JOSEPH COCHINGYAN, JR., PETITIONER, VS. HON. GAUDENCIO CLORIBEL, PRESIDING JUDGE OF BRANCH VI, COURT OF FIRST INSTANCE OF MANILA, LEGIONNAIRES ENTERPRISES, INC., IRENEO R. CLAPA…

Cochingyan versus Cloribel

The Case

This is a petition for certiorari filed by Joseph Cochingyan, Jr. against Judge Gaudencio Cloribel, presiding judge of Branch Six of the Court of First Instance of Manila, together with Legionnaires Enterprises, Inc. and the various parties claiming shares in the proceeds of reparations goods. Cochingyan asks the Supreme Court to review a series of orders issued by the respondent court in two civil cases that had been consolidated before Branch Six. The controversy grows out of the implementation of the Philippine reparations program under Republic Act 1789, the Reparations Law, and of a chain of compromise agreements approved by the trial court. The case matters because it fixes the rule that a compromise agreement, once judicially approved, is final and binding on the parties and may be enforced by execution, and because it defines the limits of a court's authority over a receiver it has appointed.

Procedural History

Two actions were commenced in the Court of First Instance of Manila. Joaquin So filed Civil Case 54912 in Branch Six for specific performance of his contracts and assignments covering reparations goods. Keyser Mercantile filed Civil Case 55250 in Branch One against Legionnaires Enterprises, Inc. for the enforcement of its own contract. Various claimants intervened in both cases. Because the two branches issued conflicting orders over the same shipment of goods, the parties negotiated, and the trial court approved compromise agreements in both cases. Civil Case 55250 was later indorsed to Branch Six for consolidation with Civil Case 54912. When Cochingyan failed to pay the parties-payees their agreed shares, the trial court issued several orders compelling payment and reinstated the receivership of Legionnaires Enterprises, Inc. Cochingyan then filed this petition for certiorari to review those orders.

Facts

Under Republic Act 1789, twenty million dollars was set aside as a Trust Fund for the benefit of World War II veterans and their widows and orphans, to be generated from cash sales of reparations goods procured from Japan. The Philippine Veterans Legion, through its national commander, formed Legionnaires Enterprises, Inc. to undertake the generation of that fund. Legionnaires Enterprises secured an allocation of four million dollars from the Reparations Commission, and the Commission recognized it as the business arm of the Philippine Veterans Legion. Legionnaires Enterprises then sold portions of its reparations rights to several buyers, among them Panay Legionnaires Enterprises, Vicente Magno, Joaquin So, Tomas Sy, Roman Baldovino, Worldwide Trading and Development Corporation, and Keyser Mercantile.

Because several buyers claimed the same goods, conflicting orders were issued by two branches of the trial court over an incoming shipment of photographic supplies. The claimants negotiated, and on May 13, 1964, Cochingyan and the buyers, except Joaquin So, executed a compromise agreement deferring the enforcement of their contracts so that the goods under the allocation could be delivered to Cochingyan. Both branches approved the compromise agreement in separate orders dated June 1, 1964. Filipinas Merchandising later assigned its rights to Cochingyan, and Joaquin So, Worldwide, and Torrefranca eventually executed their own compromise agreement with Cochingyan on February 17, 1966, renouncing their claims in exchange for one million pesos payable from the goods.

The receivership of Legionnaires Enterprises was dissolved on February 21, 1966, and Cochingyan took delivery of the reparations goods in various shipments. The parties-payees and the veterans organizations repeatedly demanded their agreed shares, but Cochingyan refused to pay. Motions for payment were filed, and the trial court granted them in orders dated July 1966 through November 1966, finally admonishing Cochingyan to pay immediately or face disciplinary action. Cochingyan then moved to reinstate the receivership, and the court reinstated it and appointed his nominee as receiver. The veterans organizations moved for reconsideration, and the court required all parties to submit their comments and their common choice of receiver.

Issues

• Whether or not the trial court acted with grave abuse of discretion in issuing the orders compelling Cochingyan to pay the parties-payees their respective shares under the approved compromise agreements.
• Whether or not the trial court acted with grave abuse of discretion in reinstating the receivership of Legionnaires Enterprises, Inc. and in appointing a receiver upon Cochingyan's motion.
• Whether or not the orders of the trial court enforcing the compromise agreements are valid and binding upon Cochingyan.

Applicable Provisions

Section 2, subsection (d) of Republic Act 1789, the Reparations Law, provides:

That the amount of twenty million dollars is set aside to form a Trust Fund to be used exclusively for the benefit and rehabilitation of veterans of the Philippines of World War II and their widows and orphans.

This provision is the source of the Trust Fund that the Philippine Veterans Legion sought to generate through Legionnaires Enterprises, Inc., and it explains why the veterans organizations are entitled to share in the proceeds of the reparations goods.

The compromise agreement of May 13, 1964, as quoted in the decision, provides:

Agree to defer the enforcement of their respective contracts with LEI on condition that their respective contracts shall be charged and enforced on the additional allocation that would be made available to the LEI and or PVL in implementation of the balance of said PVL and or LEI allocation approved by the Commission under its Resolution No. 88, as amended by its Resolution No. 91 and any other allocation that the LEI and or the PVL may secure either as new, or additional allocation or allocation in substitution, in order that all the reparations consumer goods procured under Resolution No. 396 can be delivered to Cochingyan, in implementation of his contract with LEI of February 7, 1964, which contract was duly ratified and confirmed by the Board of Directors of LEI and its stockholders.

This is the agreement that the trial court approved and later enforced against Cochingyan, and it is the basis of the parties-payees' right to payment from the goods delivered to him.

Ruling

On the first issue, the Court held that the trial court did not abuse its discretion in ordering Cochingyan to pay the parties-payees. A compromise agreement, once approved by the court, is a judgment that is final and binding on the parties, and it may be enforced by execution. Cochingyan had assumed the obligations of Legionnaires Enterprises to the veterans organizations and to the buyers under the various agreements, and he took delivery of the goods. His refusal to pay the agreed shares justified the orders of the trial court compelling payment.

On the second issue, the Court held that the reinstatement of the receivership was within the sound discretion of the trial court. A receiver may be appointed when necessary to protect the interests of the parties, and the trial court, having found that the interests of the claimants required protection, acted properly in reinstating the receivership. The Court emphasized that the appointment of a receiver rests upon the sound discretion of the court, and that such discretion will not be interfered with on certiorari absent a clear showing of grave abuse.

On the third issue, the Court held that the orders of the trial court enforcing the compromise agreements were valid and binding upon Cochingyan. The compromise agreements had been approved by the court, and Cochingyan had accepted the benefits flowing from them. He could not now repudiate the obligations that were the consideration for those benefits.

Doctrine

A compromise agreement, once approved by the court, is final and binding on the parties and may be enforced by execution. A party who accepts the benefits of a compromise agreement cannot later repudiate its obligations. The appointment of a receiver rests upon the sound discretion of the trial court, and such discretion will not be interfered with on certiorari absent a clear showing of grave abuse. The Trust Fund under Republic Act 1789 is set aside exclusively for the benefit and rehabilitation of veterans of the Philippines of World War II and their widows and orphans, and the parties who undertake its generation are bound to account for and deliver the shares of the veterans organizations.

Disposition

The petition was dismissed, and the orders of the respondent court were affirmed.

Remember This

A compromise agreement approved by the court is a judgment that is final and binding, and a party who accepts its benefits cannot repudiate its obligations. Examiners use this case to test the rule on the enforceability of judicially approved compromise agreements and the discretion of the trial court in appointing a receiver.