Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 171820 December 13, 2007
DIAMOND BUILDERS CONGLOMERATION,
ROGELIO S. ACIDRE, TERESITA P. ACIDRE, GRACE C.
OSIAS, VIOLETA S. FAIYAZ and EMMA S.
CUTILLAR, Petitioners,
vs.
COUNTRY BANKERS INSURANCE
CORPORATION, Respondent.
DECISION
NACHURA, J.:
Before us is a petition for review on certiorari to annul the
Decision1 of the Court of Appeals (CA) in CA-G.R. C.V. No.
48603, which reversed the Decision2 of the Regional Trial Court,
Branch 7, Manila (RTC Manila) in Civil Case No. 92-62029 and
granted respondent Country Bankers Insurance Corporation’s
(Country Bankers’) prayer for a sum of money against the
petitioners.
The controversy originated from a civil case3 pending before the
Regional Trial Court, Branch 125, Caloocan City (RTC Caloocan)
filed by Marceliano Borja (Borja) against Rogelio S. Acidre (Rogelio)
for the latter’s breach of his obligation to construct a residential and
commercial building. Rogelio is the sole proprietor of petitioner
Diamond Builders Conglomeration (DBC).
To put an end to the foregoing litigation, the parties entered into a
Compromise Agreement4 which provided, in part:
COMPROMISE AGREEMENT
1. x x x
a. In lieu of rescission, the parties have mutually agreed, subject
to the provisions hereunder, to fully implement the building
contract dated October 1, 1990 and supplemented on October
2, 1990 with an additional scope of work marked as Annex "A"
of the complaint and the Letter-Agreement dated November
16, 1991 signed by the [petitioner Rogelio] and plaintiff’s son(,)
Ferdinand A. Borja, marked as Annex "B" of the complaint,
which required full compliance of the structural design of
Engr. Ramos and explicit reminders in the constructing of the
residential/commercial building and the additional works
therein specified for the added consideration of ₱100,000.00
as alleged in paragraphs 2 and 3 of the complaint, Annex "C"
hereof.
b. [Petitioner Rogelio] admits full payment of plaintiff to him
the amount of ₱1,530,000.00 leaving the balance of
₱570,000.00 of the contractual price of ₱2,100,000.00 for the
construction of the buildings aforementioned.
c. [Petitioner Rogelio] agrees to fully complete the construction
of the residential/commercial building mentioned in
paragraph 1 hereof provided plaintiff would pay to him,
subject to hereunder terms, the aforesaid amount of
₱570,000.00.
d. The plaintiff agrees to pay [petitioner Rogelio] the amount
of ₱570,000.00 subject to the terms hereunder set forth and
subject strictly to the condition that [petitioner Rogelio] will
finish the building above-described pursuant to the agreements
[Annex(es) "A" and "B"] set forth in paragraph 1 hereof.
e. Plaintiff shall pay [petitioner Rogelio] the amount of
₱570,000.00 as follows:
i. ₱370,000.00 – the 5th day from approval of this
compromise agreement by this Honorable Court and to
coincide (with) the start of the 75 days for [petitioner
Rogelio] to complete the construction of the building.
ii. ₱200,000.00 – When the aforedescribed building is
fully constructed pursuant to agreements stated in
paragraph 1 hereof.
iii. Said building must be fully finished pursuant to the
agreement stated in paragraph 1 hereof within 75 days
(excluding Sundays and Holidays) counted from receipt
of payment of ₱370,000.00. The date of receipt to be
issued by [petitioner Rogelio] will control. The 75th day
will be 12:00 noon of the 75th day.
iv. From receipt of the aforesaid amount of ₱370,000.00,
[petitioner Rogelio] shall submit in favor of plaintiff a
performance or surety bond in the equivalent amount of
₱370,000.00 – to answer or indemnify plaintiff in the
event the building is not finished on the 75th day.
v. In the event the building is finished within 75 days as
heretofore stated and pursuant to the agreements set
 forth in paragraph 1 hereof, in addition to the amount of
₱200,000.00, the plaintiff shall also pay [petitioner
Rogelio] the amount of ₱90,000.00 by way of [bonus].
However, in the event [petitioner Rogelio] shall fail to
fully complete the construction of the building pursuant
to the agreements set forth in paragraph 1 hereof within
75 days as heretofore stated, [petitioner Rogelio] shall not
be entitled to any further payments and the performance
or surety bond above-mentioned shall be fully
implemented by way of penalizing [petitioner Rogelio]
and/or as award for damages in favor of plaintiff.
xxxx
f. x x x
g. That the construction herein contemplated shall not extend
beyond 75 days. Said period shall commence five days from
the date of the final approval hereof by this Honorable Court.
i. That any violation and/or avoidance of the terms and
conditions of this Compromise Agreement by either of the
parties herein shall forthwith entitle the aggrieved party to an
immediate execution hereof and to the necessary and
corresponding reliefs and remedies therefore. (Emphasis
supplied.)
