SPS. JESUS AND LOLITA MARTIR, G.R. No. 170395
Petitioners,
Present:
Panganiban, C.J.
(Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
SPS. RAYMUNDO AND PURA
VERANO, Promulgated:
Respondents.
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YNARES-SANTIAGO, J.:
This is a petition for review on certiorari
under Rule 45 of the Rules of Court assailing the June 3, 2005
Decision[1] of
the Court of Appeals in CA-G.R. CV No. 73181 which reversed and set aside the
September 14, 2001 Order[2] of
the Regional Trial Court of Bacolod City, Branch 43 dismissing Civil Case No.
11066 for lack of jurisdiction, as well as its October 14, 2005 Resolution[3]
denying the Motion for Reconsideration.
The facts of the case are as follows:
On March 18, 1991, petitioners spouses Jesus and Lolita Martir and
respondents spouses Raymundo and Pura Verano entered into a Compromise[4]
for the purpose of settling Civil Case No. 5045 entitled “Sps. Raymundo and
Pura Verano v. Sps. Jesus and Lolita Martir” pending before the Regional Trial
Court of Bacolod City, Branch 51.
Under the compromise agreement, petitioners undertook to sell to the
Department of Agrarian Reform (DAR) the 10 lots enumerated therein and to use a
portion of the proceeds to pay off respondents’ loan obligations with the
Philippine National Bank (PNB) amounting to P1,145,000 and to secure the
release of the mortgaged properties. The
remainder of the proceeds will be divided equally between petitioners and
respondents.
On
Finding the terms and conditions setforth in the compromise agreement to the mutual benefit of the parties, and not being contrary to law, the contract between them being the law between the parties, nor is it obnoxious to public interest, public morals, public policy, and the law of ethics, the same is hereby approved and judgment is hereby rendered in accordance therewith. The parties are hereby enjoined to faithfully comply each and every obligation entered into as obligated by them in their respective capacities. No other pronouncement as to costs and litigation expenses.
SO ORDERED.
Respondents alleged that petitioners failed to fully comply with their
undertaking under the compromise agreement because out of the 10 lots, only four
were sold to DAR. As a result,
respondents’ obligations with PNB ballooned to P4,300,000, thus they were
constrained to look for other sources of funds to pay their loan with PNB.
On
In their Answer,[6]
petitioners admitted that under the compromise agreement, they undertook to
sell the 10 lots to the DAR. However, they
encountered resistance from some of respondents’ farm laborers hence they were
unable to sell the 10 lots. Petitioners
also alleged that respondents caused the sale of the remaining lots without
their knowledge and consent.
Subsequently, petitioners moved for the dismissal of Civil Case No. 11066
on the ground of lack of jurisdiction considering that it involves an alleged
breach of the Compromise Agreement which was approved by Branch 51. Hence, the enforcement of the said compromise
agreement should be made before same branch.
Respondents opposed the motion to dismiss claiming that since the
judicially approved agreement was actually a motion to dismiss with prejudice,
they are left with no other recourse to enforce the same but to file a separate
civil action based on the same compromise agreement which is a contract binding
between the parties.[7]
On
WHEREFORE, finding the nature of the present action one for
the enforcement of the compromise approved on March 19, 1991 in Civil Case No. 50[45],
then pending before Branch 51 of this Court, jurisdiction for the enforcement
thereof continues to rest in that Court which may be availed of by the
plaintiff by way of a Motion for Execution, this case is hereby DISMISSED for
lack of jurisdiction.
SO ORDERED.[8]
Respondents appealed to the Court of Appeals which reversed and set aside
the order of the trial court dismissing the case for lack of jurisdiction, and
ordered the court a quo to proceed
with the trial of Civil Case No. 11066 and to decide the same on the merits.
Petitioners’ motion for reconsideration was denied,[9]
hence this petition raising the following issues:
I. WHETHER OR
NOT THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT DID NOT
RULE THAT THE COMPLAINT FILED BY HEREIN RESPONDENTS WITH BRANCH 43 OF THE
REGIONAL TRIAL COURT REVOLVES AROUND A JUDICIALLY APPROVED COMPROMISE
AGREEMENT, HENCE ENFORCEABLE BY A WRIT OF EXECUTION ISSUED BY THE COURT THAT
APPROVED THE COMPROMISE AGREEMENT (i.e. BRANCH 51, RTC).
