REPUBLIC VS FLORENDO
executed was in the form of a contract of sale. The
A compromise agreement is a contract
whereby the parties make reciprocal concessions in
order to resolve their differences and thus avoid
litigation or to put an end to one already commenced.
28 When it complies with the requisites and principles
of contracts, it becomes a valid agreement which has
the force of law between the parties. 29 It has the
effect and authority of res judicata once entered into,
30 even without judicial approval.
A compromise agreement is a simple
contract which is perfected by mere consent. 32 From
that moment of the meeting of the minds of the parties,
it becomes binding on them. To be valid, judicial
approval is not required.
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 a determination of the controversy and
has the force and effect of a judgment. It is
immediately executory and not appealable, except for
vices of consent, forgery, fraud, misrepresentation
and coercion. 34 Thus, although a compromise
agreement has the effect and authority of res judicata
upon the parties even without judicial approval, no
execution may issue until it has received the approval
of the court where the litigation is pending and
compliance with the terms of the agreement is
thereupon decreed.
The compromise agreement the parties
elements of a valid contract of sale are: (a) consent or
meeting of the minds; (b) determinate subject matter
and (c) price certain in money or its equivalent. 36 All
the elements are present here. The parties agreed on
the sale of a determinate object (the seven lots) and
the price certain
Respondents, however, insist that, as to the
three lots, there was no meeting of the minds because
the condition relating to the delivery of clean titles was
not fulfilled. Respondents are wrong.
The delivery of clean titles was not a
condition imposed on the perfection of the contract of
sale but a condition imposed on petitioner's obligation
to pay the purchase price of these lots. 38 In Jardine
Davies Inc. v. CA, 39 we distinguished between a
condition imposed on the perfection of a contract and
a condition imposed merely on the performance of an
obligation. While failure to comply with the first
condition results in the failure of a contract, non-
compliance with the second merely gives the other
party options and/or remedies to protect its interests
The next question is whether this perfected
compromise agreement is valid despite the finality of
judgment of the CA. In Magbanua v. Uy, 41 we
answered in the affirmative:
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. CAaDSI
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. 42
Accordingly, we hold that the compromise
agreement reached by the parties while the appeal
was pending in the CA is valid. When the CA rendered
its June 25, 2002 decision, it unknowingly adjudicated
a case which, for all intents and purposes, had already
been closed and terminated by the parties themselves
when they agreed on a settlement. 43 It does not
matter that the CA decision lapsed into finality when
neither party questioned it. A compromise agreement
is still valid even if there is already a final and
executory judgment. 44
Furthermore, compromises are favored and
encouraged by the courts. 45 Parties are bound to
abide by them in good faith. 46 Since they have the
force of law between the parties, no party may discard
them unilaterally. 47
Consequently, considering that the June
25, 2002 decision of the CA had been superseded by
the compromise agreement of the parties, the various
orders of the RTC directing the execution of the said
June 25, 2002 CA decision were invalid and of no
force and effect. 48 acAESC
And since the compromise agreement
between the parties has been upheld and the
execution of the June 25, 2002 CA decision has been
invalidated, it is no longer necessary to resolve the
second issue
TAN VS. RAMIREZ
ISSUE: The core issue is whether the CA
erred in relying upon the compromise agreement and
the contract of sale to conclude that the respondents
had been possessors in good faith and with just title
 and could acquire the subject property through
ordinary acquisitive prescription.
Prescription as a mode of acquiring ownership
Prescription, as a mode of acquiring
ownership and other real rights over immovable
property, 21 is concerned with lapse of time in the
manner and under conditions laid down by law,
namely, that the possession should be in the concept
of an owner, public, peaceful, uninterrupted, and
adverse. 22 The party who asserts ownership by
adverse possession must prove the presence of the
essential elements of acquisitive prescription. 23
Acquisitive prescription of real rights may
be ordinary or extraordinary. 24 Ordinary acquisitive
prescription requires possession in good faith and with
just title for ten years. 25 In extraordinary prescription,
ownership and other real rights over immovable
property are acquired through uninterrupted adverse
possession for thirty years without need of title or of
good faith. 26 STCDaI
Possession "in good faith" consists in the
reasonable belief that the person from whom the thing
is received has been the owner thereof, and could
transmit his ownership. 27 There is "just title" when
the adverse claimant came into possession of the
property through one of the modes recognized by law
for the acquisition of ownership or other real rights, but
the grantor was not the owner or could not transmit
any right. 28
Compromise agreement not a valid basis
of possession in good faith and just title
We find that the CA mistakenly relied upon
the compromise agreement, executed by Belacho to
conclude that the respondents were possessors in
good faith and with just title who acquired the property
through ordinary acquisitive prescription.