The RTC Caloocan approved the Compromise Agreement and
rendered a Decision5 in accordance with the terms and conditions
contained therein.
In compliance with the Compromise Agreement, Rogelio obtained
a Surety Bond6 from Country Bankers in favor of the spouses
Borja.7 In this regard, Rogelio and his spouse, petitioner Teresita P.
Acidre, together with DBC employees Grace C. Osias, Violeta S.
Faiyaz and Emma S. Cutillar (the other petitioners herein), signed
an Indemnity Agreement8 consenting to their joint and several
liability to Country Bankers should the surety bond be executed
upon.
On April 23, 1992, Country Bankers received a Motion for
Execution9 of the surety bond filed by Borja with the RTC Caloocan
for Rogelio’s alleged violation of the Compromise Agreement.
Consequently, Country Bankers, in a letter10 dated May 13, 1992,
advised petitioners that in the event it is constrained to pay under
the surety bond to Borja, it shall proceed against petitioners for
reimbursement.
In turn, petitioners wrote Country Bankers informing the latter of
the filing of an Opposition to Borja’s Motion for Execution. 11 In
spite of the opposition, however, the RTC Caloocan issued a Writ
of Execution12 on May 25, 1992. Petitioners then filed a motion for
reconsideration.
On May 29, 1992, Sheriff Perceverando Pangan of RTC Caloocan
served Country Bankers a copy of the writ. Posthaste, Country
Bankers, in writing, requested Sheriff Pangan for a 10-day grace
period within which to settle the claim.13
Subsequently, Rogelio filed an Urgent Omnibus Motion14 to
suspend the Writ of Execution and to resolve the Motion for
Reconsideration dated June 3, 1992. Upon receipt of the Omnibus
Motion, Country Bankers forthwith wrote Sheriff Pangan and
requested that the implementation of the Writ of Execution be held
in abeyance so as not to render moot and academic the RTC
Caloocan’s resolution on the Omnibus Motion.15
Nonetheless, on June 9, 1992, Country Bankers was served a Notice
of Levy/Sheriff’s Sale16 with a list of its personal properties to be
sold at the scheduled public auction on June 15, 1992.
The next day, or on June 10, 1992, Country Bankers verified with
the RTC Caloocan the status of petitioners’ Omnibus Motion. It
was informed that the motion had yet to be acted upon. On the
same date, Sheriff Pangan arrived at Country Bankers’ office, and
the latter was thus constrained to pay the amount of the surety
bond.17
Significantly, on June 22, 1992, twelve (12) days after the satisfaction
of judgment in Civil Case No. C-14745, Rogelio filed a Petition for
Certiorari and Prohibition with Preliminary Injunction and
Restraining Order18 with the CA, docketed as CA-G.R. SP No.
28205. Although the appellate court issued a Temporary Restraining
Order (TRO), the petition was eventually denied due course and
dismissed outright for being fait accompli, as what it sought to
enjoin or prohibit had already been fully satisfied and executed. 19
In the meantime, after Country Bankers was compelled to pay the
amount of the surety bond, it demanded reimbursement from the
petitioners under the Indemnity Agreement.20 However, petitioners
refused to reimburse Country Bankers.
In addition, upon the dismissal of their petition in CA-G.R. SP No.
28205, petitioners wrote Country Bankers and informed the latter
that the voluntary payment of the bond effectively prevented them
from contesting the validity of the issuance of the Writ of
Execution.21
As a result, Country Bankers filed a complaint for sum of money
against the petitioners which, as previously stated, the RTC Manila
dismissed. It disposed of the case, thus:
WHEREFORE, and considering the foregoing, judgment is hereby
rendered:
1. Dismissing the complaint for lack of merit;
2. On the counterclaim, ordering [Country Bankers] to pay
[petitioners] attorney’s fees of ₱50,000.00, plus the costs of
suit.
SO ORDERED.
