THIRD DIVISION

[G.R. No. 161003. May 6, 2005]

FELIPE O. MAGBANUA, CARLOS DE LA CRUZ, REMY ARNAIZ, BILLY ARNAIZ, ROLLY ARNAIZ, DOMINGO
SALARDA, JULIO CAHILIG and NICANOR LABUEN, petitioners, vs. RIZALINO UY, respondent.

DECISION

PANGANIBAN, J.:

Rights may be waived through a compromise agreement, notwithstanding a final judgment that has
already settled the rights of the contracting parties. To be binding, the compromise must be shown to
have been voluntarily, freely and intelligently executed by the parties, who had full knowledge of the
judgment. Furthermore, it must not be contrary to law, morals, good customs and public policy.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, assailing the May 31, 2000
Decision[2] and the October 30, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 53581.
The challenged Decision disposed as follows:

WHEREFORE, having found that public respondent NLRC committed grave abuse of discretion, the Court
hereby SETS ASIDE the two assailed Resolutions and REINSTATES the order of the Labor Arbiter dated
February 27, 1998.[4]

The assailed Resolution denied reconsideration.

The Facts

The CA relates the facts in this wise:

As a final consequence of the final and executory decision of the Supreme Court in Rizalino P. Uy v.
National Labor Relations Commission, et. al. (GR No. 117983, September 6, 1996) which affirmed with
modification the decision of the NLRC in NLRC Case No. V-0427-93, hearings were conducted [in the
National Labor Relations Commission Sub-Regional Arbitration Branch in Iloilo City] to determine the
amount of wage differentials due the eight (8) complainants therein, now [petitioners]. As computed,
the award amounted to P1,487,312.69 x x x.

On February 3, 1997, [petitioners] filed a Motion for Issuance of Writ of Execution.

On May 19, 1997, [respondent] Rizalino Uy filed a Manifestation requesting that the cases be terminated
and closed, stating that the judgment award as computed had been complied with to the satisfaction of
[petitioners]. Said Manifestation was also signed by the eight (8) [petitioners]. Together with the
Manifestation is a Joint Affidavit dated May 5, 1997 of [petitioners], attesting to the receipt of payment
from [respondent] and waiving all other benefits due them in connection with their complaint.

xxxxxxxxx

On June 3, 1997, [petitioners] filed an Urgent Motion for Issuance of Writ of Execution wherein they
confirmed that each of them received P40,000 from [respondent] on May 2, 1997.

On June 9, 1997, [respondent] opposed the motion on the ground that the judgment award had been
fully satisfied. In their Reply, [petitioners] claimed that they received only partial payments of the
judgment award.

xxxxxxxxx

On October 20, 1997, six (6) of the eight (8) [petitioners] filed a Manifestation requesting that the cases
be considered closed and terminated as they are already satisfied of what they have received (a total of
P320,000) from [respondent]. Together with said Manifestation is a Joint Affidavit in the local dialect,
dated October 20, 1997, of the six (6) [petitioners] attesting that they have no more collectible amount
from [respondent] and if there is any, they are abandoning and waiving the same.
On February 27, 1998, the Labor Arbiter issued an order denying the motion for issuance of writ of
execution and [considered] the cases closed and terminated x x x.

On appeal, the [National Labor Relations Commission (hereinafter NLRC)] reversed the Labor Arbiter and
directed the immediate issuance of a writ of execution, holding that a final and executory judgment can
no longer be altered and that quitclaims and releases are normally frowned upon as contrary to public
policy.[5]

Ruling of the Court of Appeals

The CA held that compromise agreements may be entered into even after a final judgment.[6] Thus,
petitioners validly released respondent from any claims, upon the voluntary execution of a waiver
pursuant to the compromise agreement.[7]

The appellate court denied petitioners motion for reconsideration for having been filed out of time.[8]

Hence, this Petition.[9]

The Issues

Petitioners raise the following issues for our consideration:

1. Whether or not the final and executory judgment of the Supreme Court could be subject to
compromise settlement;

2. Whether or not the petitioners affidavit waiving their awards in [the] labor case executed without the
assistance of their counsel and labor arbiter is valid;
3. Whether or not the ignorance of the jurisprudence by the Court of Appeals and its erroneous counting
of the period to file [a] motion for reconsideration constitute a denial of the petitioners right to due
process.[10]

The Courts Ruling

The Petition has no merit.

First Issue:

Validity of the Compromise Agreement

A compromise agreement is a contract whereby the parties make reciprocal concessions in order to
resolve their differences and thus avoid or put an end to a lawsuit.[11] They adjust their difficulties in the
manner they have agreed upon, disregarding the possible gain in litigation and keeping in mind that such
gain is balanced by the danger of losing.[12] Verily, the compromise may be either extrajudicial (to
prevent litigation) or judicial (to end a litigation).[13]

A compromise must not be contrary to law, morals, good customs and public policy; and must have been
freely and intelligently executed by and between the parties.[14] To have the force of law between the
parties,[15] it must comply with the requisites and principles of contracts.[16] Upon the parties, it has
the effect and the authority of res judicata, once entered into.[17]

When a compromise agreement is given judicial approval, it becomes more than a contract binding upon
the parties. Having been sanctioned by the court, it is entered as a determination of a controversy and
has the force and effect of a judgment.[18] It is immediately executory and not appealable, except for
vices of consent or forgery.[19] The nonfulfillment of its terms and conditions justifies the issuance of a
writ of execution; in such an instance, execution becomes a ministerial duty of the court.[20]

Following these basic principles, apparently unnecessary is a compromise agreement after final
judgment has been entered. Indeed, once the case is terminated by final judgment, the rights of the
parties are settled. There are no more disputes that can be compromised.
Compromise Agreements

after Final Judgment

The Court is tasked, however, to determine the legality of a compromise agreement after final judgment,
not the prudence of entering into one. Petitioners vehemently argue that a compromise of a final
judgment is invalid under Article 2040 of the Civil Code, which we quote:[21]

Art. 2040. If after a litigation has been decided by a final judgment, a compromise should be agreed
upon, either or both parties being unaware of the existence of the final judgment, the compromise may
be rescinded.

Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a
compromise. (Bold types supplied)

The first paragraph of Article 2040 refers to a scenario in which either or both of the parties are unaware
of a courts final judgment at the time they agree on a compromise. In this case, the law allows either of
them to rescind the compromise agreement. It is evident from the quoted paragraph that such an
agreement is not prohibited or void or voidable. Instead, a remedy to impugn the contract, which is an
action for rescission, is declared available.[22] The law allows a party to rescind a compromise
agreement, because it could have been entered into in ignorance of the fact that there was already a
final judgment. Knowledge of a decisions finality may affect the resolve to enter into a compromise
agreement.

The second paragraph, though irrelevant to the present case, refers to the instance when the courts
decision is still appealable or otherwise subject to modification. Under this paragraph, ignorance of the
decision is not a ground to rescind a compromise agreement, because the parties are still unsure of the
final outcome of the case at this time.

Petitioners argument, therefore, fails to convince. Article 2040 of the Civil Code does not refer to the
validity of a compromise agreement entered into after final judgment. Moreover, an important requisite,
which is lack of knowledge of the final judgment, is wanting in the present case.
Supported by Case Law

The issue involving the validity of a compromise agreement notwithstanding a final judgment is not
novel. Jesalva v. Bautista[23] upheld a compromise agreement that covered cases pending trial, on
appeal, and with final judgment.[24] The Court noted that Article 2040 impliedly allowed such
agreements; there was no limitation as to when these should be entered into.[25] Palanca v. Court of
Industrial Relations[26] sustained a compromise agreement, notwithstanding a final judgment in which
only the amount of back wages was left to be determined. The Court found no evidence of fraud or of
any showing that the agreement was contrary to law, morals, good customs, public order, or public
policy.[27]

Gatchalian v. Arlegui[28] upheld the right to compromise prior to the execution of a final judgment. The
Court ruled that the final judgment had been novated and superseded by a compromise agreement.[29]
Also, Northern Lines, Inc. v. Court of Tax Appeals[30] recognized the right to compromise final and
executory judgments, as long as such right was exercised by the proper party litigants.[31]

Rovero v. Amparo,[32] which petitioners cited, did not set any precedent that all compromise
agreements after final judgment were invalid. In that case, the customs commissioner imposed a fine on
an importer, based on the appraised value of the goods illegally brought to the country. The latters
appeal, which eventually reached this Court, was denied. Despite a final judgment, the customs
commissioner still reappraised the value of the goods and effectively reduced the amount of fine.
Holding that he had no authority to compromise a final judgment, the Court explained:

It is argued that the parties to a case may enter into a compromise about even a final judgment rendered
by a court, and it is contended x x x that the reappraisal ordered by the Commissioner of Customs and
sanctioned by the Department of Finance was authorized by Section 1369 of the [Revised Administrative
Code]. The contention may be correct as regards private parties who are the owners of the property
subject-matter of the litigation, and who are therefore free to do with what they own or what is awarded
to them, as they please, even to the extent of renouncing the award, or condoning the obligation
imposed by the judgment on the adverse party. Not so, however, in the present case. Here, the
Commissioner of Customs is not a private party and is not the owner of the money involved in the fine
based on the original appraisal. He is a mere agent of the Government and acts as a trustee of the
money or property in his hands or coming thereto by virtue of a favorable judgment. Unless expressly
authorized by his principal or by law, he is not authorized to accept anything different from or anything
less than what is adjudicated in favor of the Government.[33] (Bold types supplied)
Compliance with the

Rule on Contracts

There is no justification to disallow a compromise agreement, solely because it was entered into after
final judgment. The validity of the agreement is determined by compliance with the requisites and
principles of contracts, not by when it was entered into. As provided by the law on contracts, a valid
compromise must have the following elements: (1) the consent of the parties to the compromise, (2) an
object certain that is the subject matter of the compromise, and (3) the cause of the obligation that is
established.[34]

In the present factual milieu, compliance with the elements of a valid contract is not in issue. Petitioners
do not challenge the factual finding that they entered into a compromise agreement with respondent.
There are no allegations of vitiated consent. Neither was there any proof that the agreement was
defective or could be characterized as rescissible,[35] voidable,[36] unenforceable,[37] or void.[38]
Instead, petitioners base their argument on the sole fact that the agreement was executed despite a
final judgment, which the Court had previously ruled to be allowed by law.

Petitioners voluntarily entered into the compromise agreement, as shown by the following facts: (1) they
signed respondents Manifestation (filed with the labor arbiter) that the judgment award had been
satisfied;[39] (2) they executed a Joint Affidavit dated May 5, 1997, attesting to the receipt of payment
and the waiver of all other benefits due them;[40] and (3) 6 of the 8 petitioners filed a Manifestation
with the labor arbiter on October 20, 1997, requesting that the cases be terminated because of their
receipt of payment in full satisfaction of their claims.[41] These circumstances also reveal that
respondent has already complied with its obligation pursuant to the compromise agreement. Having
already benefited from the agreement, estoppel bars petitioners from challenging it.

Advantages of Compromise

A reciprocal concession inherent in a compromise agreement assures benefits for the contracting
parties. For the defeated litigant, obvious is the advantage of a compromise after final judgment. Liability
arising from the judgment may be reduced. As to the prevailing party, a compromise agreement assures
receipt of payment. Litigants are sometimes deprived of their winnings because of unscrupulous
mechanisms meant to delay or evade the execution of a final judgment.
The advantages of a compromise agreement appear to be recognized by the NLRC in its Rules of
Procedure. As part of the proceedings in executing a final judgment, litigants are required to attend a
pre-execution conference to thresh out matters relevant to the execution.[42] In the conference, any
agreement that would settle the final judgment in a particular manner is necessarily a compromise.

Novation of an Obligation

The principle of novation supports the validity of a compromise after final judgment. Novation, a mode
of extinguishing an obligation,[43] is done by changing the object or principal condition of an obligation,
substituting the person of the debtor, or surrogating a third person in the exercise of the rights of the
creditor.[44]

For an obligation to be extinguished by another, the law requires either of these two conditions: (1) the
substitution is unequivocally declared, or (2) the old and the new obligations are incompatible on every
point.[45] A compromise of a final judgment operates as a novation of the judgment obligation, upon
compliance with either requisite.[46] In the present case, the incompatibility of the final judgment with
the compromise agreement is evident, because the latter was precisely entered into to supersede the
former.

Second Issue:

Validity of the Waiver

Having ruled on the validity of the compromise agreement in the present suit, the Court now turns its
attention to the waiver of claims or quitclaim executed by petitioners. The subject waiver was their
concession when they entered into the agreement. They allege, however, that the absence of their
counsel and the labor arbiter when they executed the waiver invalidates the document.

Not Determinative

of the Waivers Validity

The presence or the absence of counsel when a waiver is executed does not determine its validity. There
is no law requiring the presence of a counsel to validate a waiver. The test is whether it was executed
voluntarily, freely and intelligently; and whether the consideration for it was credible and reasonable.
[47] Where there is clear proof that a waiver was wangled from an unsuspecting or a gullible person, the
law must step in to annul such transaction.[48] In the present case, petitioners failed to present any
evidence to show that their consent had been vitiated.

The law is silent with regard to the procedure for approving a waiver after a case has been terminated.
[49] Relevant, however, is this reference to the NLRCs New Rules of Procedure:

Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be
reduced to writing and signed by the parties and their respective counsel, or authorized representative,
if any,[50] before the Labor Arbiter.

