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G.R. No. 158901 March 9, 2004PROCESO QUIROS and LEONARDA VILLEGAS,petitioners,vs.MARCELO ARJONA, TERESITA BALARBAR, JOSEPHINE ARJONA, and CONCHITA ARJONA,respondents. P-Proceso Quiros and Leonarda Villegas filed - office of the barangay captain of Labney, San Jacinto, Pangasinan, - for recovery of ownership and possession of a parcel of land located at Labney, San Jacinto, Pangasinan

-to recover from their uncle R-Marcelo Arjona their lawful share of the inheritance from their late grandmother Rosa Arjona Quiros alias Doza, the same to be segregated from the following parcels of land:

a) A parcel of land at Labney, Torud, San Jacinto, Pangasinan (44,520) square meters;

b) A parcel of Unirrig. riceland at Labney, San Jacinto, San Jacinto, Pangasinan, 6450 sq. meters assessed at P2390.00;

c) A parcel of Unirrig. riceland at Labney, San Jacinto, Pangasinan, 6450 sq. meters at assessed at P1700.00;d) A parcel of Unirrig. riceland at Labney, San Jacinto, Pangasinan assessed at P5610.00;

e) A parcel of Cogon land situated at Labney, San Jacinto, Pangasinan, 14133 sq. meters assessed at P2830.

An amicable settlement was reached between the parties. By reason thereof, R-Arjona executed a document denominated as "PAKNAAN" ("Agreement", in Pangasinan dialect), which reads: MARCELO ARJONA of Barangay Sapang, Buho, Palayan City, Nueva Ecija, have a land consisting of one (1) hectare;

which I gave to Proceso Quiros and Leonarda Villegas;

this land was inherited by Doza;

that is why I am giving the said land to them for it is in my name. On the same date, another "PAKNAAN" was executed by Jose Banda, as follows:

JOSE BANDA, married to Cecilia L. Banda and resident of Sitio Torrod, Barangay Labney, San Jacinto, Pangasinan. A land was entrusted to me situated in Sitio Torrod, Brgy. Labney, San Jacinto, Pangasinan, land of Arjona family. I am cultivating/tilling this land but if ever Leonarda Villegas and Proceso Quiros would like to get this land, I will voluntarily surrender it to them. P filed at MCTC - a complaint with prayer for the issuance of a writ of execution of the compromise agreement;

denied because the subject property cannot be determined with certainty.

RTC - reversed the decision of the MC on appeal;

- ordered the issuance of the writ of execution. R appealed to the CA- reversed the decision of the RTC;

- reinstated the decision of the MCTCISSUE:WON the amicable settlement executed by the parties is valid and enforceable. YES, remedy is reformation.WON a writ of execution may issue on the basis thereof. NO P contentions Sec. 416 of the LGC which provides that an amicable settlement shall have the force and effect of a final judgment upon the expiration of 10 days from the date thereof, unless repudiated or nullified by the proper court. since no such repudiation or action to nullify has been initiated, the MC has no discretion but to execute the agreement which has become final and executory. that despite the failure of the Paknaan to describe with certainty the object of the contract, the evidence will show that after the execution of the agreement, respondent Marcelo Arjona accompanied them to the actual site of the properties at Sitio Torod, Labney, San Jacinto, Pangasinan and pointed to them the 1 hectare property referred to in the said agreement.

R insist - that respondent Arjona could not have accompanied P to the subject land at Torrod, Labney because he was physically incapacitated and there was no motorized vehicle to transport him to the said place. Civil Code - encourage and favor compromises and do not even require judicial approval. Article 2029 of the Civil Code, the courts must endeavor to persuade the litigants in a civil case to agree upon some fair compromise. Pursuant to Article 2037 of the Civil Code, a compromise has upon the parties the effect and authority of res judicata, and this is true even if the compromise is not judicially approved. Articles 2039 and 2031 thereof also provide for the suspension of pending actions and mitigation of damages to the losing party who has shown a sincere desire for a compromise, in keeping with the Codes policy of encouraging amicable settlements. Cognizant of the beneficial effects of amicable settlements, the Katarungang Pambarangay Law (P.D. 1508) and later the LGC provide for a mechanism for conciliation where party-litigants can enter into an agreement in the barangay level to reduce the deterioration of the quality of justice due to indiscriminate filing of court cases. Section 416 of the said Code, an amicable settlement shall have the force and effect of a final judgment of the court upon the expiration of 10 days from the date thereof, unless repudiation of the settlement has been made or a petition to nullify the award has been filed before the proper court P submit - that since the amicable settlement had not been repudiated or impugned before the court within the 10-day prescriptive period in accordance with Section 416 of the LGC, the enforcement of the same must be done as a matter of course and a writ of execution must accordingly be issued by the court. GR - where no repudiation was made during the 10-day period, the amicable settlement attains the status of finality and it becomes the ministerial duty of the court to implement and enforce it. EXPN - where its execution is unjust, may warrant the suspension of execution of a decision that has become final and executory. In the case at bar, the ends of justice would be frustrated if a writ of execution is issued considering the uncertainty of the object of the agreement. To do so would open the possibility of error and future litigations. On ocular inspection however, the municipal trial court found that the land referred to in the second Paknaan was different from the land being occupied by P. Hence, no writ of execution could be issued for failure to determine with certainty what parcel of land respondent intended to convey. In denying the issuance of the writ of execution, the AC ruled that the contract is null and void for its failure to describe with certainty the object thereof. While we agree that no writ of execution may issue, we take exception to the appellate courts reason for its denial. Since an amicable settlement, which partakes of the nature of a contract, is subject to the same legal provisions providing for the validity, enforcement, rescission or annulment of ordinary contracts, there is a need to ascertain whether the Paknaan in question has sufficiently complied with the requisites of validity in accordance with Article 1318 of the Civil Code. There is no question that there was meeting of the minds between the contracting parties. In executing the Paknaan, the respondent undertook to convey 1 hectare of land to petitioners who accepted. It appears that while the Paknaan was prepared and signed by respondent Arjona, P acceded to the terms thereof by not disputing its contents and are in fact now seeking its enforcement. object - 1-hectare parcel of land representing P inheritance from their deceased grandmother; cause of the contract is the delivery of P share in the inheritance. The inability of the MC to identify the exact location of the inherited property did not negate the principal object of the contract. This is an error occasioned by the failure of the parties to describe the subject property, which is correctible by reformation and does not indicate the absence of the principal object as to render the contract void. It cannot be disputed that the object is determinable as to its kind, i.e.1 hectare of land as inheritance, and can be determined without need of a new contract or agreement. Clearly, the Paknaan has all the earmarks of a valid contract. Although both parties agreed to transfer one-hectare real property, they failed to include in the written document a sufficient description of the property to convey. This error is not one for nullification of the instrument but only for reformation.