On appeal, the CA reversed and set aside the decision of the RTC
Manila, to wit:
WHEREFORE, premises considered, the Appeal is GRANTED
and the Decision dated November 2, 1992 of Branch 7 of the
Regional Trial Court of Manila is hereby REVERSED and a new
one entered, ordering [petitioners] to pay [Country Bankers] the sum
of THREE HUNDRED SEVENTY THOUSAND PESOS
(₱370,000.00), as reimbursement or actual damages, plus interest
thereon at the rate of 12% per annum computed from the date of
judicial demand, or from July 24, 1992, the date of filing of the
complaint until the said amount has been fully paid.
SO ORDERED.
In reversing the trial court, the CA ruled that Country Bankers, as
surety of Rogelio’s loan obligation, did not effect voluntary payment
on the bond. The appellate court found that what Country Bankers
paid was an obligation legally due and demandable. It declared that
Country Bankers acted upon compulsion of a writ of execution,
which appears to have been regularly, and validly issued, and, by its
very nature, is immediately enforceable.
Hence, this appeal positing a sole issue for our resolution, to wit:
Whether petitioners should indemnify Country Bankers for the
payment of the surety bond.
In fine, petitioners contend that Country Bankers is not entitled to
reimbursement when it voluntarily paid the surety bond considering
it knew full well the remedies availed of by petitioners to stay the
execution of the compromise judgment. Thus, Country Bankers
must bear the loss or damage arising from its voluntary act.
We deny the appeal and affirm the appellate court’s ruling. Country
Bankers should be reimbursed for the ₱370,000.00 it paid to Borja
under the surety bond.
In impugning the CA’s decision, petitioners invoke their pending
Omnibus Motion to stay the execution of the compromise
judgment. Petitioners’ theory is that, although the RTC Caloocan
had already issued a writ of execution and Country Bankers had
been served a Notice of Levy/Sheriff’s Sale of its properties at the
impending public auction, the payment made by Country Bankers
to Borja is a voluntary act. Petitioners push their theory even further,
and deign to suggest that Country Bankers should have itself
intervened in the proceedings before the RTC Caloocan to stay the
writ of execution.
We reject this preposterous suggestion. Petitioners ought to be
reminded of the nature of a judgment on a compromise and a writ
of execution issued in connection therewith.
A compromise judgment is a decision rendered by a court
sanctioning the agreement between the parties concerning the
determination of the controversy at hand. Essentially, it is a
contract, stamped with judicial imprimatur, between two or more
persons, who, for preventing or putting an end to a lawsuit, adjust
their difficulties by mutual consent in the manner which they agree
on, and which each of them prefers in the hope of gaining, balanced
by the danger of losing.22 Upon court approval of a compromise
agreement, it transcends its identity as a mere contract binding only
upon the parties thereto, as it becomes a judgment that is subject to
execution in accordance with Rule 39 of the Rules of Court.23
Ordinarily, a judgment based on compromise is not appealable. It
should not be disturbed except upon a showing of vitiated consent
or forgery. The reason for the rule is that when both parties enter
into an agreement to end a pending litigation and request that a
decision be rendered approving said agreement, it is only natural to
presume that such action constitutes an implicit, as undeniable as an
express, waiver of the right to appeal against said decision. 24 Thus, a
decision on a compromise agreement is final and executory, and is
conclusive between the parties.25
It is beyond cavil that if a party fails or refuses to abide by a
compromise agreement, the other party may either enforce the
compromise or regard it as rescinded and insist upon his original
demand.26 Following this mandatory rule, the RTC Caloocan
granted Borja’s motion, and subsequently issued an order to the
sheriff to execute the compromise judgment. Notwithstanding the
foregoing, petitioners still maintain that since they had taken steps
to stay the execution of the compromise judgment, Country
Bankers, with full knowledge of their active opposition to the
execution thereof, should not have readily complied with the RTC
Caloocan Order.
Petitioners’ argument contemplates a brazen defiance of a validly
issued court order, which had not been restrained by the appellate
court or this Court. The argument is unacceptable.
The Compromise Agreement between Borja and Rogelio explicitly
provided that the latter’s failure to complete construction of the
building within the stipulated period27 shall cause the full
implementation of the surety bond as a penalty for the default, and
as an award of damages to Borja. Furthermore, the Compromise
Agreement contained a default executory clause in case of a
violation or avoidance of the terms and conditions thereof.
Therefore, the payment made by Country Bankers to Borja was
proper, as failure to pay would have amounted to contumacious
disobedience of a valid court order.