The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily entered
into by the parties and after having explained to them the terms and consequences thereof.

A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before
whom the case is pending shall be approved by him, if after confronting the parties, particularly the
complainants, he is satisfied that they understand the terms and conditions of the settlement and that it
was entered into freely and voluntarily by them and the agreement is not contrary to law, morals, and
public policy.[51]

This provision refers to proceedings in a mandatory/conciliation conference during the initial stage of the
litigation. Such provision should be made applicable to the proceedings in the pre-execution conference,
for which the procedure for approving a waiver after final judgment is not stated. There is no reason to
make a distinction between the proceedings in mandatory/conciliation and those in pre-execution
conferences.

The labor arbiters absence when the waivers were executed was remedied upon compliance with the
above procedure. The Court observes that the arbiter made searching questions during the pre-
execution conference to ascertain whether petitioners had voluntarily and freely executed the waivers.
[52] Likewise, there was evidence that they made an intelligent choice, considering that the contents of
the written waivers had been explained to them.[53] The labor arbiters absence when those waivers
were executed does not, therefore, invalidate them.

The Court declines to rule on the allegation that respondents counsels encroached upon the professional
employment of petitioners lawyer when they facilitated the waivers.[54] The present action is not the
proper forum in which to raise any charge of professional misconduct. More important, petitioners failed
to present any supporting evidence.

The third issue, which refers to the timely filing of petitioners Motion for Reconsideration filed with the
CA, will no longer be discussed because this Courts decision has resolved the case on the merits.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners.

SO ORDERED.

Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.

[1] Rollo, pp. 3-14.

[2] Id., pp. 16-28. Special Fifteenth Division. Penned by Justice Ruben T. Reyes (Division chair), with the
concurrence of Justices Andres B. Reyes Jr. and Jose L. Sabio Jr. (members).

[3] Id., p. 71.

[4] Id., p. 27.

[5] Assailed Decision, pp. 2-6; rollo, pp. 17-21.

[6] Id., pp. 8 & 23.

[7] Id., pp. 9 & 24.

[8] Assailed Resolution; rollo, p. 71.

[9] The case was deemed submitted for decision on October 5, 2004, upon this Courts receipt of
petitioners Memorandum, signed by Atty. Mariano R. Pefianco. Respondents Memorandum, signed by
Attys. Nicolas P. Lapea Jr. and Gilbert F. Ordoa, was received by this Court on September 8, 2004.

[10] Petitioners Memorandum, p. 4; rollo, p. 121.

[11] Art. 2028, Civil Code; Manila International Airport Authority v. ALA Industries Corporation, 422 SCRA
603, 609, February 13, 2004; Ramnani v. Court of Appeals, 413 Phil. 194, 207, July 10, 2001; Abarintos v.
Court of Appeals, 374 Phil. 157, 168, September 30, 1999; Del Rosario v. Madayag, 317 Phil. 883, 887,
August 28, 1995.

[12] Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, 311 SCRA 143,
154, July 26, 1999.

[13] Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, supra; Abinujar
v. Court of Appeals, 313 Phil. 407, 413, April 18, 1995.

[14] The Learning Child, Inc. v. Lazaro, 340 SCRA 72, 75, September 7, 2000; Calla v. Maglalang, 382 Phil.
138, 143, February 9, 2000; Salazar v. Jarabe, 91 Phil. 596, 601, July 11, 1952.

[15] Golden Donuts, Inc. v. National Labor Relations Commission, 379 Phil. 303, 314, January 19, 2000.
[16] See Regal Films, Inc. v. Concepcion, 414 Phil. 807, 813, August 9, 2001; Anacleto v. Van Twest, 393
Phil. 616, 624, August 29, 2000; Del Rosario v. Madayag, supra.

[17] Art. 2037, Civil Code; Cebu International Finance Corporation v. Court of Appeals, 374 Phil. 844, 858,
October 12, 1999; Del Rosario v. Madayag, supra.

[18] Velasquez v. Court of Appeals, 426 SCRA 309, 316, March 25, 2004; Manila International Airport
Authority v. ALA Industries Corporation, supra.; Golden Donuts, Inc. v. National Labor Relations
Commission, supra; Abarintos v. Court of Appeals, supra.

[19] Art. 2038; San Antonio v. Court of Appeals, 371 SCRA 536, 543, December 7, 2001; Thermphil, Inc. v.
Court of Appeals, 421 Phil. 589, 596, November 20, 2001; Salvador v. Ortoll, 343 SCRA 658, 668, October
18, 2000; Santos v. Dames, 345 Phil. 242, 247, October 2, 1997.

[20] Manila International Airport Authority v. ALA Industries Corporation, supra; Abinujar v. Court of
Appeals, supra.

[21] Petitioners Memorandum, p. 5; rollo, p. 122.

[22] City of Zamboanga v. Mandi, 196 SCRA 498, 502, April 30, 1991.

[23] 105 Phil. 348, March 24, 1959.

[24] Id., p. 351.

[25] Id., p. 351.

[26] 150-C Phil. 354, November 24, 1972.

[27] Id., p. 359.

[28] 75 SCRA 234, February 17, 1977.

[29] Id., p. 241.

[30] 163 SCRA 25, June 29, 1988.

[31] Id., p. 30.

[32] 91 Phil. 228, May 5, 1952.

[33] Id., p. 234, per Montemayor, J.

[34] Art. 1318, Civil Code.

[35] Art. 1381, Civil Code.

[36] Art. 1390, Civil Code.

[37] Art. 1403, Civil Code.

[38] Art. 1409, Civil Code.

[39] Assailed Decision, p. 3; rollo, p. 18.

[40] Ibid.

[41] Id., pp. 5 & 20. In their Joint Affidavit written in their local dialect, the six petitioners attested to the
truth of all the allegations in their Joint Affidavit dated May 5, 1997 (id., pp. 9 & 24).

[42] 1, Rule VIII (Execution Proceedings), New Rules of Procedure of the NLRC, enacted February 12,
2002.

[43] Arts. 1157 & 1231, Civil Code.

[44] Art. 1291.

[45] Art. 1292.

[46] See Dormitorio v. Fernandez, 72 SCRA 388, 393, August 21, 1976; Lu v. Yap, 74 Phil. 287, July 30,
1943. In these cases, the Court specifically found an animus novandi or intent to substitute an obligation
that arose from a final judgment.

[47] Art. 2038, Civil Code; Agustilo v. Court of Appeals, 417 Phil. 218, 234, September 7, 2001; AG&P
United Rank & File Association v. National Labor Relations Commission, 332 Phil. 937, 947, November 29,
1996; Sicangco v. National Labor Relations Commission, 235 SCRA 96, 101, August 4, 1994; Periquet v.
National Labor Relations Commission, 186 SCRA 724, 730, June 22, 1990.

[48] Alcosero v. National Labor Relations Commission, 351 Phil. 368, 383, March 26, 1998; AG&P United
Rank & File Association v. National Labor Relations Commission, supra; Sicangco v. National Labor
Relations Commission, supra; Periquet v. National Labor Relations Commission, supra, p. 731.
Dire necessity may be an acceptable ground to annul quitclaims if the consideration is unconscionably
low and the employee was tricked into accepting it. Veloso v. Department of Labor and Employment, 200
SCRA 201, 205, August 5, 1991.

[49] See Loyola Security & Detective Agency v. National Labor Relations Commission, 313 Phil. 750, 754,
May 9, 1995.

[50] It is apparent from the provision that the signatures of counsels and authorized representatives
would not be required if they are not present at the time the agreements are made.

[51] 2, Rule V (Proceedings Before Labor Arbiters), New Rules of Procedure of the NLRC.

[52] Assailed Decision, pp. 10-11; rollo, pp. 25-26.

[53] Id., pp. 12 & 27.

[54] Petitioners Memorandum, p. 6; rollo, p. 123.

THIRD DIVISION

MARIA SHEILA ALMIRA T. VIESCA,

Petitioner,
- versus -

DAVID GILINSKY,*

Respondent.

G.R. No. 171698

Present:

YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO, and

NACHURA, JJ.

Promulgated:

July 4, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari of the Decision[1] of the Court of Appeals promulgated on 19
October 2005 in CA-G.R. SP No. 90285 which affirmed, with modification, the Order dated 16 June 2005
rendered by the Regional Trial Court, Branch 136, Makati City, in Civil Case SP Proc. Case No. M-5785.

The facts of the case are as follows:

Petitioner and respondent, a Canadian citizen, met sometime in January 1999 at the Makati Shangri-La
Hotel where the former worked as a hotel manager. After a few months, a relationship blossomed
between the two. On 22 October 2001, their son Louis Maxwell was born.[2] On 30 October 2001,
respondent executed an Affidavit of Acknowledgment/Admission of Paternity[3] of the child.
Subsequently, the Civil Registrar of Makati City issued a Certification granting the change of Louis
Maxwells surname from Viesca to Gilinsky.[4]

Unfortunately, the relationship between petitioner and respondent soured and they parted ways during
the early part of 2003.

On 6 February 2004, respondent filed a Petition praying that he be entitled to the company of Louis
Maxwell at any time of any given day; he be entitled to enjoy the company of Louis Maxwell during
weekends and on such occasions the child shall be allowed to spend the night with his father; and he be
entitled to enjoy a yearly three-week vacation in any destination with his child.[5] The case was raffled
off to public respondents sala and was docketed as SP Proc. Case No. No 5785.

During the pendency of respondents petition, the parties arrived at a compromise agreement. This
compromise agreement was submitted before the trial court and became the basis of the Compromise
Judgment issued on 12 May 2004.[6] We reproduce the Compromise Judgment below
COMPROMISE JUDGMENT

Acting on the joint motion to render judgment based on Compromise Agreement and finding the
allegations therein to be of merit, same is hereby given due course.

Judgment is therefore rendered based on the compromise agreement which is quoted hereunder.

COMPROMISE AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Agreement entered this 22nd day of April 2004 by and between:

DAVID GILINSKY, of legal age, single and residing at Suite 2828, Makati Shang-rila Hotel, Ayala Avenue
corner Makati Avenue, Makati City, hereinafter referred to as the FATHER

-and-

SHEILA T. VIESCA, of legal age, single and a resident of Lot 2, Block 39, Phase 5, Fort Bonifacio, Taguig,
Metro Manila, hereinafter referred to as the MOTHER.

WITNESSETH:

WHEREAS, the parties are the biological parents of minor LOUIS MAXWELL (the CHILD) born on 22
October 2001;
WHEREAS, as a result of disputes and differences, the parties are now living separately and apart;

WHEREAS, the parties desire to provide for a complete settlement of the issues pertaining to the
custody, visitorial rights, support and maintenance of the child;

WHEREAS, each party acknowledges his or her personal obligations as parent of the child and, by these
presents, each hereby undertakes to render the performance of these obligations to the child and
comply with his or her duties as a parent;

NOW, THEREFORE, for and in consideration of the promises and dispositions made in this agreement, the
parties hereto have agreed as follows:

I. CUSTODY OF THE CHILD

The mother shall continue to have custody over LOUIS MAXWELL while the father shall exercise visitorial
rights as hereunder stated.

Both parties, by these presents, undertake to take every measure necessary, desirable and proper, to
consider the best interest of the child at all times, whether with them or away from them. Any act, word
or manipulative scheme that may cause the alienation of feelings or loss of respect or that either one or
both of them, from either one of the parties, shall never be tolerated.

II. VISITATION RIGHTS

As the child will continue to be in the custody of the mother, the father, as the non-custodial parent shall
be entitled to the following supervised visitation rights, to wit:

a. He shall be entitled to the company of the child every Saturday and/or Sunday afternoon;

b. The child shall be allowed to spend the night with the father once a week;
c. Nothing herein shall prevent the father from visiting the child during reasonable hour in the afternoon
of any day of the week at the mothers residence in the presence of the mother or her duly designated
representative, and with prior notice to the mother.

One year after the signing of this agreement, the parties shall meet to discuss and resolve the matter
pertaining to the entitlement of the father to enjoy a yearly, three-week vacation in any destination with
the child.

In the exercise and/or enjoyment of the above rights, the mother shall have the right to designate any
person of suitable age to accompany the child.

III. SUPPORT

a. The father shall give monthly financial support of US Dollars Five Hundred (US$500.00) or its
Peso equivalent within the first five days of the month effective upon the signing of this agreement. The
amount shall be subject to such yearly adjustment of such rate equal to the inflation rate determined by
the appropriate government agency.

b. On top of the said monthly financial support, the Father shall provide:

i. full medical and dental expenses and/or insurance coverage for the child;

ii. full education for the child at Colegio San Agustin, Makati or any other suitable school;

iii. college Education Insurance for the child;

iv. monthly car amortization of Ten Thousand Pesos (P10,000.00) or One Fourth (1/4) of the
current amortization whichever is lower;
v. Monthly amortization due as of the date of this Agreement for the Rockwell-Manansala
Condominium unit until its full payment and transfer of title, including its association dues and charges.
The mother here affirms/confirms she is holding title to the condominium in trust for the child.

The mother shall ensure that all arrears and/or outstanding obligations prior to the execution of this
agreement shall have been settled and paid. As soon as the above have been fully complied with, the
father shall pay the ensuing monthly amortization.

