GR 148318; (November, 2004) (Digest)
G.R. No. 148318 ; November 22, 2004
NATIONAL POWER CORPORATION, petitioner, vs. HON. ROSE MARIE ALONZO-LEGASTO, as Presiding Judge, RTC of Quezon City, Branch 99, JOSE MARTINEZ, Deputy Sheriff, RTC of Quezon City, CARMELO V. SISON, Chairman, Arbitration Board, and FIRST UNITED CONSTRUCTORS CORPORATION, respondents.
FACTS
NPC and FUCC entered into a contract for the construction of geothermal power plant facilities. During execution, FUCC encountered hard rock and requested to perform blasting works, which were not originally included. The parties negotiated a price for this extra work, with FUCC eventually accepting NPC’s offer of P458.07 per cubic meter in a June 28, 1993 letter. FUCC later abandoned the project, leading NPC to take over. FUCC filed various suits. To end the litigation, the parties executed a Compromise Agreement on April 20, 1995, which was judicially approved. The agreement stipulated that all claims arising from the contract were deemed settled, and any unresolved disputes would be referred to arbitration.
ISSUE
Whether the Compromise Agreement bars FUCC from claiming additional compensation for the blasting works.
RULING
Yes. The Supreme Court ruled that FUCC’s claim is barred by the Compromise Agreement. A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. It has the force of law between the parties and is conclusive upon them. The Court emphasized that the agreement executed by NPC and FUCC was a general compromise, settling all differences related to the BACMAN II project. The clear language of the agreement stated that all claims of FUCC against NPC were “deemed settled, waived and withdrawn.” The claim for additional blasting compensation, being a demand that existed and was known to FUCC at the time of the agreement’s execution, is encompassed within this general settlement. FUCC cannot resurrect a claim it had voluntarily relinquished for the sake of peace and to terminate all litigation. The Court upheld the final and binding nature of the compromise, rendering the subsequent arbitration award for extra blasting costs invalid for violating the agreement’s terms.