was no right to
assignments. rescind compromise agreements. Where a party violated the
5) Complainants failed to fully comply, hence they were terms of a compromise agreement, the only recourse open to
not give new assignments, prompting them to file anew the other party was to enforce the terms thereof.
four separate complaints for illegal dismissal, non- When the new Civil Code came into being, its Article 2041 xxx
payment of 13th month pay, etc. against respondents, created for the first time the right of rescission. That provision
before LA Espiritu who held that the conditions of the gives to the aggrieved party the right to "either enforce the
JCA were violated thereby justifying rescission of the compromise or regard it as rescinded and insist upon his original
JCA. demand." Article 2041 should obviously be deemed to qualify the
6) All parties appealed to NLRC who rendered a decision broad precept enunciated in Article 2037 that "[a] compromise
that the approval of the JCA by LA Reyno operated as has upon the parties the effect and authority of res judicata.
res judicata between the parties and renders it
unappealable and immediately executory. In exercising the second option under Art. 2041, the aggrieved
7) CA affirmed the decision of NLRC, holding that the party may, if he chooses, bring the suit contemplated or involved
complainants should have moved for the execution of in his original demand, as if there had never been any
the JCA instead of filing a separate and independent compromise agreement, without bringing an action for
action for illegal dismissal. rescission. This is because he may regard the compromise as
already rescinded by the breach thereof of the other party.
Issue:

WON the approval of JCA operated as res judicata barring the To reiterate, Article 2041 confers upon the party concerned the
filing of new complaints against respondents, and corollarily, authority, not only to regard the compromise agreement as
WON the proper remedy is to move for the execution of the JCA. rescinded but also, to insist upon his original demand. We find
that petitioners validly exercised this option as there was breach
Ruling: Both NO. and non-compliance of the Joint Compromise Agreement by
respondents.
xxx While we consider Napar's decision to require petitioners to Japanese military currency to the Bank of Taiwan
submit documents and employment clearances, to attend operate to discharge the obligations.
seminars and interviews and take examinations, which according 7) Consequently, petitioner demanded from the Bank the
to Napar is imperative in order for it to effectively carry out its repayment of the money paid by him relying on the
business objective, as falling within the ambit of management decision of the SC in the Haw Pia case but the bank
prerogative, this undertaking should not, however, deny replied that the case had been compromised and can no
petitioners their constitutional right of tenure. Besides, there is longer be reopened, leading to a case which the trial
no evidence nor any allegation proffered that Napar has no court ruled in favor of petitioner, holding that the
available clients where petitioners can be assigned to work in the second payment was improperly made (solution
same position they previously occupied. Plainly, Napar's scheme indebiti).
of requiring petitioners to comply with reassessment procedures
only seeks to prevent petitioners' immediate reassignment. Issue:

"xxx The exercise of management prerogative, however, is not WON the petitioner can demand reimbursement of its second
absolute as it must be exercised in good faith and with due payment despite the compromise made between the parties.
regard to the rights of labor."40 Such "cannot be used as a
subterfuge by the employer to rid himself of an undesirable Ruling: No
worker."41
That this agreement has the nature of a compromise cannot be
Respondents' non-compliance with the strict terms of the Joint denied for it was entered into to avoid "the provocation of a suit"
Compromise Agreement of reassigning petitioners and ensuring which defendant was then contemplating to take against plaintiff
that they will be given work within the required time constitutes and his brother in the belief that the payment made to the Bank
repudiation of the agreement. As such, the agreement is of Taiwan was not valid (Article 1809, old Civil Code). Note that
considered rescinded in accordance with Article 2041 of the Civil at that time the decision of the Supreme Court in the Haw Pia
Code. Petitioners properly chose to rescind the compromise case has not as yet been rendered. It being a compromise, it is
agreement and exercised the option of filing anew their binding upon the parties (Article 1809, old Civil Code), and as
complaints, pursuant to Art. 2041. It was error on the part of the such it has "the same authority as res judicata" (Article
CA to deny petitioners the right of rescission. 1816, Idem.)