Reformation is a remedy in equity whereby a written instrument is made or construed so as to express or conform to the real intention of the parties where some error or mistake has been committed.In granting reformation, the remedy in equity is not making a new contract for the parties, but establishing and perpetuating the real contract between the parties which, under the technical rules of law, could not be enforced but for such reformation. In order that an action for reformation of instrument as provided in Article 1359 of the Civil Code may prosper, the following requisites must concur: (1) there must have been a meeting of the minds of the parties to the contract; (2) the instrument does not express the true intention of the parties; and (3) the failure of the instrument to express the true intention of the parties is due to mistake, fraud, inequitable conduct or accident. When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement, except when it fails to express the true intent and agreement of the parties thereto, in which case, one of the parties may bring an action for the reformation of the instrument to the end that such true intention may be expressed. Both parties acknowledge that P are entitled to their inheritance, hence, the remedy of nullification, which invalidates the Paknaan, would prejudice P and deprive them of their just share of the inheritance. R cannot be allowed to renege on his legal obligation to transfer the property to its rightful heirs. A refusal to reform the Paknaan under such circumstances would have the effect of penalizing one party for negligent conduct, and at the same time permitting the other party to escape the consequences of his negligence and profit thereby. No person shall be unjustly enriched at the expense of another.

[G.R. No. 113070.September 30, 1999]

ABARINTOS vs CA P and PR are co-owners of Arnaiz Hermanos, a hacienda consisting of several hectares of land devoted to the production and raising of sugar cane, coconut and other crops. Portions of the hacienda also serve as fishpond, salt bed and prawn farm. Francisca Ponce De Leon along with the other PR owns around 64.485976% of the property while P represent a total of 35.5140232%. By virtue of a SPA,the co-owners appointed P-Jose Garcia as administrator of the property. P-Garcia- owns a 5.91900305% share- acted as attorney-in-fact of the co-owners- wielded almost absolute power over the property.-decided on the crops planted; - the investments made; - the equipment used; - the purchases done; - the produce sold and the quantity, price and time to sell the produce.- exercised full control over the funds of the co-ownership, including the distribution thereof to the co-owners.

R started to entertain doubts on the manner Garcia administered the property.They questioned the manner of distribution of profits prompting the respondents to hire the services of an accounting firm, to conduct an auditof the books of the co-ownership. The audit resulted to a startling discoveryof disbursements, expenditures, withdrawal of funds, deposits and investments which were improperly made and thus, prejudicial to the interest of the co-owners. Co-owners, by virtue of resolutionsapproved by the majority, decided to manage and operate the farm themselves, including its financial matters, and required Garcia to render a fair, true and complete accounting of the transactions entered into by him as administrator. Eventually the co-owners terminate the co-ownership and divide the property among themselves. PR moved that Garcia be made to account for the proceeds of the operation of the farm during his incumbency as administrator.P-Garcia, however, walked out of the meeting.Notwithstanding Garcias absence, the co-owners declared the existence of a quorum andimplemented the resolutionwhich earlier revoked the special power of attorney executed in favor of Garcia. By a majority vote of the co-owners, an action for accounting was filed against Garcia before the RTC Negros Oriental. P- Garcia filed a complaint for partitionwithex parteappointment of receiver, before the RTC of Bais City. P filed an urgentex partemotion for appointment of receiver,which failed to contain a notice of hearing.No copy of the motion was sent to the private respondents. RTC Bais City appointed Enrico Garcia as receiver, without any hearing subject however to the filing of a P30,000.00 bond as fixed by the court and Lawyer Enrico Garcia complied with the order of the court. PR, through Ana Maria A. Diago filed with the same court a motionfor inhibition and recall and/or annulment of all orders issued in connection with appointment of receiver and partition.

Enrico Garcia, as receiver filed a motionex partein his appointment, which sought to grant him authority to withdraw funds from the bank.The motion failed to contain a notice of hearing and private respondents were not furnished with a copy thereof. Judge denied the motion for inhibition. LC - denied private respondents motion for annulment of the orders granted theex partemotion of the receiver, Enrico Garcia which authorized the latter to withdraw money from the Far East Bank and Trust Company, Dumaguete City and/or from the Bank of the Philippine Islands, Bais City, Negros Oriental.

LC - granted anew theex partemotion of the receiver Enrico Garcia to withdraw funds for the operation of the co-ownership property; to sell sugar, molasses, copra, salt and fish products and to deposit the proceeds of the sale with the bank. Parties entered into a compromise agreementand submitted the same to the court for approval.

COMPROMISE AGREEMENT PAGE 556-558 OF SCRA PR brought before the CA a petition forcertiorariand prohibition with prayer for preliminary injunction and/or temporary restraining order which sought to annul or set aside the LC orders. CA granted petition forcertiorariand prohibition filed by PR. After carefully reviewing the records of this case, We perceive the following important data:(1) that ex parte motionsare mere scraps of papers; (2) that a motion to dismiss Civil Case No. 139-B is so important as to be wrongfully ignored by mere ex parte motions; (3) that a question of inhibition involves an important question of faith in the administration of justice as to be easily ignored or cast aside; (4) that the absence of notice or opportunity to be heard violates the fundamental principle of due process and constitutes grave abuse of discretion by the respondent judge amounting to lack of or excess of jurisdiction; and (5) that since partition of the property of the decedents Hacienda has already been agreed upon by the parties, Civil Case No. 139-B is inappropriate and baseless and should have been dismissed outright.

