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FELIPE O. MAGBANUA v. RIZALINO UY

FACTS:

This case involves a Petition for Review filed under Rule 45 of the Rules of Court, challenging the Decision and the Resolution of the Court of Appeals (CA) in CA-GR SP No. 53581. The CA Decision overturned the two resolutions of the National Labor Relations Commission (NLRC) and reinstated the order of the Labor Arbiter. The final and executory decision of the Supreme Court in a previous case affirmed with modification the decision of the NLRC and ordered hearings to determine the amount of wage differentials due to the petitioners. The petitioners, through a manifestation signed by all the parties, stated that the judgment award had been complied with and waived all other benefits due to them. However, the petitioners later filed a motion for the issuance of a writ of execution, claiming they only received partial payment of the judgment award. Six of the eight petitioners filed another manifestation, stating they are already satisfied with what they have received and abandoned any further claims. The Labor Arbiter denied the motion for the issuance of a writ of execution and considered the cases closed and terminated. The NLRC reversed the Labor Arbiter's decision, holding that quitclaims and releases are normally frowned upon as contrary to public policy. The CA, on the other hand, held that compromise agreements may be entered into even after a final judgment, and found that the petitioners validly released the respondent from any claims through the execution of a waiver pursuant to the compromise agreement.

ISSUES:

  1. Whether a compromise agreement entered into after a final judgment is valid.

  2. Whether Article 2040 of the Civil Code applies to the validity of a compromise agreement entered into after a final judgment.

  3. Whether a compromise agreement entered into after final judgment is valid and enforceable.

  4. Whether the waiver of claims or quitclaim executed by the petitioners is valid.

  5. Whether the absence of the Labor Arbiter when the waivers were executed invalidates them

  6. Whether respondent's counsels encroached upon the professional employment of petitioners' lawyer when they facilitated the waivers

  7. Whether the timely filing of petitioners' Motion for Reconsideration with the CA should be discussed

RULING:

  1. A compromise agreement entered into after a final judgment is valid as long as it complies with the requisites and principles of contracts. Once a compromise agreement is given judicial approval, it becomes more than a contract - 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. Execution becomes a ministerial duty of the court in case of nonfulfillment of its terms and conditions.

  2. Article 2040 of the Civil Code does not refer to the validity of a compromise agreement entered into after final judgment. It only allows the rescission of a compromise agreement if either or both parties are unaware of the existence of a final judgment at the time of the agreement. Lack of knowledge of the final judgment is an important requisite for the applicability of Article 2040. In the present case, there is no lack of knowledge of the final judgment, thus Article 2040 does not apply.

  3. A compromise agreement entered into after final judgment is valid and enforceable, provided that it complies with the requisites and principles of contracts. The validity of the agreement is not determined by when it was entered into, but by the presence of consent, an object certain, and a valid cause of obligation. The Commissioner of Customs, as a mere agent of the government, is not authorized to accept anything different from or less than what is adjudicated in favor of the government based on the original judgment.

  4. The presence or absence of counsel when a waiver is executed does not determine its validity. There is no law requiring the presence of counsel to validate a waiver. The test for the validity of a waiver is whether it was executed voluntarily, freely, and intelligently, and whether the consideration for it was credible and reasonable. In this case, the petitioners failed to present any evidence to show that their consent had been vitiated.

  5. The labor arbiter's absence when the waivers were executed does not invalidate them. The absence was remedied by the compliance with the procedure set forth in the law. The labor arbiter made searching questions during the pre-execution conference to ensure that petitioners voluntarily and freely executed the waivers.

  6. The Court declines to rule on the allegation of professional misconduct by respondent's counsels as the present action is not the proper forum for such charge, and petitioners failed to present any supporting evidence.

  7. The third issue is not discussed because the Court's decision has resolved the case on the merits.

PRINCIPLES:

  • A compromise agreement is a contract wherein the parties make reciprocal concessions to resolve their differences and avoid or end a lawsuit. It must not be contrary to law, morals, good customs, and public policy, and must be freely and intelligently executed by and between the parties. Once a compromise agreement is given judicial approval, it becomes a determination of a controversy and has the force and effect of a judgment.

  • A compromise agreement entered into after a final judgment is valid as long as it complies with the requisites and principles of contracts. It is immediately executory and not appealable, except for vices of consent or forgery.

  • Article 2040 of the Civil Code allows the rescission of a compromise agreement if either or both parties are unaware of the existence of a final judgment at the time of the agreement. Lack of knowledge of the final judgment is an important requisite for the applicability of Article 2040.

  • A compromise agreement entered into after final judgment is valid and enforceable if it complies with the requisites and principles of contracts.

  • The presence or absence of counsel when a waiver is executed does not determine its validity. The test for the validity of a waiver is whether it was executed voluntarily, freely, and intelligently, and whether the consideration for it was credible and reasonable.

  • A compromise agreement entered into by the parties must be approved by the Labor Arbiter to ensure that it was voluntary and not contrary to law, morals, and public policy.

  • The absence of the Labor Arbiter during the execution of waivers can be cured if the procedure for approval is followed and there is evidence that the waivers were executed freely and voluntarily.

  • Charges of professional misconduct should be raised in the proper forum and supported by evidence.