6) BERG VS. NATIONALITY BANK OF NEW YORK 102 PHIL. 309 Xxx, as a rule, a compromise is entered into not because it settles
a valid claim but because it settles a controversy between parties.
Facts: And here there was a real compromise when defendant waived
the payment of interest amounting over $4,000.
1) Petitioner was the guarantor of Red Star Stores, Inc.
(Red Star) which was indebted to the respondent The compromise of any matter is valid and binding, not
Nationality Bank of New York, Manila Branch (Bank). because it is the settlement of a valid claim, but because
2) During the Japanese occupation, the Bank of Taiwan it is the settlement of a controversy. (Page 877.)
required the Red Stars to liquidate its obligation and,
accordingly, plaintiff paid the same in full.
In order to effect a compromise there must be a definite
3) After liberation, after the respondent Bank reopened, it
proposition and an acceptance. As a question of law it
sent a letter to the Red Star requesting it to indicate the
does not matter from whom the proposition of
steps it wanted to take to liquidate its war obligation,
settlement comes; if one is made and accepted, it
but petitioner contacted with the respondent telling
constitutes a contract, and in the absence of fraud it is
that he had already settled the account with the Bank of
binding on both parties. (Page 879.).
Taiwan during the Japanese occupation, to which
respondent intimated that it could not regard such
Hence it is a general rule in this country, that
payment as discharging the obligation.
compromises are to be favored, without regard to the
4) Plaintiff informed the Bank that he was willing to
nature of the controversy compromised, and that they
compromise his case by paying the indebtedness
cannot be set aside because the event shows all the gain
provided the Bank forego its claim as to interest, which
to have been on one side, and all the sacrifice on the
offer was approved by the bank, and pursuant to such,
other, if the parties have acted in good faith, and with a
petitioner signed an acknowledgment of the debt and
belief of the actual existence of the rights which they
an agreement relative to its liquidation.
have respectively waived or abandoned; and if a
5) Thereafter, petitioner made a partial payment and was
settlement be made in regard to such subject, free from
given an extension of 30 days to pay the balance, which
fraud or mistake, whereby there is a surrender or
he paid by authorizing the Bank to sell the shares he had
satisfaction, in whole or in part, or of something of value,
pledge to secure his debt.
upon the other, however baseless may be the claim upon
6) On April 9, 1948, a Supreme Court decision (Haw Pia
either side or harsh the terms as to either of the parties,
case) was rendered holding that payments made in
the other cannot successfully impeach the agreement in Issue:
a court of justice . . . where the compromise is instituted
and carried through in good faith, the fact that there was WON the RTC has jurisdiction over the complaint of respondent
a mistake as to the laws or as to the facts, except in amidst the amicable settlement between the parties before the
certain cases where the mistake was mutual and Barangay…
correctable as such in equity, cannot afford a basis for
setting a compromise aside or defending against a suit Ruling: YES.
brought thereon . . . Furthermore, and as following the
rule stated, a compromise of conflicting claims asserted xxx, in Heirs of Zari, et al. v. Santos, we clarified that the
in good faith will not be disturbed because by a broad precept enunciated in Art. 2037 is qualified by Art. 2041 of
subsequent judicial decision in an analogous case it the same Code, which provides:
appears that one party had no rights to forego. (Page
883, 884.)" (Mccarthy vs. Barber Steamship Lines, 45 If one of the parties fails or refuses to abide by the compromise,
Phil., 488, 498-499). the other party may either enforce the compromise or regard it as
rescinded and insist upon his original demand.
7) CHAVEZ VS. COURT OF APPEALS. GR 159411. (2005)
In exercising the second option under Art. 2041, the aggrieved
Facts: party may, if he chooses, bring the suit contemplated or involved
in his original demand, as if there had never been any
1) Petitioner Teodoro Chavez and respondent Jacinto compromise agreement, without bringing an action for
Trillana entered into a contract of lease whereby the rescission.[15] This is because he may regard the compromise as
former leased to the latter his fishpond in Bulacan for a already rescinded[16] by the breach thereof of the other party.
term of 6 years.
xxx. In the case at bar, the Revised Katarungang
2) Paragraph 5 of the contract further provided that Pambarangay Law provides for a two-tiered mode of
respondent shall undertake all construction and enforcement of an amicable settlement, to wit: (a) by execution
preservation of improvements in the fishpond that may by the Punong Barangaywhich is quasi-judicial and summary in
be destroyed during the period of the lease, at his nature on mere motion of the party entitled thereto; and (b) an
expense, without reimbursement from petitioner. action in regular form, which remedy is judicial.[21] However, the
mode of enforcement does not rule out the right of rescission
3) In August 1996, a powerful typhoon hit the country under Art. 2041 of the Civil Code. The availability of the right of
which damaged the subject fishpond, which respondent rescission is apparent from the wording of Sec. 417[22] itself
did not immediately repaired as the water level was still which provides that the amicable settlement may be enforced by
high, until he found out that the major repairs were execution by the lupon within six (6) months from its date or by
being undertaken by the petitioner in the fishpond with action in the appropriate city or municipal court, if beyond that
the use of a crane. period. The use of the word may clearly makes the procedure
4) Consequently, respondent filed a complaint before of provided in the Revised Katarungang Pambarangay Law
the Office of the Barangay Captain of Taliptip, Bulacan, directory[23] or merely optional in nature.
