Santos v Santos

Topic: Judgment upon Compromise Agreement

The trial court denied Dana's petition, for there is no sufficient allegation of fraud or mistake in
the petition.

Dana filed a motion for reconsideration, which the trial court denied in an Order. Aggrieved, she
filed a petition for certiorari with the CA, ascribing grave abuse of discretion on the part of the
trial court when it denied her petition for relief and allowed the Decision to stand despite her
inability to present her evidence. After a further exchange of pleadings, the appellate court, in a
Resolution referred Dana's petition to the Philippine Mediation Center.

Under the auspices of the appellate court mediator, Dana and Leodegario entered into a
compromise agreement, where they agreed to transfer the titles to their conjugal real properties
in the name of their four common children. Dana moved for the archival of the case.

CA issued a Resolution declaring the case closed and terminated by virtue of the compromise
agreement and ordering the issuance of entry of judgment.

Dana filed a Manifestation alleging that Leodegario was not complying with the compromise
agreement and thus reiterate thru the Motion to Reopen and/or Reinstate the Petition .
Leodegario countered that he has complied with the essential obligations under the compromise
agreement. He, subsequently, filed a Manifestation showing such compliance.

Motion is hereby DENIED for lack of merit. Respondent's manifestation showing compliance
with the compromise agreement is hereby NOTED.

The appellate court noted Leodegario's Manifestation showing his compliance with the terms of
the compromise agreement; on the other hand, it found that Dana did not make any allegation
or showing of her compliance with the terms of the compromise agreement. It then concluded
that the motion was unmeritorious since Dana, as a party to the compromise agreement herself,
should also prove her faithful compliance therewith.

Undaunted, Dana filed a Motion for Reconsideration and/or to Submit Petition for Decision (with
Plea to Preserve Marital Union), asserting that the compromise agreement was never intended
to settle the issue of the validity and subsistence of her marriage to Leodegario.

CA denied Dana's Motion for Reconsideration and/or to Submit Petition for Decision.

Appellate court found the Motion for Reconsideration and/or to Submit Petition for Decision
unmeritorious. It held that the marital ties between Dana and Leodegario had been severed by
the trial court's decision hence, the compromise agreement did not involve the validity of their
marriage but only their property relations.

Furthermore, the appellate court found that Dana, in her Motion to Archive Case, had conceded
her intention to have the case dismissed upon compliance with the stipulations of the
Compromise Agreement.

Aggrieved, Dana filed the present petition for review on certiorari before this Court.

Issues

1. WON CA erred in refusing to reopen Dana's petition on the basis of the finality of
the trial court decision. YES
2. WON CA's decision which terminated Dana's case (petition for annulment of judgment
re: annulment) by reason of the compromise agreement was erroneous? NO

Ruling:

Dana argues that she never intended to compromise the issue of the validity of her marriage, as
this cannot be the subject of compromise under Article 2035 of the New Civil Code. She further
asserts that under Article 2041 of the New Civil Code, as applied in Miguel v. Montanez, she is
entitled to simply consider the compromise agreement as rescinded, since Leodegario
committed a breach of the agreement. Dana also claims that the termination of the case on the
basis of the compromise agreement violated her right to due process, since she was unable to
present her side of the controversy. Lastly, she contends that the appellate court erred in ruling
that the trial court decision declaring the marriage void had become final, claiming that her
petition for relief amounted to a motion for new trial, the filing of which is one of the
requirements for filing an appeal under A.M. No. 02-11-10-SC.

The defensor vinculi, in his Comment, asserts that Dana's failure to file a motion for
reconsideration or an appeal paved the way for the trial court judgment to attain finality. Due to
Dana's failure to file an appeal in accordance with Section 20 of A.M. No. 02-11-10-SC, the
OSG now contends, as the appellate court similarly concluded, that the trial court decision had
attained finality.

The core issue in this petition is the propriety of setting aside the judgment upon
compromise rendered by the court a quo. Dana maintains that the judgment should be
vacated because of Leodegario's alleged breach of their compromise; and because she did not
intend to compromise the issue of the validity of her marriage. To bolster her stand, she invokes
Sections 1 and 2, Article XV of the Constitution and urges the State to uphold, or at least try to
uphold, her marriage. Leodegario, on the other hand, asserts the binding force of the trial court's
decision and the judgment on compromise, claiming that the courts a quo acted according to
law and jurisprudence in rendering the assailed judgments.