II. WHETHER OR
NOT THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN IT DID NOT
RULE THAT A JUDICIALLY APPROVED COMPROMISE AGREEMENT IS RES JUDICATA
BETWEEN THE PARTIES, HENCE THE PARTIES CANNOT FILE ANOTHER CASE INVOLVING THE
SAME ISSUES.[10]
Petitioners allege that the complaint filed by respondents before Branch
43 basically sought the enforcement of the terms of the compromise
agreement. Since the same has been
approved by Branch 51, respondents’ remedy in case of refusal or failure of a
party to abide by the agreement, is to file a motion for issuance of a writ of
execution by the same Branch 51 and not by filing another case in court. Citing the case of Denila v. Bellosillo,[11]
petitioners argue that once a court acquires jurisdiction over a case, it
continues to retain that jurisdiction until the case is finally terminated or
complete remedy is granted. Such
jurisdiction is not terminated by a decision approving an amicable settlement
where the parties assumed that a writ of execution would be issued to enforce
the stipulations thereof. Petitioners also aver that the compromise agreement
has the effect and authority of res judicata and should not be disturbed
except for vices of consent or forgery.
On the other hand, respondents maintain that since Civil Case No. 5045
has been dismissed with prejudice, they can no longer seek the enforcement of
the compromise agreement therein other than by way of a separate and
independent civil action.
The petition is meritorious.
A compromise agreement is a contract whereby the parties make reciprocal concessions in order to resolve their differences and thus
avoid litigation or to put an end to one already commenced.[12] Once stamped with judicial imprimatur,
it becomes more than a mere contract binding upon the parties; having the
sanction of the court and entered as its determination of the controversy, it
has the force and effect of any other judgment. It has the effect and authority of res
judicata, although no execution may issue until it would have received the
corresponding approval of the court where the litigation pends and its
compliance with the terms of the agreement is thereupon decreed.[13]
In the instant case, the parties executed the Compromise Agreement to put
an end to Civil Case No. 5045. On
A compromise agreement once approved by final order of the court has the
force of res judicata between the
parties and should not be disturbed except for vices of consent or
forgery. Hence, a decision on a
compromise agreement is final and executory; it has the force of law and is
conclusive between the parties. It
transcends its identity as a mere contract binding only upon the parties
thereto, as it becomes a judgment that is subject to execution in accordance
with the Rules.[17] Thus, in Dela Rama v. Mendiola,[18]
this Court held:
Even more than a contract which may be enforced by ordinary
action for specific performance, the compromise agreement is part and parcel of
the judgment, and may therefore be enforced as such by a writ of execution.
Finally, when the terms of an amicable settlement are
violated, as in the case at bar, the remedy of the aggrieved party is to move
for its execution.
Likewise, Article 2041 of the Civil Code explicitly provides that if one
of the parties fails or refuses to abide by the compromise, the other party may
either enforce the compromise or regard it as rescinded and insist upon his
original demand.
In the case for reimbursement filed by respondents before the
Basic is the rule that if a party fails or refuses to abide by a
compromise agreement, the other party may either enforce the compromise or
regard it as rescinded and insist upon his original demand. This rule must be followed.[19] As it is, Branch 43 was without power to
relieve respondents from an obligation they had voluntarily assumed, simply
because the compromise agreement turned out to be unwise, disastrous or
foolish. It had no authority to impose
upon the parties a judgment different from or against the terms and conditions
of their compromise agreement.[20]
We find no merit in respondents’ contention that since Civil Case No.
5045 was dismissed with prejudice by virtue of the compromise agreement, they
can no longer seek its enforcement in the same proceeding; instead they will
now have to file a separate action based on the same compromise agreement
which, according to respondents, is a mere contract between the parties.
The dismissal with prejudice of Civil Case No. 5045 simply means that the
approval of the compromise agreement has the force of res judicata between the parties.
The judicially approved compromise agreement transcends its identity as
a mere contract binding only upon the parties thereto, as it becomes a judgment
that is subject to execution.
WHEREFORE, the
petition is GRANTED. The June 3, 2005 Decision of the Court of
Appeals in CA-G.R. CV No. 73181 and its October 14, 2005 Resolution are REVERSED and SET ASIDE. The Order of the
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson
MA. ALICIA
AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
CERTIFICATION
Pursuant
to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
ARTEMIO
V. PANGANIBAN
Chief Justice
[1] Rollo, pp. 36-42. Penned by Associate Justice Pampio A.
Abarintos and concurred in by Associate Justices Mercedes Gozo-Dadole and Ramon
M. Bato, Jr.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
No. L-39569,
[12] Armed Forces of the Philippines Mutual
Benefit Association, Inc. v. Court of
Appeals, G.R. No. 126745,
[13]
[14] Abarintos v. Court of Appeals, 374 Phil.
157, 170 (1999).
[15] Canonizado v. Benitez, 212 Phil. 564,
570 (1984).
[16] See Denila v. Bellosillo, supra note 11.
[17] Manila International Airport Authority
(MIAA) v. ALA Industries Corporation, G.R. No. 147349, February 13, 2004,
422 SCRA 603, 610-611.
[18]
G.R. No. 135394,
[19] Choithram Jethmal Ramnani v. Court of
Appeals, 413 Phil. 194, 209 (2001);
[20]