In Ramnani v. Court of Appeals, 29 we held
that the main purpose of a compromise agreement is
to put an end to litigation because of the uncertainty
that may arise from it. Reciprocal concessions are the
very heart and life of every compromise agreement.
30 By the nature of a compromise agreement, it brings
the parties to agree to something that neither of them
may actually want, but for the peace it will bring them
without a protracted litigation. 31
In the present case, to avoid any conflict
with Belacho, Roberto and Nicomedesa paid
P1,800.00 in consideration of Belacho's desistance
from further pursuing her claim over two (2) parcels of
land, including the subject property. Thus, no right can
arise from the compromise agreement because the
parties executed the same only to buy peace and to
write finis to the controversy; it did not create or
transmit ownership rights over the subject property. In
executing the compromise agreement, the parties, in
effect, merely reverted to their situation before Civil
Case No. B-565 was filed.
Contract of sale cannot support
claim of good faith and just title
Neither can the respondents benefit from
the contract of sale of the subject property, executed
by Belacho in favor of Roberto, to support their claim
of possession in good faith and with just title. In the
vintage case of Leung Yee v. F.L. Strong Machinery
Co. and Williamson, 32 we explained good faith in this
manner:
One who purchases real
estate with knowledge of a defect or
lack of title in his vendor cannot
claim that he has acquired title
thereto in good faith as against the
true owner of the land or of an
interest therein; and the same rule
must be applied to one who has
knowledge of facts which should
have put him upon such inquiry and
investigation as might be necessary
to acquaint him with the defects in
the title of his vendor. 33 Aden
Good faith, or the want of it, can be
ascertained only from the acts of the one claiming it,
as it is a condition of mind that can only be judged by
actual or fancied token or signs. 34
In the present case, no dispute exists that
Roberto, without Nicomedesa's knowledge or
participation, bought the subject property on
September 16, 1977 or during the pendency of Civil
Case No. B-565. Roberto, therefore, had actual
knowledge that Belacho's claim to ownership of the
subject property, as Gavino's purported heir, was
disputed because he (Roberto) and Nicomedesa were
the defendants in Civil Case No. B-565. Roberto even
admitted that he bought the subject property from
Belacho to "avoid any trouble." 35 He, thus, cannot
claim that he acted in good faith under the belief that
there was no defect or dispute in the title of the vendor,
Belacho.
Not being a possessor in good faith and
with just title, the ten-year period required for ordinary
acquisitive prescription cannot apply in Roberto's
favor. Even the thirty-year period under extraordinary
acquisitive prescription has not been met because of
the respondents' claim to have been in possession, in
the concept of owner, of the subject property for only
twenty-four years, from the time the subject property
was tax declared in 1974 to the time of the filing of the
complaint in 1998.
Coca Cola vs Mercado
Case: May agreement na…. Nag execute ng mga
Quitclaim…
Under the Civil Code of the Philippines, 8 contracting
parties may establish such stipulations, clauses, terms, and
conditions, as they deem convenient, so long as they are not
contrary to law, morals, good customs, public order, or public
policy. A compromise agreement is a contract whereby the parties
undertake reciprocal obligations to resolve their differences in order
to avoid litigation or put an end to one already instituted. 9 It is a
judicial covenant having the force and effect of a judgment, subject
to execution in accordance with the Rules of Court, and having the
effect and authority of res judicata upon its approval by the court
where the litigation is pending. 10
Finding the Compromise Agreement dated June 16,
2010 between petitioner and respondents to be validly executed,
not being contrary to law, morals, good customs, public order, or
public policy, we, therefore, accept and affirm the same
||| (Coca-Cola Bottlers Philippines, Inc. v. Mercado, G.R. No.
190381 (Resolution), [October 6, 2010], 646 PHIL 759-769)
Diamond Builders vs Country Bankers

Case: Merong agreement or compromise: explicitly provided that
the latter's failure to complete construction of the building within the
stipulated period 27 shall cause the full implementation of the
surety bond as a penalty for the default, and as an award of
damages to Borja. Nagkaroon ng violation about the terms.
In impugning the CA's decision, petitioners invoke their pending
Omnibus Motion to stay the execution of the compromise judgment.
Petitioners' theory is that, although the RTC Caloocan had already
issued a writ of execution and Country Bankers had been served a
Notice of Levy/Sheriff's Sale of its properties at the impending
public auction, the payment made by Country Bankers to Borja is a
voluntary act. Petitioners push their theory even further, and deign
to suggest that Country Bankers should have itself intervened in
the proceedings before the RTC Caloocan to stay the writ of
execution.
We reject this preposterous suggestion.
Petitioners ought to be reminded of the nature of a
judgment on a compromise and a writ of execution
issued in connection therewith.