P filed a MR - appellate court denied.ISSUE: Effect of the compromise agreement entered into by the parties and approved by the court, on the action for partition withex parteappointment of receiver filed by herein petitioner Jose Garcia.

WON the compromise agreement entered into between the parties constitutes and operates as a partition. YES, it effectively terminated the co-ownership over the properties.

Under Article 2028 of the Civil Code, a compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced.A judicial compromise has the force of law and is conclusive between the parties.Once an agreement is stamped with judicial approval, it becomes more than a mere contract binding upon the parties, and having the sanction of the court and entered as its determination of the controversy, it has the force and effect of any other judgment. The compromise agreement entered into between the parties, as represented by Jose Garcia on the part of the plaintiffs and Ana Maria Diago, on the part of the defendants, constitutes and operates as a partition that effectively terminated the relation of co-ownership over the properties contemplated thereunder. It is settled that every act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition, although it should purport to be a sale, an exchange, a compromise, or any other transaction. Parties already agreed on the mechanics of the partition and apportioned the property owned in common.Notwithstanding such glaring fact, P-Jose Garcia decided to file a complaint for partition withex parteappointment of receiver. Eventually though, a compromise agreement was forged between the co-owners, as duly represented by P-Garcia on the part of the plaintiffs and PR-Diago on the part of the defendants. It reveals that herein P-Jose Garcia was a signatory to the compromise partition.The records show that the compromise partition was duly approved by the RTC Dumaguete City. Be that as it may, the partition for which Civil Case No. 139-B was filed had already been realized through the execution of the compromise agreement by the co-owners and the subsequent approval thereof by the court. Stated differently, inasmuch as the co-owners have already agreed to partition the property and in fact appointed Ana Maria Diago and Jose Garcia, as joint administrators during the winding-up period, and considering that the compromise agreement had been duly stamped with judicial approval, the pending issues in Civil Case No. 139-B have already been rendered moot and academic. The law provides that a compromise has upon the parties the effect and authority ofres judicata.It is axiomatic that a decision based on a compromise agreement is immediately final and executory.A compromise agreement, once approved by final orders of the court, has the force ofres judicatabetween the parties and should not be disturbed except for vices of consent or forgery. We see no reason to depart from the general rule in the absence of any vice of consent or forgery clearly established in this case.Indeed, compromises are generally to be favored and cannot be set aside if the parties acted in good faith and made reciprocal concessions to each other in order to terminate a case. Verily, the co-owners by their compromise agreement in Civil Case No. 139-B, contracted, among others, to partition the co-ownership property and to distribute it among themselves.Similarly, the co-owners authorized Ana Maria Diago and Jose Garcia to act as joint administrators pending the final winding-up of the affairs of the co-ownership.Moreover, the parties agreed to waive their respective claims and counterclaims in connection with the case. We therefore hold that the compromise agreement transcends its identity as a mere contract binding only upon the parties thereto.Having been approved by a court of law, it has become a judgment which is subject to execution in accordance with the Rules.G.R. No. 175123 July 4, 2012MOLDEX REALTY, INC. and ANSELMO AGERO,Petitioners,vs.SPOUSES RICARDO J. VILLABONA and GILDA G. VILLABONA and EDUARDO J. VILLABONA,Respondents.

R filed a Complaint against P and Levi P. Sayo (Sayo) for the annulment of TCT registered under the name of Moldex and formerly covered by OCTs 3322, 3323. R likewise prayed for the award of damages.

R-Eduardo J. Villabona alleged:

that he was the true owner of Lot No. 2346, covered by OCT No. 3322; R-Ricardo Villabona and Gilda Villabona of Lot No. 2527, covered by OCT No. 3323. acquired these properties by virtue of a Deed of Sale executed by their parents, Rafael Villabona and Ursula Jose Villabona. that P-Moldex, through its alleged representative Sayo, negotiated for the purchase of the subject properties, whereby Lot No. 2346 would be sold for P1,132,080 and Lot No. 2527 for P511,320. Sayo then was able to successfully obtain from R-Ricardo the original copy of OCT Nos. 3322 and 3323. Sayo encashed the check payment of P-Moldex for Lot No. 2346, while P-Anselmo Agero encashed that for Lot No. 2527. that P caused the cancellation and transfer of OCTs through allegedly falsified DOAS. that the deeds were falsified, because these were executed after the deaths of Rafael and Ursula. R attached to their Complaint photocopies of the DOS executed by them and their parents; TCT Nos. NT-250333 and NT-250334; Certificates of Death of Rafael and Ursula; and DOAS allegedly executed between spouses Rafael and Ursula and P-Moldex. P-Agero denied being an agent of respondent Moldex in the purchase of the subject properties. He further denied having received money representing the purchase price of these lots. P-Moldex alleged:

that Sayo and Agero were R real estate brokers and offered the subject properties for sale. that R had executed DOAS, whereby Lot No. 2527 was sold forP383,490 and Lot No. 2346 for P849,060. In consideration of the sale of the two parcels of land, it issued United Coconut Planters Bank (UCPB) of P1,132,080, which was endorsed by R-Ricardo. The check was subsequently deposited and the amount therein stated withdrawn.

R-Ricardo voluntarily handed the titles over to Sayo, so that the latter could cause the transfer thereof. denied having any knowledge of or participation in the alleged falsified DOAS. P-Moldex attached photocopies of the deeds it executed with respondent Ricardo, as well as the UCPB check including the dorsal part thereof. R filed an Amended Complaint impleading Atty. Elias Estrella, the Deputy Register of Deeds of Cabanatuan City; Atty. Alfredo G. Ortaleza, the lawyer who notarized the alleged falsified Deeds of Absolute Sale; and Jacinto Uy, the chairperson of theBoard of Directors of petitioner Moldex. Trial ensued. After the presentation of Ricardo as the first witness, Atty. Cecilio Suarez, counsel for R, prayed for a resetting of the hearing for the presentation of another witness. RESET- laging wala si counsel.