IV. COURT APPROVAL OF AGREEMENT

This agreement shall be governed by and construed in accordance with the laws of the Republic of the
Philippines. The parties hereto shall, in good faith, strictly abide by the terms hereof.

The parties agree to submit this written agreement for the courts approval.

V. JUDICIAL RELIEF

Should either one of the parties fail to comply with the terms and conditions of this Agreement, the
aggrieved party may seek judicial relief against the erring party and apply with the proper court for a
writ of execution against said erring party to enforce his or her obligations imposed in this Agreement.
The offending party shall pay for the cost of litigation, attorneys fees, other expenses, and interest
incurred in such application for a writ of execution.

IN WITNESS WHEREOF, we have hereunto affixed our respective signatures on the date and place
hereinabove mentioned.
(SGD) DAVID GILINSKY (SGD) SHEILA T. VIESCA[7]

Father Mother

On 5 April 2005, respondent filed an Urgent Motion for Issuance of Writ of Execution. It was alleged in
said motion that petitioner had repeatedly refused to abide by the terms of the compromise judgment,
particularly the provision allowing Louis Maxwell to spend a night with him at any day of the week.
Respondent likewise stated in his motion that he had already filed a Petition to cite petitioner in
contempt which was raffled off to the Regional Trial Court, Branch 59 of Makati City.[8]

Respondents Urgent Motion for Issuance of Writ of Execution was scheduled to be heard on 8 April
2005. Notice thereof was received by petitioners counsel on 5 April 2005.[9] On 7 April 2005, petitioners
counsel filed a Manifestation[10] requesting that the hearing on said motion be reset, as he had to be in
Balanga, Bataan on the date and time of the scheduled hearing. He also prayed that he be given a period
of seven days within which to file his Comment/Opposition to respondents Urgent Motion for Issuance
of Writ of Execution.

Despite petitioners Manifestation, the trial court still proceeded to hear respondents urgent motion on 8
April 2005 and issued the Writ of Execution prayed for by respondent.[11]

On 9 April 2005, the court sheriff together with respondent tried to serve the Writ of Execution upon
petitioner at her residence in Taguig City. Petitioners mother informed the sheriff and respondent that
petitioner was then at her office. The sheriff then asked petitioners mother to inform petitioner about
the service of the Writ of Execution. After about half an hour, petitioner, her father, and her lawyer Atty.
Jorge Manuel arrived. Atty. Manuel received the copy of the Writ of Execution but informed the court
sheriff that they would not comply with the courts order and would challenge the writ.[12]

As expected, petitioner filed a Motion to Quash Writ of Execution[13] insisting that said writ was issued
with indecent haste violative of her right to due process, and that the writ varied the terms of the
Compromise Agreement since it failed to take into consideration the parties understanding that in the
enjoyment of respondents visitorial rights, petitioner shall have the right to designate any person of
suitable age to accompany the child.[14]

On 15 April 2005, petitioners Motion to Quash Writ of Execution was heard. What transpired during the
hearing was summarized by the trial court in its Order given in open court as follows:

The Court heard the arguments raised by the counsel for the [herein petitioner] and the reply/comment
thereto made by the counsel for the [herein respondent]. The [herein petitioner] thru counsel imposed
certain conditions if ever the visitorial rights of the [herein respondent] would be granted. Though
[herein petitioners] wished that those conditions be contained in an affidavit, which to the mind of the
court would only delay the resolution of the motion, the court thereupon ordered that the statement of
the petitioner be made orally but under oath, thus, [herein respondent] was placed in the witness stand.

Thereafter, the court ruled to deny the motion to quash the writ of execution filed by [herein petitioner]
thru counsel for lack of merit and grant the prayer of the [herein respondent] that he be allowed to
exercise his visitorial rights over the minor LUIS MAXWELL VIESCA today under the conditions imposed
by the [herein petitioner], some of which are contained in the compromise agreement to which [herein
respondent] promised under oath to obey the same (sic).

WHEREFORE, let the [herein respondent] DAVID GILINSKY exercise his visitorial rights over the minor
LUIS MAXWELL VIESCA on the following conditions, to wit:

1. [Herein respondent] shall surrender to the court his passport everytime he is with his child; and

2. [Herein respondent] shall not secure/apply another passport (sic) for his son LUIS MAXWELL; and

3. [Herein petitioner] shall exercise her right to designate any person of suitable age to accompany the
child whenever [herein respondent] would exercise his visitorial right.
[Herein Petitioner] is commanded to bring the minor child LUIS MAXWELL VIESCA to court not later than
3:00 oclock this afternoon, to be pick-up (sic) by the [herein private respondent], upon the service of his
order to the [herein petitioner] by the sheriff of this court.

Failure of the [herein petitioner] to comply with this order shall be a ground for contempt of this court
AND SHALL BE DEALTH WITH SEVERELY.[15]

In addition, petitioner alleges that in the course of argument between the parties during this hearing,
Judge Rebecca Mariano was not able to contain her bias against petitioner when she reproved the latters
stubborn refusal[16] to comply with the Compromise Judgment. Believing that Judge Mariano had
shown her partiality in favor of respondent, petitioners counsel moved in open court for her inhibition.
[17] To this, Judge Mariano remarked:

COURT

ALRIGHT, before I inhibit myself, the MOTION TO QUASH is DENIED and my position granting visitorial
rights of the child is GRANTED.[18]

Subsequently, respondent filed a Manifestation with Motion to Withdraw Motion for Temporary Relief of
Support dated 25 April 2005[19] to which petitioner filed her Comment[20] as ordered by the trial court.
In their pleadings, the parties presented disparate accounts of what transpired after the hearing on 15
April 2005.

According to respondent

3. At 3:00 oclock p.m. of said afternoon, [herein respondent], together with undersigned counsel,
promptly went to the court to await the arrival of his son, Louis Maxwell.
4. At or about 4:00 oclock, This Courts sheriff informed undersigned counsel that he had just served a
copy of the order upon the adverse counsel.

5. Undersigned counsel immediately conferred with Atty. E. Perez, [herein petitioners] counsel, to
arrange the implementation of the above-quoted Order. Atty. Perez informed undersigned of his clients
inability to comply with the 3:00 oclock mandate given that the Order was served to her only at 3:25
p.m., to which the undersigned counsel responded by saying that [herein petitioner] could still have
Louis Maxwell brought to court even after the designated time.

6. Despite the clear and unequivocal tenor of This Courts Order, Atty. Perez informed the undersigned
counsel that since [herein petitioner] was still at work, his client could only bring the child at the lobby of
Shangri-la hotel, Makati, at around 8:00 oclock p.m. of that day.

Undersigned counsel immediately rejected the proposed arrangement for the same does not only run
counter to the express mandate of This Courts Order but more importantly would deprive [respondent]
of spending quality time with his son the raisaon detre of the stipulation in the Compromise Agreement
providing an overnight stay. Undersigned counsel, moreover, explained that 8:00 oclock p.m. is
unreasonable and oppressive, not for [herein respondent] but more for the child, as the proposed time is
the expected bedtime of three-year olds.

The adverse counsel, however, remained insistent that the child could only be brought by the [herein
petitioner] at 8:00 oclock p.m. and intimated that since the court order came as a surprise and was
served at past 3:00 p.m., [herein respondent] should not expect [herein petitioner] to alter her schedule
at such short notice.

The undersigned counsel finally relented to the 8:00 oclock arrangement as it was clear that the adverse
counsel and [herein petitioner]

was (sic) unaffected by [herein respondents] earnest desire to spend quality time with his son.

7. Albeit the representation [herein petitioners] counsel that his client committed to bring the child at
8:00 oclock at Shangri-la, Makati, [herein petitioner] arrived at past 9:00 oclock p.m. [Herein petitioner]
not only brought the child but likewise brought with her the childs grandmother (herein petitioners
mother) and several of her friends. And instead of allowing only one person to act as guardian over Louis
Maxwell, [herein petitioner] insisted on having both herself and her mother accompany Louis during his
overnight stay with [herein respondent]. [Herein respondent] had no choice but to accede to such
demand lest he be deprived once more of the enjoyment of his right.

xxxx

10. Furthermore, [herein petitioner] arrived at past 9 oclock p.m. despite her undertaking that she will
bring the child to [herein respondent] at 8 oclock p.m.; [herein petitioner] also imposed on two
guardians: herself and her mother, instead of only one guardian, as provided in the Compromise
Judgment; The child was not allowed by [herein petitioner] to sleep in [herein respondents] room and
was made to sleep in her separate room with her mother; finally, on the argument that overnight stay
simply means sleeping over, [herein petitioner] left with Louis and her mother at 6 oclock in the morning
of 16 April 2005.[21]

On the other hand, petitioner countered

4. It is clear therefore that there was nothing in the oral argument nor in the Order given in open court
that the child was supposed to be brought to Court at 3:00 p.m. that same day to accommodate [herein
respondents] request for visitorial rights. Neither is there mention of the specific time in the
Compromise Judgment. It appears that it was [herein respondent] who had prior notice or advanced
information as to the contents of the Order from his Manifestation that

3. At 3:00 oclock p.m. of said afternoon, [herein respondent], together with undersigned counsel,
promptly went to the court to await the arrival of his son, Louis Maxwell.

5. Undersigned counsel received a copy of the Order dated 15 April 2005 only at 4:15 p.m. of that same
day, hence, it was impossible for [herein petitioner] to comply with Order commanding her to bring the
child to court not later than 3:00 oclock this afternoon. Be that as it may, counsel immediately got in
touch with [herein petitioner] to advise her to comply with the Order but [herein petitioner] stated she
could not leave her office immediately because of prior commitment and instead suggested that she
would bring the child to [herein respondent] Shangrila Hotel resident in the evening. Hereon counsel
relayed the information/suggestion to [herein respondents] counsel and after a series of calls, an
arrangement was made for the evening. What actually happened that evening, the parties had different
accounts.
6. [Herein petitioner] maintains that

a. She arrived late at little past 9:00 oclock because of heavy traffic. It was a Friday, pay day and last day
for income tax payment.

b. [Herein respondent] conveniently failed to mention that when [herein petitioner] arrived with the
child Louis Maxwell at the hotel lobby, they were met by [herein respondent] together with three (3)
Manulife insurance agents and a physician. [Herein respondent] and the insurance men tried almost to
coercion to convince [herein petitioner] to agree that the child be subjected to medical examination that
night so that [herein respondent] could secure a multimillion insurance policy for the child with David
Gilinsky as the sole beneficiary. [Herein petitioner] naturally did not agree. [Herein petitioner] does not
want to speculate but the circumstances, time and manner of taking the policy appears to be dubious.
The fact remains that whatever desire of [herein respondent] to spend quality time with the child was
clouded when he allowed these insurance men to get in the way when they should not be there in the
first place.[22]

On 26 April 2005, petitioner filed an Ex-Parte Reiterative Motion to Inhibit claiming that Judge Mariano
could no longer handle the case with the cold neutrality of an impartial judge[23] because of her
statement pertaining to petitioners failure to abide by the Compromise Judgment. Respondent filed his
opposition thereto, arguing that Judge Marianos remark was merely based on her observation of
petitioners behavior and attitude during the proceedings of this case.[24]

On 17 May 2005, respondent once more filed a Motion for the Issuance of a Writ of Execution,
contending that petitioner had repeatedly failed to comply with their agreement as regards his visitorial
rights over Louis Maxwell. Respondent claimed that petitioner relied on the fact that as the Compromise
Judgment did not state the time when Louis Maxwell should be in his company, she had insisted on an
8:00 oclock p.m. to 6:00 oclock a.m. schedule. Respondent also lamented petitioners habit of reneging,
at the last minute, on their agreements over Louis Maxwells weekend visits with him and petitioners
insistence that two guardians accompany Louis Maxwell during his overnight stays.[25] Thus, respondent
prayed for the following:
a. To command [herein petitioner] to bring the child to either This Court or to the [herein
respondents] residence not later than 3:00 p.m. of 20 May 2005 and for the child to be allowed to leave
the company of the [herein respondent] at 4:00 p.m. of 21 May 2005; and

b. To direct the [herein petitioner] pay (sic) the amount of P295,000.00, as and by way of
attorneys fees.

Other relief just and equitable under the circumstances are likewise prayed for.[26]

In her Comment,[27] petitioner asserted that Judge Mariano should no longer rule on respondents
motion, since there was a pending motion for her to inhibit. She likewise took the opportunity to refute
respondents allegations with regard to her purported failure to observe the terms of the Compromise
Judgment. Petitioner claimed that on 14 May 2005, Louis Maxwell fell sick and so she was unable to
bring him to private respondent. In fact, petitioners counsel even sent a letter dated 16 May 2005 to
respondents lawyer explaining her version of the story.[28] She also posed objection to respondents plea
that Louis Maxwell be brought either to the trial court or to him since the child was still sick, and taking
him out of the house would only worsen his condition. Moreover, petitioner argued that to grant
respondents prayer would contravene the provisions of the Compromise Judgment under which his
entitlement to the company of his son every weekend is a separate and distinct term from his right to
spend a night with the child. She also claimed that as agreed upon, respondent should be the one to pick
up the child and to return him to her. Finally, petitioner assailed respondents prayer for attorneys fees
for lack of basis.

