G.R. No. 213421 , August 24, 2020
UNIROCK CORPORATION, AS REPRESENTED BY EDISON U. OJERIO, PETITIONER, VS. ARMANDO C. CARPIO* AND HARDROCK AGGREGATES, INC., RESPONDENTS.

FACTS

This case originated from a resolved quieting of title case where Unirock was declared the owner of certain properties. During execution, the parties entered into a Memorandum of Agreement (MOA), approved by the RTC as a Compromise Judgment. The MOA granted Hardrock the exclusive right to quarry on the property in exchange for royalty payments to Unirock. Subsequently, a third party, Teresa Gonzales, filed a separate case claiming ownership and seeking the royalties, leading the RTC in that case to order Hardrock to deposit royalties in escrow pending resolution.
Claiming Hardrock failed to pay royalties as agreed, Unirock filed a motion for a writ of execution to enforce the Compromise Judgment in the original case. Hardrock opposed, arguing execution was unjust because Unirock’s ownership was being challenged in Gonzales’s pending case and because the DENR had cancelled the MOA. The RTC denied Unirock’s motion as premature, finding its evidence of non-payment insufficient. The CA affirmed, ruling the MOA’s cancellation by the DENR and the pending third-party case were supervening events that rendered execution inequitable.

ISSUE

Whether the Court of Appeals erred in affirming the denial of the motion for execution of the compromise judgment.

RULING

Yes. The Supreme Court reversed the CA and remanded the case. The legal logic is twofold. First, a judgment based on a compromise agreement has the force of res judicata and is immediately executory, akin to a final judgment. The alleged supervening events—the DENR’s cancellation of the MOA and Gonzales’s pending case—do not bar its execution. The DENR-POA’s cancellation, involving a mining agreement, cannot nullify the civil contract aspects of the MOA already embodied in a final judicial compromise. Gonzales’s claim, being a separate action, does not affect the finality of the compromise between Unirock and Hardrock.
Second, under Article 2041 of the Civil Code, a party aggrieved by a breach of a compromise may either enforce it or consider it rescinded and revert to the original demand. Unirock’s motion for execution was a clear choice to enforce the agreement. The RTC and CA erred in requiring a separate action for rescission. Since Hardrock effectively admitted the breach by not denying non-payment and raising invalid defenses, the fact of breach is established. The case is remanded to the RTC solely to receive evidence for the proper computation of the unpaid royalties, as the extent of liability remains to be determined.