In view of this, the presentation of the evidence for the plaintiffs is hereby considered closed and terminated specially so that there was a promise on the part of the plaintiffs, through counsel, that a settlement will be arrived at and a compromise agreement will be presented today, yet nothing was heard over [sic] on the part of the plaintiffs as well as counsel. R filed a MR of the RTC Order, insisting that they were still to present two more witnesses. absent pa din sa hearing-

Hearing was reset once more, upon agreement of the parties, in anticipation of an amicable settlement. Atty. Suarez moved for the cancellation of the hearing scheduled because of a previously scheduled one in another court. He further manifested that a compromise agreement had been approved by respondents and may be submitted for the approval of the trial court once the agreement was signed by the parties. During the hearing, Atty. Suarez and R were likewise absent. P objected to the resetting of the hearing on account of the numerous postponements attributable to the nonappearance of R and their counsel.Upon agreement of the parties, the hearing was reset and had to be reset two times more for possible amicable settlement of the case. Finally, with Atty. Suarez still failing to appear at the hearing, the RTC issued an Order submitting the case for decision based on whatever evidence had been adduced. TC - stating that there being no formal offer of evidence from P, it thus resolved to set aside the previous Order. The court gave 15 days for petitioners to submit their written formal offer of evidence from receipt of the Order, after which the case was to be deemed submitted for resolution. Without waiting for the submission of the written formal offer of evidence, the RTC rendered its assailed Decision, the dispositive portion of which states:1. Declaring Transfer Certificate of Title Nos. NT-250333 and NT-250334 both of the Registry of Deeds of Cabanatuan City in the name of Moldex Realty Inc. is hereby declared null and void;2. Ordering jointly and severally the defendants to pay the plaintiffs the amount of P100,000.00 Philippine Currency, as actual, moral and exemplary damages; and,3. To pay the plaintiffs the sum of P10,000.00 as attorney[]s fees.

P- Moldex received a copy of the Decision, it filed a Manifestation asking for a clarification of the trial courts Order. It alleged that it was in a quandary over whether to file its formal offer of evidence, considering that it had not yet presented any, and that the court had already ordered respondents presentation of evidence as closed and terminated without any formal offer. P-Moldex filed a MR. It alleged:

that Judge Ballutay gravely erred and abused his discretion when he rendered the assailed Decision before R had completed their evidence and rested their case, and before defendants had the opportunity to adduce evidence; that the Decision was rendered without the 15-day period given to P to formally submit their evidence pursuant to the Order; that the Decision was tantamount to a judgment on the pleadings and/or summary judgement; and that the Decision was contrary to the law and the facts.

RTC denied the MR for the following reasons: counsel for petitioner Moldex, Atty. Samuel Acorda, was absent on several hearing dates; he manifested in open court during the 31 May 2000 hearing that petitioner Moldex had nothing to do with the case; the parties failed to submit a compromise agreement despite manifesting that they would; and the case had already dragged on for a number of years.

On appeal, the CA affirmed the ruling of the TC: that P had been given ample time to present their evidence, but failed to do so and in fact agreed to submit the case for resolution. that the TC based its findings on the documents attached to the Complaint, pointing out that these documents had been properly identified and marked during the testimony of Ricardo. Neither did the CA find the RTCs resolution of the case reprehensible despite the fact that the 15 days given to petitioners to submit their formal offer of evidence had not yet lapsed. that P-Moldex failed to prove that it had actually paid R the value of the subject properties.

that the DOAS, which were purportedly signed by Ursula and Rafael Villabona, were null and void. ISSUE: WON

It is clear from the records that since 18 January 2001, P did not have the opportunity to present their evidence through no fault of their own. Most of the time, counsel for R did not attend the scheduled hearings. While it is true that some of the postponements were attributable to P, these were agreed upon by the parties in order to reach an amicable settlement. It must be emphasized that, in this jurisdiction, a compromise agreement is highly encouraged as provided under the Civil Code. Articles 2029 and 2030 thereof reads:

Art. 2029. The court shall endeavour to persuade the litigants in a civil case to agree upon some fair compromise.

Art. 2030. Every civil action or proceeding shall be suspended:

(1) If willingness to discuss a possible compromise is expressed by one or both parties; or

(2) If it appears that one of the parties, before the commencement of the action or proceeding, offered to discuss a possible compromise but the other party refused the offer.

The duration and terms of the suspension of the civil action or proceeding and similar matters shall be governed by such provisions of the rules of court as the Supreme Court shall promulgate. Said rules of court shall likewise provide for the appointment and duties of amicable compounders. Furthermore, upon failure of the parties to present an amicable settlement, what the trial court should have done was to continue the trial by resolving R R and allowing P to present their evidence in chief. Rather, the RTC immediately considered the case submitted for decision. After realizing that no formal offer of evidence had been submitted by P, it recalled the 12 November 2001 Order, through another Order dated 28 November 2001, and required petitioners to submit their formal offer of evidence. Clearly, the procedure adopted by the RTC was contrary to that provided in Rule 30, Section 5 of the Rules of Court PAGE 624 SCRA Moreover, without verifying the date of receipt by P of the 28 November 2001 Order, and without waiting for the submission of their formal offer of evidence, the RTC rendered its Decision. Not only the parties, but even the court itself is bound by its own Order. The RTC further brushed aside petitioner Moldexs Manifestation filed on 5 February 2002 that it still had to present evidence to prove its case, as well as its explanation that it only received the 28 November 2001 Order on 29 January 2002. It is equally important to note that the trial court relied merely on the Annexes of photocopied documents attached to the Complaint, without giving the same weight to those attached to petitioner Moldexs Answer. On the one hand, R claim that the titles to the subject properties were transferred by virtue of falsified DOAS executed by their deceased parents in favor of P-Moldex. On the other hand, P-Moldex alleges that the titles were transferred to its name by virtue of the DOAS executed by R themselves. It further claims that payment had been made upon Ricardos endorsement of the check, extinguishing its obligation to him. Clearly, there were still substantial issues that needed to be threshed out that necessitated the presentation of evidence.