Meanwhile, Judge Mariano issued an Order dated 16 May 2005, directing the parties to attend an in-
chamber conference on 20 May 2005 relative to respondents Motion to Withdraw Support and
petitioners Ex-Parte Reiterative Motion to Inhibit.[29]

In respondents Comment to the present Petition, it is claimed that the following terms were agreed
upon by the parties during the in-chamber conference held on 20 May 2005:

a. The respective counsels of each party will meet on 26 May 2005 to agree on the time frame
for the sleepover provision;
b. Pending the conclusion of the agreement, the child will be fetched from the Petitioners
residence at 6 oclock p.m. and will be brought back at 9 oclock a.m. the following day, effective May 20-
21 and May 27-28.

c. Private Respondent is to surrender his passport during these visits.

d. Petitioners mother will act as the designated guardian; and

e. The withdrawal of the parties respective motions, i.e., Petitioners Reiterative Motion to
Inhibit and Motion to Withdraw Support.[30]

The 20-21 May 2005 sleepover proceeded as scheduled.[31] However, discord between the parties
resurfaced when respondent was unable to spend time with Louis Maxwell on 27-28 May 2005. It
appears that petitioners mother, who was the designated accompanying guardian, got sick and because
of this, respondent did not enjoy the company of his son. Once more, respondent sought the trial courts
intervention through his Very Urgent Motion to Enforce and Enjoy Visitorial Rights dated 30 May 2005.
[32] Respondent averred therein that on 27 May 2005, he sent his driver to fetch Louis Maxwell and his
maternal grandmother pursuant to the agreement forged on 20 May 2005. When his driver reached
petitioners residence, he was informed that Louis Maxwell and his grandmother could not go with him,
as the grandmother was allegedly sick. Respondent claimed that Louis Maxwells grandmother was
merely feigning sickness since she refused his offer to get medical help. Besides, had petitioner really
intended to abide by their agreement, respondent argued that she could have appointed one of her
brothers or her sister to accompany Louis Maxwell during his sleepover. Thus, respondent concluded
that the totality of petitioner's conduct unmasked her lack of interest in observing the Compromise
Judgment, particularly Clause II thereof. He therefore prayed for the following reliefs:

a) To allow (him) to have the company of his son on Wednesday, June 1, 2005, beginning 6:00 p.m. up to
9:00 a.m. of the following day. For this purpose, for this Court to further allow (him) to fetch his son at
[herein petitioners] residence and bring him back at [herein petitioners] abode not later than 9:00 a.m.
of the following day.
b) To designate the hours of 6:00 p.m. of any given Friday to 9:00 a.m. of the following day, as the regular
day and hours at which the [herein respondent] can enjoy the company of his son pursuant to Clause II
of the Compromise Judgment dated May 12, 2004.

c) To designate the Court Sheriff and/or any other court officer to act as the accompanying guardian of
Louis Maxwell Viesca Gilinsky during the implementation of the prayed for relief under paragraph (a)
hereof and of the sleep-over provision mentioned in Clause II of the Compromise Judgment.

d) To command [herein petitioner] to pay the amount of Thirty Thousand Pesos (P30,000.00), as and by
way of cost of litigation, attorneys fees and other expenses pursuant to Clause V of the Compromise
Judgment.

Just and equitable reliefs prayed for under the circumstances.[33]

Respondent requested that his Very Urgent Motion to Enforce and Enjoy Visitorial Rights be heard on 1
June 2005 notwithstanding the three-day notice rule required under the Revised Rules of Civil
Procedure, as he was about to go on a two-week business trip on 3 June 2005.

Petitioner posed her objection to respondents motion, as it violated the three-day notice rule. She also
denied that the 27 May 2005 incident was her fault as her mother was really not feeling well that day.
She denounced respondents fixation over the cancellation of Louis Maxwells sleepover that night, in
total disregard of the fact that the 20 May 2005 scheduled sleepover pushed through as agreed upon.
She claimed that she did not have any reason to deprive respondent of his rights under the Compromise
Judgment, and so there was no need for respondent to file his Very Urgent Motion to Enforce and Enjoy
Visitorial Rights.[34]

On 1 June 2005, Judge Mariano rendered the following Order:

ORDER
Set for todays hearing is the Very Urgent Motion to Enforce and Enjoy Visitorial Rights filed by the
[herein respondent] and the Comment thereto filed by the [herein petitioner]. The Court heard the
arguments between the parties accusing each other of violation of the compromise agreement.

The [herein respondent] wanted to present testimonial evidence to prove his allegation in the motion
but which was denied by the Court for lack of material time.

The Court likewise reminded the parties the fact that the [herein respondent] surrenders his passport
everytime he exercises his visitorial right was voluntary on his part and not as part of the compromise
agreement.

WHEREFORE, the court ruled that the [herein respondent] can exercise his visitorial right today at 6:00
oclock in the evening to be accompanied by the sheriff of this court. If the [herein petitioner] is not
available nor the grandmother to accompany the minor child, the court instructed the [herein petitioner]
to appoint another person who can accompany the child so as not to avoid any delay in fetching the
minor child. Likewise the motion was reset to July 1, 2005, at 10:30 oclock in the morning.

Considering that the very urgent motion filed by the [herein respondent] was commented or objected to
by the [herein petitioners] counsel, let the [herein respondent], thru counsel file a reply within five (5)
days from receipt of this Order and the [herein petitioner] is given the same period of time from receipt
of the reply within which to file a rejoinder, if she so desires.

SO ORDERED.

Given in open court, this 1st day of June 2005, at Makati City.

REBECCA R. MARIANO

Judge[35]
On 16 June 2005, Judge Mariano proceeded to resolve respondents very urgent motion in the following
manner:

ORDER

Before the Court is the Very Urgent Motion to Enforce and Enjoy Visitorial Rights filed by the [herein
respondent] thru counsel, alleging among others, that [herein petitioner] had once again proven herself
to be unfaithful to her promises and representations, citing the incident which happened on 27 May
2005, the scheduled meeting of the [herein respondent] and his son. On the said date, [herein
petitioners] grandmother (sic) became sick, however, the latter refused the offer of the petitioner to get
medical help. Said alleged illness became more doubtful when the grandmother insisted on being well
enough to push through with the visitation but at 9:00 oclock in the evening instead of 6:00 oclock in the
evening, as previously agreed upon by the parties.

On the Comment filed by the [herein petitioner], she stated that the present motion should be denied
because it violates the three-day notice rule and there is no good cause to set the hearing on shorter
notice.

We shall now rule on the motion.

Under Section 4, Rule 15 of the Revised Rules of Court and following the pronouncements by the High
Court in the cases of Cledera, et al. vs. Sarmiento, et al 39 SCRA 552; Estipora vs. Navarro, 69 SCRA 285,
the motion under consideration should have been dismissed ourtright, however, the above-cited
provision or the so-called three-day notice rule is not absolute. Like any other rule, it admits of
exception, i.e. urgent motions (Remedial Law Compendium, Vol. 1, Regalado). Moreover, in the interest
of substantial justice, this Court finds it imperative and necessary to brush-aside any technicality since
the issue involved herein is basically the natural right of a father to enjoy the company and presence of
his beloved son. To the mind of the Court, the best and most applicable law in cases of this nature is the
conscience of untroubled and unprejudiced majesty. Finally, the right of custody accorded to parents
springs from the exercise of parental authority (Santos Sr. vs. Court of Appeals, 242 SCRA 407). Hence,
the motion under consideration is hereby given due course.

Accordingly, [herein petitioner] is ordered to perform the following, to wit:

1. Allow [herein respondent] to enjoy the company of Louis Maxwell on 24 June 2005 and on
every Friday of each week starting from 6:00 pm to 9:00 am of the following day, pursuant to Clause II of
the compromise Judgment dated 12 May 2004;

2. The Deputy Sheriff of this court is hereby designated to act as the accompanying guardian of
Louis Maxwell Viesca Gilinsky during the implementation of the prayed for relief under paragraph 1
hereof;

3. Pay the [herein respondent] the amount of Thirty-Thousand Pesos (Php 30,000.00), as and by
way of cost of litigation, attorneys fees and other expenses pursuant to Clause V of the Compromise
Agreement.

As regards the prayer under paragraph (a) of the motion, the same is denied for being moot and
academic.

SO ORDERED.

Given in Chambers this 16th June 2005, Makati City.

REBECCA R. MARIANO Judge[36]

During the hearing on 1 July 2005, it was clarified that the Deputy Sheriff would act as accompanying
guardian of Louis Maxwell only in case of the unavailability of petitioner or her failure to designate the
childs overnight companion.[37]

Aggrieved, petitioner elevated the case via Petition for Certiorari and Prohibition before the Court of
Appeals seeking the reversal and setting aside of the 16 June 2005 Order of the trial court as well as its
Orders dated 1 June 2005 and 8 April 2005.[38]

In her petition with the Court of Appeals, petitioner contended that the assailed Order dated 16 June
2005 altered or amended the Compromise Judgment. She asserted that by approving respondents
prayer that he be given the right to enjoy Louis Maxwells company every Friday of each week starting
from 6:00 p.m. to 9:00 a.m. of the following day, Judge Mariano altered Clause II(b) of the Compromise
Judgment which states that (t)he child shall be allowed to spend the night with the father once a week.
As the Compromise Judgment did not specifically provide for the day and time of the week when Louis
Maxwell should be in the company of respondent, the trial court exceeded its jurisdiction when it
rendered its 16 June 2005 Order. In addition, she contends that by designating the Deputy Sheriff of the
court to act as the accompanying guardian of the child during the latters sleepovers, the trial court again
disregarded the terms of the Compromise Judgment with respect to the appointment of Louis Maxwells
guardian whenever he visits with respondent. These alterations, petitioner argues, should not be
permitted since a compromise agreement, once it was approved by the court, has the force of res
judicata between the parties and should not be disturbed except for vices of consent or forgery.[39] The
court is not allowed to impose a judgment different from the terms of the agreement.[40]

Petitioner also insisted that Judge Mariano should desist from further hearing the case below.

On 19 October 2005, the Court of Appeals partially granted the petition by deleting the award of
P30,000.00 that the trial court awarded to private respondent in its Order of 16 June 2005. The
dispositive portion of the Decision of the Court of Appeals states:

WHEREFORE, the petition is PARTIALLY GRANTED in that the Order dated June 16, 2005 is MODIFIED. The
award of Thirty Thousand Pesos (Php30,000.00), as and by way of litigation cost, attorneys fees and
other expenses pursuant to clause V of the Compromise Judgment in favor of private respondent is
DELETED.[41]
Petitioners Motion for Reconsideration was denied in the Resolution promulgated on 24 February 2006.
[42]

Hence, the present recourse raising the following issues for our consideration:

WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN DECIDING A QUESTION OF LAW, NOT
THERETOFORE DETERMINED BY THIS HONORABLE COURT, AND/OR DECIDING IT IN A WAY NOT IN
ACCORD WITH LAW OR WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT CONSIDERING THAT-

A. THE TRIAL COURT AMENDED OR ALTERED THE TERMS OF THE COMPROMISE JUDGMENT
WITHOUT THE CONCURRENCE OF BOTH PARTIES THERETO.

B. RESPONDENT JUDGE ISSUED THE ASSAILED ORDER AMENDING THE COMPROMISE

JUDGMENT IN HASTE AND WITHOUT EVIDENTIARY SUPPORT AS IT WAS ISSUED WITHOUT WAITING FOR
THE SCHEDULED HEARING OF THE MOTION FILED BY PRIVATE RESPONDENT AND DESPITE THE PENDING
MOTION TO INHIBIT.[43]

The petition is partly meritorious.

A compromise agreement has been described as a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced.[44] A compromise agreement
that is intended to resolve a matter already under litigation is normally called a judicial compromise.
Once it is stamped with judicial imprimatur, it becomes more than a mere contract binding upon the
parties. Having the sanction of the court and entered as its determination of the controversy, it has the
force and effect of any other judgment.[45] Such agreement has the force of law and is conclusive
between the parties. It transcends its identity as a mere contract binding only upon the parties thereto,
for it becomes a judgment that is subject to execution in accordance with the Rules.[46] Thus, a
compromise agreement that has been made and duly approved by the court attains the effect and
authority of res judicata, although no execution may be issued unless the agreement receives the
approval of the court where the litigation is pending and compliance with the terms of the agreement is
decreed.[47]
The settlement of disputes brought before the courts is encouraged. In fact, in the Civil Code and in the
Revised Rules of Court, courts are directed to persuade the litigants in civil cases to agree upon some fair
compromise.[48]

Unfortunately in the case before us, the compromise agreement entered into between the parties fell
way short of its objective of finally putting an end to their dispute. The sheer number of incidents which
cropped up shortly after the trial courts approval of the compromise agreement reveals that the
compromise judgment failed to bring peace to the parties. Interestingly enough, the only points of
disagreement are Clause II(b) of the Compromise Judgment which pertains to the overnight visits of
Louis Maxwell with respondent and the last paragraph of the same clause regarding the appointment of
the childs accompanying guardian.

Clause II(b) states that (t)he child shall be allowed to spend the night with the father once a week. The
sentence seems simple enough to be understood by a layman. Petitioner claims that the parties did not
specify the day and time of the week when private respondent could enjoy the overnight company of
Louis Maxwell in order to give the parties some flexibility and to give them the opportunity to arrange
the schedule themselves.[49] But the parties have overstretched the indeterminate language of said
provision. Indeed, the parties have been at odds over the interpretation and implementation of this plain
provision of the Compromise Judgment and this could have caused much confusion in the mind of the
young Louis Maxwell who had to be brought from one place to another at such unholy hours of the night
only to be awakened from deep slumber in the early hours of the morning to be taken to another place.
And yet, all of these could have been avoided had the parties opted to be more specific in their
agreement. The question thus becomes: can the trial court modify, by motion of one of the parties, a
Compromise Judgment? We hold in the negative.

