G.R. No. L-46703. November 29, 1977.
TAN CHUAN LEONG or RAMON C. L. TAN PALANCA and GILBERT K. TAN PALANCA, petitioners, vs. THE HONORABLE COURT OF APPEALS (Fourth Division) and METROPOLITAN BANK & TRUST COMPANY, respondents.

FACTS

Petitioners Tan Chuan Leong and Gilbert K. Tan Palanca sought a review of the Court of Appeals’ decision dated July 6, 1977, in CA-G.R. No. 51715-R. The appellate court had modified the trial court’s judgment by declaring a specific sale of property null and void for being simulated and fictitious, while affirming the decision in all other respects. The case originated from a complaint filed by Metropolitan Bank & Trust Company against the petitioners and others for the collection of a sum of money.
Within the extended period to file their petition for review with the Supreme Court, the petitioners’ counsel filed a Manifestation dated October 7, 1977. They informed the Court that the parties had successfully concluded an amicable settlement. Attached to the manifestation was a Compromise Agreement, executed by their respective counsels on September 27, 1977, wherein the petitioners agreed to pay the bank the total sum of Thirty-Three Thousand Pesos (P33,000.00) in full settlement of the bank’s claim and for attorney’s fees.

ISSUE

Whether the Compromise Agreement executed by the parties’ counsels is valid and should be approved by the Supreme Court to terminate the case.

RULING

Yes, the Supreme Court approved the Compromise Agreement and rendered judgment in accordance with its terms. The legal logic is anchored on the principle that compromises are highly favored in law as a means to settle disputes and avoid protracted litigation. Upon the filing of the Compromise Agreement, the Court, per its Resolution of October 19, 1977, required the parties to confirm the agreement executed by their counsels, pursuant to Rule 138, Section 23 of the Rules of Court, which governs attorneys’ authority to bind their clients. Both parties duly complied by submitting their Confirmations dated October 28, 1977, and a Manifestation dated November 10, 1977, thereby ratifying the acts of their counsel and removing any doubt as to the authority behind the settlement.
The Court found the terms of the agreement to be in order, as it provided for the full satisfaction of the respondent bank’s monetary claim against the petitioners. The agreement expressly stipulated that the payment of P33,000.00 constituted full settlement and that, upon its receipt, the bank would have no further claim against the petitioners arising from the complaint. Furthermore, the parties prayed that the Supreme Court approve the agreement and embody it in its decision, thereby modifying the Court of Appeals’ decision insofar as they were inconsistent. Consequently, the Supreme Court granted the prayer, approving the compromise as a final and executory resolution of the case. The decision was concurred in by all members of the Division.