InBorje v. Court of First Instance of Misamis Occidental, Branch II,we said:

Verily, the above discussion shows the need of presentation of proof for the respective allegations of the parties. For the respondent Court to make a summary finding of lack of malice or bad faith on the part of private respondents from those controverted facts and then decree the dismissal of the case is, therefore, violative of due process.In view of the doubtful question of facts presented herein, respondent court, in the exercise of sound discretion, should have refused to consider and decide in a summary manner and should have allowed the parties to present proof in support of their respective stand. This is because the right to a hearing, which is the right of the parties interested or affected to present their respective cases and submit evidence in support thereof, is one of the primary cardinal rights of litigants.The importance of this right has been underscored in several cases of this nature decided by this Court. In one of such cases,De Leon vs.Henson,his Court ruled that the dismissal of an action upon a motion to dismiss constitutes a denial of due process, if, from a consideration of the pleadings, it appears that there are issues of fact which cannot be decided without a trial of the case on the merits. Similarly, inConstantino vs. Estenzo, citing Garanciang, et al. vs. Garanciang, et al. and Boaga vs. Soler,this Court held as follows:

"x x x Summary or outright dismissals of actions are not proper where there are factual matters in dispute which need presentation and appreciation of evidence. The demands of a fair, impartial and wise administration of justice call for faithful adherence to legal precepts on procedure which ensure to litigants the opportunity to present their evidence and secure a ruling on all the issues presented in their respective pleadings. Short cuts in judicial processes are to be avoided where they impede rather than promote a judicious dispensation of justice." It was therefore incumbent on the RTC to allow the presentation of petitioners evidence for the proper disposal of the case. In all, we find that the TC violated the parties due process when it proceeded with the trial contrary to the procedure provided by the Rules of Court. It failed to resolve Rs MR questioning the 18 January 2001 Order and prevented P from presenting their evidence in chief. Let this case be remanded to RTC Cabanatuan City, which is hereby ORDERED to resolve R MR and to proceed with the trial thereafter, as provided under the Rules of Court.G.R. No. 147349 February 13, 2004MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA),petitionervs.ALA INDUSTRIES CORPORATION,respondent.

P-MIAA conducted a public bidding for a contract involving the structural repair and waterproofing of the International Passenger Terminal (IPT) and International Container Terminal (ICT) buildings of the Ninoy Aquino International Airport (NAIA). Out of eleven bidders, R-ALA Corp submitted the second lowest and most advantageous bid. The contract was awarded to R in the amount ofP32,000,000.00 when it agreed to reduce the price fromP36,000.00.CONTRACT is on PAGE 605-606 SCRA. The contract contains escalation clauses and price adjustments. R made the necessary repairs and waterproofing. After submission of its progress billings to P, R received partial payments. Progress billing No. 6 remained unpaid despite repeated demands by R.

P unilaterally rescinded the contract on the ground that R failed to complete the project within the agreed completion date. P advised R of a committee formed to determine the extent of the work done which was given until September 30, 1994 to submit its findings. Just the same, R was not fully paid. R objected to the rescission made by P and reiterated its claims. As of the filing of the complaint for sum of money and damages R was seeking to recover from P the latters outstanding obligation andamount due from the first to fifth progress billings. With the filing of R sur-rejoinder to P rejoinder, the TC directed the parties to proceed to arbitration. The Courta quosruling is based on Article XXVII of the contract that provides for arbitration.

Both parties executed a compromise agreement, assisted by their counsels, and jointly filed in court a motion for judgment based on compromise agreement.

RTCrendered judgment approving the compromise agreement. The pertinent portions of the compromise read as follows:1. As full and complete payment of its claims against P arising from their waterproofing contract subject of this case, R accepts Ps offer of payment in the amount of (P5,946,294.31).2. P shall pay R said amount of (P5,946,294.31) within a period of thirty (30) days from receipt of a copy of the Order of the Court approving this Compromise Agreement.3.Failure of the P to pay said amount to R within the period above stipulated shall entitle the R to a writ of execution from this Honorable Court to enforce all its claims pleaded in the Complaint.4. In consideration of the Implementation of this Compromise Agreement, R agrees to waive all its claims against the P as pleaded in the Complaint, and P also agrees to waive all its claims, rights and interests pleaded in the answer, and all such other claims that it has or may have in connection with, related to or arising from the Waterproofing Contract subject of this case with R.

For P failure to pay within the period above stipulated, R filed a motion for execution to enforce its claim in the total amount ofP13,118,129.84. P filed a comment and attributed the delays to its being a government agency. In its effort to render Rs motion for execution moot and academic, P paid RP5,946,294.31 on February 2, 1998. TC denied R motion for execution. It also denied the MR:The delay in complying with the Compromise Agreement having been satisfactorily explained by the Office of the Government Counsel, the Motion for Reconsideration of the order denying [respondents] Motion for Execution is denied. CA reversed the TC, ordered it to issue a writ of execution to enforce Rs claim to the extent of Ps remaining balance. A judgment rendered in accordance with a compromise agreement was immediately executory, and that a delay of almost two months was not substantial compliance therewith.

