G.R. No. 86760 ; April 30, 1991
CITY OF ZAMBOANGA, VITALIANO D. AGAN, EFREN S. MARIANO and PEDRO A. PACIO, petitioners, vs. HON. PELAGIO S. MANDI, Presiding Judge of Regional Trial Court, Branch 12, AURELIO JULIAN and BENITA LEDESMA JULIAN, respondents.

FACTS

Petitioner City of Zamboanga filed an eminent domain case against respondent spouses Julian over a parcel of land. The trial court fixed just compensation at P0.18 per sq.m., a decision affirmed by the Court of Appeals. The Julians appealed to the Supreme Court. Pending appeal, the parties negotiated a settlement. The Julians wrote the City offering to sell the lot at P3.00 per sq.m. and to move for dismissal of the appeal upon acceptance. The City Council authorized the Mayor to sign a Compromise Agreement at that price, “subject… to the approval of the Supreme Court.” A Compromise Agreement was signed, and a joint motion for its approval was filed with the Supreme Court.
Subsequently, without waiting for the Supreme Court’s approval, the City Council passed another resolution authorizing the Mayor to sign a Deed of Absolute Sale at P3.00 per sq.m., this resolution omitting the condition of prior Supreme Court approval. The Deed was executed. The City later received a copy of the Entry of Judgment showing the appellate decision had become final and executory earlier. When the City refused to pay the P3.00 rate, the Julians filed a mandamus case to enforce the Compromise Agreement. The trial court granted mandamus, ordering the City to pay.

ISSUE

Whether the Compromise Agreement is valid and enforceable despite the lack of Supreme Court approval and the subsequent finality of the appellate decision in the expropriation case.

RULING

Yes, the Compromise Agreement is valid and enforceable. The Court ruled that the parties’ subsequent conduct manifested a clear intent to novate or supersede the final judgment in the expropriation case. Although the initial city resolution made the agreement subject to Supreme Court approval, the City’s subsequent acts—specifically, passing a second unconditional resolution authorizing the sale and actually executing the Deed of Absolute Sale—demonstrated it had abandoned that suspensive condition. This created new obligations voluntarily assumed by the parties.
The finality of the appellate decision does not invalidate the compromise. Under Article 2040 of the Civil Code, a compromise after final judgment is permissible. The City’s alleged ignorance of that finality when it compromised is not a ground to attack the agreement, as the Julians had already withdrawn from the appeal in consideration of the settlement. The proper remedy for such ignorance, if any, would be an action for rescission under Article 2040, which the City did not avail. Therefore, the Julians correctly sought to enforce the compromise via mandamus under Article 2041 of the Civil Code. The trial court did not commit grave abuse of discretion in issuing the writ. The Petition was dismissed.