COMPROMISES

Art. 2028. A compromise is a contract whereby the parties, by making reciprocal concessions,
avoid a litigation or put an end to one already commenced

Nature - consensual contract:

perfected by mere consent
when not contrary to LMPP
Valid and binding enforcable by both parties

If entered into by parties to a litigation; may be submitted to the court to terminate the case.
Court will check validity
If valid and approved by the court
The court will render judgment according to the terms of the compromises and enjoins the parties to
comply with its terms
Requisites:
Uncertainty of juridical relation
Agreement to eliminate the uncertainty through reciprocal concessions
Definite proposition
Definite acceptance
Does not matter from whom the proposition comes from
Constitutes a contract
Binding on both parties

Reasons
To avoid a litigation or to end a suit already instituted
Mutual concessions, mutual gains to avoid expense and trouble of litigation

Kinds of Compromise
Judicial
To terminate a suit already instituted
Agreement entered into embodied in the courts decision
Extrajudicial
Avoid provocation of suit

Enforceability
Gen: Once perfected, parties must abide by it. A final, mutual, complete settlement of all previous
dealings between the parties bars all actions for damages alleged to have resulted or accrued from any
transaction merged in the settlement.
except when there is error, deceit, violence or forgery

Cebu Intl Finance Corp vs Court of Appeals (GR 123031; Oct 12, 1999)
The compromise Agreement could not bind a party who did not sign the compromise agreement nor avail
of its benefits
Compromise has upon the parties the effect and authority of res judicata, with respect to the matter
definitely stated therein, or which by implication from its terms should be deemed to have been included
therein even if the agreement has not been judicially approved.

AFP Mutual Fund vs CA

Like any other contract, an extrajudicial compromise agreement is not exempted from the rules and
principles of a contract
 A compromise that is intended to resolve a matter already under litigation is a judicial comproomise

Art. 2029. The court shall endeavor to persuade the litigants in a civil case to agree upon some fair
compromise.

Duty of the Court - Mandator on the court to endeavour to agree on a fair compromise. Performed on
any stage whenever propitious occasion arises.

Art. 2030. Every civil action or proceeding shall be suspended:

(1) If willingness to discuss a possible compromise is expressed by one or both parties; or

(2) If it appears that one of the parties, before the commencement of the action or proceeding,
offered to discuss a possible compromise but the other party refused the offer.

The duration and terms of the suspension of the civil action or proceeding and similar matters
shall be governed by such provisions of the rules of court as the Supreme Court shall promulgate.
Said rules of court shall likewise provide for the appointment and duties of amicable
compounders.

Suspension of Proceedings - This is in order to give opportunity to the litigants to come to a

comrpomise which is in line with public policy to discourage litigation as much as possible.

Art. 2031. The courts may mitigate the damages to be paid by the losing party who has shown a
sincere desire for a compromise.

Art. 2032. The court's approval is necessary in compromises entered into by guardians, parents,
absentee's representatives, and administrators or executors of decedent's estates.

Attorneys - cannot, without special authority, compromise their clients litigation, or recieve anything in
discharge of a clients claim but the full amount in cash.
- When client becomes aware of the compromise and judgment and fails to repudiate his attorneys actions
he will not afterwards be heard to contest its validity

Art. 2033. Juridical persons may compromise ONLY in the form and with the requisites which may be
necessary to alienate their property.

Effect: Juridical persons may compromise but only regards their property

Power of Municipality to Compromise - municipal council may enter into contracts:

a. In the manner and requisites necessary to alienate property belonging to the municipality
b. As prescribed in the Municipal Law
c. Approved by the Provincial Governor

Anacleto vs Van Twest

The power to compromise or settle claims in favor of or against the corporation is vested in the board of
directors
A compromise agreement entered into by a person not duly authorized to do so by the principal is void
and has no legal effect
A judgment based upon a compromise entered by an attorney without a special authority from the client is
null and void

EFFECT ON CRIMINAL LIABILITY

Art. 2034. There may be a compromise upon the civil liability arising from an offense; but such
compromise SHALL NOT extinguish the public action for the imposition of the legal penalty.

Trigger: A person is civilly liable for an offense; offended parties and offender seek to compromise on civil
liability
Effects: Compromise extinguishes civil liability but does not affect criminal liability.

Criminality is not affected by compromise or novation.

A Public Criminal Action has for it object the punishment of the offender.
It is the social and public interest that all crimes be punished
Even if the offended party expressly waives indemnification, it is the duty of the prosecutor to bring
criminal charges.