A compromise judgment is a decision
rendered by a court sanctioning the agreement
between the parties concerning the determination of
the controversy at hand. Essentially, it is a contract,
stamped with judicial imprimatur, between two or
more persons, who, for preventing or putting an end
to a lawsuit, adjust their difficulties by mutual consent
in the manner which they agree on, and which each of
them prefers in the hope of gaining, balanced by the
danger of losing. 22 Upon court approval of a
compromise agreement, 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 Rule 39 of the Rules of Court. 23
Ordinarily, a judgment based on
compromise is not appealable. It should not be
disturbed except upon a showing of vitiated consent
or forgery. The reason for the rule is that when both
parties enter into an agreement to end a pending
litigation and request that a decision be rendered
approving said agreement, it is only natural to
presume that such action constitutes an implicit, as
undeniable as an express, waiver of the right to
appeal against said decision. 24 Thus, a decision on
a compromise agreement is final and executory, and
is conclusive between the parties. 25
It is beyond cavil that if a party fails or
refuses to abide by a compromise agreement, the
other party may either enforce the compromise or
regard it as rescinded and insist upon his original
demand. 26 Following this mandatory rule, the RTC
Caloocan granted Borja's motion, and subsequently
issued an order to the sheriff to execute the
compromise judgment. Notwithstanding the
foregoing, petitioners still maintain that since they had
taken steps to stay the execution of the compromise
judgment, Country Bankers, with full knowledge of
their active opposition to the execution thereof, should
not have readily complied with the RTC Caloocan
Order. DEHaAS
Petitioners' argument contemplates a
brazen defiance of a validly issued court order, which
had not been restrained by the appellate court or this
Court. The argument is unacceptable.
The Compromise Agreement between
Borja and Rogelio explicitly provided that the latter's
failure to complete construction of the building within
the stipulated period 27 shall cause the full
implementation of the surety bond as a penalty for the
default, and as an award of damages to Borja.
Furthermore, the Compromise Agreement contained
a default executory clause in case of a violation or
avoidance of the terms and conditions thereof.
Therefore, the payment made by Country Bankers to
Borja was proper, as failure to pay would have
amounted to contumacious disobedience of a valid
court order.
Clearly, even without the aforesaid default
clause, the compromise judgment remained
executory as against Rogelio, as the principal obligor
(co-debtor), and Country Bankers as surety of the
obligation. Section 4, Rule 39 of the Rules of Court
provides:
SEC. 4. Judgments not
stayed by appeal. — Judgments in
actions for injunction, receivership,
accounting and support, and such
other judgments as are now or may
hereafter be declared to be
immediately executory, shall be
enforceable after their rendition and
shall not be stayed by an appeal
taken therefrom, unless otherwise
ordered by the trial court. On appeal
therefrom, the appellate court in its
discretion may make an order
suspending, modifying, restoring or
granting the injunction,
receivership, accounting, or award
of support.
The stay of execution
shall be upon such terms as to bind
or otherwise as may be considered
proper for the security or protection
of the rights of the adverse party.
Other judgments in actions declared to be immediately
executory and not stayed by the filing of an appeal are
for: (1) compromise, 28 (2) forcible entry and unlawful
detainer, 29 (3) direct contempt, 30 and (4)
expropriation. 31
Likewise, Section 9, paragraph (a), 32 of
the same Rule outlines the procedure for execution of
judgments for money, thus:
SEC. 9 Execution of
judgments for money, how
enforced. —
(a) Immediate payment
on demand. — The officer shall
enforce an execution of a judgment
for money by demanding from the
judgment obligor the immediate
payment of the full amount stated in
the writ of execution and all lawful
fees. The judgment obligor shall
pay in case, certified bank check
payable to the judgment oblige, or
any other form of payment
acceptable to the latter, the amount
 of the judgment debt under proper
receipt directly to the judgment
oblige or his authorized
representative if present at the time
of payment. The lawful fees shall be
handed under proper receipt to the
executing sheriff who shall turn
over the said amount within the
same day to the clerk of court of the
court that issued the writ.
As Rogelio's obligation under the compromise
agreement, and approved by the RTC Caloocan, had
a penal clause 33 which is monetary in nature, 34 the
writ of execution availed of by Borja, and paid by
Country Bankers, strictly complied with the rules on
execution of money judgments. SCIAaT
It is true that the petitioners did not directly
question the compromise judgment. What was
pending before the Caloocan RTC was petitioners'
Omnibus Motion praying for a stay in the
implementation of the writ of execution. However, the
bottom line issue raised in the Omnibus Motion is,
actually, a question on the compromise judgment,
since its resolution would require an inquiry into the
stipulations contained in the Compromise Agreement,
particularly the provision on immediate execution.
