FACTS:

The case involves a dispute over several parcels of land owned by petitioner Domingo Realty. Respondent Acero had constructed a factory building on these properties, claiming that he leased the land from his co-defendant Victorio. The parties entered into a Compromise Agreement on December 3, 1987, wherein they recognized Domingo Realty's ownership and Acero agreed to vacate the property within 60 days. The trial court approved the agreement, rendering a decision adopting its stipulations. Domingo Realty filed a motion for a re-survey of the properties, which was granted. Acero then filed a motion to nullify the agreement, claiming that the re-survey would violate it, but later filed a motion for re-survey, which was granted.

Several years after the Compromise Agreement was entered into, disputes arose regarding its validity and enforcement. Acero claimed that he was only required to vacate a portion of the property he occupied, alleging a mistake in the interpretation of the agreement. Another issue raised was the non-inclusion of Victorio, Acero's alleged lessor, in the agreement. The Court of Appeals held that Victorio's exclusion could lead to future challenges on the validity of the agreement.

The Court of Appeals also found the Compromise Agreement to be vague as it did not specify a mutually agreed upon surveyor to determine the property boundaries. The trial court issued various orders and judgments in relation to the agreement, but the Court of Appeals set aside these orders and the agreement itself. The petition before the Supreme Court questions the timeliness of filing the petition before the Court of Appeals, the effect of Victorio's non-inclusion, the validity of the agreement due to vagueness, and the validity of the agreement due to mistake.

ISSUES:

1. What is the proper remedy available to a party who believes that his consent in a compromise agreement was vitiated by mistake upon which a judgment was rendered by a court of law?

2. Can a motion for new trial or motion for reconsideration be filed to challenge a judgment based on a compromise agreement?

3. Is an order denying a motion for new trial or reconsideration appealable?

4. What is the remedy if the 15-day period for taking an appeal has lapsed?

5. Can a petition for relief from judgment be filed after the 15-day period for taking an appeal has lapsed?

6. Can a special civil action for certiorari be filed if the petition for relief from judgment is denied?

7. Whether a petition for certiorari is the appropriate remedy in this case.

8. Whether the non-inclusion of a party in a compromise agreement renders the agreement void.

9. Whether the Compromise Agreement is vague and uncertain.

10. Whether the term "portion" in paragraph 3 of the Compromise Agreement refers to the property occupied by the respondent.

11. Whether the alleged vagueness in the object of the agreement is a ground for nullifying it.

12. Whether the compromise judgment can be set aside on the ground of mistake.

13. Whether the alleged mistake in the Compromise Agreement is excusable.

14. Whether the failure to specify in the Compromise Agreement that respondent intended to vacate only a portion of the property he was leasing is sufficient to nullify the agreement.

15. Whether the case should be remanded back to the trial court for further proceedings with respect to petitioner Domingo Realty's complaint against defendant David Victorio.

RULING:

1. A party who believes that his consent in a compromise agreement was vitiated by mistake upon which a judgment was rendered by a court of law may file a motion for new trial or motion for reconsideration to challenge the judgment.

2. Yes, a motion for new trial or motion for reconsideration can be filed to challenge a judgment based on a compromise agreement.

3. No, an order denying a motion for new trial or reconsideration is not appealable. The remedy is to appeal from the judgment itself and not from the order rejecting the motion.

4. If the 15-day period for taking an appeal has lapsed, the aggrieved party can avail of Rule 38 by filing a petition for relief from judgment within 60 days after learning of the judgment, but not more than six (6) months after the judgment was entered.

5. Yes, a petition for relief from judgment can still be filed after the 15-day period for taking an appeal has lapsed.

6. If the petition for relief from judgment is denied, the aggrieved party can file a special civil action for certiorari under Rule 65 from the order rejecting the petition for relief from judgment.

7. The petition for certiorari filed by respondent Acero with the Court of Appeals is the wrong remedy. A simple appeal to the Court of Appeals would have sufficed. The petition is also filed out of time, as it was filed prior to the effectivity of the 1997 Rules of Court which prescribed a 60-day period for filing such petition.