Bulacan, regarding the unauthorized repairs by
petitioner, and the ouster of his personnel from the Thus, although the Kasunduan executed by petitioner and
leases premises which violated their valid and subsisting respondent before the Office of the Barangay Captain had the
lease contract. force and effect of a final judgment of a court, petitioners non-
5) Subsequently, after the conciliation proceedings, the compliance paved the way for the application of Art. 2041 under
parties reached a Kasunduan regarding the manner of which respondent may either enforce the compromise, following
payment of petitioner (P100,000.00 instead of the procedure laid out in the Revised Katarungang Pambarangay
P150,000.00, if he paid at a certain time, and if such will Law, or regard it as rescinded and insist upon his original
not work, payment of P150,000.00 in installments) demand. Respondent chose the latter option when he instituted
6) Subsequently, however, alleging non-compliance by Civil Case No. 5139-V-97 for recovery of unrealized profits and
petitioner with their lease contract and the foregoing reimbursement of advance rentals, moral and exemplary
Kasunduan, respondent filed a complaint against damages, and attorneys fees. Respondent was not limited to
petitioner before the RTC of Valenzuela City, which claiming P150,000.00 because although he agreed to the amount
ruled in favor of respondent. in the Kasunduan, it is axiomatic that a compromise settlement is
7) Upon appeal, CA affirmed the decision with some not an admission of liability but merely a recognition that there is
modification, prompting petitioner’s appeal contending a dispute and an impending litigation which the parties hope to
that RTC of Valenzuela City had no jurisdiction over the prevent by making reciprocal concessions, adjusting their
action for his alleged violation of the lease contract respective positions in the hope of gaining balanced by the
which was already amicably settled before the Office of danger of losing. Under the Kasunduan, respondent was only
the Barangay Captain of Taliptip, Bulacan, Bulacan. required to execute a waiver of all possible claims arising from
the lease contract if petitioner fully complies with his obligations rights, either substantive or procedural, except insofar as the
thereunder. It is undisputed that herein petitioner did not. sum of P2,450 due as rentals up to October 6, 1956, which was
made payable on or before December 31, 1956. With respect to
8) LEONOR, plaintiff-respondent vs. SYCIP, defendant-petitioner. the rentals accruing after October 6, 1956, he retained all such
GR L-14220. (1961) rights, plus the corresponding lien on the personal property
subject to the chattel mortgage.
Facts:
Contrary to defendant's pretense, plaintiff could not have sued
1) Plaintiff Domingo E. Leonor (respondent) and defendant Coronado for, by virtue of his aforementioned assignment, the
Francisco Sycip (petitioner) entered into a contract, latter merely yielded his preferred lien in favor of plaintiff herein,
whereby the former leased to the latter a two-story and did not assume any responsibility for defendant's
building located at Pasay City, for a period of two years. obligation in favor of plaintiff herein. Besides, having violated the
chattel mortgage contract, by refusing to deliver the mortgaged
2) Subsequently, Sycip failed to pay the corresponding property to the sheriff, for purposes of the extra-judicial
rentals prompting Leonor’s institution against him a Civil foreclosure, to which the defendant had explicitly agreed in the
Case No. 1972 for unlawful detainer. deed of chattel mortgage, he may not require the plaintiff to
adhere thereto (Art. 1191,, Civil Code of the Phil.). Again, owing
3) But as one Napoleon A. Coronado agreed to guarantee to the breach of the compromise agreement between the
the payment of the rentals of Sycip by assigning to parties, resulting, not only from defendant's refusal to deliver the
Leonor his (Coronado's) rights under a deed of chattel mortgaged property to the sheriff, but, also, from his failure to
mortgage executed, prior thereto, by Sycip in his pay, on or before December 31, 1956, the sum P2,450, due on
(Coronado's) favor, Leonor moved for the dismissal of October 6, 1956, plaintiff has, under Article 2041 of the Civil
said case No. 1972, which was granted. Code of the Philippines, the right to "enforce the compromise or
regard it as rescinded a insist upon his original demand".
4) As Sycip kept on defaulting in the payment of rentals,
Leonor requested the Sheriff of Pasay City, on February It is worthy of notice, in this connection, that, unlike Article 2039
11, 1957, to cause the personal property subject to said of the same Code, which speaks of "a cause of annulment or
chattel mortgage to be foreclosed extrajudicially, as rescission of the compromise" and provides that "the
stipulated in the contract, but this provision thereof compromise may be annulled or rescinded" for the cause therein
could not be enforced because Sycip refused to specified, thus suggesting an action for annulment or rescission,
surrender' said property to the sheriff said Article 2041 confers up the party concerned, not a "cause" for
5) Hence, Leonor again sued Sycip for unlawful detainer, rescission, or t right to "demand" the rescission, of a compromise,
from which Leonor got a favorable judgment sentencing but the authority, not only to "regard it as rescinded", but, also, to
Sycip to vacate the premises and to pay Leonor rentals, "insist upon his original demand". The language this Article 2041,
with interests. particularly when contrasted with that of Article 2039, denotes
6) Sycip appealed the case where he contended that that no action for rescission required in said Article 2041, and that
Assignment of Chattel Mortgage, which dismissed the the party aggrieved by the breach of a compromise agreement
first action (Civil Case No. 1792), was a compromise may, if he choose bring the suit contemplated or involved in his
agreement that had the effect and authority of Res original demand, as if there had never been any compromise
Judicata, and that plaintiff should have sought a judicial agreement, without bringing an action for rescission thereof. He