Trinidad vs Marcelo
Criminal liability cannot be the subject of a compromise; A complaint for misconduct, malfeasance or
misfeasance against a public officer or employee cannot just be withdrawn at any time by the complainant

Dasalla Sr. vs CFI

Civil liability may be waived or condoned
Affidavit executed by the petitioner, releasing the respondent from additional civil liability arising from the
death of the formers son, is legal

INVALID COMPROMISES

Art. 2035. 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.
 Civil Status
A. GEN. RULE: The law PROHIBITS the recognition or denial of a persons civil status where it is in
consideration of some price, prestation or concession by the other party.
B. EXCEPTION:
a. The law DOES NOT PROHIBIT a simple and full recognition of the status of another, not amounting to a
compromise.
b. Where there is no controversy as to the civil status of a person, as a natural child, a later compromise
giving the said person his share in the estate of a deceased, is valid.
C. APPLICATION: In Lajom vs. Viola, a possible objection to the promise of the defendants to give the
plaintiff (allegedly a co-heir of defendants) his share in the estate as an acknowledged natural child is that
such agreement may run counter to article 2035. However, it does not appear from the complaint that the
defendants ever impugned or denied the plaintiff's status as an acknowledged natural child; on the
contrary, according to the complaint, the defendants admitted such status by promising to give the plaintiff
his lawful share in the estate of the father. There having been, in accordance with the allegations in the
complaint, no controversy over the condition of the plaintiff as acknowledged natural child, the agreement
between the plaintiff and defendants alleged in the complaint, if shown at the trial, is not a compromise at
all.

Marriage
A. GEN. RULE: The law PROHIBITS a compromise on the validity of a marriage or legal separation.
B. EXCEPTION: Such compromise CAN BE UPHELD IF:
a. it is in favor of the validity of marriage, and
b. the issue refers to a cause of annulment, such as fraud, violence, insanity, etc. in which public interest is
not involved.
i. EXCEPTION: But if the cause is one which gives rise to absolute nullity, such as incetous relationship or
bigamy, the compromise is void even if it is in favor of the validity of the marriage.
C. APPLICATION: In xxx, xxx

Future Support
A. GEN. RULE: The law PROHIBITS a compromise on future legal support.
B. EXCEPTION:
a. There can be a VALID compromise on support arising from an onerous contract because this is
governed by the will of the parties.
b. And even in legal support, there can be a VALID compromise on the manner of payment and on the
securities to a guaranty of such payment, so long as the right itself is preserved
C. APPLICATION: In xxx, xxx

Jurisdiction of Courts
A. GEN. RULE: Jurisdiction CANNOT be conferred upon the court by consent of the parties; NOR CAN an
express agreement deprive a court of jurisdiction conferred upon it by law.
B. APPLICATION: In Nepomuceno v. Carlos, the question is one of the jurisdiction of the court over the
settlement of the estate of a deceased person. Such jurisdiction cannot be conferred by consent of
parties. If, as a matter of law, there was, in 1901, no judicial proceeding pending in court for the
settlement of this estate, then the parties could not, even by their express consent, confer such
jurisdiction.

Other Matters
1. There CAN be compromise on parental and marital authority.
2. Official abuse SHOULD NOT be the subject of compromise.
a. APPLICATION: In the separate opinion of J. Plana in People v. Caruncho, official abuse is not and should
not be subject to compromise. Rather, it should be prosecuted despite the desistance of the offended
party, if there is available evidence. Presidential Decree No. 1508 itself expressly provides that there can
be no amicable settlement "when one party is a public officer or employee, and the dispute relates to the
performance of his official functions."
 Art. 2036. A compromise comprises only those objects which are definitely stated therein, or
which by necessary implication from its terms should be deemed to have been included in the
same.

A general renunciation of rights is understood to refer only to those that are connected with the
dispute which was the subject of the compromise.

A. GEN. RULE: A compromise agreement must be strictly interpreted. It must be understood as including:
a. only matters specifically determined therein, or
b. which by necessary inference from its wording, must be deemed included.
B. APPLICATION: In Ferrer v. Ignacio, the plaintiffs action as well as the defendants cross complaint
depend entirely as to whether or not the spouses Mariano Trias and Maria Ferrer have complied with their
obligation with regard to the redemption of the lands referred to in the compromise agreement. To decide
this question, it is necessary to determine the nature and scope of this obligation.

At all events, supposing that the defendants executed the contract under the impression
that the right to redeem the parcels of land was still subsisting, as it does not appear that
the plaintiff has induced them into this belief, this fact, at most, constitutes an error of fact
which the defendants can not set up in this action, it having been the object and result of the
compromise to withdraw the parties from a suit already commenced.

A compromise agreement abrogating the right of a party to retain possession of a property as a lessee,
does not necessarily destroy her right of redemption created by another contract.

A compromise agreement comprises not only those objects definitely stated in it, but also those, which by
necessary implication, should be deemed to have been included in it (Adriatico Consortium Inc vs Land
Bank)

Art. 2037. 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. (1816)

EFFECTS OF COMPROMISE:
1. extinguishes the rights and actions which gave rise to it;
2. new ties and obligations are created.