8. The non-inclusion of a party in a compromise agreement does not render the agreement void. The agreement remains valid and binding as to the parties who signed it.

9. The Compromise Agreement is not vague and uncertain. While the exact area of encroachment was not specified in the agreement, it can be determined from the technical description of the plaintiffs' title, which the defendant admitted to be correct. The object of the agreement is considered determinate and specific.

10. The term "portion" in paragraph 3 of the Compromise Agreement refers to the property of the plaintiff that is being encroached upon by the respondent. Regardless of whether it is the entire lot or only a portion occupied by the respondent that will be affected by the encroachment, what controls is the encroachment on the lot of the plaintiff.

11. The terms of the Compromise Agreement are clear and leave no doubt upon the intent of the parties. The alleged vagueness in the object of the agreement cannot be used as an excuse for its nullification.

12. The compromise judgment cannot be set aside on the ground of mistake. It is presumed that the parties to a contract know and understand the import of their agreement. The party alleging mistake must prove that they did not know the doubt, contingency, or risk affecting the object of the contract.

13. The alleged mistake in the Compromise Agreement is not excusable. The respondent was already aware of the technical description of the titled lots and the boundaries and area of the lot he leased. He could have easily taken precautionary measures to verify the encroachment of the area he was leasing on the titled lot but failed to do so. The mistake was a result of palpable neglect and cannot be used to nullify the agreement.

14. Failure to specify in the Compromise Agreement that respondent intended to vacate only a portion of the property is not sufficient to nullify the agreement. It was the respondent's responsibility to ensure that such provision was incorporated in the agreement, and his failure to do so is considered negligence on his part and does not invalidate the agreement.

15. The case is ordered to be remanded back to the Pasay RTC, Branch III for further proceedings with respect to petitioner Domingo Realty's complaint against defendant David Victorio.

PRINCIPLES:

• A contract where the consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.

• A judgment rendered on the basis of a compromise agreement is final, unappealable, and immediately executory.

• If a party claims that his consent to a compromise agreement was obtained through fraud, mistake, or duress, he must file a motion for new trial or motion for reconsideration to challenge the judgment.

• An order denying a motion for new trial or reconsideration is not appealable.

• If the 15-day period for taking an appeal has lapsed, a petition for relief from judgment can be filed.

• If the petition for relief from judgment is denied, a special civil action for certiorari can be filed.

• A petition for certiorari is not a substitute for a lost appeal. The proper remedy in such cases is a petition for relief from judgment.

• The non-inclusion of a party in a compromise agreement does not render the agreement void. The agreement remains valid and binding as to the parties who signed it.

• The object of a contract need not be specified with absolute certainty. It is enough that the object is determinable for the contract to be considered valid.

• Contracts must be construed so as to give effect to all the provisions.

• The literal meaning of the stipulations in a contract will control.

• Mistake, fraud, violence, intimidation, undue influence, or falsity of documents can nullify a compromise agreement.

• There is no mistake if the party alleging it knew the doubt, contingency, or risk affecting the object of the contract.

• To invalidate consent, the error must be excusable, arising from facts unknown to the party alleging it.

• A mistake caused by manifest negligence cannot invalidate a juridical act.

• Contracts bind the parties not only to what has been expressly stipulated but also to all necessary consequences thereof.

• Courts are not authorized to extricate parties from the necessary consequences of their acts.

• Parties to a compromise agreement must act in good faith and make reciprocal concessions.

• Compromises are to be favored and cannot be set aside if the parties acted in good faith.

• Courts cannot make or alter contracts to save parties from adverse stipulations.

• Parties to contracts involving titled lands must exercise diligence by verifying the authenticity and validity of the title, verifying the boundaries of the lot, conducting ocular inspection, inquiring from adjacent owners, and undertaking other measures to make the public aware of the transaction.

• The court has the authority to remand a case back to the trial court for further proceedings if deemed necessary.