ROMULA MABALE, FILOMENO TAMALA, FE MANGOMPIT TAMALA, GENARA MANGOMPIT ETOC AND NESTOR MANGOMPIT, PETITIONERS, VS. HON. SIMPLICIO M. APALISOK, PRESIDING JUDGE CFI, BRANCH I, DIPO…

Mabale versus Apalisok

The Case

This is a petition for review under Republic Act Number 5440, and in substance also a special civil action of certiorari, brought by Romula Mabale, her children, and her son-in-law against the presiding judge of the Court of First Instance of Zamboanga del Norte. The petitioners assail the order of the trial court directing them to vacate a coconut lot and to stop disturbing the buyer in its enjoyment, after the trial court found that a compromise agreement and the judgment based on it were valid and still enforceable. The case matters because it gathers in one place the rules on judicial compromises: their force of res judicata, their immediate executability, the narrow grounds for annulling them, and the proper remedy of a party who feels aggrieved by a judgment approving a settlement.

Procedural History

Three separate civil cases were pending between the same parties. Two were actions for consolidation of ownership over two lots sold under pacto de retro, one filed in the Court of First Instance of Zamboanga del Norte and the other in the Court of First Instance of Misamis Occidental. The third, filed in the Court of First Instance of Zamboanga del Norte, was an action to recover a sum of money for copra paid for but never delivered. That third case never reached trial, because the parties and their counsel submitted a compromise agreement dated April 22, 1976, which purported to settle all three cases. The trial court rendered judgment based on that compromise on June 18, 1976. When Romula Mabale failed to pay the stipulated amount, the court issued a writ of execution, a new title was issued to Tan Tian Tiong, and a writ of possession followed. Tan Tian Tiong then filed a petition to declare Romula and all persons acting under her in contempt for refusing to vacate. The trial court, in its order of July 6, 1977, held that the compromise was not tainted with fraud and ordered Romula and all persons claiming under her to vacate the lot within thirty days, failing which the contempt proceeding would continue. Romula received a copy of that order on August 5, 1977, and on September 3, 1977 mailed her petition to the Supreme Court.

Facts

Romula Mabale, a widow of Sapang Dalaga, Misamis Occidental, was the registered owner of Lot Number 1592, an eleven-hectare coconut land, under a transfer certificate of title issued to her in 1966. On May 10, 1973, she sold that lot under pacto de retro for 10,000 pesos to Lagrimas Lim, the wife of Tan Tian Tiong. She had earlier sold another eight-hectare lot under pacto de retro to the same Lagrimas Lim for 14,000 pesos. She failed to redeem either lot within the stipulated period.

To consolidate their ownership, the spouses Tan Tian Tiong and Lagrimas Lim sued Romula in September 1975, in separate actions covering the two lots. Also in September 1975, Tan Tian Tiong sued her for the recovery of 22,250 pesos, representing amounts she had received from him in 1972, 1973 and 1974 for the purchase of copra, which she neither delivered nor returned.

In the copra case, the parties filed a compromise agreement dated April 22, 1976, settling all three cases. Under its terms, Romula agreed to pay the spouses 46,000 pesos on or before July 22, 1976; failing payment, she would cede Lot Number 1592 to them; the spouses would in turn pay her 20,000-peso debt to the Development Bank of the Philippines with interest; and she or any of her children could repurchase the lot within five years. The trial court approved the compromise in its judgment of June 18, 1976. Romula did not pay. Execution followed, Tan Tian Tiong paid the bank 21,101 pesos and 81 centavos on September 7, 1976, a new title was issued to him, and a writ of possession was served. Because she refused to vacate, the contempt petition and the assailed order of July 6, 1977 followed.

Issues

• Whether or not the judgment of the trial court based on the compromise agreement is valid and executory.
• Whether or not a contempt proceeding is proper in view of the failure of Romula Mabale, her children and son-in-law to vacate Lot Number 1592.

Applicable Provisions

Article 2037 of the Civil Code provides:

A compromise has upon the parties the effect and authority of res judicata.

This is the core provision: it gives the settlement the conclusive effect of a final judgment, which is why the Court treats the judgment approving it as binding on Romula.

Article 2038 of the Civil Code provides:

A compromise may be annulled on the ground of mistake, fraud, violence, intimidation, undue influence, or falsity of documents.

This fixes the only grounds on which Romula could have attacked the settlement, and none of them was seasonably invoked.

Article 2041 of the Civil Code provides:

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.

This is the remedy the Tan Tian Tiong spouses chose: they enforced the compromise by execution rather than reviving their original claims.

Ruling

On the first issue, the Court held that the judgment based on the compromise is binding and conclusive upon Romula, and that its enforcement, already begun, may be completed. The Court conceded that the compromise was not flawless: its caption should have included the other two cases, its terms were involuted, and the trial court should have held a hearing and asked Romula categorically in open court whether she understood its stipulations. Still, the agreement was valid, because Romula was assisted by her lawyer when she signed it, she was personally furnished a copy of the judgment approving it, and that judgment had already been partly executed. The Court stressed that a judgment on compromise is not appealable and is immediately executory unless a motion is filed to set aside the compromise on the ground of fraud, mistake or duress. Romula did not seasonably move to set aside either the compromise or the judgment. Instead, her children filed a separate action for reconveyance, and she and her children filed another action to rescind the settlement and annul the judgment. The Court also rejected her claim that Tan Tian Tiong, being an alien, was disqualified to acquire the lot, because the trial court had required him to prove his Philippine citizenship and he submitted a certified copy of his certificate of naturalization.

On the second issue, the Court upheld the contempt proceeding as proper, since the order to vacate rested on a valid and executory judgment which the petitioners refused to obey.

Doctrine

A compromise has upon the parties the effect and authority of res judicata, and a judgment based upon a compromise is more than a mere contract: it has the force of res judicata and cannot be unilaterally repudiated without legal cause. As a rule, a judgment on compromise is not appealable and is immediately executory, unless a motion is filed to set aside the compromise on the ground of fraud, mistake or duress, in which event an appeal may be taken from the order denying the motion. To be entitled to appeal from a judgment approving a compromise, a party must move not only to set aside the judgment but also to annul the compromise itself on the ground of fraud, mistake or duress vitiating consent. A compromise tainted by mistake, fraud, violence, intimidation, undue influence or falsity of documents may be annulled; and where one party fails to abide by it, the other may either enforce it or regard it as rescinded and insist on the original demand. Finally, trial courts should scrutinize a compromise agreement with utmost care and circumspection, so as to obviate misunderstanding and controversy when it is later implemented.

Disposition

The petition was denied, and the order of the trial court upholding the compromise and the judgment based on it, and directing the petitioners to vacate Lot Number 1592, was sustained.

Remember This

Memorize the line that a compromise has upon the parties the effect and authority of res judicata, and that a judgment on compromise is immediately executory and not appealable absent a timely motion to annul the compromise itself for fraud, mistake or duress. Examiners use this case to test the remedies against a compromise judgment and the rule that a party who settles cannot later repudiate the settlement without legal cause.