Both concluded that the trial court decision had attained finality after Dana's inability to file an
appeal therefrom. The two resolutions of the appellate court presuppose that the judgment on
the validity of Dana and Leodegario's marriage had attained finality. Dana, on the other hand,
asserts that it had not.
The Court agrees with the conclusion of the CA and the defensor vinculi regarding the finality of
the RTC decision; however, we do not agree with their assertions as to the effect of the decision
on the subsequent proceedings a quo.

There is indeed no showing in the record that Dana moved for reconsideration or new trial
from the RTC decision. She, nevertheless, filed an appeal. However, probably cognizant of the
proscription in Section 20 of A.M. No. 02-11-10-SC, which makes the filing of a motion for
reconsideration or a motion for new trial a precondition for filing an appeal, she withdrew
her appeal and filed a petition for relief from judgment.

There is no provision in A.M. No. 02-11-10-SC prohibiting resort to a petition for relief from
judgment in a marriage nullity case. Furthermore, the said Rule sanctions the suppletory
application of the Rules of Court to cases within its ambit. It cannot, therefore, be said that Dana
availed of an inappropriate remedy to question the decision of the trial court. Indeed, the
trial court admitted Dana's petition for relief, heard the parties on the issues thereon, and
rendered an order denying the petition. Dana then properly and seasonably assailed the
order of denial via certiorari to the CA. It is, therefore, clear that the proceedings in Civil
Case No. 03-6954 continued even after the trial court had rendered judgment and even
after the lapse of the 15-day period for appealing the decision.

Nevertheless, considering the nature and office of a petition for relief, which is to set aside
a final judgment, the Court cannot agree with Dana's assertion that the decision of the RTC
in Civil Case No. 03-6954 had not attained finality. In fact, the decision has already been
annotated in their marriage contract. This finding, however, does not detract from the fact that
the proceedings in Civil Case No. 03-6954 continued even after the trial court had rendered
judgment, precisely because Dana filed a petition for relief from that judgment. From the
denial of her petition, she sought recourse to the appellate court.

The appellate court, in dismissing the case upon the parties' compromise on their conjugal
properties, invoked the finality of the RTC decision as a bar to the litigation of the other issues
raised by Dana's petition. This conclusion is untenable.

In Samia v. Medina, which involved the application of the statutory ascendant of Rule 38 in the
old Code of Civil Procedure, the Court held: There is a great deal of similarity between an order
granting a motion for a new trial based upon "accident or surprise which ordinary prudence
could not have guarded against" under section 145 of the Code of Civil Procedure, and an order
granting a motion for a new trial based upon "mistake, inadvertence, surprise, or excusable
neglect," under section 113 of the Code of Civil Procedure, as both set aside the judgment,
order, or proceeding complained of; both call for a new trial, and in both the injured party may
question the order granting the motion for the new trial upon appeal from the new judgment
rendered upon the merits of the case. The only fundamental difference lies in this, that while the
judgment, order, or proceeding coming under section 145 of the Code of Civil Procedure is not
final, that coming under section 113 is final. But this does not alter the nature or effect of the
order granting the new trial, for this order does not put an end to the litigation in the sense
that the party injured thereby has no other remedy short of appeal; he may question the
propriety of the new trial on appeal from an adverse judgment rendered after such
trial. (Emphasis and underscoring Ours)

In Servicewide Specialists, Inc. v. Sheriff of Manila decided prior to the enactment of the 1997
Rules of Civil Procedure, the Court held:
There is no question that a judgment or order denying relief under Rule 38 is final and
appealable, unlike an order granting such relief which is interlocutory. However, the
second part of the above-quoted provision (that in the course of an appeal from the
denial or dismissal of a petition for relief, a party may also assail the judgment on the
merits) may give the erroneous impression that in such appeal the appellate court may
reverse or modify the judgment on the merits. This cannot be done because the
judgment from which relief is sought is already final and executory.

The purpose of the rule is to enable the appellate court to determine not only the existence of
any of the grounds relied upon whether it be fraud, accident, mistake or excusable negligence,
but also and primarily the merit of the petitioner's cause of action or defense, as the case may
be. If the appellate court finds that one of the grounds exists and, what is of decisive
importance, that the petitioner has a good cause of action or defense, it will reverse the denial
or dismissal, set aside the judgment in the main case and remand the case to the lower court for
a new trial in accordance with Section 7 of Rule 38.