foreclosure of the chattel mortgage or sued the need not seek a judicial declaration of rescission, he may "regard"
guarantor instead of instituting the present action for the compromise agreement already rescinded".
unlawful detainer.
Any other view would lead, insofar as the parties here are
Issue:
concerned, to a splitting of plaintiff's cause of action. Indeed, to
seek a rescission of the compromise, an action would have to be
WON the Assignment of Chattel Mortgage, which dismissed the
brought in the court of first instance, such action is incapable of
first action (Civil Case No. 1792), was a compromise agreement
pecuniary estimation, where the unlawful detainer case would
that had the effect and authority of Res Judicata.
have to be filed with municipal court. Moreover, if the right of
action for unlawful detainer would be subordinated to the action
WON respondent should have sought a judicial foreclosure
rather than file an action for unlawful detainer. for rescission of the compromise agreement, then the latter
would be a prejudicial question and the proceedings the former
Ruling: Both No (Both issues are integrated/mixed in the ratio.) would have to be suspended until the final disposition of the
action for rescission. The summary naturalization of the remedy
Plaintiff had, of course, the option to seek a judicial foreclosure of unlawful detainer would thus be completely defeated or
of said chattel mortgage, but he was not bound to do so, for the destroyed. Surely, the framers of Article 2041 of the Civil Code of
assignment in his favor of the chattel mortgage merely gave him the Philippines could not have intended such result. The case of
additional rights. It did not deprive him of any of his existing Bas Vda. de Concepcion v. Santos, L-3585 (July 9, 1951), cited in
appellant's brief, involved a compromise made on January 24, No. SC Affirmed the CA’s Decision.
1943, years before the approval of said Code, and, hence, it is
not in point. A compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one
9. CONCHITA A. SONLEY, Petitioner, v. ANCHOR SAVINGS BANK/ already commenced. Like any other contract, a compromise
EQUICOM SAVINGS BANK, Respondent. agreement must comply with the requisites in Article 1318 of the
Civil Code, to wit: (a) consent of the contracting parties; (b)
Facts: object certain that is the subject matter of the contact; and (c)
cause of the obligation that is established. Like any other
Petitioner filed a complaint for nullity of rescission of contract contract, the terms and conditions of a compromise agreement
and damages against respondent , a thrift banking institution, in must not be contrary to law, morals, good customs, public policy
the RTC whose business name was changed to Equicom Savings and public order.
Bank.
Under Article 2041 of the Civil Code, "(i)f one of the parties fails
Petitioner alleged that she agreed to enter into a contract to sell or refuses to abide by the compromise, the other party may
for a real property that has been foreclosed by Anchor whereby either enforce the compromise or regard it as rescinded and
petitioner will pay for a downpayment and the balance be insist upon his original demand." "The language of this Article
payable in sixty (60) monthly instalments. However, petitioner 2041 x x x denotes that no action for rescission is required x x x,
defaulted in paying her monthly obligation because the post and that the party aggrieved by the breach of a compromise
dated checks issued by the petitioner were dishonoured which agreement may, if he chooses, bring the suit contemplated or
prompted Anchor to rescind the contract to sell. involved in his original demand, as if there had never been any
compromise agreement, without bringing an action for rescission
Subsequently, after the issuance of the a Pre Trial Order by the thereof. He need not seek a judicial declaration of rescission, for
trial court, the parties agreed to an amicable settlement and he may 'regard' the compromise agreement already 'rescinded'.
entered into a compromise agreement. On the basis thereof, the
trial court rendered judgment whereby petitioner agreed to It is worthy of notice, in this connection, that, unlike Article 2039
repurchase the subject property from Anchor plus 12% interest of the same Code, which speaks of "a cause of annulment or
per annum. However, petitioner failed to comply its obligation. rescission of the compromise" and provides that "the
Thus, prompted Anchor to file a manifestation and Motion for compromise may be annulled or rescinded" for the therein
execution with prayer that (1) that the contract to sell that was specified, thus suggesting an action for annulment or rescission,
entered into between the parties be rescinded; (2) that [Anchor] said Article 2041 confers upon the party concerned, not a
be allowed to apply all the payments that were made to it by the "cause" for rescission, or the right to "demand" the rescission of
petitioner as rentals; and (3) that petitioner immediately vacate a compromise, but the authority, not only to "regard it as
the subject property. RTC Granted the Motion for failure of the rescinded", but, also, to "insist upon his original demand". The
plaintiff to comply with the terms and conditions of the language of this Article 2041, particularly when contrasted with
Compromise Agreement and in line with Rule 39 Section 1 of the that of Article 2039, denotes that no action for rescission is
Rules of Court, to wit: required in said Article 2041, and that the party Aggrieved by the
breach of a compromise agreement may, if he chooses, bring the
Section 1. Execution upon judgments or final orders. - suit contemplated or involved in his original demand, as if there
Execution shall issue as a matter of right on motion, had never been any compromise agreement, without bringing an
upon a judgment or order that disposes of the action or action for rescission thereof. He need not seek a judicial
proceeding upon the expiration of the period to appeal declaration of rescission, for he may "regard" the compromise
there from if no appeal has been duly perfected. agreement already "rescinded".

