G.R. No. 113070 September 30, 1999
HON. PAMPIO A. ABARINTOS, Former Presiding Judge, Branch XLV, Regional Trial Court of Negros Oriental, JOSE A. GARCIA, TOMAS GARCIA, VIRGINIA A. GARCIA and MARIA A. DIAZ, petitioners, vs. COURT OF APPEALS, FRANCISCA A. PONCE DE LEON, ANA MARIA A. DIAGO, AGUEDA A. DIONALDO, MA. LUISA A. VALERA, MA. CRISTINA A. LACSON, ANTONIO B. ARNAIZ, RAMON B. ARNAIZ, MA. MAGDALENA B. ARNAIZ, MA. MANUELA A. SINCO, TERESITA A. PALANCA, JOSEFINA A. TAMBUNTING, CONCHITA Z. ARNAIZ, VICENTE Z. ARNAIZ, LEOPOLDO Z. ARNAIZ, LIBRADA A. LARENA, ARACELI A. PRESTON, ANTONIO E. ARNAIZ, JOSE RAMON B. ARNAIZ and LEOPOLDO E. ARNAIZ, respondents.

FACTS

Petitioners and private respondents are co-owners of Arnaiz Hermanos, a hacienda. Private respondents own around 64.485976% of the property, while petitioners own 35.5140232%. Petitioner Jose A. Garcia, who owned a 5.91900305% share, was appointed administrator via a special power of attorney. Over time, private respondents lost trust in Garcia’s administration. An audit revealed improper disbursements and transactions prejudicial to the co-owners. The majority co-owners passed resolutions to manage the property themselves, required Garcia to account, and eventually decided to terminate the co-ownership. On November 17, 1990, the co-owners convened and partitioned the property. During this meeting, private respondents moved for Garcia to account for the proceeds during his administration, but Garcia walked out. The co-owners declared a quorum and implemented the resolution revoking Garcia’s special power of attorney. Subsequently, by majority vote, an action for accounting (Civil Case 9803) was filed against Garcia. On November 23, 1990, Garcia filed a complaint for partition with ex parte appointment of receiver (Civil Case No. 139-B). On November 26, 1990, petitioners filed an urgent ex parte motion for appointment of receiver without a notice of hearing and without furnishing a copy to private respondents. The next day, the RTC issued an order appointing a receiver without a hearing. The receiver later filed ex parte motions (without notice or hearing to private respondents) to withdraw and control co-ownership funds, which the court granted. On July 24, 1991, the parties entered into a compromise agreement in the related accounting case (Civil Case No. 9979), which provided for joint administration of remaining co-ownership properties by Ana Maria A. Diago and Jose A. Garcia, and the winding up of the co-ownership affairs. This compromise agreement was approved by the court. Private respondents filed a petition for certiorari with the Court of Appeals, challenging the RTC orders in the partition case (Civil Case 139-B). The Court of Appeals granted the petition, nullified the RTC orders, and enjoined further action in the partition case except to order its immediate dismissal with prejudice.

ISSUE

Whether the Court of Appeals correctly nullified the orders of the Regional Trial Court in the partition case (Civil Case 139-B) and ordered its dismissal.

RULING

Yes. The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The compromise agreement entered into by the parties and approved by the court in the related accounting case (Civil Case 9979) constituted a final judgment on the merits. This agreement provided for the joint administration of the remaining co-ownership properties by Ana Maria A. Diago and Jose A. Garcia and outlined the process for winding up the co-ownership affairs. The Supreme Court held that this compromise agreement, having been judicially approved, transcended its identity as a mere contract and became a judgment which was subject to execution. Consequently, the continuation of the partition suit (Civil Case 139-B) would be inconsistent with and would violate the terms of the final and executory compromise judgment. The Court of Appeals was therefore correct in nullifying the RTC orders issued in the partition case and in ordering its dismissal.