Tiu v.

Sy
G.R. No. 189604, June 6, 2019
First Division
Topic: Void Contracts

Facts: This case originated from a complaint filed by respondent Samuel Sy (respondent) against
petitioners Jimmy Tiu, Anson Gonzalo (Gonzalo), Paul Ong (Ong), Jason Tiu and Long Long
Manufacturing Corporation (collectively, petitioners) for annulment of document, accounting,
determination of compensation, etc. Respondent alleged that: (1) sometime in December of 1988,
he, together with petitioners Jimmy Tiu, Gonzalo and Ong, entered into the business of repacking of
snack foods under the name "Longlong Repacking";  (2) in 1997, they decided to register the
business with the Securities and Exchange Commission;  (3) respondent subsequently took charge of
all the operation and management aspects of the business, from securing supplies, repacking (and
later manufacturing and repacking), delivery, supervision, selling and even cooking of the
products;  (4) while there was no written agreement with regard to their compensation, the parties
impliedly agreed that he will determine his own compensation for the services he rendered;   (5)
respondent encashed checks for the compensation of his services in the same way that all the other
parties did;  (6) sometime in 1995, he was allowed by the parties to invest an initial amount of P2
Million in the stock market, which he replenished every now and then by withdrawing from the
corporation's bank accounts using checks co-signed by petitioners;  (7) from 1995 to mid-1998, the
total amount of money withdrawn were computed by petitioners to be slightly more than P3
Million; (8) petitioners confronted respondent and accused him of using the amount for his own
personal purposes; (9) petitioners forced him to sign a promissory note  amounting to P2 Million (of
which he was able to pay P1,443,241.66); (10) petitioners, by threatening to take him to court, also
made him sign a Deed of Assignment  which he was not able to read, but nevertheless signed in
order to be allowed to leave petitioners' office;  and (11) since the purported documents were
signed by mistake, occasioned by moral coercion and lack of consideration, they should be
annulled/declared void and petitioners ordered to jointly and severally pay whatever is found due
him under the law, including attorney's fees of P350,000.00. The issue reached the Supreme Court.
Hence this case.

Issue: Did the RTC erred in the dismissal of the case?

Ruling: The RTC erred in ordering the dismissal of the case before it on the basis of the parties'
Joint Motion to Dismiss.
The Joint Motion to Dismiss partook of a compromise agreement, i.e., "an agreement
between two or more persons, who for preventing or putting an end to a lawsuit, adjust their
difficulties by mutual consent in the manner which they agree on, and which everyone of them
prefers to the hope of gaining, balanced by the danger of losing."  Like a compromise agreement, a
Joint Motion to Dismiss must comply with the requisites and principles of contracts. Hence, it must
have the concurrence of: (1) consent of the contracting parties; (2) object certain which is the
subject matter of the contract; and (3) cause of the obligation which is established. It must also not
be contrary to law, morals, good customs, and public policy.
Here, the parties' mutual consent was shown by the signatures of respondent and
petitioner Sy acting on behalf of the other petitioners. The object certain was the subject of the
compromise agreement which was the dismissal of the parties' respective claims. The cause of the
obligation was the parties' undertaking to withdraw their claims against each other. Respondent,
however, withdrew his consent to the Joint Motion to Dismiss after its perfection. While a
unilateral revocation of consent to a perfected contract is not allowed, we find that the Joint
Motion to Dismiss was, in the first place, void under Article 1409 (1) of the Civil Code for having a
cause or object contrary to law.
 As petitioners admitted in their petition before us, the parties intended that, in exchange
for respondent's dismissal of Civil Case No. 43-V-01 pending with the RTC Valenzuela, petitioners
would cause the dismissal of their complaint in Crim. Case No. 02-199518 pending with the RTC
Manila. In Trinidad v. Office of the Ombudsman, we ruled that criminal liability cannot be the
subject of a compromise because a criminal case is committed against the people, and the
offended party may not waive or extinguish the criminal liability that the law imposes for its
commission. This explains why a compromise is not one of the grounds prescribed by the Revised
Penal Code for the extinction of criminal liability. Thus, regardless of whether the parties here
agreed to the dismissal of Criminal Case No. 02-199518 alone or in conjunction with I.S. No. 00H-
39191-392508-16-00 pending with the DOJ, such compromise of criminal liability is not allowed.