Petitioner filed a motion for certiorari before the CA, claiming 10. MAQUILAN VS MAQUILAN
that the trial court committed grave abuse of discretion in issuing
a writ of execution, since there is nothing in the trial court's Facts:
August 16,2010 judgment which authorizes the issuance of such
a writ in case the parties fail to perform the obligations stated Petitioner and respondent are spouses who once had blissful
under the Compromise Agreement. CA Dismissed the petition. married life and out of which were blessed to have a son.
However, their once sugar coated romance turned
ISSUE: bitter when petitioner discovered that private
respondent was having illicit sexual affair with
WON the trial court erred in issuing a writ of execution as the her paramour, which thus, prompted the
issuance thereof was not authorized and specifically provided for petitioner to file a case of adultery against
in its judgment. private respondent and the latter’s paramour.
Consequently, both the private respondent and
Ruling: her paramour were convicted of the crime
charged.
Thereafter, respondent filed a petition for declaration of nullity of marriage was still
Declaration of Nullity of Marriage, Dissolution pending. However, the Court must stress that this
and Liquidation of Conjugal partnership of Gains voluntary separation of property is subject to the
and damages on the ground of psychological rights of all creditors of the conjugal partnership
incapacity on the part of the petitioner. During of gains and other persons with pecuniary interest
the Pre Trial of the said case, both parties pursuant to Article 136 of the Family Code.
entered into a compromise agreement for partial
settlement of the conjugal partnership of gains. Th e c onv i ct i o n o f a d ul t e ry d oe s no t c arry th e
ac c es s ory of c iv i l i nt er di ct i o n. Ar ti c le 3 4 of th e
Subsequently, petitioner filed a motion for the repudiation of the Rev is e d P e na l C od e pr ov id es f or th e co n se qu e nc es
AGREEMENT. This motion was denied. Petitioner then filed a of c iv i l i nt er di c t io n:
Petition for Certiorari and Prohibition with the Court of
Appeals c l a i m i n g t h a t t h e R T C c o m m i t t e d g r a v e Art . 34 . C iv i l In te rd ic t io n. C iv i l i n ter d i ct i on
error and abuse of discretion amounting to lack sh al l d epr iv e t h e o ffe n d er d ur in g th e t ime
or excess of jurisdiction (1) in upholding the of h is se n te n ce of t he ri gh ts o f p are n ta l
validity of the Compromise Agreement dated au t hor i ty , or g ua rd ia n sh ip , ei t her a s to t he
January 11, 2002; (2) when it held in its Order per s on or pr o per ty of an y war d , of m ar i ta l
dated February 7, 2002 that the Compromise au t hor i ty , of th e r ig h t t o m an ag e hi s
Agreement was made within the cooling -off pro p ert y a n d o f th e r ig h t to d i sp os e of
period; (3) when it denied petit ioners Motion to su c h pr o per ty by a ny a c t or a ny
Repudiate Compromise Agreement and to c onv eya n ce i nt er v iv os .
Reconsider Its Judgment on Compromise
Agreement; and (4) when it conducted the Art. 43. Prision correccional Its accessory
proceedings without the appearance and penalties. The penalty
participation of the Office of the Solicitor of prision correccional shall carry with it that of
General and/or the Provincial Prosecut or but has suspension from public office, from the right to
been dismissed. The CA held that the conviction follow a profession or calling, and that of
of the respondent of the crime of adultery does perpetual special disqualification from the right
not ipso facto disqualify her from sharing in the of suffrage, if the duration of said imprisonment
conjugal property. shall exceed eighteen months. The offender shall
suffer the disqualification provided in this article
Issue: although pardoned as to the principal penalty,
unless the same shall have been expressly
Whether or not a compromise agreement entered into by remitted in the pardon.
spouses, one of whom was convicted of adultery, giving the
convicted spouse a share in the conjugal property, valid and The proceedings pertaining to the Compromise
legal. Agreement involved the conjugal properties of
the spouses. The settlement had no relation to
RULING: Yes. the questions surrounding the validity of their
marriage. Nor did the settlement amount to a
Th e C om pro mi se Agr ee m en t pa r t i al ly d iv i d ed t he c o l l u s i o n b e t w e e n t h e p a r t i e s . I t i s c l e a r , th a t t he
pr o p ert i es of t he c o nj ug al p ar t n er s h ip of g ai ns cr ime o f a d ul t ery d o es n o t c arry t he a c ce ss ory
be tw ee n t he p art i es an d d oe s n o t de a l w i th t he pe na l ty of c iv i l i nt er di c t i on w hi c h d e priv es t h e
v al i di ty of a marr i age or le ga l se p ar a t io n . It i s n o t per s on of t he ri gh t s to man ag e her pr o per ty an d to
am on g th o se t ha t ar e ex pr e ss ly pr oh i b it ed by Ar ti c le di s po se o f s u ch pr o per t y i nt er v ivo s .
20 35 . M ore ov er , t he c o n te n ti o n th a t t h e
C om pro mi s e Agr e em e n t is t an t am ou n t to a The argument of the petitioner that he was not
c ir c umv en t i on of t h e l a w pr o h ib i ti ng t he g ui l ty duly informed by his previous counsel about the
sp o us e fr om s har i ng i n t he c o nj ug al pr o per t ie s i s legal effects of the voluntary settlement is not
m i sp la c ed . E xi s ti ng l aw an d jur is pr ud e nc e do n o t convincing.
im po se s u ch d is q ua l if ic a ti o n .
[I] t i s we l l -s et t le d th a t t he ne g li ge n ce
Under Article 143 of the Family Code, separation of c ou n se l bi n ds t he c l ie nt . Th i s is
of property may be effected voluntarily or for ba se d o n t h e ru l e th at a ny a c t
sufficient cause, subject to judicial appr oval. The perf or me d by a l awy er wi t hi n t he
questioned Compromise Agreement which was sc o pe of h i s g en era l or i mp li ed
judicially approved is exactly such a separation of au t hor i ty is re gar de d as an a ct o f h i s
property allowed under the law. This conclusion c li en t . C on se q ue n tly , t h e m is t ake or
holds true even if the proceedings for the ne gl ig e nc e of pe t i ti o ner s' co u ns e l
may r es u lt i n th e r en d it i on o f a n Defendant-spouses appealed this decision to the Court of
un fav ora b le j ud gm e n t a ga in s t t h em . Appeals, but said appeal was ordered dismissed by this Court’s
Special Fifth Division for defendants spouses’ abuse of the
Exc ep t io n s to t he f or e go in g hav e extensions of time granted them, pursuant to Section 1 (f) of Rule
be en r e c og ni ze d b y t h e C our t i n ca se s 50 of the Rules of Court.
wh ere re ck le ss or gr os s ne gl ig e nc e of
c ou ns e l d e pr iv es t h e c l i en t of d ue Meanwhile, on June 30, 1993, defendant Limpo filed a
pro c es s of l aw , or wh en it s Manifestation and Motion praying for the dismissal of the
ap p li c at i on " r e su l ts i n t he o ut r i gh t complaint on the ground that the judgment sought to be revived
de pr iv a t io n of o ne' s pr o per ty t hr o ug h did not include defendant Limpo. After responsive pleadings
a t e ch n i ca l ity ." were filed by the parties, the trial court issued an Order dated
November 3, 1993 dismissing the complaint against defendant
The Decision of the Court of Ap peals Limpo. This Order was reiterated by the trial court in the Order
is AFFIRMED with MODIFICATION that the subject dated April 19, 1994 which likewise dismissed defendant Limpo’s
Compromise Agreement is VALID without compulsory counterclaim.
prejudice to the rights of all creditors and other
persons with pecuniary interest in the properties Not satisfied with the Order of the trial court, plaintiff bank filed
of the conjugal partnership of gains. the appeal at bench.