ISSUE: WON there was a fortuitous event that excused petitioner from complying with the terms and conditions of the judicially approved Compromise Agreement. NO. Delay in Payment by Reason of a Fortuitous Event - A compromise agreement is a contract whereby the parties make reciprocal concessions to resolve their differences,9thus avoiding litigation10or putting an end to one that has already commenced.11Generally favored in law,12such agreement is a bilateral act or transaction that is binding on the contracting parties and is expressly acknowledged by the Civil Code as a juridical agreement between them.13Provided it is not contrary to law, morals, good customs, public order or public policy,14it is immediately executory. Judicial Compromise Final and Executory - In a long line of cases, we have consistently held that "x x x a compromise once approved by final orders of the court has the force of res judicata16between the parties and should not be disturbed except for vices of consent or forgery. Hence, a decision on a compromise agreement is final and executory x x x. Such agreement has the force of lawand is conclusive between the parties.It transcends its identity as a mere contract binding only upon the parties thereto, as it becomes a judgment that is subject to execution in accordance with the Rules.Judges therefore have the ministerial and mandatory duty to implement and enforce it. To be valid, a compromise agreement is merely required by law, first, to be based on real claims; second, to be actually agreed upon in good faith.Both conditions are present in this case. The claims of the parties are valid, and the agreement done without any fraud or vice of consent. Without a doubt, each of the parties herein entered into Compromise Agreement freely and voluntarily. When they carefully negotiated the terms and provisions thereof, they were adequately assisted by their respective counsels -- petitioner, no less than by the Office of the Government Corporate Counsel (OGCC).Each party agreed to something that neither might have actually wanted, except for the peace that would be brought by the avoidance of a protracted litigation. Hence, the Agreement must govern their relations. The Christmas Season Not a Fortuitous Event - The failure to pay on the date stipulated was clearly a violation of the Agreement. Within thirty days from receipt of the judicial Order approving it -- on December 20, 1997 -- payment should have been made, but was not. Thus, non fulfillment of the terms of the compromise justified execution.It is the height of absurdity for petitioner to attribute to a fortuitous event its delayed payment. Petitioners explanation is clearly "a gratuitous assertion that borders on callousness."The Christmas season cannot be cited as an act of God that would excuse a delay in the processing of claims by a government entity that is subject to routine accounting and auditing rules. A fortuitous event is one that cannot be foreseen or, though foreseen, is inevitable.It has the following characteristics:

(a) [T]he cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligations, must be independent of human will; (b) it must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor."

None of these elements appears in this case. First, processing claims against the government and subjecting these to the usual accounting and auditing procedures are certainly not only foreseeable and expectable, but also dependent upon the human will. Liquidation and payment resulting therefrom can be deliberately delayed or speeded up. Second, the Christmas season is not a caso fortuito, but a regularly occurring event. It is in fact foreseeable, and its occurrence has absolutely nothing to do with the processing of claims. Third, the occurrence of the Christmas season did not at all render impossible the normal fulfillment of the obligation of petitioner; otherwise, few claims would ever be paid during this period. It ought to have taken appropriate measures to ensure that a delay would be avoided. When it entered into the Agreement, it knew fully well that the 30-day period for it to pay its obligation would end during the Christmas season. Thus, it cannot now be allowed to renege on its commitment. Fourth, petitioner cannot argue that it is free from any participation in the delay. It should have laid out on the compromise table the problems that would be caused by a deadline falling during the Christmas season. Furthermore, it should have explained to respondent that government accounts would be examined carefully and thoroughly to the last detail, in strict compliance29with accounting and auditing rules issued by and pursuant to the constitutional mandate of the Commission on Audit. In the present case, there was already an antecedent appropriation for the contract when petitioner entered into it. Obviously, prior planning had not taken into account the liquidation process in the conduct of the compromise. The sheer neglect shown by petitioner in failing to consider these matters aggravated the resulting injury suffered by respondent. The former cannot be allowed to hide now behind its government cloak. Fortuitous Event Negated by Negligence - The act-of-God doctrine requires all human agencies to be excluded from creating the cause of the mischief.34Such doctrine cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of loss35or injury. Since the delay in payment in the present case was partly a result of human participation -- whether from active intervention or neglect -- the whole occurrence was humanized and was therefore outside the ambit of a caso fortuito. Verily, an assiduous scrutiny of the records convinces us that it was negligent,and that it thereby incurred a delay in the performance of its contractual obligation under the judicial compromise. It thus created an undue risk or injury to respondent by failing to exercise that reasonable degree of care, precaution or vigilance that the circumstances justly demanded, and that an ordinarily prudent person would have done. Court Without Power to Alter a Judicial Compromise - The principle of autonomy of contracts must be respected."The Compromise Agreement was a contract perfected by mere consent;hence, it should have been respected. Item 3 thereof provided that failure of petitioner to pay within the stipulated period would entitle respondent to a writ of execution to enforce all the claims that had been pleaded by the latter in the Complaint. This provision must be upheld, because the Agreement supplanted the Complaint itself. Although judicial approval was not required for the perfection of that Agreement once it was granted, it could not and must not be disturbed except for vices of consent or forgery. No such infirmity can be found in the subject Compromise Agreement. Its terms are clear and leave no doubt as to their intention. Thus, the literal meaning of its stipulations must control.It "must be strictly interpreted and x x x understood as including only matters specifically determined therein or which, by necessary inference from its wording, must be deemed included." The lower court was without power to relieve petitioner from an obligation it had voluntarily assumed, simply because the Agreement later turned out to be unwise, disastrous or foolish.It had no authority to impose upon the parties a judgment different from or against the terms and conditions of their Compromise Agreement.It could not alter a contract by construction or make a new one for the parties; "its duty is confined to the interpretation of the one which they have made for themselves without regard to its wisdom or folly as the court cannot supply material stipulations or read into the contract words which it does not contain."It could not even set aside its judgment without declaring in an incidental hearing that the Agreement was vitiated by any of the grounds enumerated in Article 2038 of the Civil Code.Above all, neither the Agreement nor the courts approval of it was ever questioned or assailed by the parties. Basic is the rule that if a party fails or refuses to abide by a compromise agreement, the other may either enforce it or regard it as rescinded and insist upon the original demand.50For failure of petitioner to abide by the judicial compromise, respondent chose to enforce it. The latters course of action was in accordance with the very stipulations in the Agreement that the lower court could not change. Estoppel Inapplicable - In estoppel, a person, who by his act or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another."No such inconsistency is present here. From the very start, respondent was already asking the courts to enforce all its claims, pursuant to the Agreement. It has not shown any act or conduct that would leads us to believe that by accepting petitioners partial payment, it has dropped all claims to which it is entitled. Certainly, an obligation may be extinguished by payment,but this rule applies when the creditor "receives and acknowledges full payment"from the debtor. Respondent has neither acknowledged full payment nor led petitioner to believe that it has. Lack of reservation or protest does not ipso facto constitute a waiver of claims. Because estoppel should be applied with caution, the action that gives rise to it must be deliberate and unequivocal. In the present case, respondent continued to pursue the execution of its total demand ofP13,118,129.84, even after receivingP5,946,294.31 from petitioner. This continued pursuit signified the formers intent not to waive its total claim. Hence, it cannot be considered estopped from enforcing such claim. The appellate court was correct in strictly following the Agreement by deducting the amount received by respondent from the latters total claim. Besides, "questions raised on appeal must be within the issues framed by the parties and, consequently, issues not raised in the trial court cannot be raised for the first time on appeal."Any assertion of equity must finally be struck down "when dilatory schemes exist."