To reiterate, a compromise judgment has the force of res judicata between the parties and should not be
disturbed except for vices of consent or forgery[50] which private respondent does not allege in this
case.

More importantly and as correctly pointed out by petitioner, it is settled that neither the courts nor
quasi-judicial bodies can impose upon the parties a judgment different from their compromise
agreement or against the very terms and conditions of their agreement[51] without contravening the
universally established principle that a contract is the law between the parties.[52] The courts can only
approve the agreement of parties. They can not make a contract for them.[53]
Nevertheless, we cannot totally blame the trial court for having granted respondents Very Urgent
Motion to Enforce and Enjoy Visitorial Rights. Perhaps, in its desire to finally put to rest the bothersome
issue concerning Clause II(b) of the Compromise Judgment and to prevent future disagreements
between the parties, the trial court saw the wisdom, as this Court does, in providing the specifics in the
said indefinite portion of the Compromise Judgment. As we previously held in the case of Hernandez v.
Colayco[54]

This is not the first unfortunate instance that a compromise judgment of a trial court has given rise to
subsequent prolonged controversy, only because the trial judge failed to exercise the required degree of
care in seeing to it that neither ambiguity nor incompleteness of details should characterize the
agreement, much less the judgment rendered on the basis thereof. The expressed desire of the parties
to end their judicial travails by submitting to a compromise deserves the utmost attention from the
court, and no effort should be spared in helping them arrive at a definite and unequivocal termination of
their problems and differences. It is high time that the matter-of-fact treatment usually accorded by trial
courts to motions to approve compromises were abandoned in favor of the more positive activist
attitude the situation demands. In acting in such a situation, the judge should bear in mind that the
objective is to end the disagreement between the parties, not to begin a new one. Thus, if the parties
and their counsel are unable to do it, the judge is expected to assist them in attaining precision and
accuracy of language that would more or less make it certain that any disputes as to the matters being
settled would not recur, much less give rise to a new controversy. (Emphasis supplied.)

Resultantly, a remand of this case is necessary to allow the parties themselves to resolve the matter
regarding the implementation of Clause II(b) of the Compromise Judgment. In this regard, the rule on
immutability for purposes of execution does not attach to a judgment that is materially equivocal or
which suffers from either patent or latent ambiguity.[55] To obviate further discord between them and
to preclude their recourse to the trial court every time one of them perceives a violation committed by
the other of Clause II(b) of the Compromise Judgment, we direct the trial court to be on guard and
ensure that the parties would lay out in concrete, specific details the terms of their agreement as to this
specific matter as well of the appointment of Louis Maxwells accompanying guardian.

Turning now to the question of whether Judge Mariano should inhibit herself from the case, we rule in
favor of respondent.

The pertinent provision of Rule 137, Section 1, of the Revised Rules of Court states:
SECTION 1. Disqualification of judges. No judge or judicial officer shall sit in any case in which he, or his
wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to
either party within the sixth degree of consanguinity or affinity, or to counsel within the fourth degree,
computed according to the rules of the civil law, or in which he has been executor, administrator,
guardian, trustee or counsel, or in which he has presided in any inferior court when his ruling or decision
is the subject of review, without the written consent of all parties in interest, signed by them and
entered upon the record.

A judge may, in the exercise of his sound discretion disqualify himself from sitting in a case, for just or
valid reasons other than those mentioned above. (Emphasis supplied).

This Court has ruled that to disqualify or not to disqualify is a matter of conscience and is addressed
primarily to the sense of fairness and justice of the judge concerned.[56] Said discretion is granted to
judges, since they are in the better position to determine the issue of voluntary inhibition, as they are
the ones who directly deal with the parties in their courtrooms.[57] The test that must be applied in
questions involving the propriety of the denial of a motion to inhibit is whether the movant was
deprived of a fair and impartial trial.[58] In this case, we hold that petitioner was not deprived of her day
in court, for she was able to file her comments on and/or objections to the motions filed by private
respondent. She, therefore, was able to ventilate her positions on the issues brought before the trial
court.

As regards Judge Marianos remark regarding petitioners obstinacy, we agree with private respondent
that the same is not a sufficient ground for public respondent to inhibit herself. Indeed, (o)pinions
formed in the course of judicial proceedings, as long as they are based on the evidence presented and
conduct observed by the judge, even if found later on to be erroneous, do not prove personal bias or
prejudice on the part of the judge.[59] Moreover, a single comment uttered by the public respondent in
the course of the proceedings should not be taken to be generally illustrative of her conduct in hearing
and determining the outcome of the entire case. Such isolated remark should not be taken to mean that
public respondent has crossed the line separating cold impartiality from unbridled bias.

WHEREFORE, premises considered, the present Petition is PARTIALLY GRANTED. The Decision of the
Court of Appeals in CA-G.R. SP No. 90285 dated 19 October 2005, is hereby REVERSED and SET ASIDE
insofar as it affirmed the Order dated 16 June 2005 of the RTC, Branch 136, Makati City in SP Proc. Case
No. M-5785, amending Clause II(b) of the Compromise Judgment and the last paragraph of Clause II.
Petitioners prayer, however, that Judge Rebecca Mariano of the RTC, Branch 136, Makati City, be directed
to inhibit herself from hearing said case is DENIED.
Judge Mariano is ordered to hold further proceedings to allow the parties to agree SPECIFICALLY and
DEFINITIVELY on how the overnight visits of Louis Maxwell with respondent and the appointment of said
childs accompanying guardian would be implemented within ten (10) days from receipt hereof. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is
hereby certified that the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO

Chief Justice

* In the Petition for Review as filed before this Court on 17 March 2006, petitioner impleaded Judge
Rebecca R. Mariano of the Regional Trial Court, Branch 136, Makati City. Such should not have been the
case since Section 4 of Rule 45 of the Revised Rules of Court provides:

SEC. 4. Contents of petition. The petition shall be filed in eighteen (18) copies, with the original copy
intended for the court being indicated as such by the petitioner, and shall (a) state the full name of the
appealing party as the petitioner and the adverse party as respondent, without impleading the lower
courts or judges thereof either as petitioners or respondents; (b) indicate the material dates showing
when notice of the judgment or final order or resolution subject thereof was received, when a motion
for new trial or reconsideration, if any, was filed and when notice of the denial thereof was received; (c)
set forth concisely a statement of the matters involved, and the reasons or arguments relied on for the
allowance of the petition; (d) be accompanied by a clearly legible duplicate original, or a certified true
copy of the judgment or final order or resolution certified by the clerk of court of the court a quo and
the requisite number of plain copies thereof, and such material portions of the record as would support
the petition; and (e) contain a sworn certification against forum shopping as provided in the last
paragraph of section 2, Rule 42.

[1] Penned by Associate Justice Juan Q. Enriquez, Jr. with Associate Justices Conrado M. Vasquez, Jr. and
Vicente Q. Roxas, concurring; rollo, pp. 32-42.

[2] Id. at 230.

[3] Id. at 231.

[4] Id. at 403.

[5] CA rollo, pp. 36-37.

[6] Rollo, pp. 132-136.

[7] Id.

[8] CA rollo, pp. 60-61.

[9] Id. at 59.

[10] Id. at 84.

[11] Rollo, pp. 260-261.

[12] Per Sheriffs Report dated 11 April 2005; id. at 262.

[13] Id. at 263-269.

[14] Id. at 265.

[15] Id. at 270-271.

[16] Id. at 8.

[17] Id.

[18] Id. at 8-9 citing TSN, 15 April 2005, p. 48.

[19] Id. at 437-445.

[20] CA rollo, pp. 104-111.

[21] Id. at 438-442.

[22] Id. at 10-11.

[23] Id. at 158-159.

[24] Id. at 415-419.

[25] Id. at 430-431.

[26] Id. at 432-433.

[27] CA rollo, pp. 108-111.

[28] Id. at 109.

[29] Rollo, p. 436.

[30] Id. at 373; In her Reply dated 10 October 2006, petitioner contends that she never agreed to the
withdrawal of her Reiterative Motion to Inhibit.

[31] CA rollo, p. 126.

[32] Id. at 114-124.

[33] Id. at 121-122.

[34] Id. at 125-129.

[35] Rollo, p. 81.

[36] Id. at 79-80.

[37] CA rollo, pp. 313-314.

[38] Id. at 1-23.

[39] Rollo, p. 265 citing Articles 2037 and 2038 of the Civil Code which respectively provide:

Art. 2037. A compromise has upon the parties the effect and authority of res judicata; but there shall be
no execution except in compliance with a judicial compromise.

Art. 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or
falsity of documents, is subject to the provisions of article 1330 of this Code.

However, one of the parties cannot set up a mistake of fact as against the other if the latter, by virtue of
the compromise, has withdrawn from a litigation already commenced.

[40] Citing Philippine Bank of Communications v. Echiverri, G.R. No. L 41795, 29 August 1980, 99 SCRA
508, 527.

[41] Rollo, p. 42.

[42] Id. at 44-45.

[43] Id. at 16.

[44] David v. Court of Appeals, G.R. No. 97240, 16 October 1992, 214 SCRA 644, 650.

[45] Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, 370 Phil. 150,
163 (1999).

[46] Manila International Airport Authority(MIAA) v. ALA Industries Corporation, G.R. No. 147349, 13
February 2004, 422 SCRA 603, 611.

[47] Martir v. Verano, G.R. No. 170395, 28 July 2006, 497 SCRA 120, 126-127.

[48] Art. 2029, Civil Code:

The Court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise.

Rule 18, Section 2(a) of the Revised Rules of Court:

Sec. 2. Nature and purpose. xxx.

(a) The possibility of an amicable settlement or of a submission to alternative modes of dispute

resolutions. (Emphasis supplied)
[49] Rollo, p. 20.

[50] Binamira v. Ogan-Occena, G.R. No. L-27777, 23 March 1987, 148 SCRA 677, 683.

[51] Philippine Bank of Communications v. Echiverri, supra note 40 at 527.

[52] Municipal Board of Cabanatuan City v. Samahang Magsasaka, Inc., G.R. No. L-25818, 25 February
1975, 62 SCRA 435, 438-439.

[53] De Guia v. Romillo, Jr., G.R. No. 51143, 22 March 1990, 183 SCRA 480, 484.

[54] G.R. No. L-39800, 27 June 1975, 64 SCRA 480, 487.

[55] Id. at 489.

[56] Flores v. Court of Appeals, 328 Phil. 992, 1019 (1996).

[57] People v. Ong, G.R. Nos. 162130-39, 5 May 2006, 489 SCRA 679, 687.

[58] Soriano v. Court of Appeals, 416 Phil. 226, 250 (2001).

[59] Rollo, p. 392 citing Seveses v. Court of Appeals, 375 Phil. 64, 73 (1999).

Today is Monday, February 11, 2019 home

Custom Search

Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 194560 June 11, 2014

NESTOR T. GADRINAB, Petitioner,

vs.

NORAT. SALAMANCA, ANTONIO TALAO AND ELENA LOPEZ, Respondents.

DECISION

LEONEN, J.:

A judgment on compromise agreement is a judgment on the merits. It has the effect of res judicata, and
is immediately final and executory unless set aside because of falsity or vices of consent. The doctrine of
immutability of judgments bars courts from modifying decisions that have already attained finality, even
if the purpose of the modification is to correct errors of fact or law.

This Rule 45 petlt10n seeks the review of the Court of Appeals' Decision1 dated July 22, 2010 and its
resolution2 dated November 19, 2010.

The Court of Appeals dismissed petitioner’s appeal and affirmed the Regional Trial Court’s decision
granting respondent Salamanca’s motion for physical partition pending the execution of a judgment on
compromise agreement between the parties.

