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D. Compromise

1. CONCEPT

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. (Article 2028, Civil Code)

2. COURT’S DUTY

a. To persuade litigants

The court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise. (Article 2029, Ibid.)

b. Suspension of civil action or proceeding

Every civil action or proceeding shall be suspended:

1) If willingness to discuss a possible compromise is expressed by one or both parties; or

2) If it appears that one of the parties, before the commencement of the action or proceeding, offered to discuss a possible compromise but the other party refused the offer. (Article 2030, Ibid.)

The duration and terms of the suspension of the civil action or proceeding and similar matters shall be governed by such provisions of the rules of court as the Supreme Court shall promulgate. Said rules of court shall likewise provide for the appointment and duties of amicable compounders. (Paragraph 2, Article 2030, Ibid.)

c. Mitigation of damages

The courts may mitigate the damages to be paid by the losing party who has shown a sincere desire for a compromise. (Article 2031, Ibid.)

d. When court approval is necessary

The court’s approval is necessary in compromises entered into by guardians, parents, absentee’s representatives, and administrators or executors of decedent’s estates. (Article 2032, Ibid.)

3. JURIDICAL PERSON

Juridical persons may compromise only in the form and with the requisites which may be necessary to alienate their property. (Article 2033, Ibid.)

4. CIVIL LIABILITY EX DELICTO

There may be a compromise upon the civil liability arising from an offense; but such compromise shall not extinguish the public action for the imposition of the legal penalty. (Article 2034, Ibid.)

5. NON-COMPROMISABLE ACTIONS

No compromise upon the following questions shall be valid:

1) The civil status of persons;

2) The validity of a marriage or a legal separation;

3) Any ground for legal separation;

4) Future support;

5) The jurisdiction of courts;

6) Future legitime. (Article 2035, Ibid.)

6. COVERAGE OF COMPROMISE

Art. 2036. A compromise comprises only those objects which are definitely stated therein, or which by necessary implication from its terms should be deemed to have been included in the same. (Article 2036, Ibid.)

7. GENERAL RENUNCIATION

A general renunciation of rights is understood to refer only to those that are connected with the dispute which was the subject of the compromise. (Paragraph 2, Article 2036, Ibid.)

8. RES JUDICATA BETWEEN PARTIES

Art. 2037. A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise. (Article 2037, Ibid.)

9. FRAUD, VIOLENCE, INTIMIDATION, UNDUE INFLUENCE, FALSITY OF DOCUMENTS

A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents, is subject to the provisions of Article 1330 of this Code. (Article 2038, Ibid.)

However, one of parties cannot set up a mistake of fact as against the other if the latter, by virtue of the compromise, has withdrawn from a litigation already commenced. (Paragraph 2, Article 2038, Ibid.)

A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. (Art. 1330, Ibid.)

10. NEWLY-DISCOVERED DOCUMENTS

When the parties compromise generally on all differences which they might have with each other, the discovery of documents referring to one or more but not to all of the questions settled shall not itself be a cause for annulment or rescission of the compromise, unless said documents have been concealed by one of the parties. (Article 2039, Ibid.)

But the compromise may be annulled or rescinded if it refers only to one thing to which one of the parties has no right, as shown by the newly-discovered documents. (Paragraph 2, Article 2039, Ibid.)

11. FINAL JUDGMENT

If after a litigation has been decided by a final judgment, a compromise should be agreed upon, either or both parties being unaware of the existence of the final judgment, the compromise may be rescinded. (Article 2040, Ibid.)

Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a compromise. (Paragraph 2, Article 2040, Ibid.)

12. FAILURE OR REFUSAL TO ABIDE BY THE COMPROMISE

If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. (Article 2041, Ibid.)

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