The 1997 Rules of Civil Procedure changed the nature of an order of denial of a petition for
relief from judgment, making it unappealable and, hence, assailable only via a petition
for certiorari. Nevertheless, the appellate court, in deciding such petitions against denials of
petitions for relief, remains tasked with making a factual determination, i.e., whether or not the
trial court committed grave abuse of discretion in denying the petition. To do so, it is still obliged,
as Service Specialists instructs, to "determine not only the existence of any of the grounds
relied upon whether it be fraud, accident, mistake or excusable negligence, but also and
primarily the merit of the petitioner's cause of action or defense, as the case may be." Stated
otherwise, the finality of the RTC decision cannot bar the appellate court from
determining the issues raised in the petition for relief, if only to determine the existence
of grave abuse of discretion on the part of the trial court in denying such petition. While a
Rule 38 Petition does not stay the execution of the judgment, the grant thereof reopens
the case for a new trial; and thus, if merit be found in Dana's certiorari petition assailing
the trial court's denial of her petition for relief, the case will be reopened for new trial.

The CA, therefore, erred in refusing to reopen Dana's petition on the basis of the finality of the
trial court decision.

ISSUE: 2. The Court now resolves the question regarding the propriety of setting aside the
judgment on compromise.

On one hand, the immutability and immediate effect of judgments upon compromise is
well-settled. In Magbanua v. Uy, it was held that: 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 entered as a determination of a controversy and has the force and
effect of a judgment. It is immediately executory and not appealable, except for vices of consent
or forgery. The nonfulfillment of its terms and conditions justifies the issuance of a writ of
execution; in such an instance, execution becomes a ministerial duty of the court.

However, like any other judgment, a judgment upon compromise which is contrary to law is
a void judgment; and "[a] void judgment or order has no legal and binding effect. It does
not divest rights, and no rights can be obtained under it; all proceedings founded upon a
void judgment are equally worthless."
 ART. 2035. No compromise upon the following questions shall be valid as regards the
validity of a marriage or a legal separation and xxx (New Civil Code)

The Court cannot give its imprimatur to the dismissal of the case at bar even if, as the appellate
court held, it was Dana's intention to have the case terminated upon the execution of the
compromise agreement. Nevertheless, the Court agrees with the appellate court when it
ruled that the scope of the compromise agreement is limited to Dana and Leodegario's
property relations vis-à-vis their children, as Article 2036 of the Civil Code provides that "[a]
compromise comprises only those objects which are definitely stated therein, or which
by necessary implication from its terms should be deemed to have been included in the
same." As held by the appellate court:

The agreement makes no mention of the marital ties between [Leodegario] and [Dana] but is
limited only to their property relations vis-à-vis their children.

However, despite the error committed by the appellate court, absent vices of consent or other
defects, the compromise agreement remains valid and binding upon Dana and Leodegario,
as they have freely and willingly agreed to, and have already complied with, the covenants
therein. The agreement operates as a partial compromise on the issue of the disposition
of the properties of the marriage.

Nevertheless, the Court is constrained to uphold the appellate court's decision, because the trial
court's denial of Dana's petition for relief from judgment does not amount to grave abuse of
discretion.

While the remaining issues in the petition partake of a factual nature, the Court deems it
necessary to write finis to this case at this level in order to avoid remanding the case to
the appellate court. It has been held that "remand is not necessary if the Court is in a
position to resolve a dispute on the basis of the records before it; and if such remand
would not serve the ends of justice. A careful perusal of the petitions filed by Dana before the
trial court, the appellate court, and this Court betrays the lack of allegations sufficient to
support a petition for relief from judgment under Rule 38.

Jurisprudence provides that fraud, as a ground for a petition for relief, refers to extrinsic or
collateral fraud which, in turn, has been defined as fraud that prevented the unsuccessful party
from fully and fairly presenting his case or defense and from having an adversarial trial of the
issue, as when the lawyer connives to defeat or corruptly sells out his client's interest.

WHEREFORE, premises considered, the petition is hereby DENIED. Resolutions of CA