11. ROLANDO LIMPO, Petitioner, vs. COURT OF APPEALS and Plaintiff-appellant Security Bank & Trust Company assails the
SECURITY BANK AND TRUST COMPANY, Respondents. Order of the trial court on the basis of the sole assigned error.

FACTS: At first, the Court of Appeals dismissed the appeal holding that
the Compromise Agreement had superseded the promissory
On November 11, 1980, plaintiff Security Bank & Trust note executed between the payee Security Bank & Trust
Company filed a complaint for a Sum of Money with the Regional Company (the Bank) and the makers spouses Miguel F. Uy and
Trial Court of Pasig, Branch 15s against Miguel F. Uy, Brigitte E. Brigitte E. Uy (spouses Uy) and Rolando Limpo (Limpo). Limpo,
Uy and Rolando Limpo, the defendants. Plaintiff Bank sought to inasmuch as he was never a party to the new agreement, was
recover the outstanding balance of a promissory note executed held to be not bound by its terms and, therefore, was no longer
by the defendants. obligated to the Bank. Upon the Bank’s motion for
reconsideration, however, the Court of Appeals reversed itself
On February 1, 1983, defendants-spouses Miguel F. and ordered the continuation of proceedings in Civil Case No.
Uy and Brigitte Uy entered into a Compromise Agreement with 62226 against Limpo.
plaintiff bank.
Hence, Limpo petitioned/appealed this to the Supreme Court.
When defendants failed to comply with the terms and conditions
of the compromise agreement, plaintiff bank, on November 27, ISSUES:
1984, filed an Ex-Parte Motion for the Issuance of Writ of
Execution. The motion not having been acted upon, plaintiff A. WHETHER OR NOT THE COMPROMISE AGREEMENT EXECUTED
bank, on July 22, 1992, filed a complaint for Revival of Judgment. BETWEEN THE SPOUSES UY AND THE BANK BIND CO-
DEFENDANT, ROLAND LIMPO WHO DID NOT PARTICIPATE IN ITS
The defendant-spouses, in their Answer, alleged as their defense EXECUTION, UNDER ARTICLE 1311(1) OF THE CIVIL CODE
laches, for failure of plaintiff bank to enforce its rights for more
than eight (8) years. Defendant Limpo, on the other hand, B. WHETHER OR NOT THE BANK MAY STILL CONTINUE THE
alleged that "he is not obligated to pay any amount to plaintiff PROCEEDINGS AGAINST ROLAND LIMPO IN CIVIL CASE NO. 6226,
under the said compromise agreement which was entered into AS CONCLUDED BY THE COURT OF APPEALS
only by and between plaintiff and defendant spouses Miguel F. Uy
and Brigitte E. Uy without his knowledge and consent." RULING:

