TOPIC: JUDGMENT ON COMPROMISE; RES JUDICATA

NESTOR T. GADRINAB, petitioner -versus- NORAT SALAMANCA, ANTONIO TALAO

FACTS:
Respondents, together with Adoracion Gadrinab and Arsenia Talao, are siblings and heirs of
the late Spouses Talao. The Spouses Talao died intestate, leaving a parcel of land in Sta.
Ana, Manila.

The five Talao children divided the property among themselves through an extrajudicial
settlement. Subsequently, Arsenia Talao waived her share over the property.

Respondent Salamanca filed a complaint for partion against her siblings Antonio,
Elena(deceased, represented by her husband, Jose Lopez), and Adoracion(deceased,
represented by petitioner Nestor and Francisco Gadrinab) before the RTC Manila.

All parties claimed their respective shares in the property. They also claimed shares in the
rentals collected from one of the units of a duplex apartment on the property.

Upon being referred to a mediation, the parties entered into a compromise agreement, and
stipulated among others that, the subject property will be subject for sale and the amount will
be divided among the four; that the subject property will be appraised by an independent
appraiser and the appraised value will be divided into four, and that Mr. Antonio Talao will
pay in advance the share of Francisco Gadrinab immediately after the report of the said
appraisal; that the amount of rentals collected shall be divided by four and distributed among
the parties and their respective shares thereon shall be given on or before March 12, 2003
by Mr. Antonio Talao; that upon payment of the appraised value to Francisco Gadrinab,
Nestor Gadrinab is given 45 days within which to leave the premises in question.

The RTC approved the compromise agreement. The judgment became final and executory
on April 10, 2003.

Petitioner filed a motion for execution of the compromise agreement. During the hearing on
the motion, the parties agreed that the rentals shall be divided only into 3 since Nestor had
already been occupying one of the duplex units. The parties also agreed that Antonio Talao
would shoulder Nestor’s share, equivalent to ¼ of the rental amount.

The portion of the duplex that Nestor refused to vacate remained unsold.

Because of the attitudes of her co-heirs, respondent Salamanca moved for the physical
partition of the property before the RTC Manila. Petitioner and Francisco Gadrinab opposed
the motion. They contended that the judgment on the compromise agreement had already
become final and executory and had the effect of Res Judicata.
The RTC Manila granted the motion for physical partition.

Petitioners appealed to the CA. The CA dismissed the appeal. It ruled that the exception to
the immutability of judgments, that is, “whenever circumstances transpire after the finality of
the decision rendering its execution unjust and inequitable,” applies. It noted that the parties
seemingly endless disagreements on matters involving the disposition of the subject property
were such circumstances that rendered the compromise agreement’s execution unjust and
inequitable. It likewise agreed with the RTC’s ruling that the “proposed physical partition of
the subject lot is just another way of enforcing the court’s decision and will not in any way
vary the parties’ agreement nor affect their right over the property.

ISSUE:
WON the CA erred in affirming the RTC’s decision allowing the physical partition of the
property despite finality of a previous judgment on compromise agreement involving the
division of the same property.

HELD:
YES.

It is a well-settled rule that a judicial compromise had the effect of res judicata and is
immediately executory and not appealable unless set aside by mistake, fraud, violence,
intimidation, undue influence, or falsity of documents that vitiated the compromise
agreement.

There are two rules that embody the principle of res judicata: 1.) “bar by prior judgment”
which means that actions on the same claim or cause of action cannot be relitigated; and 2.)
“conclusiveness of judgment” which means that facts already tried and determined in another
action involving a different claim or cause of action cannot anymore be relitigated.

This case involves “bar by prior judgment”. Respondents cannot file another action for
partition after judgment on compromise had already been rendered in a previous action for
partition involving the same parties and property.

Doctrine on bar by prior judgment and immutability of judgment apply whether judgment is
rendered after a full-blown trial or after the parties voluntarily executed a compromise
agreement duly approved by court.

In this case, there was no issue as to the fact that the parties freely entered into the
compromise agreement. There was also no dispute about the clarity of its terms. Some of the
parties simply do not wish to abide by the compromise agreement.

This court does not see how substantial justice will be served by disturbing a previous final
judgment on compromise when failure of its execution was caused by the parties
themselves. Likewise, respondents’ argument that a supervening event – the disagreement
among the parties, was present to justify disturbance of the final judgment on compromise
fails to persuade. A supervening event may justify the disturbance of a final judgment on
compromise if it “brought about a material change in the situation” between the parties. The
material change contemplated must render the execution of the final judgment unjust and
inequitable. The subsequent disagreement among the parties did not cause any material
change in the situation or in the relations among the parties.

Judges have a ministerial and mandatory duty to implement and enforce a compromise
agreement. Absent appeal or motion to set aside the judgment, courts cannot modify, impose
terms different from the terms of a compromise agreement, or set aside the compromises
and reciprocal concessions made in good faith by the parties without grave abusing their
discretion. They cannot relieve parties from their obligations simply because the agreements
are unwise. Further, the mere fact that the compromise agreement favors one party does not
render in invalid. Courts do not have the power to alter contracts in order to save one party
from the effects of adverse stipulations.