366 Phil. 849; 96 OG No. 17, 2510 (April 24, 2000)
GONZAGA-REYES, J.:
"1. Declaring null and void the offsetting made by defendantAssociated Citizens Bank (now Westmont) to plaintiff Shuya Noda's dollar deposit against the obligations of defendant Habaluyas Enterprises, Inc.The motion for partial reconsideration filed by Shugo Noda & Co., Ltd. and Shuya Noda was denied in the Order dated April 27, 1995 of the trial court, while the motion for clarification and/or reconsideration of Sally B. Habaluyas was granted, such that the second sentence, paragraph 7, of the dispositive portion of the decision was modified to read as follows:
2. Ordering Associated Citizens Bank to return and/or release to plaintiff Shuya Noda the amount of US$290,927.96 out of his US$400,000.00 deposit.
3. Ordering Associated Citizens Bank to release/deliver to defendant Habaluyas Enterprises, Inc. the interest on the sum of US$290,927.96 at the rate of 8% per annum from April 26, 1974 until said sum is fully released/delivered to plaintiff Shuya Noda.
4. Declaring the offsetting of the sum of US$109,072.04 out of plaintiff Shuya Noda's US$400,000.00 deposit, together with the interest on said sum of US$109,072.04 at the rate of 8% per annum from April 26, 1974 to this date, against the P6,016,659.31 (originally P5,000,000.00) loan extended by defendant Associated Citizens Bank to defendant Habaluyas Enterprises, Inc. for the sawmill;
5. Dismissing plaintiff's complaint against defendant Associated Citizens Bank for recovery of exemplary damages, attorney's fees and expenses of litigation and the latter's counterclaim against plaintiffs.
6. Dismissing the cross-claim of defendant Habaluyas Enterprises, Inc. and Pedro J. Habaluyas (substituted by Ms. Sally B. Habaluyas) against defendant Associated Citizens Bank and the latter's counterclaim against defendant Pedro J. Habaluyas (substituted by Sally J. Habaluyas).
7. Ordering defendant Habaluyas Enterpises, Inc., to pay to defendant Associated Citizen's Bank the amounts of (a) P1,702,495.26 plus interest thereon at the rate of 16% per annum from May 17, 1974 until fully paid; (b) P300,000.00 plus interest thereon at the rate of 14% per annum from June 6, 1974 until fully paid; (c) P500,000.00, P1,350,000.00, P200,000.00 and P300,000.00 plus interest thereon at the rate of 14% per annum from August 26, 1974 until fully paid; and (d) P1,664,164.05 plus interest thereon at the rate of 21% per annum from December 20,1979 until fully paid; but deducting from said amounts and accrued interest as of this date the sum of P2,680,000.00 plus interest thereon at the rate of 8% per annum from April 26, 1974 to this date. Should the net outstanding amounts, inclusive of interests, remain unpaid ninety (90) days after notice, the mortgaged properties covered by the above-mentioned Chattel Mortgage and Real Estate Mortgage shall be sold at public auction in order to realize the mortgage obligation;
8. Ordering defendant Habaluyas Enterprises, Inc. to pay defendant Associated Citizens Bank the amounts of (a) P300,000.00, P250,000.00 and P465,000.00 plus interest thereon at the rate of 14% per annum from August 26,1974, September 30,1974, and September 26, 1975, respectively until fully paid; and (b) P200,000.00 and P193,500.00 plus interest thereon, at the rate of 14% per annum from November 7, 1975 until fully paid; and
9. Ordering defendant Habaluyas Enterprises, Inc. to pay to defendant Associated Citizens Bank the amount of P455,156.00 plus interest thereon at the legal rate from filing of the latter's counterclaim until fully paid."[2]
"7. xxxx. Should the net outstanding amounts, inclusive of interests, remain unpaid ninety (90) days after notice, the mortgaged properties covered by the abovementioned Chattel Mortgage and Real Estate Mortgage (with respect only to the one-half share of the state of the deceased Pedro J. Habaluyas) shall be sold at public auction in order to realize the mortgage obligation."[3]All the parties appealed. The bank appealed, specifically, paragraphs 1,2,3,4 and 6 (insofar as the dismissal of its counterclaim against Pedro J. Habaluyas is concerned) of the dispositive portion of the decision. The appeals were given due course per orders dated February 15, 1995 (with respect to defendant Bank), April 28, 1995 (as to defendants Habaluyas Enterprises, Inc and Estate of Pedro J. Habaluyas), and July 3, 1995 (with respect to plaintiffs Shugo Noda and Co., Ltd. and Shuya Noda).[4]
"Now, therefore, for and in consideration of the foregoing premises and the mutual covenants hereinafter set forth, the parties hereby agree as follows:A "Motion for Approval of Compromise Agreement" dated July 24, 1995 was filed by Shugo Noda and Co., Ltd. and Shuya Noda before the appellate court. In their comment dated March 21, 1996, HEI and the Estate presented no objection to the said motion.[6] Westmont Bank filed an opposition thereto.[7] In the challenged resolution dated May 16, 1996, the appellate court approved the agreement and stated as reasons therefor:
- The Compromise Agreement between Pedro J. Habaluyas, HEI and NODA (referring to Shuya Noda) of 8 October 1979 is hereby rescinded and cancelled, and substituted by this Compromise Agreement. Consequently, the Partial Judgment based on the compromise dated 30 October 1979 should be cancelled or amended accordingly.
