G.R. No. 161003. May 6, 2005
458 SCRA 184
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.
Ponente: PANGANIBAN, J.:
Rights may be waived through a compromise agreement, notwithstanding a final judgment that has already settled therights 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.
Doctrines:
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; A compromise may be either extrajudicial or judicial; To have the force of law between the parties, it must comply with the requisites and principles of contracts.
A compromise agreement is immediately executory and not appealable, except for vices of consent or forgery.
A compromise agreement that covered cases pending trial, on appeal, and with final judgment upheld in Jesalva v. Bautista; Even prior to the execution of a final judgment as held in Gatchalian v. Arlegui.
The validity of the agreement is determined by compliance with the requisites and principles of contracts, not by when it was entered into;
Advantages of a compromise agreement appear to be recognized by the NLRC in its Rules of Procedure.
If the parties could end their legal battles in an amicable way, it would be to the best interest of the parties and the courts as well. (Salvador vs. Ortoll, 343 SCRA 658 [2000])
FACTS:
1.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].
2.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.
3.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.
4.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.
5.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].
6.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.
7.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.
8.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.
9.Ruling of the CA. The CA held that compromise agreements may be entered into even after a final judgment.
10.Thus, petitioners validly released respondent from any claims, upon the voluntary execution of a waiver pursuant to the compromise agreement.
11.The appellate court denied petitioners motion for reconsideration for having been filed out of time.
ISSUE:
1.Whether or not the final and executory judgment of theSupreme Court could be subject to compromise settlement; YES;
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; YES;
HELD:
1.YES.
Petitioners allege, however, that the absence of their counsel and the labor arbiter when they executed the waiver invalidates the document.
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:
i.it was executed voluntarily, freely and intelligently; and
ii.whether the consideration for it was credible and reasonable.
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. 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.
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.
2. YES.
The issue involving the validity of a compromise agreement notwithstanding a final judgment is not novel.
Jesalva v. Bautista upheld a compromise agreement that covered cases pending trial, on appeal, and with final judgment. The Court noted that Article 2040 impliedly allowed such agreements; there was no limitation as to when these should be entered into.
Palanca v. Court of Industrial Relations 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.
Gatchalian v. Arlegui 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.
Also, Northern Lines, Inc. v. Court of Tax Appeals recognized the right to compromise final and executory judgments, as long as such right was exercised by the proper party litigants.
Rovero v. Amparo, 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.
Dispositive Portion:
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona, Carpio-Morales and Garcia, JJ., concur.
Petition denied, assailed decision affirmed.