California Manufacturing Co. v. Las Piñas
REITERATIONFacts
The Antecedents: The underlying dispute involved assessments for local and real property taxes levied by the City of Las Piñas against California Manufacturing Company, Inc. (CMCI). The total assessed amount in question was P73,043,634.47. CMCI's factory in Las Piñas had ceased operations. Procedural History: CMCI filed a Petition for Review on Certiorari with the Supreme Court to challenge the tax assessments. After the parties submitted their respective comments and replies, the Court gave due course to the petition and directed the submission of memoranda. During the pendency of the case, CMCI offered to compromise the tax liabilities by paying fifty percent (50%) of the assessed amount. The Petition: The case reached the Supreme Court via a Petition for Review on Certiorari. Subsequently, a Joint Petition to Withdraw Petition for Review on Certiorari was filed. This withdrawal was prompted by a compromise agreement approved by the City Council of Las Piñas through City Resolution No. 2385-08, wherein CMCI agreed to pay 50% of the assessed taxes, amounting to P36,522,817.24, to facilitate business clearance and avoid further litigation.
Issue(s)
Whether the compromise agreement entered into by the parties is valid and should be approved. Whether the compromise agreement, once approved by the Supreme Court, has the force and effect of a judgment.
Ruling
The Supreme Court granted the Joint Petition/Motion to Withdraw Petition for Review on Certiorari. It rendered judgment in accordance with City Resolution No. 2385-08, Series of 2008 of the Sangguniang Panlungsod of Las Piñas, dismissing the case. The petitioner had already paid ₱36,522,817.24 in accordance with the compromised 50% of the assessed amount.
Ratio Decidendi
On the validity and approval of the compromise agreement: The Court found City Resolution No. 2385-08, Series of 2008 of the Sangguniang Panlungsod of Las Piñas to be validly executed and not contrary to law, morals, good customs, public order, or public policy. Article 1306 of the Civil Code of the Philippines allows contracting parties to establish stipulations as they deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. A compromise agreement is a contract where parties make reciprocal concessions to avoid or end litigation, and it is an accepted practice in courts. The Court therefore accepted and approved the compromise offer. On the force and effect of the compromise agreement: The Court held that a compromise agreement intended to resolve a matter already under litigation is a judicial compromise. Having judicial mandate and entered as its determination of the controversy, it has the force and effect of a judgment. It transcends its identity as a mere contract between the parties as it becomes a judgment that is subject to execution in accordance with the Rules of Court. Thus, a compromise agreement that has been made and duly approved by the court attains the effect and authority of res judicata, although no execution may be issued unless the agreement receives the approval of the court where the litigation is pending and compliance with the terms of the agreement is decreed.
Main Doctrine
A compromise agreement, when approved by the court, attains the force and effect of a judgment and has the authority of res judicata.