Validity of a compromise agreement
September 29, 1997
Facts:
Rosalia S. Lugod is the only child of spouses Juan C. Sanchez and Maria Villafranca while [herein private respondents] Arturo S. Lugod, Evelyn L. Ranises and Roberto S. Lugod are the legitimate children of private respondent Rosalia.
The petitioners, Rolando, Florida Mierly, Alfredo and Myrna, all surnamed Sanchez, are the illegitimate children of Juan C. Sanchez.
Following the death of her mother, Maria Villafranca, on September 29, 1967, [herein private respondent] Rosalia filed on January 22, 1968, thru counsel, a petition for letters of administration over the estate of her mother and the estate of her father, Juan C. Sanchez, who was at the time in state of senility, but later died on October 21, 1968.
On September 30, 1968, [herein private respondent] Rosalia, as administratrix of the intestate estate of her mother, submitted an inventory and appraisal of the real and personal estate of her late mother
On January 14, 1969, [herein petitioners] as heirs of Juan C. Sanchez, filed a petition for letters of administration (Special Proceedings No. 1022) over the intestate estate of Juan C. Sanchez, which petition was opposed by (herein private respondent) Rosalia.
On October 30, 1969, however, Rosalia and the petitioners assisted by their respective counsels executed a compromise agreement wherein they agreed to divide the properties enumerated therein of the late Juan C. Sanchez.
On January 19, 1970, [herein petitioners] filed a motion to require administratrix, [herein private respondent] Rosalia, to deliver deficiency of 24 hectares and or to set aside compromise agreement. However on April 13, 1970, (herein private respondent) Rosalia and [herein petitioners] entered into and executed a memorandum of agreement which modified the compromise agreement.
On October 25, 1979, or nine years later, [herein petitioners] filed, thru counsel, a motion to require [herein private respondent] Rosalia to submit a new inventory and to render an accounting over properties not included in the compromise agreement. They likewise filed a motion to defer the approval of the compromise agreement in which they prayed for the annulment of the compromise agreement on the ground of fraud.
The Memorandum of Agreement dated April 13, 1970, which the parties entered into with the assistance of their counsel, amended the above compromise.
The Court of Appeals, in a Resolution 10 dated September 4, 1992, initially dismissed private respondent’s petition. Acting, however, on a motion for reconsideration and a supplemental motion for reconsideration dated September 14, 1992 and September 25, 1992, respectively, 11 Respondent Court thereafter reinstated private respondents’ petition in a resolution 12 dated October 14, 1992.
In due course, the Court of Appeals, as earlier stated, rendered its assailed Decision granting the petition, setting aside the trial court’s decision and declaring the modified compromise agreement valid and binding.
Issue:
WoN a compromise agreement partitioning inherited properties valid even without the approval of the trial court hearing the intestate estate of the deceased owner?chanroblesvirtuallawlibrary
Held;
No, the compromise agreement among the parties is valid and binding even without the said trial court’s approval.
Petitioners contend that, because the compromise agreement was executed during the pendency of the probate proceedings, judicial approval is necessary to shroud it with validity. They stress that the probate court had jurisdiction over the properties covered by said agreement. They add that Petitioners Florida Mierly, Alfredo and Myrna were all minors represented only by their mother/natural guardian, Laureta Tampus.
These contentions lack merit. Article 2028 of the Civil Code defines a compromise agreement as “a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.” Being a consensual contract, it is perfected upon the meeting of the minds of the parties. Judicial approval is not required for its perfection. Petitioners’ argument that the compromise was not valid for lack of judicial approval is not novel; the same was raised in Mayuga v. Court of Appeals, 32 where the Court, through Justice Irene R. Cortes, ruled:jgc:chanrobles.com.ph “It is alleged that the lack of judicial approval is fatal to the compromise. A compromise is a consensual contract. As such, it is perfected upon the meeting of the minds of the parties to the contract. And from that moment not only does it become binding upon the parties, it also has upon them the effect and authority of res judicata, even if not judicially approved.”
In the case before us, it is ineludible that the parties knowingly and freely entered into a valid compromise agreement. Adequately assisted by their respective counsels, they each negotiated its terms and provisions for four months; in fact, said agreement was executed only after the fourth draft. As noted by the trial court itself, the first and second drafts were prepared successively in July, 1969; the third draft on September 25, 1969; and the fourth draft, which was finally signed by the parties on October 30, 1969, 33 followed. Since this compromise agreement was the result of a long drawn out process, with all the parties ably striving to protect their respective interests and to come out with the best they could, there can be no doubt that the parties entered into it freely and voluntarily. Accordingly, they should be bound thereby. To be valid, it is merely required under the law to be based on real claims and actually agreed upon in good faith by the parties thereto. hanrobles virtual lawlibrary
Indeed, compromise is a form of amicable settlement that is not only allowed but also encouraged in civil cases. Article 2029 of the Civil Code mandates that a “court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise.”cralaw virtua1aw library
In opposing the validity and enforcement of the compromise agreement, petitioners harp on the minority of Florida Mierly, Alfredo and Myrna. Citing Article 2032 of the Civil Code, they contend that the court’s approval is necessary in compromises entered into by guardians and parties in behalf of their wards or children.
However, we observe that although denominated a compromise agreement, the document in this case is essentially a deed of partition, pursuant to Article 1082 of the Civil Code which provides that” [e]very act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be partition, although it should purport to be a sale, an exchange, a compromise, or any other transaction.”cralaw virtua1aw library
For a partition to be valid, Section 1, Rule 74 of the Rules of Court, requires the concurrence of the following conditions: (1) the decedent left no will; (2) the decedent left no debts, or if there were debts left, all had been paid; (3) the heirs and liquidators are all of age, or if they are minors, the latter are represented by their judicial guardian or legal representatives; and (4) the partition was made by means of a public instrument or affidavit duly filed with the Register of Deeds. 38 We find that all the foregoing requisites are present in this case.
Therefore the court affirm the validity of the parties’ compromise agreement/partition in this case. #aba
Real LexEcon 