Inappealable

A compromise judgment is a decision rendered by a court sanctioning the agreement between the parties concerning the controversy at hand. Said decision is final and not appealable, except upon a showing of vitiated consent or forgery. This is illustrated in this case of a surety company (CBIC) and the spouses Rolly and Tita and their three employees.

Rolly who was engaged in construction business under the name of DBC entered into a contract with Lino for the construction of the latter’s residential and commercial building. For breach of said contract, Lino sued Rolly.

To settle the case Rolly and Lino entered into a compromise agreement wherein Rolly agreed to fully complete the construction of the residential/commercial building within 75 days provided Lino would pay the balance of the contract price of P570,000 as follows: P370,000 on the 5th day from approval of the Compromise Agreement (CA) by the court and to coincide with the start of the 75 days; balance of P200,000 upon completion within said period. Rolly also agreed to put up a performance bond which shall be fully implemented by way of penalizing him and/or as award of damages in Lino’s favor if he fails to fully complete the construction within 75 days. The CA also stipulated that any violation and/or avoidance of its terms and conditions by either of the parties shall forthwith entitle the aggrieved party to an immediate execution thereof and to the necessary and corresponding relief and remedies.

The said CA was then filed and approved by the court and a decision was rendered in accordance with its terms and conditions.

In compliance with the CA, Rolly obtained a Surety Bond from CBIC in favor of Lino with Rolly’s wife Tita and their three employees signing an indemnity agreement consenting to their joint and several liability to CBIC should the bond be executed upon.

Because of the alleged violation of the CA by Rolly, Lino filed a Motion for Execution copy furnished CBIC. While Rolly opposed said Motion, the court granted it and issued a writ of execution. Rolly filed a motion for reconsideration but the Sheriff nevertheless served the writ upon CBIC which asked for 10-day grace period to settle the claim.

While Rolly filed another motion and CBIC requested that the implementation of the writ be held in abeyance, the Sheriff nonetheless served a Notice of Levy/Sheriff’s Sale of CBIC’s properties. Since there was no action yet on Rolly’s motion, CBIC was constrained to pay the amount of the surety bond and in turn sued Rolly, Tita and their three employees for reimbursement.

Rolly et.al., however, refused to pay. They contended that CBIC is not entitled to reimbursement because its voluntary payment of the bond effectively prevented them from contesting the validity of the issuance of the writ and pursuing their remedies to stay the execution which CBIC knew fully well. Thus CBIC must bear the loss or damage from its voluntary act. Were they correct?

No. 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. Thus a decision on a CA is final and executory and is conclusive between the parties. Following this rule, the court is correct in granting Lino’s motion for execution and subsequently issuing an order to the sheriff to execute the said CA which explicitly provided that Rolly’s failure to complete the construction of the building within the stipulated period shall cause the full implementation of the surety bond and that violation/avoidance of its terms and conditions entitles the aggrieved party to an immediate execution thereof.

Therefore, the payment of P370,000 made by CBIC to Lino was proper, as failure to pay would have amounted to contumacious disobedience of a valid court order. Ineluctably, Rolly, Tita and their three employees who consented to be jointly and severally liable to CBIC should the bond be executed upon are obligated to reimburse the latter for the said amount it paid (Diamond Builders et. al. vs. Country Bankers etc. G.R. 171820, December 13, 2007).

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E-mail at: jcson@pldtdsl.net