On February 5, 1993, plaintiff bank filed a Motion for Judgment A. No, the executed compromise agreement did not bind and
on the Pleadings alleging that defendants spouses’ Answer failed impose obligation on the co-defendant, Roland Limpo.
to tender genuine issues. On April 20, 1993, the trial court issued
an order against defendants spouses ordering them to pay It is settled that a compromise agreement cannot bind persons
plaintiff bank the amount of ₱38,833.44 with interest at the rate who are not parties to it. This rule is based on Article 1311(1) of
of 20% per annum computed from January 12, 1983 until the the Civil Code which provides that "contracts take effect only
amount is fully paid. between the parties, their assigns and heirs x x x." The sound
reason for the exclusion of non-parties to an agreement is the
absence of a vinculum or juridical tie which is the efficient cause
for the establishment of an obligation. In the Compromise was a clear declaration of liability. Debate arises with respect to
Agreement that was presented to the trial court, there is no Limpo who was never mentioned in both the agreement and the
question that only the spouses Uy and the Bank were parties. judgment despite that fact that he was impleaded as a
Limpo did not participate in its execution and there was no defendant. How should this omission affect him?
reference to him in any of its provisions. He cannot be bound by
the Compromise Agreement. Judicial precedent as to the implication of a judgment approving
a compromise agreement that fails to expressly mention or
What happens then if the court approves a compromise include all the defendants is found in Bopis v. Provincial Sheriff of
agreement that fails to include all of the defendants? Camarines Norte, the facts of which are akin to those of this
case.
In approving a compromise agreement, no court can impose
upon the parties a judgment different from their real agreement There, four defendants, Camino, Eco, Guadalupe and Bopis, were
or against the very terms and conditions of the amicable sued by the plaintiff for recovery of possession of real property.
settlement entered into. The principle of autonomy of contracts Later, a compromise agreement was executed among Camino,
must be respected. These being said, considering that the Eco and the plaintiff, whereby Camino and Eco agreed to pay the
Compromise Agreement imposed no obligation upon Limpo, it plaintiff a sum of money. The compromise agreement was later
follows that the judgment rendered by the Regional Trial Court approved by the trial court. Camino and Eco, however, failed to
(RTC) of Pasig, based on the Compromise Agreement, could pay the entire amount and, as a result, a writ of execution was
likewise not impose any obligation upon him. The duty of the issued against all four defendants. Guadalupe and Bopis
court is confined to the interpretation of the agreement that the questioned their inclusion in the writ of execution since the
contracting parties have made for themselves without regard to judgment approving the agreement did not include them. This
its wisdom or folly as the court cannot supply material Court found their contention meritorious and declared the writ of
stipulations or read into the contract words which it does not execution null and void with respect to Guadalupe and Bopis.
contain. Consequently, the contention of Limpo is correct. The Quoting from the Decision:
terms and conditions set forth in the Compromise Agreement, as
approved by the court, are controlling and, therefore, there is no As will be seen, only Rufina Camino and Pasto Eco were adjudged
basis to include him in reviving the judgment. to pay Alfonso Ortega the amount of ₱140.00 on February 28,
1951. Although they were included as party defendants, the
B. No, the bank may not continue the proceedings against Roland spouses Fermin Bopis and Emilia Guadalupe were not ordered to
Limpo in said civil case. pay Alfonso Ortega. Obviously, they were absolved from liability.
Accordingly, as to them, there was nothing to execute since they
The Court of Appeals’ instructions to continue the proceedings have been absolved from liability.
against Limpo in Civil Case No. 62226 is not correct and amount
to an alteration of a matter that is already res judicata. The Court, in that case, ostensibly concluded that a decision that
fails to expressly mention the liability of one of the defendants
Quoting the reasoning made by the Court of Appeals: will be taken to mean that he has been absolved in that case.
From this pronouncement, the failure to mention Limpo in the
x x x If the spouses Uy would become insolvent and could not pay judgment of the RTC of Pasig will correspondingly mean his
their obligation under the Compromise Agreement, the SBTC [the absence of liability to the Bank. As this implied declaration
Bank] could collect the whole amount of the obligation from became final with the approval of the Compromise Agreement,
defendant Rolando Limpo. A judgment, therefore, against the Court of Appeals’ instructions to continue the proceedings
Rolando Limpo would not be incompatible with the existence of against Limpo in Civil Case No. 62226 amount to an alteration of
the Compromise Agreement for in such a situation SBTC could a matter that is already res judicata.
exercise its option to secure execution of judgment against either
or both the Uys and Limpo. The only limitation is that SBTC could Since Limpo is no longer liable to the Bank, the issue of
not collect more than the total amount of indebtedness. prescription is not necessary to resolve.

