FRANCISCO PERIQUET, PETITIONER, VS. HON. JUDGE ANDRES REYES, COURT OF FIRST INSTANCE OF RIZAL, ET AL., RESPONDENTS.

Periquet versus Reyes

The Case

This is a petition for mandamus and certiorari filed by Francisco Periquet against the Judge of the Court of First Instance of Rizal. Periquet asks the Supreme Court to compel the respondent judge to approve, certify, and elevate the record on appeal in a civil case, or in the alternative to declare null the compromise agreement the parties signed, the decision approving it, and all orders issued after that decision. The case matters because it fixes the rule on the appealability of a judgment based on a compromise: such a judgment is generally final and immediately executory, and the door to appeal opens only when a party moves to set the compromise aside on the ground of fraud, mistake, or duress.

Procedural History

The action began in the Court of First Instance of Rizal, where the Suarez Estate, Incorporated and several incorporators sued the special administrator of the estate of Maria Suarez, Francisco Periquet, and Flaviana Muli Vda. de Suarez to declare the corporation the owner of twenty parcels of land. The parties filed a compromise agreement, and on March 9, 1964, the trial court rendered judgment approving the compromise and the result of the drawing of lots. Periquet moved to amend the dispositive portion, and the motion was denied. He then asked for a receiver. Later he filed a motion to set aside the compromise agreement and the decision and for new trial, claiming he had signed on the mistaken belief that his share was allotted to him personally. The trial court denied the motion by order of May 29, 1964, holding him estopped. Periquet filed a notice of appeal and an appeal bond, and then a record on appeal. The other parties opposed the appeal on the ground that a judgment on a compromise is not appealable and had already become final. By order of October 3, 1964, the trial court disallowed the appeal and disapproved the record on appeal, and it denied reconsideration. Periquet then came to the Supreme Court by petition for mandamus and certiorari, charging grave abuse of discretion.

Facts

On May 16, 1951, Maria Suarez, then unmarried, agreed with her mother Flaviana Muli Vda. de Suarez, B. Rene Gomez, Marcelo Suarez, and Marcial Suarez to form a corporation to be known as the Suarez Estate, Incorporated, to engage in the real estate business. Using the initial paid up capital, Maria Suarez purchased in her own name twenty parcels of land in Mandaluyong, Rizal. The corporation was formally incorporated on November 21, 1951, but the lots remained registered in her name. Maria Suarez married Francisco Periquet in April 1953, and she died on December 5, 1954.

Settlement proceedings for her estate were commenced, and the Philippine Trust Company was appointed special administrator. The twenty parcels were included in the inventory as assets of the deceased. The corporation and the other incorporators then filed a complaint to declare the corporation the sole and absolute owner of the lots and to order their delivery to it.

On February 29, 1964, the parties filed a motion to approve a compromise agreement. Under it, the lots were to be returned to the incorporators and the heirs of the deceased incorporators, the remaining unsold lots to be owned in common in stated proportions: thirty-three and one-third percent to Flaviana Muli Vda. de Suarez, thirty-six and two-thirds percent to Francisco Periquet as surviving spouse of Maria Suarez, and thirty percent to Marcial Suarez, B. Rene Gomez, and the heirs of Marcelo Suarez. The agreement was signed by the parties and their counsel, and Periquet's own counsel prepared it. On March 7, 1964, the parties drew lots before the deputy clerk of court, and on March 9, 1964, the trial court approved the compromise and the drawing of lots. The five lots drawn as the share of Maria Suarez were titled in the name of Francisco Periquet as her surviving spouse.

Issues

• Whether or not a judgment rendered on a compromise agreement is appealable.
• Whether or not the case falls within the exception allowing an appeal, namely that a party moved to set the compromise aside on the ground of fraud, mistake, or duress.
• Whether or not Periquet's mistaken belief that the share was allotted to him in his personal capacity is the kind of mistake that invalidates consent.
• Whether or not the trial court abused its discretion in disallowing the appeal and disapproving the record on appeal.

Applicable Provisions

Article 1331 of the new Civil Code provides:

In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract.

This is the standard the Court applies to test whether Periquet's alleged mistake can open the door to setting aside the compromise and, with it, to an appeal.

Article 997 of the Civil Code provides:

When the widow or widower survives with legitimate children or descendants, and acknowledged natural children, or natural children by legal fiction, the former shall be entitled to the share of a legitimate child.

The Court invokes the laws of succession to show that Periquet's proposal would deprive his wife's surviving mother of her hereditary share and vest the whole thirty-six and two-thirds percent upon the husband, contrary to law.

Ruling

On the first issue, the Court holds that generally a judgment on a compromise agreement is not only without appeal but is also immediately executory. When the parties agree to settle their differences, to end a pending litigation, and request the court to render judgment based on their agreement, there is an implied waiver of their right to appeal from the decision.

On the second issue, the Court recognizes an exception: an appeal exists from the order denying a motion to set the compromise aside on the ground of fraud, mistake, or duress. To fall within the exception, the moving party must allege vitiated consent. But not every act that may be considered fraudulent, erroneous, or under duress can be the basis for annulling a contract.

On the third issue, the Court holds that a mistake invalidates consent only if it refers to the substance of the thing which is the object of the contract, or to the condition which has principally moved one or both parties to enter into it. The error must be the causal, not merely incidental, factor that induced the complaining party to enter the agreement. Periquet's alleged mistake contradicts the explicit terminology of the fifth paragraph of the agreement, which partitioned the lots among the incorporators and heirs of the deceased incorporators, and which was drafted by his own personal counsel. It was his wife, not he, who contributed to the corporation, so he could not demand a share in his personal capacity. His filing of two motions seeking enforcement of the judgment showed he originally considered it in accord with the agreement. Miscalculation or misappreciation of the legal import of the agreement, where the party is assisted by counsel, will not provide a basis for setting aside a compromise on the ground of mistake. A compromise entered into and carried out in good faith will not be discarded even if there was a mistake of law or fact.

On the fourth issue, the Court holds that the trial court did not abuse its discretion. Periquet's contention being plainly untenable, there would be no point in declaring that the court below abused its discretion in refusing to give due course to the appeal. Even if he were technically entitled to mandamus, the net result would merely be further delay in adjudicating that his case is devoid of merit. The Court also notes that the administrator's failure to sign the compromise is not available to Periquet for evading the effect of his own consent, and only the administrator may raise that objection. The question of the timeliness of the appeal need not be passed upon.

Doctrine

A judgment based on a compromise agreement is not appealable and is immediately executory, because the parties' request for judgment on their agreement implies a waiver of the right to appeal. The exception is that an appeal lies from the order denying a motion to set the compromise aside on the ground of fraud, mistake, or duress. Under Article 1331 of the new Civil Code, mistake invalidates consent only if it refers to the substance of the thing which is the object of the contract, or to the conditions which have principally moved the parties to enter into it; the error must be causal, not incidental. A miscalculation or misappreciation of the legal import of an agreement, where the party is assisted by counsel, is not a ground to set aside a compromise. A compromise entered into and carried out in good faith will not be discarded even if there was a mistake of law or fact.

Disposition

The petition was dismissed, with costs against the petitioner, Francisco Periquet.

Remember This

Memorize this line: a judgment on a compromise is final and immediately executory, and only a timely motion to set it aside on the ground of fraud, mistake, or duress opens the door to appeal. Examiners use this case to test the appealability of compromise judgments and the doctrine that a mistake of law or a misappreciation of legal import, especially with counsel at one's side, does not vitiate consent.