Respondents, together with Adoracion Gadrinab and Arsenia Talao, are siblings and heirs of the late
Spouses Talao, Nicolas and Aurelia.3 The Spouses Talao died intestate, leaving a parcel of land in Sta.
Ana, Manila.4

The five Talao children divided the property among themselves through an extrajudicial settlement.5
Subsequently, Arsenia Talao waived her share over the property in favor of her siblings.6
Respondent Salamanca filed a complaint for partition against her siblings, Antonio, Elena (deceased, now
represented by her husband, Jose Lopez), and Adoracion (deceased, now represented by heirs,
petitioner Nestor and Francisco Gadrinab) before the Regional Trial Court of Manila.7

All parties claimed their respective shares in the property.8 They also claimed shares in the rentals
collected from one of the units of a duplex apartment on the property.9 The total amount of rental
collection in the possession of Jose Lopez was 528,623.00.10 The amount, according to Jose’s counsel,
was ready for distribution.11

Upon being referred to mediation, the parties entered into a compromise agreement and stipulated the
following:

1) That the subject property (land with all the improvements) situated at 2370 Nacar Street, San Andres,
Sta. Ana, Manila will be subject for sale and the amount will be divided among the four (plaintiff and
defendants);

2) That the subject property will be appraised by independent appraiser and the appraised value will be
divided into four. Mr. Antonio Talao will pay in advance the share of Francisco Gadrinab immediately
after the report of the said appraisal;

3) That Cuervo Appraiser will be the one who appraised [sic] the property on or before March 21, 2003
and any appraised value shall binding [sic] on all parties;

4) That the rental collection in its total amount of Five Hundred Twenty Eight Thousand and Six Hundred
Twenty Three Pesos (528,623.00) and the uncollected amount up to February 2003 once collected will
be divided among the parties;

5) That the amount of 528,623.00 divided by four be distributed among the parties will be given to all
parties on or before March 12, 2003 by Mr. Antonio Talao;
6) That upon payment of the appraised value to Francisco Gadrinab, Mr. Nestor Gadrinab is given forty-
five (45) days within which to leave the premises in question;

7) That the parties agreed to waive all their claims and counter-claims arising from this case; and

8) That the parties agreed to request this Honorable Court that a decision be issued base [sic] on this
Compromise Agreement or this Compromise Agreement be submitted before this Honorable Court for
approval.12

On April 10, 2003, the Regional Trial Court approved the compromise agreement.13 Based on the entry
of judgment, the case became final and executory on April 10, 2003.14

Nestor Gadrinab filed a motion for execution of the compromise agreement.15 He demanded his one-
fourth share in the accumulated rentals.16 During the hearing on the motion for execution, the parties
agreed that the rentals shall be divided only into three since Nestor had already been occupying one of
the duplex units.17 The parties also agreed that Antonio Talao would shoulder Nestor’s share, equivalent
to one-fourth of the rental amount.18

Pursuant to the compromise agreement, Cuervo Appraiser appraised the property.19 Unsatisfied with
the appraisal, Antonio Talao moved for the property’s reappraisal.20 This was denied by the Regional
Trial Court.21

The portion of the duplex that Nestor refused to vacate,22 remained unsold.23

Because of the attitude of her co-heirs, respondent Salamanca moved for the physical partition of the
property before the Regional Trial Court of Manila.24 She prayed for the physical partition of the
property instead of having it sold.25

Nestor and Francisco Gadrinab opposed the motion.26 They contended that the judgment on the
compromise agreement had already become final and executory and had the effect of res judicata.27
Antonio Talao and Jose Lopez did not object to the motion for physical partition.28
On December 29, 2005, the Regional Trial Court of Manila granted the motion for physical partition.29

Nestor and Francisco Gadrinab appealed to the Court of Appeals. They assailed the grant of Salamanca’s
motion for physical partition after the issuance of the judgment on compromise agreement.30

In a decision promulgated on July 22, 2010,31 the Court of Appeals dismissed the appeal. The Court of
Appeals ruled that the exception to the immutability of judgments, that is, "whenever circumstances
transpire after the finality of the decision rendering its execution unjust and inequitable,"32 applies in
this case. The Court of Appeals specifically noted that the "parties’ seemingly endless disagreements on
matters involving the disposition of the subject property"33 were such circumstances that rendered the
compromise agreement’s execution unjust and inequitable. The Court of Appeals agreed with the
Regional Trial Court’s ruling that "the proposed physical partition of the subject lot . . . is just another
way of enforcing the [c]ourt’s decision and will not in anyway vary the parties’ agreement nor affect their
right over the property."34

On November 19, 2010, the Court of Appeals denied petitioner’s motion for reconsideration.35

Hence, this petition was filed.

Petitioner argued that the Court of Appeals erred in affirming the Regional Trial Court’s order granting
respondent Salamanca’s motion for physical partition.36 A judgment on the compromise agreement had
already been rendered and had attained finality.37 Petitioner also argued that the Court of Appeals
failed to consider the following terms of the compromise agreement:

2. That the subject property will be appraised by independent appraiser and the appraised value will be
divided into four (4). Mr. Antonio Talao will pay in advance the share of Francisco Gadrinab immediately
after the report of the said appraisal;

....
4. That the rental collection in its total amount of FIVE HUNDRED TWENTY EIGHT THOUSAND SIX
HUNDRED TWENTY THREE PESOS (Php528,623.00) and the uncollected amount up to February 2003
once collected [sic] will be divided among the parties;

5. That the amount of FIVEHUNDRED TWENTY EIGHT THOUSAND SIX HUNDRED TWENTY THREE PESOS
Php528,623.00 divided by four (4) among the parties will be given to all parties on or [sic] March 12,
2003 by Mr. Antonio Talao at Greenbelt, Mc Donald at 9:00 o’clock in the morning;

6. That upon payment of the appraised value to Mr. Francisco Gadrinab, Mr. Nestor Gadrinab is given
forty five (45) days within which to leave the premises in question[.]38 (Emphasis in the original)

Petitioner alleged that the judgment on the compromise agreement had already been partially complied
with, as respondent Salamanca had already been paid her share in the accrued rentals.39 On the other
hand, petitioner still had not been paid his share,40 prompting him to file the motion for execution.41

Petitioner pointed out that there was no agreement that he must vacate the property before it could be
sold.42

Moreover, petitioner argued that the Court of Appeals’ decision violated his right to due process.43
According to him, had there been a full-blown trial on the action for partition, he would have been able
to present evidence of exclusive possession of half of the property.44

In their separate comments, respondents Salamanca and Talao argued that this case fell under the
exception of the rule on immutability of judgments.45 The non-compliance of some of the parties with
the compromise agreement constituted an event that "[makes] it difficult if not totally impossible to
enforce the compromise agreement."46

Respondents Salamanca and Talao also argued that the physical partition of the property would not
prejudice the parties.47 The order granting the motion for physical partition was a mere enforcement of
the compromise agreement, which entitled the parties to their shares in the proceeds of the sale.48
Respondent Salamanca pointed out that the grant of the motion for physical partition would still be
consistent with the intent of the compromise agreement since it would result in the proceeds being
divided equally among the parties.49 "The Order granting the physical partition was within the inherent
power and authority of the court having jurisdiction to render a particular judgment to enforce it and to
exercise equitable control over such enforcement."50

Moreover, petitioner’s refusal to vacate the property prevented it from being sold so that the proceeds
could already be distributed among the parties.51

On the violation of due process, respondents Salamanca and Talao argued that it was only before this
court that this issue was raised.

The issue in this case is whether the Court of Appeals erred in affirming the Regional Trial Court’s
decision allowing the physical partition of the property despite finality of a previous judgment on
compromise agreement involving the division of the same property.

The petition is meritorious.

The Court of Appeals erred in

affirming the Regional Trial

Court’s decision allowing the

physical partition of the property

Respondent Salamanca filed two actions for physical partition. The two parties settled the first action
through a judicial compromise agreement. The same respondent filed the second action after she had
determined that her co-heirs were not being cooperative in complying with the compromise agreement.

In a compromise agreement, the parties freely enter into stipulations. "[A] judgment based on a
compromise agreement is a judgment on the merits"52 of the case. It has the effect of res judicata.
These principles are impressed both in our law and jurisprudence.

Thus, Article 2037 of the Civil Code provides:

Article 2037. A compromise has upon the parties the effect and authority of res judicata; but there shall
be no execution except in compliance with a judicial compromise.

In Spouses Romero v. Tan,53 this court said:

It is well settled that a judicial compromise has the effect of res judicata and is immediately executory
and not appealable unless set aside [by mistake, fraud, violence, intimidation, undue influence, or falsity
of documents that vitiated the compromise agreement].54

There is res judicata when the following concur:

1. Previous final judgment;

2. By a court having jurisdiction over the parties and the subject matter;

3. On the merits of the case;

4. Between identical parties, on the same subject matter, and cause of action55

There are two rules that embody the principle of res judicata. The first rule refers to "bar by prior
judgment,"56 which means that actions on the same claim or cause of action cannot be relitigated.57
This rule is embodied in Rule 39, Section 47, paragraph (b) of the Rules of Court, which provides:

Section 47. Effect of judgments or final orders. — The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to
any other matter that could have been raised in relation thereto, conclusive between the parties and
their successors in interest by title subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same title and in the same capacity[.]

The second rule refers to "conclusiveness of judgment."58 This means that facts already tried and
determined in another action involving a different claim or cause of action cannot anymore be
relitigated.59 This rule is embodied in Rule 39, Section 47, paragraph (c) of the Rules of Court, which
provides:

Section 47. Effect of judgments or final orders. — The effect of a judgment or final order rendered by a
court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

....

(c) In any other litigation between the same parties or their successors in interest, that only is deemed to
have been adjudged in a former judgment or final order which appears upon its face to have been so
adjudged, or which was actually and necessarily included therein or necessary thereto. (49a)

This case involves "bar by prior judgment." Respondents cannot file another action for partition after
final judgment on compromise had already been rendered in a previous action for partition involving the
same parties and property.

This court explained in FGU Insurance Corporation v. Regional Trial Court60 the doctrine of finality of
judgment:

Under the doctrine of finality of judgment or immutability of judgment, a decision that has acquired
finality becomes immutable and unalterable, and may no longer be modified in any respect, even if the
modification is meant to correct erroneous conclusions of fact and law, and whether it be made by the
court that rendered it or by the Highest Court of the land. Any act which violates this principle must
immediately be struck down.61
This doctrine admits a few exceptions, usually applied to serve substantial justice:

1. "The correction of clerical errors;

2. the so-called nunc pro tunc entries which cause no prejudice to any party;

3. void judgments; and

4. whenever circumstances transpire after the finality of the decision rendering its execution unjust and
inequitable."62

Doctrines on bar by prior judgment and immutability of judgment apply whether judgment is rendered
after a full-blown trial or after the parties voluntarily execute a compromise agreement duly approved by
the court.

Because a judicial compromise agreement is in the nature of both an agreement between the parties
and a judgment on the merits, it is covered by the Civil Code provisions on contracts. It can be avoided
on grounds that may avoid an ordinary contract, e.g., it is not in accord with the law;63 lack of consent
by a party; and existence of fraud or duress. Further, the pertinent Civil Code provisions on compromise
agreements provide:

Article 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or
falsity of documents is subject to the provisions of Article 1330 of this Code.

Article 1330. A contract where consent is given through mistake, violence, intimidation, undue influence,
or fraud is voidable.

Therefore, courts cannot entertain actions involving the same cause of action, parties, and subject
matter without violating the doctrines on bar by prior judgment and immutability of judgments, unless
there is evidence that the agreement was void, obtained through fraud, mistake or any vice of consent,
or would disrupt substantial justice.

In this case, there was no issue as to the fact that the parties freely entered into the compromise
agreement. There was also no dispute about the clarity of its terms. Some of the parties simply do not
wish to abide by the compromise agreement’s terms.

This court does not see how substantial justice will be served by disturbing a previous final judgment on
compromise when failure of its execution was caused by the parties themselves.

Likewise, respondents’ argument that a supervening event, i.e. disagreement among the parties, was
present to justify disturbance of the final judgment on compromise fails to persuade. A supervening
event may justify the disturbance of a final judgment on compromise if it "brought about a material
change in [the] situation"64 between the parties. The material change contemplated must render the
execution of the final judgment unjust and inequitable. Otherwise, a party to the compromise
agreement has a "right to have the compromise agreement executed, according to its terms."65

The subsequent disagreement among the parties did not cause any material change in the situation or in
the relations among the parties. The situation and relations among the parties remained the same as the
situation and their relations prior to the compromise agreement. They remained co-owners of the
property, which they desired to partition.

Moreover, the parties voluntarily agreed to the compromise agreement, which was already stamped
with judicial approval. The agreement’s execution would bring about the effects desired by all parties
and the most just and equitable situation for all. On the other hand, the judgment granting the second
action for partition filed by respondent Salamanca was obtained with opposition.

Judges "have the ministerial and mandatory duty to implement and enforce [a compromise
agreement]."66 Absent appeal or motion to set aside the judgment, courts cannot modify, impose terms
different from the terms of a compromise agreement, or set aside the compromises and reciprocal
concessions made in good faith by the parties without gravely abusing their discretion.67
"[They cannot] relieve parties from [their] obligations . . . simply because [the agreements are] . . .
unwise."68 Further, "[t]he mere fact that the Compromise Agreement favors one party does not render
it invalid."69 Courts do not have power to "alter contracts in order to save [one party]

from [the effects of] adverse stipulations. . . ."70

Respondents have remedies if

parties to the compromise

agreement refuse to abide by its

terms

The issue in this case involves the non-compliance of some of the parties with the terms of the
compromise agreement.1âwphi1 The law affords complying parties with remedies in case one of the
parties to an agreement fails to abide by its terms.

A party may file a motion for execution of judgment. Execution is a matter of right on final judgments.
Section 1, Rule 39 of the Rules of Court provides:

Section 1. Execution upon judgments or final orders. — Execution shall issue as a matter of right, on
motion, upon a judgment or order that disposes of the action or proceeding upon the expiration of the
period to appeal therefrom if no appeal has been duly perfected. (1a)

If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in
the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the
judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with
notice to the adverse party.

The appellate court may, on motion in the same case, when the interest of justice so requires, direct the
court of origin to issue the writ of execution. (n)
If a party refuses to comply with the terms of the judgment or resists the enforcement of a lawful writ
issued, an action for indirect contempt may be filed in accordance with Rule 71 of the Rules of Court:

Section 3. Indirect contempt to be punished after charge and hearing. — After a charge in writing has
been filed, and an opportunity given to the respondent to comment thereon within such period as may
be fixed by the court and to be heard by himself or counsel, a person guilty of any of the following acts
may be punished for indirect contempt;

....

