GUALBERTO TENCHAVEZ, PLAINTIFF AND APPELLANT, VS. ATLAS CONSOLIDATED MINING & DEVELOPMENT CO., ET AL., DEFENDANTS, ATLAS CONSOLIDATED MINING & DEVELOPMENT CO., MINDANAO MOTHER L…

Tenchavez versus Atlas Consolidated Mining and Development

The Case

This is Tenchavez versus Atlas Consolidated Mining and Development, a civil case in which Gualberto Tenchavez sued Atlas Consolidated Mining and Development Corporation, Mindanao Mother Lode Mines, Incorporated, and a long list of individual defendants. Tenchavez was the plaintiff and appellant; the mining companies and the named persons were the defendants. The action arose from his claims over properties and assets connected with the defunct Toledo Mining Company, Incorporated, and from an award he had won in the Court of First Instance of Cebu. The case matters to a reviewee not for any sweeping doctrinal pronouncement, but because the Supreme Court decided it on a compromise agreement — a settlement the parties reached on their own and asked the Court to approve. It is a clean illustration of how a compromise novates and supersedes a judgment, and of how the Court treats a withdrawal of counsel's opposition once the lawyers have been paid.

Procedural History

The case began in the Court of First Instance of Cebu, in a civil case entitled Gualberto Tenchavez versus Atlas Consolidated Mining and Development Corporation and others. Judgment was rendered there in favor of Tenchavez, and it is that judgment which the compromise later describes as an award. Tenchavez, as plaintiff, appealed to the Supreme Court, and the defendants likewise appeared as appellants. While the case was pending before the Supreme Court, the parties executed a Compromise Agreement on the twelfth of April, 1967, and on the fourteenth of April, 1967, they filed a joint petition asking the Court to render judgment in accordance with that agreement. On the same date, two of the defendants, Alvaro Pastor, Junior, and Efrain Pelaez, filed a manifestation of conformity to the compromise and joined the petition for judgment. Also on that date, counsel for the plaintiff filed a motion to approve and record their lien for attorney's fees and litigation expenses. Three days later, two of those counsel sent a telegram opposing the approval of the compromise. On the nineteenth of April, 1967, all three counsel filed a motion to withdraw both their lien motion and their cabled opposition, stating that the matter of their fees had been settled and that they had been paid. The case was thus submitted to the Supreme Court on the joint petition for judgment, with no remaining objection.

Facts

Gualberto Tenchavez had litigated against Atlas Consolidated Mining and Development Corporation, Mindanao Mother Lode Mines, Incorporated, and a group of individual defendants. He obtained a favorable award in the Court of First Instance of Cebu, and the case went up on appeal, with Tenchavez as plaintiff and appellant and the companies and persons as defendants and appellants.

While the appeal was pending, the parties negotiated a settlement. Under the Compromise Agreement, Tenchavez acknowledged receipt of one hundred thousand pesos as full and complete payment, settlement, and discharge of all his claims and causes of action in the case, and he relinquished and waived any and all rights arising out of the award in the Cebu case. He also relinquished in favor of Atlas any interest he might have in the properties and assets of the defunct Toledo Mining Company, Incorporated, and he acknowledged and confirmed the validity of the dissolution of that company, the distribution of its assets, and the subsequent transfers of those assets to Mindanao Mother Lode Mines, Incorporated and then to Atlas. For their part, the companies and the individual defendants declared that all claims they had or might have against Tenchavez were fully discharged, waived, cancelled, and declared null and void. The agreement expressly provided that it novates and supersedes the judgment of the Court of First Instance of Cebu, and the parties undertook to file a joint petition with the Supreme Court for its approval.

The agreement was signed on the twelfth of April, 1967, at Makati, Rizal, and notarized. Tenchavez's wife signed her marital consent. The joint petition for judgment followed on the fourteenth of April, 1967. Counsel for Tenchavez then sought to record their lien for fees and expenses, and two of them cabled an opposition to the compromise, alleging that it had been executed without their knowledge or conformity. But on the nineteenth of April, 1967, all three counsel moved to withdraw both the lien motion and the cabled opposition, manifesting that after a conference among the client and the lawyers, the whole question had been settled, that they had received their attorney's fees under the agreement, and that all of them were satisfied with the arrangements. They expressly prayed that the Court approve the compromise agreement.

Issues

• Whether or not the Compromise Agreement entered into by the parties should be approved and judgment rendered in accordance therewith.
• Whether or not the motion of counsel for the plaintiff to approve and record their lien for attorney's fees and litigation expenses, and their cabled opposition to the compromise, should be considered withdrawn.

