Practice Court 1 Report

Seguncencia S. Arpon

Effective Pre-Trial Technique

Chapter 9: Compromises
Compromise:
Contract where parties, by making reciprocal concessions,
avoid litigation or put an end to one already commenced.
An agreement where 2 or more persons who, for
preventing or putting to an end a lawsuit, adjust their
difficulties by mutual consent in the manner which they
agree on, and which every one of them prefers to the hope
of gaining, balanced by the danger of losing. ( Arenas v.
Chico, 74 SCRA 118)
The element of reciprocal concessions is the very
heart and life of every compromise
Principal Characteristics:
According to J. Paras
Consensual
Reciprocal
Nominate
Onerous
Accessory
Kinds:
1. Judicial
2. Extrajudicial

The law ordains that the court endeavor to persuade the litigants in
a civil case to agree upon some fair compromise (Art. 2029, NCC)
o Merced v. Roman Catholic Archbishop, 20 SCRA 1077: No
reciprocal concessions in the compromise agreement, but
was binding upon parties
(Art. 2030) Actions/ Proceedings are suspended:
1. I f willingness to discuss a possible compromise is expressed by
one or both parties; or
2. If it appears that 1 of them, before commencement of the action,
offered to discuss possibility of compromise but was refused by
the other
o Sec. 3, Rule 21, RA 876: Upon suspension, arbitrators are
appointed
o Offer to arbitrate is not among grounds to suspend the action
under Art. 2030
Judge is obligated to initiate compromise (Art. 2029)

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Seguncencia S. Arpon

Amicable Settlements, Arbitrators

Rooted in the Louisiana and Spanish Civil Codes
Litigation by means of friendly adjusters ( jucio de amigable
componedores)
J. Santos (Father of pre-trial in the Phil): opines that SC distinguishes
the amicable compounders in Art 2030 from the board of arbitrators
appointed under RA 876
When Court Approval Necessary:
Those entered into by:
1. guardians;
2. parents;
3. absentees reps;
4. administrators or executors of decedents estates
Special Power of Attorney
Art. 1878: Representative of parties need SPA to compromise
Absence makes the agreement unenforceable, capable of being
ratified.
Cannot submit stipulation of facts without authority from client
(Caballero v Deiparine)
Juridical Persons
May compromise only in form and must comply with requisites
necessary to alienate property (Art. 2033)
Pending Issues
Become moot upon approval of compromise (Berenger v.
Arcangel, 149 SCRA 164)
What May Be Compromised:
1. Civil liability arising from offense
o Does not extinguish the public action for the imposition of
the legal penalty
o Must be entered before or during litigation
2. Crimes against chastity or private crimes
3. Violations of NIRC or other BIR laws
o Before filing information in court
When Compromise Not Valid:
1. Civil status of persons
2

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Seguncencia S. Arpon

2.
3.
4.
5.
6.

Validity of marriage or legal separation

Future support
Jurisdiction of courts
Future legitime
Habeas corpus and election cases ( Sec. 2, par. g, Rule 21)

Coverage and Effect of Compromise

Strictly construed and covers only those expressly stated or
necessarily implied (Art. 2036)
Has effect of res judicata
No execution except in compliance with a judicial compromise
If extrajudicial, can be enforced only by court litigation
Not valid unless signed by parties
If without stipulation, court may fix period for compliance of
compromise
Persons not parties to a case but voluntarily enter into
compromise are bound
Binds surety even if entered without his knowledge
Judge is Expected to Assist Parties
In drafting compromise
In examining and study the agreement to assure stipulations are
valid and proper
Where there is Mistake, Fraud, Violence in Compromise
Apply Art. 1330: Makes the compromise voidable
May be annulled by party
Mistake: should refer to the substance of the object
o If of identity/qualification: only if it is the principal cause
o If of account: gives rise to correction
If fraud is alleged: Person enforcing should show that terms were
fully explained to former
o Failure to disclose facts, if it is a duty constitutes fraud
o Should be serious to make it voidable
o If simulated or fictitious contract: void
If violence/intimidation: annuls the obligation
Appeal from Judgment Approving Compromise
If party fails/refuses to abide: Party may enforce compromise or
regard it as rescinded and insist upon his original demand (Art.
2041, NCC)

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Seguncencia S. Arpon

Must move not only to set aside the judgment, but also to annul
or set aside the compromise itself on ground of fraud, mistake
or duress vitiating his consent
Rule 38, Rules of Court: Petition for Relief must be filed within 6
months from judgment
Sec. 3, Rule 138: Petition must be verified, filed within 60 days
after petitioner learns of judgment, but not more than 6 months,
accompanied by affidavit of merit
Compromise based on erroneous report may be set aside
Invalid stipulations do not render the compromise void
o If it can still stand independently
o Generally, court cant modify the terms without consent of
parties or hearing

Effect of Discovery of Documents upon Compromise

Not a cause for annulment or rescission unless it was concealed
by one of the parties
Ground if document refers to only one thing to which one of the
parties has no right, as shown by the newly-discovered
documents
Compromise After Final Judgment
If agreed or entered after final judgment, with either or both
unaware of the final judgment, it may be rescinded
But if final judgment is appealed, there can still be a compromise
in the meantime ( Artuyo v Azana, 62 Phil 425)
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