(b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court, including the
act of a person who, after being dispossessed or ejected from any real property by the judgment or
process of any court of competent jurisdiction, enters or attempts or induces another to enter into or
upon such real property, for the purpose of executing acts of ownership or possession, or in any manner
disturbs the possession given to the person adjudged to be entitled thereto[.]

Since a judgment on compromise agreement is effectively a judgment on the case, proper remedies
against ordinary judgments may be used against judgments on a compromise agreement. Provided these
are availed on time and the appropriate grounds exist, remedies may include the following: a) motion for
reconsideration; b) motion for new trial; c) appeal; d) petition for relief from judgment; e) petition for
certiorari; and f) petition for annulment of judgment.71

Respondent Salamanca knew that the only reason for the failed compromise agreement was the non-
compliance with the agreement’s terms of some of her co-heirs. Particularly, it was stipulated that
petitioner’s removal from the property was conditioned upon payment of an amount equivalent to his
share. Respondent Talao refused to abide by his own undertaking to shoulder respondent Salamanca’s
share. He also refused to acknowledge the appraisal of the appraiser appointed in the compromise
agreement. This refusal caused the failure of the compromise agreement.

Instead of availing herself of the proper remedies so the compromise could be enforced and the
partition could be effected, respondent Salamanca chose to move again for the partition of the property
and set aside a valid and final judgment on compromise. This court cannot allow such motion to prosper
without going against law and established jurisprudence on judgments.
WHEREFORE, the Court of Appeals’ decision is REVERSED and SET ASIDE. The judgment on the
compromise agreement is REINSTATED.

SO ORDERED.

MARVIC MARIO VICTOR F. LEONEN

Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice

Chairperson

DIOSDADO M. PERALTA

Associate Justice MARTIN S. VILLARAMA, JR.*

Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.
PRESBITERO J. VELASCO, JR.

Associate Justice

Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify
that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

* Villarama, Jr., J, designated as Acting Member per Special Order No. 1691 dated May 22, 2014 in view
of the vacancy in the Third Division.

1 Rollo, p. 31-42. This decision was penned by Associate Justice Noel G. Tijam, with Associate Justices
Marfone Gonzales-Sison and Danton Q. Bueser concurring.

2 Id. at 43-45. This resolution was penned by Associate Justice Noel G. Tijam, with Associate Justices
Marlene Gonzales-Sison and Danton Q. Bueser concurring.

3 Id. at 32.
4 Id.

5 Id.

6 Id.

7 Id.

8 Id.

9 Id. at 33.

10 Id.

11 Id.

12 Id. at 33–34. The text of the compromise agreement reproduced above is based on the Court of
Appeals’ decision.

13 Id. at 34.

14 Id.

15 Id.

16 Id.
17 Id.

18 Id. at 34–35.

19 Id. at 35.

20 Id.

21 Id.

22 Id.

23 Id.

24 Id.

25 Id.

26 Id.

27 Id. at 35–36.

28 Id. at 36.
29 Id. at 37.

30 Id. at 37–38.

31 Id. at 31–42.

32 Id. at 39.

33 Id.

34 Id. at 40.

35 Id. at 43–45.

36 Id. at 15–16.

37 Id.

38 Id. at 19–20.

39 Id.

40 Id. at 20.

41 Id.
42 Id.

43 Id. at 23.

44 Id. at 23–24.

45 Id. at 72 and 109.

46 Id. at 75.

47 Id. at 76 and 108.

48 Id. at 108.

49 Id. at 75.

50 Id. at 76.

51 Id. at 109.

52 Spouses Romero v. Tan, 468 Phil. 224, 240 (2004) [Per J. Quisumbing, Second Division].

53 468 Phil. 224 (2004) [Per J. Quisumbing, Second Division].

54 Id. at 240; See also Aromin v. Floresca, 528 Phil. 1165, 1186 (2006) [Per J. Callejo, Sr., First Division].

55 See Heirs of Enrique Diaz v. Virata,529 Phil. 799, 823-824 (2006) [Per J. Chico-Nazario, First Division].

56 See also Facura v. Court of Appeals, G.R. No. 166495, February 16, 2011, 643 SCRA 427, 458–460 [Per
J. Mendoza, Second Division].

57 See also Facura v. Court of Appeals, G.R. No. 166495, February 16, 2011, 643 SCRA 427, 458–460 [Per
J. Mendoza, Second Division].

58 See also Facura v. Court of Appeals, G.R. No. 166495, February 16, 2011, 643 SCRA 427, 458–460 [Per
J. Mendoza, Second Division].

59 See also Facura v. Court of Appeals, G.R. No. 166495, February 16, 2011, 643 SCRA 427, 458–460 [Per
J. Mendoza, Second Division].

60 G.R. No. 161282, February 23, 2011, 644 SCRA 50 [Per J. Mendoza, Second Division].

61 Id. at 56.

62 Id.

63 See Guiang v. Kintanar, 193 Phil. 251, 288–289 (1981) [Per J. Barredo, Second Division].

64 See Cachopero v. Celestial, G.R. No. 146754, March 21, 2012, 668 SCRA 619, 635 [Per J. Leonardo-De
Castro, First Division].
65 Cachopero v. Celestial, G.R. No. 146754, March 21, 2012, 668 SCRA 619, 635 [Per J. Leonardo-De
Castro, First Division].

66 Id. at 632, citing Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) v.
Abella, 489 Phil. 515 (2005) [Per J. Chico-Nazario, Second Division].

67 See Viesca v. Gilinsky, 553 Phil. 498, 522–523 (2007) [Per J. Chico-Nazario, Third Division]; Domingo
Realty v. Court of Appeals, 542 Phil. 39, 65–66 (2007) [Per J. Velasco, Jr., Second Division]; Aromin v.
Floresca, 528 Phil. 1165, 1190 (2006) [Per J. Callejo, Sr., First Division].

68 Cachopero v. Celestial, G.R. No. 146754, March 21, 2012, 668 SCRA 619, 632 [Per J. Leonardo-De
Castro, First Division], citing Air Transportation Office v. Gopuco, Jr., 501 Phil. 228, 239 (2005) [Per J.
Chico-Nazario, Second Division].

69 Domingo Realty v. Court of Appeals, 542 Phil. 39, 66 (2007) [Per J. Velasco, Jr., Second Division].

70 Id.

71 See also Domingo Realty v. Court of Appeals, 542 Phil. 39, 55-56 (2007) [Per J. Velasco, Jr., Second
Division].

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REPUBLIC ACT NO. 876

AN ACT TO AUTHORIZE THE MAKING OF ARBITRATION AND SUBMISSION AGREEMENTS, TO PROVIDE

FOR THE APPOINTMENT OF ARBITRATORS AND THE PROCEDURE FOR ARBITRATION IN CIVIL
CONTROVERSIES, AND FOR OTHER PURPOSES

Section 1. Short Title. - This Act shall be known as "The Arbitration Law."

Section 2. Persons and matters subject to arbitration. - Two or more persons or parties may submit to
the arbitration of one or more arbitrators any controversy existing between them at the time of the
submission and which may be the subject of an action, or the parties to any contract may in such
contract agree to settle by arbitration a controversy thereafter arising between them. Such submission or
contract shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the
revocation of any contract.

Such submission or contract may include question arising out of valuations, appraisals or other
controversies which may be collateral, incidental, precedent or subsequent to any issue between the
parties.

A controversy cannot be arbitrated where one of the parties to the controversy is an infant, or a person
judicially declared to be incompetent, unless the appropriate court having jurisdiction approve a petition
for permission to submit such controversy to arbitration made by the general guardian or guardian ad
litem of the infant or of the incompetent.
But where a person capable of entering into a submission or contract has knowingly entered into the
same with a person incapable of so doing, the objection on the ground of incapacity can be taken only in
behalf of the person so incapacitated.

Section 3. Controversies or cases not subject to the provisions of this Act. - This Act shall not apply to
controversies and to cases which are subject to the jurisdiction of the Court of Industrial Relations or
which have been submitted to it as provided by Commonwealth Act Numbered One hundred and three,
as amended.

Section 4. Form of arbitration agreement. - A contract to arbitrate a controversy thereafter arising

between the parties, as well as a submission to arbitrate an existing controversy shall be in writing and
subscribed by the party sought to be charged, or by his lawful agent.

The making of a contract or submission for arbitration described in section two hereof, providing for
arbitration of any controversy, shall be deemed a consent of the parties to the jurisdiction of the Court of
First Instance of the province or city where any of the parties resides, to enforce such contract or
submission.

Section 5. Preliminary procedure. - An arbitration shall be instituted by:

(a) In the case of a contract to arbitrate future controversies by the service by either party upon the
other of a demand for arbitration in accordance with the contract. Such demand shall be set forth the
nature of the controversy, the amount involved, if any, and the relief sought, together with a true copy of
the contract providing for arbitration. The demand shall be served upon any party either in person or by
registered mail. In the event that the contract between the parties provides for the appointment of a
single arbitrator, the demand shall be set forth a specific time within which the parties shall agree upon
such arbitrator. If the contract between the parties provides for the appointment of three arbitrators,
one to be selected by each party, the demand shall name the arbitrator appointed by the party making
the demand; and shall require that the party upon whom the demand is made shall within fifteen days
after receipt thereof advise in writing the party making such demand of the name of the person
appointed by the second party; such notice shall require that the two arbitrators so appointed must
agree upon the third arbitrator within ten days from the date of such notice.
(b) In the event that one party defaults in answering the demand, the aggrieved party may file with
the Clerk of the Court of First Instance having jurisdiction over the parties, a copy of the demand for
arbitration under the contract to arbitrate, with a notice that the original demand was sent by registered
mail or delivered in person to the party against whom the claim is asserted. Such demand shall set forth
the nature of the controversy, the amount involved, if any, and the relief sought, and shall be
accompanied by a true copy of the contract providing for arbitration.

(c) In the case of the submission of an existing controversy by the filing with the Clerk of the Court
of First Instance having jurisdiction, of the submission agreement, setting forth the nature of the
controversy, and the amount involved, if any. Such submission may be filed by any party and shall be duly
executed by both parties.

(d) In the event that one party neglects, fails or refuses to arbitrate under a submission agreement,
the aggrieved party shall follow the procedure prescribed in subparagraphs (a) and (b) of this section.

Section 6. Hearing by court. - A party aggrieved by the failure, neglect or refusal of another to
perform under an agreement in writing providing for arbitration may petition the court for an order
directing that such arbitration proceed in the manner provided for in such agreement. Five days notice in
writing of the hearing of such application shall be served either personally or by registered mail upon the
party in default. The court shall hear the parties, and upon being satisfied that the making of the
agreement or such failure to comply therewith is not in issue, shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the agreement. If the making of the agreement or
default be in issue the court shall proceed to summarily hear such issue. If the finding be that no
agreement in writing providing for arbitration was made, or that there is no default in the proceeding
thereunder, the proceeding shall be dismissed. If the finding be that a written provision for arbitration
was made and there is a default in proceeding thereunder, an order shall be made summarily directing
the parties to proceed with the arbitration in accordance with the terms thereof.

The court shall decide all motions, petitions or applications filed under the provisions of this Act, within
ten days after such motions, petitions, or applications have been heard by it.

Section 7. Stay of civil action. - If any suit or proceeding be brought upon an issue arising out of an
agreement providing for the arbitration thereof, the court in which such suit or proceeding is pending,
upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration, shall
stay the action or proceeding until an arbitration has been had in accordance with the terms of the
agreement: Provided, That the applicant, for the stay is not in default in proceeding with such
arbitration.

Section 8. Appointment of arbitrators. - If, in the contract for arbitration or in the submission described
in section two, provision is made for a method of naming or appointing an arbitrator or arbitrators, such
method shall be followed; but if no method be provided therein the Court of First Instance shall
designate an arbitrator or arbitrators.

The Court of First Instance shall appoint an arbitrator or arbitrators, as the case may be, in the following
instances:

(a) If the parties to the contract or submission are unable to agree upon a single arbitrator; or

(b) If an arbitrator appointed by the parties is unwilling or unable to serve, and his successor has not
been appointed in the manner in which he was appointed; or

(c) If either party to the contract fails or refuses to name his arbitrator within fifteen days after
receipt of the demand for arbitration; or

(d) If the arbitrators appointed by each party to the contract, or appointed by one party to the
contract and by the proper Court, shall fail to agree upon or to select the third arbitrator.

(e) The court shall, in its discretion appoint one or three arbitrators, according to the importance of
the controversy involved in any of the preceding cases in which the agreement is silent as to the number
of arbitrators.

(f) Arbitrators appointed under this section shall either accept or decline their appointments within
seven days of the receipt of their appointments. In case of declination or the failure of an arbitrator or
arbitrators to duly accept their appointments the parties or the court, as the case may be, shall proceed
to appoint a substitute or substitutes for the arbitrator or arbitrators who decline or failed to accept his
or their appointments.
Section 9. Appointment of additional arbitrators. - Where a submission or contract provides that
two or more arbitrators therein designated or to be thereafter appointed by the parties, may select or
appoint a person as an additional arbitrator, the selection or appointment must be in writing. Such
additional arbitrator must sit with the original arbitrators upon the hearing.

