G.R. No. 178312 ; January 30, 2013
Land Bank of the Philippines, Petitioner, vs. Heirs of Spouses Jorja Rigor-Soriano and Magin Soriano, namely: Marivel S. Carandang and Joseph Soriano, Respondents.

FACTS

The respondents are the heirs of landowners whose two parcels of agricultural land, totaling 15.086 hectares, were placed under Operation Land Transfer pursuant to Presidential Decree No. 27. The Department of Agrarian Reform (DAR) and the Land Bank initially valued the properties at ₱10,000 per hectare. Dissatisfied, the respondents filed an action for just compensation before the Regional Trial Court (RTC), sitting as a Special Agrarian Court (SAC), arguing for a higher valuation based on their claim that the lands were irrigated and productive.
The SAC ruled in favor of the landowners, fixing just compensation at ₱1,227,571.10 with 6% annual interest from the date of taking, which it determined to be October 25, 1999. The Court of Appeals affirmed this decision. Land Bank elevated the case to the Supreme Court via a petition for review. During the pendency of this appeal, the parties executed a Compromise Agreement wherein the respondents agreed to accept a specific sum as full payment, thereby seeking to terminate the case.

ISSUE

The primary issue is whether the Compromise Agreement executed by the parties is valid and should be approved by the Court, thereby rendering the appeal moot.

RULING

The Supreme Court approved the Compromise Agreement and declared the case closed and terminated. The legal logic rests on the nature and validity of compromise agreements under the Civil Code. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. For its validity, it must comply with the requisites of a contract: consent, object, and cause. Crucially, its terms must not be contrary to law, morals, good customs, public policy, or public order.
The Court examined the Agreement and found it to be a judicial compromise, as the parties intended it to fully settle their pending litigation. The respondents expressly accepted the stipulated amount as full just compensation and acknowledged receipt, thereby achieving the ultimate objective of the action. There was no showing that the agreement was vitiated by fraud, mistake, or duress, or that it contravened any legal norm. Since a valid compromise has the effect of res judicata and is immediately binding, and considering that the payment was fully executed and the properties delivered, no further judicial action was required. The approval of the agreement thus rendered the substantive appeal on the valuation moot.