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Compromise agreement with the government

Art. 2028. A compromise is a contract whereby the parties, by making

reciprocal concessions, avoid litigation or put an end to one already
commenced.

In the case of Paraiso International properties inc. vs CA and peoples housing land
Corp. (G.R. no. 153420, april 16, 2008) the supreme court defined a compromise
agreement as essentially a contract perfected by mere consent, the latter being
manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract.

The legal requisites of a government Compromise agreement was enumerated in

the case of archbishop Capalla versus the honorable Commission on Election (G.R.
No. 201112, June 13 2012) A government contract is essentially similar to a private
contract contemplated under the Civil Code. The legal requisites of consent of the
contracting parties, an object certain which is the subject matter, and cause or
consideration of the obligation must likewise concur. Otherwise, there is no
government contract to speak of. [4] The pertinent provisions of the Civil Code on the
particular kind of contract involved generally apply as well to a government
contract.

However, since a government contract would generally involve the

disbursement of public funds, several laws and regulations, otherwise not applicable
in an ordinary contract, would have to be observed. [5] These laws are aimed not only
to ensure the correct expenditure of these funds, but, most importantly, the
protection of public interest in ensuring transparency and the most advantage to
the government.
Further more as in the case of Magbanua vs Uy (G.R. No. 161003. May 6, 2005)
discussing the validity of a compromise agreement saying that, There is no
justification to disallow a compromise agreement, solely because it was entered into
after final judgment. The validity of the agreement is determined by compliance
with the requisites and principles of contracts, not by when it was entered into. As
provided by the law on contracts, a valid compromise must have the following
elements: (1) the consent of the parties to the compromise, (2) an object
certain that is the subject matter of the compromise, and (3) the cause of
the obligation that is established.34

A compromise must not be contrary to law, morals, good customs and

public policy; and must have been freely and intelligently executed by and
between the parties.To have the force of law between the parties, it must
comply with the requisites and principles of contract. Upon the parties, it has
the effect and the authority of res judicata, once entered into.

When a compromise agreement is given judicial approval, it becomes more than

a contract binding upon the parties. Having been sanctioned by the court, it is
entered as a determination of a controversy and has the force and effect of a
judgment. It is immediately executory and not appealable, except for vices of
consent or forgery.] The nonfulfillment of its terms and conditions justifies the
issuance of a writ of execution; in such an instance, execution becomes a ministerial
duty of the court.

The notable difference between a private contract and a Governent contract is the
prohibition of the disbursement of fund without the approved allocation from
congress, this is was cited and mentioned as in the case of Hon. Osmena vs COA
and Honrable Domingo ( G.R. no. 98355, March 2, 1994) where the supremem court
ruled that. The Auditing Code of the Philippines (P.D. 1445) further provides that no
contract involving the expenditure of public funds shall be entered into
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unless there is an appropriation therefore and the proper accounting official
of the agency concerned shall have certified to the officer entering into the
obligation that funds have been duly appropriated for the purpose and the amount
necessary to cover the proposed contract for the current year is available for
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expenditure on account thereof. (Emphasis supplied) Any contract entered into
contrary to the foregoing requirements shall be VOID