Section 10. Qualifications of arbitrators. - Any person appointed to serve as an arbitrator must be of legal
age, in full-enjoyment of his civil rights and know how to read and write. No person appointed to served
as an arbitrator shall be related by blood or marriage within the sixth degree to either party to the
controversy. No person shall serve as an arbitrator in any proceeding if he has or has had financial,
fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding, or
has any personal bias, which might prejudice the right of any party to a fair and impartial award.

No party shall select as an arbitrator any person to act as his champion or to advocate his cause.

If, after appointment but before or during hearing, a person appointed to serve as an arbitrator shall
discover any circumstances likely to create a presumption of bias, or which he believes might disqualify
him as an impartial arbitrator, the arbitrator shall immediately disclose such information to the parties.
Thereafter the parties may agree in writing:

(a) to waive the presumptive disqualifying circumstances; or

(b) to declare the office of such arbitrator vacant. Any such vacancy shall be filled in the same
manner as the original appointment was made.

Section 11. Challenge of arbitrators. - The arbitrators may be challenged only for the reasons
mentioned in the preceding section which may have arisen after the arbitration agreement or were
unknown at the time of arbitration.

The challenge shall be made before them.

If they do not yield to the challenge, the challenging party may renew the challenge before the Court of
First Instance of the province or city in which the challenged arbitrator, or, any of them, if there be more
than one, resides. While the challenging incident is discussed before the court, the hearing or arbitration
shall be suspended, and it shall be continued immediately after the court has delivered an order on the
challenging incident.

Section 12. Procedure by arbitrators. - Subject to the terms of the submission or contract, if any are
specified therein, are arbitrators selected as prescribed herein must, within five days after appointment
if the parties to the controversy reside within the same city or province, or within fifteen days after
appointment if the parties reside in different provinces, set a time and place for the hearing of the
matters submitted to them, and must cause notice thereof to be given to each of the parties. The
hearing can be postponed or adjourned by the arbitrators only by agreement of the parties; otherwise,
adjournment may be ordered by the arbitrators upon their own motion only at the hearing and for good
and sufficient cause. No adjournment shall extend the hearing beyond the day fixed in the submission or
contract for rendering the award, unless the time so fixed is extended by the written agreement of the
parties to the submission or contract or their attorneys, or unless the parties have continued with the
arbitration without objection to such adjournment.

The hearing may proceed in the absence of any party who, after due notice, fails to be present at such
hearing or fails to obtain an adjournment thereof. An award shall not be made solely on the default of a
party. The arbitrators shall require the other party to submit such evidence as they may require for
making an award.

No one other than a party to said arbitration, or a person in the regular employ of such party duly
authorized in writing by said party, or a practicing attorney-at-law, shall be permitted by the arbitrators
to represent before him or them any party to the arbitration. Any party desiring to be represented by
counsel shall notify the other party or parties of such intention at least five days prior to the hearing.

The arbitrators shall arrange for the taking of a stenographic record of the testimony when such a record
is requested by one or more parties, and when payment of the cost thereof is assumed by such party or
parties.

Persons having a direct interest in the controversy which is the subject of arbitration shall have the right
to attend any hearing; but the attendance of any other person shall be at the discretion of the
arbitrators.
Section 13. Oath of arbitrators. - Before hearing any testimony, arbitrators must be sworn, by any officer
authorized by law to administer an oath, faithfully and fairly to hear and examine the matters in
controversy and to make a just award according to the best of their ability and understanding.
Arbitrators shall have the power to administer the oaths to all witnesses requiring them to tell the whole
truth and nothing but the truth in any testimony which they may give in any arbitration hearing. This
oath shall be required of every witness before any of his testimony is heard.

Section 14. Subpoena and subpoena duces tecum. - Arbitrators shall have the power to require any
person to attend a hearing as a witness. They shall have the power to subpoena witnesses and
documents when the relevancy of the testimony and the materiality thereof has been demonstrated to
the arbitrators. Arbitrators may also require the retirement of any witness during the testimony of any
other witness. All of the arbitrators appointed in any controversy must attend all the hearings in that
matter and hear all the allegations and proofs of the parties; but an award by the majority of them is
valid unless the concurrence of all of them is expressly required in the submission or contract to
arbitrate. The arbitrator or arbitrators shall have the power at any time, before rendering the award,
without prejudice to the rights of any party to petition the court to take measures to safeguard and/or
conserve any matter which is the subject of the dispute in arbitration.

Section 15. Hearing by arbitrators. - Arbitrators may, at the commencement of the hearing, ask
both parties for brief statements of the issues in controversy and/or an agreed statement of facts.
Thereafter the parties may offer such evidence as they desire, and shall produce such additional
evidence as the arbitrators shall require or deem necessary to an understanding and determination of
the dispute. The arbitrators shall be the sole judge of the relevancy and materiality of the evidence
offered or produced, and shall not be bound to conform to the Rules of Court pertaining to evidence.
Arbitrators shall receive as exhibits in evidence any document which the parties may wish to submit and
the exhibits shall be properly identified at the time of submission. All exhibits shall remain in the custody
of the Clerk of Court during the course of the arbitration and shall be returned to the parties at the time
the award is made. The arbitrators may make an ocular inspection of any matter or premises which are
in dispute, but such inspection shall be made only in the presence of all parties to the arbitration, unless
any party who shall have received notice thereof fails to appear, in which event such inspection shall be
made in the absence of such party.

Section 16. Briefs. - At the close of the hearings, the arbitrators shall specifically inquire of all
parties whether they have any further proof or witnesses to present; upon the receipt of a negative reply
from all parties, the arbitrators shall declare the hearing closed unless the parties have signified an
intention to file briefs. Then the hearing shall be closed by the arbitrations after the receipt of briefs
and/or reply briefs. Definite time limit for the filing of such briefs must be fixed by the arbitrators at the
close of the hearing. Briefs may filed by the parties within fifteen days after the close of the oral
hearings; the reply briefs, if any, shall be filed within five days following such fifteen-day period.

Section 17. Reopening of hearing. - The hearing may be reopened by the arbitrators on their own
motion or upon the request of any party, upon good cause, shown at any time before the award is
rendered. When hearings are thus reopened the effective date for the closing of the hearings shall be
the date of the closing of the reopened hearing.

Section 18. Proceeding in lieu of hearing. - The parties to a submission or contract to arbitrate
may, by written agreement, submit their dispute to arbitration by other than oral hearing. The parties
may submit an agreed statement of facts. They may also submit their respective contentions to the duly
appointed arbitrators in writing; this shall include a statement of facts, together with all documentary
proof. Parties may also submit a written argument. Each party shall provide all other parties to the
dispute with a copy of all statements and documents submitted to the arbitrators. Each party shall have
an opportunity to reply in writing to any other party's statements and proofs; but if such party fails to do
so within seven days after receipt of such statements and proofs, he shall be deemed to have waived his
right to reply. Upon the delivery to the arbitrators of all statements and documents, together with any
reply statements, the arbitrators shall declare the proceedings in lieu of hearing closed.

Section 19. Time for rendering award. - Unless the parties shall have stipulated by written agreement
the time within which the arbitrators must render their award, the written award of the arbitrators shall
be rendered within thirty days after the closing of the hearings or if the oral hearings shall have been
waived, within thirty days after the arbitrators shall have declared such proceedings in lieu of hearing
closed. This period may be extended by mutual consent of the parties.alf-itc

Section 20. Form and contents of award. - The award must be made in writing and signed and
acknowledged by a majority of the arbitrators, if more than one; and by the sole arbitrator, if there is
only one. Each party shall be furnished with a copy of the award. The arbitrators in their award may
grant any remedy or relief which they deem just and equitable and within the scope of the agreement of
the parties, which shall include, but not be limited to, the specific performance of a contract.

In the event that the parties to an arbitration have, during the course of such arbitration, settled their
dispute, they may request of the arbitrators that such settlement be embodied in an award which shall
be signed by the arbitrators. No arbitrator shall act as a mediator in any proceeding in which he is acting
as arbitrator; and all negotiations towards settlement of the dispute must take place without the
presence of the arbitrators.

The arbitrators shall have the power to decide only those matters which have been submitted to them.
The terms of the award shall be confined to such disputes.

The arbitrators shall have the power to assess in their award the expenses of any party against another
party, when such assessment shall be deemed necessary.

Section 21. Fees of arbitration. - The fees of the arbitrators shall be fifty pesos per day unless the parties
agree otherwise in writing prior to the arbitration.

Section 22. Arbitration deemed a special proceeding. - Arbitration under a contract or submission shall
be deemed a special proceeding, of which the court specified in the contract or submission, or if none be
specified, the Court of First Instance for the province or city in which one of the parties resides or is
doing business, or in which the arbitration was held, shall have jurisdiction. Any application to the court,
or a judge thereof, hereunder shall be made in manner provided for the making and hearing of motions,
except as otherwise herein expressly provided.

Section 23. Confirmation of award. - At any time within one month after the award is made, any party to
the controversy which was arbitrated may apply to the court having jurisdiction, as provided in section
twenty-eight, for an order confirming the award; and thereupon the court must grant such order unless
the award is vacated, modified or corrected, as prescribed herein. Notice of such motion must be served
upon the adverse party or his attorney as prescribed by law for the service of such notice upon an
attorney in action in the same court.

Section 24. Grounds for vacating award. - In any one of the following cases, the court must make an
order vacating the award upon the petition of any party to the controversy when such party proves
affirmatively that in the arbitration proceedings:

(a) The award was procured by corruption, fraud, or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of them; or

(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon
sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; that
one or more of the arbitrators was disqualified to act as such under section nine hereof, and wilfully
refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any
party have been materially prejudiced; or

(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final
and definite award upon the subject matter submitted to them was not made.

Where an award is vacated, the court, in its discretion, may direct a new hearing either before the same
arbitrators or before a new arbitrator or arbitrators to be chosen in the manner provided in the
submission or contract for the selection of the original arbitrator or arbitrators, and any provision
limiting the time in which the arbitrators may make a decision shall be deemed applicable to the new
arbitration and to commence from the date of the court's order.

Where the court vacates an award, costs, not exceeding fifty pesos and disbursements may be awarded
to the prevailing party and the payment thereof may be enforced in like manner as the payment of costs
upon the motion in an action.

Section 25. Grounds for modifying or correcting award. - In any one of the following cases, the court
must make an order modifying or correcting the award, upon the application of any party to the
controversy which was arbitrated:

(a) Where there was an evident miscalculation of figures, or an evident mistake in the description of
any person, thing or property referred to in the award; or

(b) Where the arbitrators have awarded upon a matter not submitted to them, not affecting the
merits of the decision upon the matter submitted; or
(c) Where the award is imperfect in a matter of form not affecting the merits of the controversy, and
if it had been a commissioner's report, the defect could have been amended or disregarded by the court.

The order may modify and correct the award so as to effect the intent thereof and promote justice
between the parties.

Section 26. Motion to vacate, modify or correct award: when made. - Notice of a motion to vacate,
modify or correct the award must be served upon the adverse party or his counsel within thirty days
after award is filed or delivered, as prescribed by law for the service upon an attorney in an action.

Section 27. Judgment. - Upon the granting of an order confirming, modifying or correcting an award,
judgment may be entered in conformity therewith in the court wherein said application was filed. Costs
of the application and the proceedings subsequent thereto may be awarded by the court in its
discretion. If awarded, the amount thereof must be included in the judgment.

Section 28. Papers to accompany motion to confirm, modify, correct, or vacate award. - The party
moving for an order confirming, modifying, correcting, or vacating an award, shall at the time that such
motion is filed with the court for the entry of judgment thereon also file the following papers with the
Clerk of Court;

(a) The submission, or contract to arbitrate; the appointment of the arbitrator or arbitrators; and
each written extension of the time, if any, within which to make the award.

(b) A verified of the award.

(c) Each notice, affidavit, or other paper used upon the application to confirm, modify, correct or
vacate such award, and a copy of each of the court upon such application.

The judgment shall be docketed as if it were rendered in an action.

The judgment so entered shall have the same force and effect in all respects, as, and be subject to all the
provisions relating to, a judgment in an action; and it may be enforced as if it had been rendered in the
court in which it is entered.

Section 29. Appeals. - An appeal may be taken from an order made in a proceeding under this Act, or
from a judgment entered upon an award through certiorari proceedings, but such appeals shall be
limited to questions of law. The proceedings upon such an appeal, including the judgment thereon shall
be governed by the Rules of Court in so far as they are applicable.

Section 30. Death of party. - Where a party dies after making a submission or a contract to arbitrate as
prescribed in this Act, the proceedings may be begun or continued upon the application of, or notice to,
his executor or administrator, or temporary administrator of his estate. In any such case, the court may
issue an order extending the time within which notice of a motion to confirm, vacate, modify or correct
an award must be served. Upon confirming an award, where a party has died since it was filed or
delivered, the court must enter judgment in the name of the original party; and the proceedings
thereupon are the same as where a party dies after a verdict.

Section 31. Repealing clause. - The provisions of chapters one and two, Title XIV, of the Civil Code shall
remain in force. All other laws and parts of laws inconsistent with this Act are hereby repealed. If any
provision of this Act shall be held invalid the remainder that shall not be affected thereby.

Section 32. Effectivity. - This Act shall take effect six months after its approval.

Approved: June 19, 1953

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 Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence
International Legal Resources AUSL Exclusive