POMPEYO L. PALARCA, PLAINTIFF AND APPELLEE VS. RESTITUTA BAROL DE ANZON, AND ARTURO ANZON, DEFENDANTS AND APPELLANTS.

Palarca versus Barol de Anzon

The Case

This is a case about the life of a judgment based on a compromise agreement. Attorney Pompeyo Palarca sued Restituta Barol de Anzon and Arturo Anzon to collect three thousand pesos for professional services rendered in the successful prosecution of the defendants' sales application before the Bureau of Lands, plus attorney's fees and damages. The defendants answered with admissions, denials, affirmative defenses, and a counterclaim. The case matters because it settles a question every litigator meets: when parties end their dispute by compromise and ask the court to render judgment in accordance with it, may the court simply adopt the agreement as its decision, without making its own findings of fact and conclusions of law? The Supreme Court says yes, and explains why such a judgment is complete in itself and may be enforced by execution.

Procedural History

The complaint was filed in the Court of First Instance of Davao. After issues were joined, the case was set for hearing, but on that date the parties instead submitted a compromise agreement and asked for judgment in accordance therewith. On the same day, the trial court rendered judgment, reciting the compromise agreement and ordering the parties to comply strictly with its terms, without special pronouncement as to costs. When the defendants failed to pay, the plaintiff moved for execution, and the court issued a writ of execution. The defendants moved for reconsideration, which the court denied. The defendants then interposed the present appeal, questioning the validity of the judgment and the order of execution. The Supreme Court affirmed the orders appealed from.

Facts

On October 12, 1955, Attorney Pompeyo L. Palarca filed a complaint in the Court of First Instance of Davao against Restituta Barol de Anzon and Arturo Anzon. He sought to recover three thousand pesos, which he alleged the defendants had agreed to pay him for his professional services in the successful prosecution of their sales application before the Bureau of Lands, and also sought attorney's fees and damages. The defendants answered with admissions, denials, affirmative defenses, and a counterclaim.

When the case was called for hearing on March 28, 1957, the parties did not proceed to trial. Instead, they submitted a compromise agreement and asked the court to render judgment in accordance therewith. Under that agreement, the defendants acknowledged and admitted indebtedness to the plaintiff in the amount of three thousand pesos, which they bound themselves, jointly and severally, to pay on or before July 1, 1958. They also bound themselves to pay three hundred pesos as attorney's fees in three monthly installments of one hundred pesos each. The plaintiff waived all further claims under his complaint except as stipulated, and the defendants waived and asked for the dismissal of their counterclaim.

On the same day, the court rendered judgment pursuant to the compromise agreement, advising the parties to comply strictly with its terms and conditions, without special pronouncement as to costs. Because the defendants failed to pay, the court, upon the plaintiff's motion, issued a writ of execution. The defendants moved for reconsideration, which was denied, and they appealed.

Issues

• Whether or not the trial court, in merely transcribing the compromise agreement, failed to make findings of fact and conclusions of law in its decision, as the law requires, thereby rendering the judgment invalid.
• Whether or not the trial court should have first ordered a hearing on whether there had been compliance, total or partial, with the judgment awarding three thousand pesos to the plaintiff, before ordering its execution.

Applicable Provisions

Article 1809 of the Civil Code, as cited in the decision, provides:

According to the legal provision cited above (Article 1809, Civil Code), a compromise may either be judicial or extrajudicial, depending upon whether its purpose be to terminate a suit already instituted or to avoid the provocation thereof.

This provision classifies the compromise in this case as judicial, since its purpose was to terminate a suit already instituted, and it is the foundation for the rule that a judicial compromise may be enforced by execution.

Article 1816 of the Civil Code, now Article 2037, as cited in the decision, provides:

Whether it be judicial or extrajudicial, a compromise has, with respect to the parties, the same authority as res judicata with the sole difference that only a compromise made in court may be enforced by execution, in accordance with the provisions of Article 1816 of the Civil Code (now Article 2037).

This provision supplies the reason why the judgment based on the compromise could be enforced by execution, which is the very relief the defendants resisted on appeal.

Ruling

On the first issue, the Court held that there is no merit in the argument that the trial court failed to make findings of fact and conclusions of law. In contemplation of law, the court is deemed to have adopted the same statement of facts and conclusions of law made and resolved by the parties themselves in their compromise agreement. Their consent rendered it both unnecessary and improper for the court to still make a preliminary adjudication of the matters covered by the agreement. The Court noted that decisions of similar tenor and form had been given effect or upheld in prior cases.

On the second issue, the Court held that a prior hearing on compliance was not required. That procedural recourse might have been proper if the defendants had made any definite claim that they caused payment to be made, but neither before the Supreme Court nor in the court below did they make any allegation to that effect. Moreover, the question of satisfaction of a judgment may be raised even during the process of execution and not necessarily prior to the issuance of the writ. The Court thus concluded that the appeal was interposed solely to delay payment of a just debt.

Doctrine

A judgment based on a compromise agreement is valid even if the court merely transcribes the agreement, because the court is deemed to have adopted the statement of facts and conclusions of law made and resolved by the parties themselves. Their consent makes a preliminary adjudication by the court both unnecessary and improper. A compromise, whether judicial or extrajudicial, has with respect to the parties the same authority as res judicata, that is, the same finality as a judgment on the merits, with the sole difference that only a compromise made in court may be enforced by execution, in accordance with Article 1816 of the Civil Code, now Article 2037. Where the compromise agreement sufficiently discloses the indebtedness and the terms of payment, nothing else is left for the court to do but to enforce or execute its judgment, because the decision is complete in itself. Finally, the question of satisfaction of a judgment may be raised even during the process of execution, and not necessarily before the issuance of the writ.

Disposition

The Supreme Court affirmed the orders appealed from, with treble costs against the appellants.

Remember This

A judgment based on a compromise is complete in itself: the court adopts the parties' own findings of fact and conclusions of law, and a judicial compromise may be enforced by execution. Examiners use this case to test the validity of compromise judgments and the rule that satisfaction of a judgment may be raised even during execution.