Clearly, even without the aforesaid default clause, the compromise
judgment remained executory as against Rogelio, as the principal
obligor (co-debtor), and Country Bankers as surety of the
obligation. Section 4, Rule 39 of the Rules of Court provides:
SEC. 4. Judgments not stayed by appeal. – Judgments in actions for
injunction, receivership, accounting and support, and such other
judgments as are now or may hereafter be declared to be
immediately executory, shall be enforceable after their rendition and
shall not be stayed by an appeal taken therefrom, unless otherwise
ordered by the trial court. On appeal therefrom, the appellate court
in its discretion may make an order suspending, modifying, restoring
or granting the injunction, receivership, accounting, or award of
support.
The stay of execution shall be upon such terms as to bind or
otherwise as may be considered proper for the security or protection
of the rights of the adverse party.
Other judgments in actions declared to be immediately executory
and not stayed by the filing of an appeal are for: (1)
compromise,28 (2) forcible entry and unlawful detainer,29 (3) direct
contempt,30 and (4) expropriation.31
Likewise, Section 9, paragraph (a),32 of the same Rule outlines the
procedure for execution of judgments for money, thus:
SEC. 9 Execution of judgments for money, how enforced. –
(a) Immediate payment on demand. – The officer shall enforce an
execution of a judgment for money by demanding from the
judgment obligor the immediate payment of the full amount stated
in the writ of execution and all lawful fees. The judgment obligor
shall pay in case, certified bank check payable to the judgment
oblige, or any other form of payment acceptable to the latter, the
amount of the judgment debt under proper receipt directly to the
judgment oblige or his authorized representative if present at the
time of payment. The lawful fees shall be handed under proper
receipt to the executing sheriff who shall turn over the said amount
within the same day to the clerk of court of the court that issued the
writ.
As Rogelio’s obligation under the compromise agreement, and
approved by the RTC Caloocan, had a penal clause33 which is
monetary in nature,34 the writ of execution availed of by Borja, and
paid by Country Bankers, strictly complied with the rules on
execution of money judgments.
It is true that the petitioners did not directly question the
compromise judgment. What was pending before the Caloocan
RTC was petitioners’ Omnibus Motion praying for a stay in the
implementation of the writ of execution. However, the bottom line
issue raised in the Omnibus Motion is, actually, a question on the
compromise judgment, since its resolution would require an inquiry
into the stipulations contained in the Compromise Agreement,
particularly the provision on immediate execution.
Thus, when the RTC Manila ruled that the payment on the bond
made by Country Bankers was voluntary, the lower court effectively
disregarded the rule on the non-appealable nature and the
immediately executory character of a judgment on a compromise.
Moreover, it has not escaped our attention that petitioners belatedly
filed a Petition for Certiorari and Prohibition with prayer for a TRO
with the CA, ostensibly to stop the execution of the compromise
judgment. Not only was the filing thereof late, it was done twelve
(12) days after the satisfaction of the compromise judgment. We are,
therefore, perplexed why, despite the urgency of the matter,
petitioners merely banked on a pending motion for reconsideration
to stay the enforcement of an already issued writ of execution.
Petitioners’ total reliance thereon was certainly misplaced.
Admittedly, the general rule is that certiorari will not lie unless a
motion for reconsideration is first filed before the respondent
tribunal to allow it an opportunity to correct the imputed
errors.35 Nonetheless, the rule admits of exceptions, thus:
(a) where the order is a patent nullity, as where the court a quo
has no jurisdiction;
 (b) where the questions raised in the certiorari proceedings
have been duly raised and passed upon by the lower court, or
are the same as those raised and passed upon in the lower
court;
(c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests of
the Government or of the petitioner or the subject matter of
the action is perishable;
(d) where, under the circumstances, a motion for
reconsideration would be useless;
(e) where petitioner was deprived of due process and there is
extreme urgency for relief;
(f) where, in a criminal case, relief from an order of arrest is
urgent and the granting of such relief by the trial court is
improbable;
(g) where the proceedings in the lower court are a nullity for
lack of due process;
(h) where the proceedings was ex-parte or in which the
petitioner had no opportunity to object; and
(i) where the issue raised is one purely of law or where public
interest is involved.36
Evidently, it would not have been premature for petitioners to have
filed a petition before the CA, upon the issuance by the RTC
Caloocan of a writ of execution, because the RTC Caloocan already
denied their Opposition to Borja’s Motion for Execution on the
surety bond. If, as petitioners insist, they had a meritorious challenge
to the satisfaction of the writ of execution, they should have
immediately filed a Petition for Certiorari with the CA and therein
alleged the exceptional circumstance warranting the non-filing of a
motion for reconsideration. Petitioners should not have persisted
on waiting for the resolution of their Omnibus Motion.
