G.R. No. L-24614 August 17, 1967
JULIA DE LA MERCED, ET AL., plaintiffs-appellants, vs. THE ROMAN CATHOLIC ARCHBISHOP OF MANILA ET AL., defendants-appellees.

FACTS

The plaintiffs-appellants, representing numerous lessees of a parcel of land in Paco, Manila, owned by the defendant Roman Catholic Archbishop of Manila, filed a complaint in February 1962. They alleged they had occupied the premises under oral leases for indefinite terms, introduced improvements, and that the defendants had entered into a new lease agreement for the same premises without their knowledge, serving them notices to vacate. They sought to have their leases respected, their duration fixed, to be given preference in leasing the premises, and to be indemnified for improvements if evicted. After the defendants filed their answers, the parties submitted a “Compromise Agreement” to the trial court. The agreement submitted to the court’s discretion the determination of the length of time plaintiffs could remain on the land, after which they would voluntarily vacate and remove their improvements, with failure to do so resulting in forfeiture of improvements. It also stipulated payment of rental arrears from the filing of the complaint at double the monthly rate until paid, and that pre-existing arrears would be subject to future negotiations. The court rendered a decision on July 31, 1963, approving the agreement and ordering plaintiffs to vacate within 18 months and pay rentals as stipulated. Almost six months later, defendants moved for execution, alleging plaintiffs failed to pay the stipulated rentals. Plaintiffs, through new counsel, opposed execution, claiming the compromise was unauthorized and they were uninformed of its terms, and prayed for the judgment to be set aside. The Court of First Instance overruled the objection and ordered execution, prompting the plaintiffs’ appeal.

ISSUE

Whether the “Compromise Agreement” was an unauthorized compromise requiring special attorney authority, thereby rendering the judgment based on it void and subject to being set aside.

RULING

The Supreme Court affirmed the order for execution. It ruled that the “Compromise Agreement” was not a true compromise requiring special attorney authority. A true compromise involves reciprocal concessions under Article 2028 of the Civil Code. Analysis of the agreement showed it contained no concessions from the plaintiffs-appellants but merely recognized their existing legal obligations as lessees: the court independently fixed the 18-month period to vacate under its Article 1687 power; the obligation to pay rental arrears and the stipulated rates arose from law and pre-existing facts, not from the agreement; the provision for paying arrears at double the monthly rate was a concession to the lessees by allowing installment payments; the forfeiture clause for failure to remove improvements was consistent with Article 1678 of the Civil Code; and the clause on future negotiations settled nothing. Since the agreement did not constitute a compromise of claims but a recognition of legal obligations, the rules on special authority for attorneys to compromise were inapplicable. The judgment based on the agreement had become final and executory for lack of appeal, and there was no error in the lower court’s refusal to set it aside.