What is a contract of compromise?
A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. (Art. 2028, Civil Code)
What are void compromises?
No compromise upon the following questions shall be valid:
(1) The civil status of persons;
(2) The validity of a marriage or a legal separation;
(3) Any ground for legal separation;
(4) Future support;
(5) The jurisdiction of courts;
(6) Future legitime. (Art. 2035, Civil Code)
What is the effect of a compromise?
A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise. (Art. 2037, Civil Code)
What is the remedy if one of the parties fails or refuses to abide by the compromise?
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parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. (Art. 2041, Civil Code)
Jurisprudence:
● Judicial vs. extrajudicial compromise
Under Article 2028 of the Civil Code, a compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. Accordingly, a compromise is either judicial, if the objective is to put an end to a pending litigation, or extrajudicial, if the objective is to avoid a litigation. As a contract, a compromise is perfected by mutual consent. However, a judicial compromise, while immediately binding between the parties upon its execution, is not executory until it is approved by the court and reduced to a judgment. The validity of a compromise is dependent upon its compliance with the requisites and principles of contracts dictated by law. Also, the terms and conditions of a compromise must not be contrary to law, morals, good customs, public policy and public order. (Land Bank of the Philippines vs. Heirs of Spouses Jorja Rigor Soriano and Magin Soriano, G.R. No. 178312. January 30, 2013)
Under Article 2028 of the Civil Code, a compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. Accordingly, a compromise is either judicial, if the objective is to put an end to a pending litigation, or extrajudicial, if the objective is to avoid a litigation. As a contract, a compromise is perfected by mutual consent. However, a judicial compromise, while immediately binding between the parties upon its execution, is not executory until it is approved by the court and reduced to a judgment. The validity of a compromise is dependent upon its compliance with the requisites and principles of contracts dictated by law. Also, the terms and conditions of a compromise must not be contrary to law, morals, good customs, public policy and public order. (Land Bank of the Philippines vs. Heirs of Spouses Jorja Rigor Soriano and Magin Soriano, G.R. No. 178312. January 30, 2013)
● Compromise agreement has the force of law and is conclusive between the parties
We have time and again ruled that a compromise agreement, when not contrary to law, public order, public policy, morals, or good customs, is a valid contract which is the law between the parties. It is a contract perfected by mere consent, whereby the parties, making reciprocal concessions, avoid litigation or put an end to one already commenced. It has the force of law and is conclusive between the parties, and courts will not relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be unwise. (Cachopero vs. Celestial, G.R. No. 146754, March 21, 2012 citing Air Transportation Office v. Gopuco, Jr., 501 Phil. 228 (2005)
We have time and again ruled that a compromise agreement, when not contrary to law, public order, public policy, morals, or good customs, is a valid contract which is the law between the parties. It is a contract perfected by mere consent, whereby the parties, making reciprocal concessions, avoid litigation or put an end to one already commenced. It has the force of law and is conclusive between the parties, and courts will not relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be unwise. (Cachopero vs. Celestial, G.R. No. 146754, March 21, 2012 citing Air Transportation Office v. Gopuco, Jr., 501 Phil. 228 (2005)
● A decision on a compromise agreement is final and executory
Prevailing case law provides that a compromise once approved by final orders 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. Such agreement has the force of law and is conclusive on 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. Judges therefore have the ministerial and mandatory duty to implement and enforce it. Hence, compromise agreements duly approved by the courts are considered the decisions in the particular cases they involve. (Cachopero vs. Celestial, G.R. No. 146754, March 21, 2012 citing PNOC-EDC) v. Abella, G.R. No. 153904, January 17, 2005, 448 SCRA 549
Prevailing case law provides that a compromise once approved by final orders 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. Such agreement has the force of law and is conclusive on 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. Judges therefore have the ministerial and mandatory duty to implement and enforce it. Hence, compromise agreements duly approved by the courts are considered the decisions in the particular cases they involve. (Cachopero vs. Celestial, G.R. No. 146754, March 21, 2012 citing PNOC-EDC) v. Abella, G.R. No. 153904, January 17, 2005, 448 SCRA 549
● A compromise agreement must comply with the requisites in Article 1318
It must be emphasized, though, that like any other contract, a compromise agreement must comply with the requisites in Article 1318 of the Civil Code, to wit: (a) consent of the contracting parties; (b) object certain that is the subject matter of the contract; and (c) cause of the obligation that is established. And, like any other contract, the terms and conditions of a compromise agreement must not be contrary to law, morals, good customs, public policy and public order. Any compromise agreement that is contrary to law or public policy is null and void, and vests no rights in and holds no obligation for any party. It produces no legal effect at all. (Uy vs. Chua, G.R. 183965, September 18, 2009. 600 SCRA, 806)
It must be emphasized, though, that like any other contract, a compromise agreement must comply with the requisites in Article 1318 of the Civil Code, to wit: (a) consent of the contracting parties; (b) object certain that is the subject matter of the contract; and (c) cause of the obligation that is established. And, like any other contract, the terms and conditions of a compromise agreement must not be contrary to law, morals, good customs, public policy and public order. Any compromise agreement that is contrary to law or public policy is null and void, and vests no rights in and holds no obligation for any party. It produces no legal effect at all. (Uy vs. Chua, G.R. 183965, September 18, 2009. 600 SCRA, 806)
● Status and filiation of a child cannot be compromised
The status and filiation of a child cannot be compromised. Public policy demands that there be no compromise on the status and filiation of a child. Paternity and filiation or the lack of the same, is a relationship that must be judicially established, and it is for the Court to declare its existence or absence. It cannot be left to the will or agreement of the parties. (Uy vs. Chua, G.R. 183965, September 18, 2009. 600 SCRA, 806)
The status and filiation of a child cannot be compromised. Public policy demands that there be no compromise on the status and filiation of a child. Paternity and filiation or the lack of the same, is a relationship that must be judicially established, and it is for the Court to declare its existence or absence. It cannot be left to the will or agreement of the parties. (Uy vs. Chua, G.R. 183965, September 18, 2009. 600 SCRA, 806)
● Future support cannot be the subject of compromise
It appears that the former dismissal was predicated upon a compromise. Acknowledgment, affecting as it does the civil status of persons and future support, cannot be the subject of compromise. Hence, the first dismissal cannot have force and effect and can not bar the filing of another action, asking for the same relief against the same defendant. Conformably, notwithstanding the dismissal of Civil Case 88-935 and the lower courts pronouncement that such dismissal was with prejudice, the second action for support may still prosper. (De Asis vs. Andres, G.R. No. 127578, February 15, 1999)
● Two-tiered mode of enforcement of an amicable settlement
It is true that an amicable settlement reached at the barangay conciliation proceedings, like the Kasunduang Pag-aayos in this case, is binding between the contracting parties and, upon its perfection, is immediately executory insofar as it is not contrary to law, good morals, good customs, public order and public policy.