G.R. No. 191336 January 25, 2012CRISANTA ALCARAZ MIGUEL,Petitioner,vs.JERRY D. MONTANEZ,Respondent.

R-Jerry Montanez secured a loan payable in one (1) year, or until February 1, 2002, from the petitioner. The R gave as collateral therefor his house and lot located at Bagumbong, Caloocan City. Due to Rs failure to pay the loan, the P filed a complaint against the R before the Lupong Tagapamayapa of Barangay San Jose, Rodriguez, Rizal. The parties entered into a Kasunduang Pag-aayos wherein the R agreed to pay his loan in installments in the amount of P2,000.00/month, and in the event the house and lot given as collateral is sold, the R would settle the balance of the loan in full. However, the R still failed to pay, and on December 13, 2004, the Lupong Tagapamayapa issued a certification to file action in court in favor of the P. P filed before the Metropolitan Trial Court Makati City, a complaint for Collection of Sum of Money. In his Answer with Counterclaim,the R raised the defense of improper venue considering that the P was a resident of Bagumbong, Caloocan City while he lived in San Mateo, Rizal. After trial the MeTC rendered a Decision:ordering defendant Jerry D. Montanez to pay plaintiff the following:

1. The amount representing the obligation with legal rate of interest from February 1, 2002 which was the date of the loan maturity until the account is fully paid;

2. The amount of of attorneys fees; and the costs. On appeal to the RTC of Makati City, the R raised the same issues cited in his Answer - affirmed the MeTC Decision R appealed to the CA raising two issues (1) WON venue was improperly laid, and (2)WON the Kasunduang Pag-aayos effectively novated the loan agreement.

GRANTED. RTC is REVERSED and SET ASIDE. A new judgment is entered dismissing Rs complaint for collection of sum of money, without prejudice to her right to file the necessary action to enforce the Kasunduang Pag-aayos.CA ruled in the negative, there is no novation of the loan. It is clear that no novation of the old obligation has taken place. Contrary to Ps assertion, there was no reduction of the term or period originally stipulated. The original period in the first agreement is one (1) year to be counted from February 1, 2001, or until January 31, 2002. When the complaint was filed before the barangay on February 2003, the period of the original agreement had long expired without compliance on the part of petitioner. Hence, there was nothing to reduce or extend. There was only a change in the terms of payment which is not incompatible with the old agreement. In other words, the Kasunduang Pag-aayos merely supplemented the old agreement. The CA went on saying that since the parties entered into a Kasunduang Pag-aayos before the Lupon ng Barangay, such settlement has the force and effect of a court judgment, which may be enforced by execution within six (6) months from the date of settlement by the Lupon ng Barangay, or by court action after the lapse of such time.Considering that more than six (6) months had elapsed from the date of settlement, the CA ruled that the remedy of the petitioner was to file an action for the execution of the Kasunduang Pag-aayos in court and not for collection of sum of money.Consequently, the CA deemed it unnecessary to resolve the issue on venue.

ISSUES: (1) Whether or not a complaint for sum of money is the proper remedy for the P, notwithstanding the Kasunduang Pag-aayos;YES.(2) Whether or not the CA should have decided the case on the merits rather than remand the case for the enforcement of the Kasunduang Pag-aayos. YES. Because the R failed to comply with the terms of the Kasunduang Pag-aayos, said agreement is deemed rescinded pursuant to Article 2041 of the New Civil Code and the P can insist on his original demand. Perforce, the complaint for collection of sum of money is the proper remedy. The petitioner contends that the CA erred in ruling that she should have followed the procedure for enforcement of the amicable settlement as provided in the Revised Katarungang Pambarangay Law, instead of filing a collection case. The petitioner points out that the cause of action did not arise from the Kasunduang Pag-aayos but on the respondents breach of the original loan agreement. It is true that an amicable settlement reached at the barangay conciliation proceedings, like the Kasunduang Pag-aayos in this case, is binding between the contracting parties and, upon its perfection, is immediately executory insofar as it is not contrary to law, good morals, good customs, public order and public policy.This is in accord with the broad precept of Article 2037 of the Civil Code, viz:

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.

Being a by-product of mutual concessions and good faith of the parties, an amicable settlement has the force and effect of res judicata even if not judicially approved.It transcends being a mere contract binding only upon the parties thereto, and is akin to a judgment that is subject to execution in accordance with the Rules.Thus, under Section 417 of the LGC,such amicable settlement or arbitration award may be enforced by execution by the Barangay Lupon within six (6) months from the date of settlement, or by filing an action to enforce such settlement in the appropriate city or municipal court, if beyond the six-month period. 1st remedy - the proceedings are covered by the LGC and the Katarungang Pambarangay IRR. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation under the settlement. 2nd remedy - the proceedings are governed by the Rules of Court, as amended. The cause of action is the amicable settlement itself, which, by operation of law, has the force and effect of a final judgment. Those remedies are only applicable if the contracting parties have not repudiated such settlement within ten (10) days from the date thereof in accordance with Section 416 of the LGC. If the amicable settlement is repudiated by one party, either expressly or impliedly, the other party has two options:

to enforce the compromise in accordance with the Local Government Code or Rules of Court as the case may be, or to consider it rescinded and insist upon his original demand. This is in accord with Article 2041 of the Civil Code, which qualifies the broad application of Article 2037, viz: If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand.