Thus, when the RTC Manila ruled that the
payment on the bond made by Country Bankers was
voluntary, the lower court effectively disregarded the
rule on the non-appealable nature and the
immediately executory character of a judgment on a
compromise.
Moreover, it has not escaped our attention
that petitioners belatedly filed a Petition for Certiorari
and Prohibition with prayer for a TRO with the CA,
ostensibly to stop the execution of the compromise
judgment. Not only was the filing thereof late, it was
done twelve (12) days after the satisfaction of the
compromise judgment. We are, therefore, perplexed
why, despite the urgency of the matter, petitioners
merely banked on a pending motion for
reconsideration to stay the enforcement of an already
issued writ of execution. Petitioners' total reliance
thereon was certainly misplaced.
||| (Diamond Builders Conglomeration v. Country Bankers
Insurance Corp., G.R. No. 171820, [December 13, 2007], 564 PHIL
756-773)
SM INVESTMENT
CASE: Right of redemption of tenant farmers… Unrevocable
power of atty and Compromise agreement court decision may be
held in abeyance.
Whether or not the Kasunduan effectively novated the judgment
obligation.
In view of the foregoing, a review of the
assailed Decision is in order, particularly on the effect
of the compromise agreement entered into after final
judgment has been rendered. cEATSI
Once a case is terminated by final
judgment, the rights of the parties are settled; hence,
a compromise agreement is no longer necessary. 28
Though it may not be prudent to do so, we have seen
in a number of cases that parties still considered and
had, in fact, executed such agreement. To be sure,
the parties may execute a compromise agreement
even after the finality of the decision. 29 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 as the liability
decreed by the judgment may be reduced. As to the
prevailing party, it assures receipt of payment
because litigants are sometimes deprived of their
winnings because of unscrupulous mechanisms
meant to delay or evade the execution of a final
judgment. 30
As much as we would like to settle the
issues raised in this petition, we cannot make a
definitive conclusion on the validity of the compromise
agreement because of some facts that complicate the
present case.
We must recall that, in our January 19,
2005 Decision, we upheld respondents' right to
redeem the subject lots for P9,790,612.00. On
December 18, 2003, respondents executed an
Irrevocable Power of Attorney in favor of Nocom,
authorizing him to redeem the subject lots. Pursuant
to the aforesaid authority, Nocom deposited with the
court the redemption money plus commission on
August 4, 2005. Consequently, the certificates of title
in the name of petitioner were cancelled, and new
ones were issued in the name of respondents. It was
only on August 20, 2005 that petitioner and
respondents executed the Kasunduan or the
compromise agreement. Although we could have
easily declared that the agreement was invalid as
there was nothing more to compromise at that time
with the redemption of the property by Nocom, yet, as
narrated earlier, respondents assailed in a separate
case the validity of the Irrevocable Power of Attorney
allegedly executed by them in favor of Nocom. The
case had reached this Court in G.R. No. 182984, but
we remanded it to the RTC of Muntinlupa City, Branch
203, for further proceedings and in accordance with
the rudiments of a regular trial, with the instruction not
to dispose of the case through a summary judgment.
The Court notes that respondents herein
are the farmers-tenants, but records show that the
pleadings in answer to the petition were filed by
Nocom for and in his own behalf. Nocom is actively
participating herein on the basis of the questioned
Irrevocable Power of Attorney. But to date, the
authority of Nocom to exercise the right of redemption
is still in issue in a separate case.
With the foregoing discussion, the
resolution of the issues herein have to be held in
abeyance, pending the settlement of the questions
raised in the other action. 31 We are not unmindful of
the right of every party to a speedy disposition of his
case, 32 but the rights of the parties herein cannot be
properly determined until the resolution of the issues
in the other action.
The court in which an action is pending
may, in the exercise of sound discretion, hold the
action in abeyance to abide by the outcome of another
case pending in another court. 33 Undeniably, the
power to stay proceedings is an incident to the power
inherent in every court to control the disposition of the
cases on its dockets, considering its time and effort,
and those of counsel and litigants. 34 Every order
suspending proceedings must be guided by the
 following precepts: it shall be done in order to avoid
multiplicity of suits and to prevent vexatious litigations,
conflicting judgments, confusion between litigants and
courts, or when the rights of parties to the second
action cannot be properly determined until the
questions raised in the first action are settled. 35

WHEREFORE, premises considered, the resolution of this petition

is hereby SUSPENDED or HELD IN ABEYANCE until after the
proceedings in Civil Case No. 05-172 shall have been terminated.

||| (SM Systems Corporation v. Camerino, G.R. No. 178591

(Resolution), [July 26, 2010], 639 PHIL 495-506)