Being a by-product of mutual concessions and good faith of the parties, an amicable settlement has the force and effect of res judicata even if not judicially approved. It transcends being a mere contract binding only upon the parties thereto, and is akin to a judgment that is subject to execution in accordance with the Rules. Thus, under Section 417 of the Local Government Code, such amicable settlement or arbitration award may be enforced by execution by the Barangay Lupon within six (6) months from the date of settlement, or by filing an action to enforce such settlement in the appropriate city or municipal court, if beyond the six-month period.
Under the first remedy, the proceedings are covered by the Local Government Code and the Katarungang Pambarangay Implementing Rules and Regulations. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation under the settlement. Under the second remedy, the proceedings are governed by the Rules of Court, as amended. The cause of action is the amicable settlement itself, which, by operation of law, has the force and effect of a final judgment.
It must be emphasized, however, that enforcement by execution of the amicable settlement, either under the first or the second remedy, is only applicable if the contracting parties have not repudiated such settlement within ten (10) days from the date thereof in accordance with Section 416 of the Local Government Code. If the amicable settlement is repudiated by one party, either expressly or impliedly, the other party has two options, namely, to enforce the compromise in accordance with the Local Government Code or Rules of Court as the case may be, or to consider it rescinded and insist upon his original demand. This is in accord with Article 2041 of the Civil Code, which qualifies the broad application of Article 2037. (Miguel vs. Montanez, G.R. No. 191336, January 25, 2012)
● No action for rescission is required
Article 2041 does not require an action for rescission, and the aggrieved party, by the breach of compromise agreement, may just consider it already rescinded. The language of this Article 2041, particularly when contrasted with that of Article 2039, denotes that no action for rescission is required in said Article 2041, and that the party aggrieved by the breach of a compromise agreement may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission thereof. He need not seek a judicial declaration of rescission, for he may "regard" the compromise agreement already "rescinded(Miguel vs. Montanez, G.R. No. 191336, January 25, 2012)
In exercising the second option under Art. 2041, the aggrieved party may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission. This is because he may regard the compromise as already rescinded by the breach thereof of the other party. (Chavez vs. CA, G.R. No. 159411, March 18, 2005)
It is true that an amicable settlement reached at the barangay conciliation proceedings, like the Kasunduang Pag-aayos in this case, is binding between the contracting parties and, upon its perfection, is immediately executory insofar as it is not contrary to law, good morals, good customs, public order and public policy.
Being a by-product of mutual concessions and good faith of the parties, an amicable settlement has the force and effect of res judicata even if not judicially approved. It transcends being a mere contract binding only upon the parties thereto, and is akin to a judgment that is subject to execution in accordance with the Rules. Thus, under Section 417 of the Local Government Code, such amicable settlement or arbitration award may be enforced by execution by the Barangay Lupon within six (6) months from the date of settlement, or by filing an action to enforce such settlement in the appropriate city or municipal court, if beyond the six-month period.
Under the first remedy, the proceedings are covered by the Local Government Code and the Katarungang Pambarangay Implementing Rules and Regulations. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation under the settlement. Under the second remedy, the proceedings are governed by the Rules of Court, as amended. The cause of action is the amicable settlement itself, which, by operation of law, has the force and effect of a final judgment.
It must be emphasized, however, that enforcement by execution of the amicable settlement, either under the first or the second remedy, is only applicable if the contracting parties have not repudiated such settlement within ten (10) days from the date thereof in accordance with Section 416 of the Local Government Code. If the amicable settlement is repudiated by one party, either expressly or impliedly, the other party has two options, namely, to enforce the compromise in accordance with the Local Government Code or Rules of Court as the case may be, or to consider it rescinded and insist upon his original demand. This is in accord with Article 2041 of the Civil Code, which qualifies the broad application of Article 2037. (Miguel vs. Montanez, G.R. No. 191336, January 25, 2012)
● No action for rescission is required
Article 2041 does not require an action for rescission, and the aggrieved party, by the breach of compromise agreement, may just consider it already rescinded. The language of this Article 2041, particularly when contrasted with that of Article 2039, denotes that no action for rescission is required in said Article 2041, and that the party aggrieved by the breach of a compromise agreement may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission thereof. He need not seek a judicial declaration of rescission, for he may "regard" the compromise agreement already "rescinded(Miguel vs. Montanez, G.R. No. 191336, January 25, 2012)
In exercising the second option under Art. 2041, the aggrieved party may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission. This is because he may regard the compromise as already rescinded by the breach thereof of the other party. (Chavez vs. CA, G.R. No. 159411, March 18, 2005)
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Compromise
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