G.R. No. 205915 , November 10, 2015
Asset Pool A (SPV-AMC), Inc., Petitioner, vs. Clark Development Corporation, Respondent.

FACTS

Petitioner Asset Pool A (SPV-AMC), Inc. (APA) is the transferee and successor-in-interest of secured creditors United Coconut Planters Bank and Metropolitan Bank and Trust Company of Mondragon Leisure and Resorts Corporation (MLRC). The case originated from APA’s appeal of the Court of Appeals’ decision dismissing its petition for certiorari, which assailed a Regional Trial Court order. The underlying action was for specific performance and damages to compel respondent Clark Development Corporation (CDC) to include the secured creditors’ claims in the bidding documents for the privatization of the Mimosa Leisure Estate (MLE). During the pendency of the appeal, CDC announced a new public bidding for the MLE. The Supreme Court issued a temporary restraining order on October 21, 2015, enjoining CDC from proceeding with the disposal of the MLE. Subsequently, the parties submitted an Urgent Joint Motion to Render Judgment Based on a Compromise Agreement, attaching the said agreement dated November 6, 2015.

ISSUE

Whether the Compromise Agreement dated November 6, 2015, entered into by the parties should be approved by the Supreme Court.

RULING

The Supreme Court approved the Compromise Agreement. The Court held that a compromise agreement is a contract whereby parties, by making reciprocal concessions, avoid or end litigation. Citing Article 2029 of the Civil Code, the Court emphasized its role in persuading parties to agree upon a fair compromise. The terms of the agreement, not being contrary to law, morals, good customs, public order, or public policy, were deemed valid. The agreement has the effect and authority of res judicata upon approval. Consequently, the Court rendered judgment in accordance with the compromise terms, enjoined the parties to comply in good faith, lifted the temporary restraining order dated October 21, 2015, and dismissed the appeal.