The sound reasoning of the Court of Appeals as to the liabilities WHEREFORE, the resolutions of the Court of Appeals dated April
of a solidary debtor is correct. However, it failed to consider two 5, 2000 and August 30, 2000 in CA-G.R. CV No. 45821 are
important incidents that make this case distinct: 1) a judgment hereby REVERSED and SET ASIDE. Rolando Limpo is
had been rendered excluding Limpo; and 2) such judgment had ordered DROPPED as a defendant in Civil Case No. 62226. No
become final. pronouncement as to costs.

A compromise agreement once approved by order of the court 12. FELICIANA BUMANLAG and FLAVIANO
becomes immediately final and executory with the force of res BUMANLAG, petitioners, vs.HON. ANACLETO B. ALZATE, as
judicata. The court’s sanction imbues it with the same effect as Presiding Judge, Branch II, Court of first Instance of Tarlac,
any other judgment. No doubt that as to the spouses Uy, there TOMASA BUMANLAG, and SILVINO ESPUGADO, respondents.
FACTS:

In the instant case (which has been brought to the SC by


certiorari assailing an Order of the Court of First Instance of
Tarlac in Civil Case No. 4912 entitled "Bumanlag, et al. v.
Bumanlag, et al.") herein petitioners sued herein private
respondents for partition of the lots inherited by both parties
from their deceased father; respondents however moved to
dismiss on the ground that some years before a final and
executory judgment (based on a compromise agreement)
involving the same parties, same subject matter, and same
causes of action had already been rendered by a court of
competent jurisdiction and that therefore the doctrine of res
judicata clearly bars the present case; petitioners contend that
said judgment is void because the compromise agreement had
been signed in their behalf by their lawyer who had not been
authorized by them to enter into such agreement, consequently
there can be no res judicata.

ISSUE:

Whether or not the compromise agreement signed (on behalf of


one of the parties thereto) by a lawyer, who did so without
authorization of said party or client, is void.

HELD:

The compromise agreement is not void but merely


unenforceable (not void) and may therefore be ratified by said
party expressly or implicity.

The petitioners by their silence for sixteen (16) years and by their
overt acts of exchanging or bartering some of the lots awarded
to them with some of the lots of the private respondents have
doubtless ratified the act of their attorney; ergo, the requisites
of res judicata being all present, the principle applies to the
instant case.

One final point. The argument that the partition in the first case
was not one with metes and bounds is bankrupt. There was such
a physical and actual partition, not merely a metaphysical one.

WHEREFORE, this petition is DISMISSED, and the assailed Order is


hereby AFFIRMED, with costs against petitioners.