In the case of Leonor v. Sycip,SC had the occasion to explain this provision of law. It ruled that Article 2041 does not require an action for rescission, and the aggrieved party, by the breach of compromise agreement, may just consider it already rescinded PAGE 352 IN SCRA Case of Chavez v. Court of Appeals,a party's non-compliance with the amicable settlement paved the way for the application of Article 2041 under which the other party may either enforce the compromise, following the procedure laid out in the Revised Katarungang Pambarangay Law, or consider it as rescinded and insist upon his original demand. PAGE 352-353 IN SCRA In this case, the respondent did not comply with the terms and conditions of the Kasunduang Pag-aayos. Such non-compliance may be construed as repudiation because it denotes that the respondent did not intend to be bound by the terms thereof, thereby negating the very purpose for which it was executed. Perforce, the petitioner has the option either to enforce the Kasunduang Pag-aayos, or to regard it as rescinded and insist upon his original demand, in accordance with the provision of Article 2041 of the Civil Code. Having instituted an action for collection of sum of money, the petitioner obviously chose to rescind the Kasunduang Pag-aayos. As such, it is error on the part of the CA to rule that enforcement by execution of said agreement is the appropriate remedy under the circumstances. Considering that the Kasunduang Pag-aayos is deemed rescinded by the non-compliance of the respondent of the terms thereof, remanding the case to the trial court for the enforcement of said agreement is clearly unwarranted. The CA took off on the wrong premise that enforcement of the Kasunduang Pag-aayos is the proper remedy, and therefore erred in its conclusion that the case should be remanded to the trial court. The fact that the petitioner opted to rescind the Kasunduang Pag-aayos means that she is insisting upon the undertaking of the respondent under the original loan contract. CA should have decided the case on the merits, as an appeal before it, and not prolong the determination of the issues by remanding it to the trial court. Pertinently, evidence abounds that the respondent has failed to comply with his loan obligation. In fact, the Kasunduang Pag-aayos is the well nigh incontrovertible proof of the respondents indebtedness with the petitioner as it was executed precisely to give the respondent a second chance to make good on his undertaking. And since the respondent still reneged in paying his indebtedness, justice demands that he must be held answerable therefor.

G.R. No. 157830 November 17, 2005DANTE M. PASCUAL, represented by REYMEL R. SAGARIO,Petitioner,vs.MARILOU M. PASCUAL,Respondent. P, a permanent resident of the USA, appointed Sagario as his attorney-in-fact by a SPA:

1. To file a case for the cancellation of TCT in the name of Marilou M. Pascual as well as the Deed of Sale of Registered Land and/or Reconveyance at the appropriate court;

2. To collect the monthly rentals from the tenant;

3. To enter into amicable settlement with Marilou M. Pascual or any other mode of payment/and/or dispute resolution;

4. To execute and sign any and all papers, contracts/documents which may be necessary relative to the above acts. Pursuant to the SPA, Sagario filed at the Isabela RTC at Roxas a complaint for Annulment of TCT of Isabela and Deed of Absolute Sale of Registered Land and/or Reconveyance with Damages. To the Complaint the defendant-herein respondent Marilou M. Pascual filed a MTDon two grounds one of which was non-compliance with the requirement under Section 412 of the LGC, she contending that there is no showing that the dispute was referred to the barangay court before the case was filed in court. Isabela RTC at Roxas granted Rs MTD in this wise:

RA 7160 Section 409 "All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated." Hence, the reliance of the plaintiff on Section 408 of R.A. 7160 is incorrect. When real property or any interest therein is involved,the dispute shall be filed before the barangay where the property is located,regardless of the residence of the parties. It is incorrect to say that the parties are not residents of the same place, Vira, Roxas, Isabela.The Attorney-in-fact of the plaintiff in the person of Reymel R. Sagario is a resident of Vira, Roxas, Isabela, and he substitute(sic)Dante Pascual by virtue of said Special Power of Attorney. Attorney-in-fact should have brought the dispute before barangay Vira, Roxas, Isabela, where the property is located. In the case of Royales vs. Intermediate Appellate Court 127 SCRA 470, "Ordinarily, non-compliance with the condition precedent prescribed by P.D. 1508 could affect the sufficiency of the plaintiffs cause of action and make his complaint vulnerable to dismissal on ground of lack of cause of action or prematurity." Ps MR denied The Court is of the opinion that the saidAttorney-in-fact shall be deemed to be the real party in interest, reading from the tenor of the provisions of the SPA.Being a real party in interest, the Attorney-in-fact is therefore obliged to bring this case first before the Barangay Court. Sec. 3, Rule 3 of the Rules of Court provides that "Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. Being the real party in interest, the Attorney-in-fact may therefore bring the necessary complaint before the Lupon Tagapayapa andappear in person as if he is the owner of the land.ISSUE: WON local lupon has jurisdiction over the dispute. NO, therefore there is no need for prior referral to it for conciliation before filing it to the court. Petitioner argues that since he, not his attorney-in-fact Sagario, is the real party in interest, and since he actually resides abroad, theluponwould have no jurisdiction to pass upon the dispute involving real property.

That attorney-in-fact Sagario is a resident of the same barangay as that of hers, respondent argues in any event, brings the matter under the jurisdiction of thelupon, for Sagario, following Section 3 of Rule 3 of the 1997 Rules of Civil Procedure which provides:

Sec. 3.Representative as parties. -Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal, being a substitute, becomes the real party-in-interest. The pertinent provisions of the LGC read: PAGE 273 - 274

SEC. 408.Subject Matter for Amicable Settlement; Exception Thereto.

SEC. 409.Venue. Objections to venue shall be raised in the mediation proceedings before the punong barangay; otherwise, the same shall be deemed waived. Any legal question which may confront the punong barangay in resolving objections to venue herein referred to may be submitted to the Secretary of Justice or his duly designated representative whose ruling thereon shall be binding. To construe the express statutory requirement ofactualresidencyas applicable to the attorney-in-fact of the party-plaintiff, as contended by respondent, would abrogate the meaning of a "real party in interest" as defined in Section 2 of Rule 314of the 1997 Rules of Courtvis a visSection 3 of the same Rule which was earlier quoted but misread and misunderstood by respondent. In fine, since the plaintiff-herein petitioner,the real party in interest, is not an actual resident of the barangay where the defendant-herein respondent resides, the localluponhas no jurisdiction over their dispute, hence, prior referral to it for conciliation is not a pre-condition to its filing in court. The RTC thus erred in dismissing petitioners complaint.