A compromise agreement has the same authority as res judicata. Rendition of a judgment in
accordance with the compromise is NOT essential to the validity of the settlement, but it cannot be
enforced by execution unless in a judgment

Judicial Compromise - Judgment must be rendered according to the compromise entered into by the
parties to a suit, if there is nothing contrary to law.

In order that a compromise may set up as a bar to a new litigation:

1. the new litigation must involve the same subject matter covered by the compromise;
2. issue should be between the same parties.
 GENERAL RULE: A judgment rendered on the basis of a compromise is not appealable and
immediately executory.
Stipulations in a compromise agreement:
1. approved by court
2. contained in the judgment rendered in accordance with the compromise;
can be enforced by execution.

EXCEPT: if a motion is filed to set aside the compromise (on the ground of fraud, mistake, or duress)

Pedro Manique et al vs Ceferino Cayco et al

Compromise is not appealable unless a motion is filed to set aside the compromise on grounds of fraud,
mistake, or duress.
Judgment rendered in accordance with a compromise need not include finding of law or fact.

Phil. Bank of Comm. vs Echiverri

The whole essence of a compromise agreement is that by making reciprocal concessions, whether of
greater benefit or not to one party avoid litigation or put an end to one already commenced. A judge is not,
therefore, authorized to disapprove the applicability to certain provisions in a compromise agreement to
some parties thereto for the reason that said parties were less guilty, that is they were not principally,
liable for the fraud committed on the bank being mere inferior employees, than the others

RP vs PEZA, Florendo
it becomes a valid agreement which has the force of law between the parties - it has the effect and
authority of res judicata once entered into, even without judicial approval.
When a compromise agreement is given judicial approval, it becomes more than a contract binding
upon the partieshaving been sanctioned by the court, it is a determination of the controversy and has
the force and effect of a judgment.

WHEN VOIDABLE

Art. 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence,
or falsity of documents, is subject to the provisions of Article 1330 of this Code.

However, one of parties cannot set up a mistake of fact as against the other if the latter, by virtue
of the compromise, has withdrawn from a litigation already commenced. (1817a)

Art. 2039. When the parties compromise generally on all differences which they might have with
each other, the discovery of documents referring to one or more but not to all of the questions settled
shall not itself be a cause for annulment or rescission of the compromise, unless said documents
have been concealed by one of the parties.
But the compromise may be annulled or rescinded if it refers only to one thing to which one of the
parties has no right, as shown by the newly-discovered documents. (n)
 Triggers
Parties compromised generally in all differences
After said compromises, there was discovery of documents referring to one or more but not all the
questions settled

Effect (General Rule) discovery shall not itself be a cause for annulment of the compromise
Effect (Exceptions to the General Rule) discovery shall be a cause for annulment
If the documents were concealed by one party
If the compromise refers only to one thing to which one of the parties has no right, as shown by the
discovered documents

COMPROMISE AFTER JUDGMENT

Art. 2040. If after a litigation has been decided by a final judgment, a compromise should be
agreed upon, either or both parties being unaware of the existence of the final judgment, the
compromise may be rescinded.
Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a
compromise. (1819a)

Triggers
There was a litigation
The litigation was decided by final judgment
A compromise agreed was agreed upon by the parties
At least one of the parties was unaware of the existence of the final judgment
Effect Said compromise may be rescinded
Exemption A judgment, which may be revoked or set aside, is not a valid ground for attacking a
compromise

Magbanua vs Uy
The validity of the agreement is determined by compliance with the requisites and principles of contracts,
not by when it was entered into;

IN CASE OF BREACH

Art. 2041. 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. (n)

Trigger
One of the parties fails or refuses to abide by the compromise
Effect
Other party has two remedies
1. Enforce the compromise
2. Regard the compromise as rescinded and insist upon his original demand

Chavez vs CA
 An amicable settlement reached after barangay conciliation proceedings has the force and effect of a final
judgment of a court if not repudiated or a petition to nullify the same is filed before the proper city or
municipal court within ten (10) days from its date; Settlement may be enforced by execution by the lupong
tagapamayapa within six (6) months from its date, or by action in the appropriate city or municipal court, if
beyond the Sixmonth period.
The Revised Katarungang Pambarangay Law provides for a twotiered mode of enforcement of an
amicable settlement, to wit: (a) by execution by the Punong Barangay which is quasijudicial and summary
in nature on mere motion of the party entitled thereto; and (b) an action in regular form, which remedy is
judicial; The mode of enforcement does not rule out the right of rescission under Art. 2041 of the Civil
Code

Leonor vs Sycip
Action for rescission is not required upon breach of compromise
If the right of action for unlawful detainer would be subordinated to the action for rescission of the
compromise agreement, then the latter would be a prejudicial question and the proceedings in the former
would have to be suspended until the final disposition of the action for rescission.

Pasay City vs CFI

A party to a compromise cannot ask for its rescission after it has enjoyed its benefits.
After court has already enforced a compromise agreement, it no longer has any jurisdiction to admit a
supplemental complaint in the same case