Applicable Provisions

The decision does not quote any statute. It rests on the parties' own Compromise Agreement, whose operative terms the Court adopts as the law between them. The provision on the consideration and waiver reads:

In consideration of the sum of ONE HUNDRED THOUSAND PESOS (P100,000.00), Philippine Currency, receipt of which is hereby acknowledged by Gualberto Tenchavez (hereinafter referred to as 'TENCHAVEZ'), as full and complete payment, settlement and discharge of any and all claims and causes of action of TENCHAVEZ involved or being litigated in G.R. No. L-26153 and of any and all claims and causes of action of whatsoever kind and nature that TENCHAVEZ had, now has or could or might have against Atlas Consolidated Mining & Development Corporation (hereinafter referred to as 'ATLAS'), Mindanao Mother Lode Mines, Inc., Manuel Lim, James E. Norton, Jose Tiong Sen Ben, Marcelo P. Karaan, Jesus Urbina, Jr., Pilar G. Urbina, Alvaro Pastor, Jr., Escolastico Cruz, S. Z. Misa, Carlos Guidotti, Sebastian Ugarte, Gerry Urbina, Pilar Urbina, Jose Trillo, Mercedes Urbina and Efrain C. Pelaez, TENCHAVEZ hereby relinquishes and waives any and all rights arising out of the award in Civil Case No. R-4848 of the Court of First Instance of Cebu entitled 'Gualberto Tenchavez vs. Atlas Consolidated Mining and Development Corporation, et al.'

This clause fixes the consideration and the scope of the waiver, and it is the heart of the settlement the Court is asked to approve.

The provision on the effect of the agreement on the prior judgment reads:

It is expressly understood by the parties herein that this Compromise Agreement novates and supersedes the judgment rendered by the Court of First Instance of Cebu in Civil Case No. R-4848 of that court entitled 'Gualberto Tenchavez vs. Atlas Consolidated Mining and Development Corporation, et al.'

This is the clause that makes the compromise, and not the old award, the governing instrument between the parties.

The provision on the undertaking to seek approval reads:

The parties herein agree and undertake to file with the Supreme Court a joint petition for the approval of this Compromise Agreement.

This is the basis for the joint petition on which the Court acts.

Ruling

On the first issue, the Court approved the Compromise Agreement and rendered judgment in accordance therewith, ordering the parties to comply with all its terms and stipulations. The Court noted that there was no further objection against the approval of the agreement and for the rendition of judgment in accordance therewith. The agreement itself supplied the terms the Court enforced: the one hundred thousand pesos acknowledged as full settlement, the waiver of all rights arising out of the Cebu award, the relinquishment of any interest in the properties and assets of Toledo Mining Company, Incorporated, the confirmation of the dissolution and the transfers of assets, and the express declaration that the agreement novates and supersedes the judgment of the Court of First Instance of Cebu.

On the second issue, the Court considered withdrawn both the motion of Attorneys Morales, Barria, and Binamira for the approval and recording of their attorney's lien and their opposition to the approval of the Compromise Agreement, as prayed for in their motion dated the eighteenth of April, 1967. The basis was counsel's own manifestation that the question of their fees had been settled, that they had received their attorney's fees under the agreement, and that all of them were satisfied with the arrangements. With the opposition gone, nothing stood in the way of approval.

Doctrine

A compromise agreement duly executed by the parties and submitted for approval becomes, once approved, the judgment of the Court, and the parties are bound to comply with all its terms and stipulations. Where the agreement expressly provides that it novates and supersedes a prior judgment, the compromise replaces that judgment as the governing instrument between the parties, and the earlier award can no longer be enforced on its own terms. A party who, for a stated consideration, relinquishes and waives all rights arising out of a prior award is bound by that waiver. And where counsel who opposed a compromise later manifest that their fees have been paid and move to withdraw both their lien motion and their opposition, the Court will consider the opposition withdrawn and approve the compromise. These rules are drawn directly from the clauses quoted above — the consideration and waiver clause, the novation clause, and the undertaking to seek approval.

Disposition

The Court approved the Compromise Agreement, rendered judgment in accordance therewith, ordered the parties to comply with all its terms and stipulations, and considered withdrawn counsel's motion for approval and recording of their attorney's lien and their opposition to the compromise, without costs.

Remember This

The one line to memorize: a compromise agreement approved by the Court becomes the judgment, and where it expressly novates and supersedes the prior judgment, it is the compromise and not the old award that governs. Examiners use this case to test the binding effect of a judicially approved compromise, the meaning of a novation clause in a settlement, and the effect of counsel's withdrawal of an opposition once attorney's fees are paid.