Art. 2028.

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a

litigation or put an end to one already commenced.

According to the code commission, the element of “reciprocal concession” Is the very heart and
life of compromise.

It is an instance requester lowers his/her initial request, making the respondent more likely to
agree to a second request. we are obligated to concede to someone who has made a concession to
us.

There are 2 kinds of compromise, namely:

Judicial- if the object is to put an end to a pending litigation;

Extrajudicial- if the object is to avoid a litigation.

Art. 2029. The court shall endeavor to persuade the litigants in a civil case to agree upon some fair
compromise.

Court is given the duty to persuade litigants to compromise. And the reason for this duty is:
litigation must, if possible, be avoided.

Art. 2030. Every civil action or proceeding shall be suspended:

(1) If willingness to discuss a possible compromise is expressed by one or both parties; or

(2) If it appears that one of the parties, before the commencement of the action or proceeding, offered
to discuss a possible compromise but the other party refused the offer.

Motion to dismiss

The revised rules of court mentions as one ground to dismiss the fact that no attempt has been
made to arrive at a compromise.

Postponement

While postponement must be discouraged, still they can be allowed when parties are tryin g to
reach an amicable settlement.

Art. 2031. The courts may mitigate the damages to be paid by the losing party who has shown a sincere
desire for a compromise.

Art. 2032. The court's approval is necessary in compromises entered into by guardians, parents,
absentee's representatives, and administrators or executors of decedent's estates.

Art. 2033. Juridical persons may compromise only in the form and with the requisites which may be
necessary to alienate their property.

Rules to compromise entered into by a juridical person:

a. A corporation may compromise through authority granted by the bourd of directors.

 b. The municipal council can also compromise provided that the legal requirements for the
alienation of property are complied with, and provided further that the provincial governoe
approves the compromise.

Art. 2034. There may be a compromise upon the civil liability arising from an offense; but such
compromise shall not extinguish the public action for the imposition of the legal penalty.

Generally. There can no be compromise on criminal aspect. But if a crime has been committed,
there can be a compromise only on the civil aspect but not generally on the criminal liability, the reason
for this is that the social and public interest demands the punishment of the offender.

But take note in a civil case , the comprise must be entered into before or during the litigation,
never after final judgement. And the compromise during litigation may even be in the form of a
“confession of judgement”.

Republic vs Garay

The government sued garay for alleged income tax deficiency. Garay filed a pleading entitled
“confession of judgement”. The commissioner allowed the payment in instalments. The trial judge
rendered a decision requiring the defendant to pay in accordance with the confession of judgement. The
government filed a motion requesting that the decision be amended to include surcharges and interest.
The court amended the decision, requiring garay to to pay for the interest.

The court ruled that the lower court’s decision should be affirmed for the confession of judgement
partook the nature of the compromise. In consideration of Garay’s admission of delinquency and the
commissioner’s willingness to allow payment in instalments, both parties have agreed to put an end to
the litigation, through the rendition of a judgment incorporating said stipulations. The decision appealed
from is one based on a compromise agreement.

Art. 2035. No compromise upon the following questions shall be valid:

(1) The civil status of persons;

(2) The validity of a marriage or a legal separation;

(3) Any ground for legal separation;

(4) Future support;

(5) The jurisdiction of courts;

(6) Future legitime.

Art. 2036. 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.

A general renunciation of rights is understood to refer only to those that are connected with the dispute
which was the subject of the compromise.

Paragraph 1: Compromise can deal with:

A. Those objects definitely stated in the compromise

 B. Those implicitly included, according to the terms stated in the compromise

Paragraph 2: Effect of general renunciation

Even if the renunciation is general, in paragraph two, it is understood to refer only to

rights connected with the dispute involved, and not to other rights.

International Hotel Corp V Hon. Asuncion

A court cannot include in a compromise judgement terms which have not been agreed upon
between the parties except if the same are required by the law to be included or are necessary
consequences of the stipulation.

Art. 2037. A compromise has upon the parties the effect and authority of res judicata; but there shall be
no execution except in compliance with a judicial compromise.

A compromise, being a contract, has the effect of re judicata only if there is no vitiated consent.
Generaly, the compromise binds the parties even without judicial approval. However, if there is no
approval, it can be enforced only by a court litigation, not by execution. Incidentally, a compromise
before a court justice, even if reduced to writing is not valid unless signed by the parties.

If a compromise is approved by court, a stipulation therein is considered court order, and if not
complied with, the non performance may be considered as contempt of court.

Republic V. Court of appeals

When there is a compromise agreement that is submitted to a court, a decision may be

rendered based on said compromise.

When is a judgement in compromise be void?

As held in the case of Jacinto vs Montesa. A judgement is based upon a compromise entered
into byan attourney without specific authority from the client is null and void. Such judgement may be
impugned, and its exexcution retrained in any proceeding by the party against whom it is sought be
enforced.

Art. 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or
falsity of documents, is subject to the provisions of Article 1330 of this Code.

However, one of parties cannot set up a mistake of fact as against the other if the latter, by virtue of the
compromise, has withdrawn from a litigation already commenced. (1817a)

Paragraph 2: Modification of a judgement on compromise

If a court renders a judgement in compromise, it generally cannot modify the compromise

unless the parties consent or unless there is a hearing to determine the presence or absence of vitiated
consent.

Art. 2039. When the parties compromise generally on all differences which they might have with each
other, the discovery of documents referring to one or more but not to all of the questions settled shall
not itself be a cause for annulment or rescission of the compromise, unless said documents have been
concealed by one of the parties.

But the compromise may be annulled or rescinded if it refers only to one thing to which one of the
parties has no right, as shown by the newly-discovered documents. (n)

Art. 2040. If after a litigation has been decided by a final judgment, a compromise should be agreed
upon, either or both parties being unaware of the existence of the final judgment, the compromise may
be rescinded.

Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a
compromise.

Under Art 2040, when a compromise is entered into in ignorance of final judgement or without
any knowledge of the judgement, such cases may be rescinded. The reason for allowing such recession
is that in here, there was no more need for the compromise in view of the existence of the final
judgement. But if the judgement is rendered but appealed, there can in the meantime be a compromise.

Art. 2041. If one of the parties fails or refuses to abide by the compromise, the other party may either
enforce the compromise or regard it as rescinded and insist upon his original demand. 

Art. 2042. The same person who may enter into a compromise may submit their controversies to one or
more arbitrators for decision.

Art. 2043. The provisions of the preceeding chapter upon compromise shall also be applicable to
arbitration.

Art. 2044. Any stipulation that the arbitrator’s award or decision shall be final, is valid, without prejudice
to article 2038, 2039, and 2040

The arbitrator’s decision is final, except:

a. If there is a vitiated consent

b. If the parties had previously agreed that to be binding it must be accepted by them, and
they have not accepted.