We have consistently ruled that an order for the issuance of a writ
of execution is ordinarily not appealable. The reason for this is that
the merits of the case should not be delved into anew after a
determination has been made thereon with finality. 37 Otherwise,
there would be practically no end to litigation since the losing party
would always try to thwart execution by appealing from every order
granting the writ. In this case, this aphorism should apply. Rogelio,
after agreeing to an amicable settlement with Borja to put an end to
the case before the RTC Caloocan, cannot flout compliance of the
court order of execution by refusing to reimburse Country Bankers,
the surety of his obligation in the compromise agreement.
Still, petitioners stubbornly refuse to pay Country Bankers,
contending that the CA itself, in CA-G.R. SP No. 28205, declared
that the payment effected was voluntary.
We are not persuaded.
Article 2047 of the Civil Code specifically calls for the application
of the provisions on solidary obligations to suretyship contracts. In
particular, Article 1217 of the Civil Code recognizes the right of
reimbursement from a co-debtor (the principal co-debtor, in case of
suretyship) in favor of the one who paid (i.e., the surety). 38 In
contrast, Article 1218 of the Civil Code is definitive on when
reimbursement is unavailing, such that only those payments made
after the obligation has prescribed or became illegal shall not entitle
a solidary debtor to reimbursement. Nowhere in the invoked CA
Decision does it declare that a surety who pays, by virtue of a writ
of execution, is not entitled to reimbursement from the principal co-
debtor. The CA Decision was confined to the mootness of the issue
presented and petitioners’ preclusion from the relief it prayed for,
i.e., a stay of the writ of execution, considering that the writ had
already been satisfied.
More importantly, the Indemnity Agreement signed by Rogelio and
the other petitioners explicitly provided for an incontestability
clause on payments made by Country Bankers.1âwphi1 The said
clause reads:
INCONTESTABILITY OF PAYMENTS MADE BY THE
COMPANY: - Any payment or disbursement made by [Country
Bankers] on account of the above-mentioned Bond, its renewals,
extensions, alterations or substitutions either in the belief that
[Country Bankers] was obligated to make such payment or in the
belief that said payment was necessary or expedient in order to avoid
greater losses or obligations for which [Country Bankers] might be
liable by virtue of the terms of the above-mentioned Bond, its
renewals, extensions, alterations, or substitutions, shall be final and
shall not be disputed by the undersigned, who hereby jointly and
severally bind themselves to indemnify [Country Bankers] of any
and all such payments, as stated in the preceding clauses.
In case [Country Bankers] shall have paid, settled or compromised
any liability, loss, costs, damages, attorney’s fees, expenses, claims,
demands, suits, or judgments as above-stated, arising out of or in
connection with said bond, an itemized statement thereof, signed by
an officer of [Country Bankers] and other evidence to show said
payment, settlement or compromise, shall be prima facie evidence
of said payment, settlement or compromise, as well as the liability
of [petitioners] in any and all suits and claims against [petitioners]
arising out of said bond or this bond application.
Ineluctably, petitioners are obligated to reimburse Country Bankers
the amount of ₱370,000.00.
Finally, petitioners desperately attempt to inveigle out of this
burden, which is of their own making, by imputing a lack of initiative
on Country Banker’s part to intervene in the execution proceedings
before the RTC.
This contention, as with the rest of petitioners’ arguments, deserves
scant consideration. Suffice it to state that Country Bankers is a
surety of the obligation with a penal clause, constituted in the
compromise judgment; it is not a joint and solidary co-debtor of
Rogelio.
In the recent case of Escaňo v. Ortigas,39 we elucidated on the
distinction between a surety as a co-debtor under a suretyship
agreement and a joint and solidary co-debtor, thus:
(A)s indicated by Article 2047, a suretyship requires a principal
debtor to whom the surety is solidarily bound by way of an ancillary
obligation of segregate identity from the obligation between the
principal debtor and the creditor. The suretyship does not bind the
surety to the creditor, inasmuch as the latter is vested with the right
to proceed against the former to collect the credit in lieu of
proceeding against the principal debtor for the same obligation. At
the same time, there is also a legal tie created between the surety and
the principal debtor to which the creditor is not privy or party to.
The moment the surety fully answers to the creditor for the
obligation created by the principal debtor, such obligation is
extinguished. At the same time, the surety may seek reimbursement
from the principal debtor for the amount paid, for the surety does
in fact "become subrogated to all the rights and remedies of the
creditor."
WHEREFORE, the Petition is DENIED. The Decision of the
Court of Appeals in CA-G.R. C.V. No. 48603 is hereby
AFFIRMED. Costs against the petitioner.
SO ORDERED.