- The obligation of the ESTATE and HEI to NODA "in the sum of US$609,047.61 with 8% per annum after March 31, 1984 on the principal amount of US$420,000.00" as awarded in the Order dated 15 February 1991 in Civil Case No. R-82-3305 is cancelled, and substituted by the covenants of the ESTATE, HEI, and DR. MA. SALLY B. HABALUYAS set forth in this Compromise Agreement.
- DR. MA. SALLY B. HABALUYAS shall immediately convey and transfer absolutely all her title, rights and interest in her undivided fifty per cent (50%) conjugal share in each of the properties covered by TCT Nos. T-51053, T-51054, and T-51055 of the Registry of Deeds of the Province of Laguna, free from any lien, obligation, encumbrance or claimants of whatever nature except Gavino Buena, unto QUIS DEVELOPMENT CORPORATION, a corporation duly organized and existing under the laws of the Philippines, with address at c/o QUISUMBING TORRES & EVANGELISTA, 11th Floor, Pacific Star Building, Makati Avenue corner Sen. Gil Puyat Avenue, Makati, Metro Manila (hereafter referred to as QDC).
- The interest earned on NODA's dollar deposits with Associated Citizens Bank (now called "Westmont Bank") covered by Certificates of Deposit Nos. 1611, 1612 and 1613 all dated 26 April 1974 and awarded in the Decision (paragraph 3) dated 6 January 1995 in Civil Case No. R-82-3305 shall belong to SHUYA NODA, considering that he is the owner of the US$400,000.00 principal of said amounts.
- The ESTATE grants QDC the option to buy its fifty per cent (50%) share in each of the properties covered by TCT Nos. T-51053, T-51054, and T-51055 of the Registry of Deeds of the Province of Laguna, within two (2) years from the date of effectivity of this Compromise Agreement, at the current market price at the time of sale to be determined by an appraiser agreed by the ESTATE and QDC, whatever nature except Gavino Buena. The ESTATE and DR. MA. SALLY B. HABALUYAS agree that said fifty per cent (50%) share of said properties of the ESTATE shall not be subject to distribution in Special Proceeding NO. Q-91-8535, while QDC's option to buy subsists.
- Immediately after execution hereof by the parties hereto, this Compromise Agreement shall be submitted to the Regional Trial Court of Manila, Branch 27, in Civil Case No. R-82-3305 for approval hereof.
- The ESTATE, HEI, and DR. SALLY B. HABALUYAS undertake to execute, deliver and/or do whatever is deemed desirable or necessary by NODA and/or QDC, to immediately effect the absolute conveyance to QDC of DR. SALLY B. HABALUYAS undivided fifty per cent (50%) conjugal share in each of the properties covered by TCT Nos. T-51053, T-51054, and T-51055 of the Registry of Deeds of the Province of Laguna; to effect the partition or segregation thereof from the fifty per cent (50%) share of the ESTATE, in which case they agree that QDC shall get such part of the properties containing a frontage on the road equal to the frontage of the portion belonging to the ESTATE; and to implement this Compromise Agreement.
- Effective upon execution of this Compromise Agreement, the ESTATE, HEI, and DR. MA. SALLY B. HABALUYAS, on the one hand, and NODA, on the other, hereby fully and comprehensively release, forgive, quitclaim, and discharge each other, together with each other's heirs, successors and assigns, from any and all claims, demands, obligations, liabilities, indebtedness, causes of actions and expenses of every type, kind, nature, description or character, whether known or unknown, due or to become due, from the beginning of time to the date of execution of this Compromise Agreement. Any claims, causes of action or liabilities arising as a result of a breach of this Compromise Agreement are specifically reserved and excluded from this release and discharge.
- If any provision of this Compromise Agreement shall be declared illegal or unenforceable, the other provisions of this Compromise Agreement which are not affected thereby shall remain valid and may be enforced at the option of NODA. However, in case this entire Compromise Agreement is declared illegal or become unenforceable, the aforesaid Compromise Agreement of 8 October 1979, Partial Judgment based on compromise dated 30 October 1979, and Order dated 15 February 1991 in Civil Case No. R-82-3305 shall be revived subject to existing proceedings, and the fifty per cent (50%) conjugal share in each of the properties covered by TCT Nos. T-51053, T-51054, and T-51055 conveyed under paragraph 3 hereof shall revert to DR. MA. SALLY B. HABALUYAS.[5]
"Compromise agreements are contracts binding between the contracting parties. Compromise upon its perfection is immediately executory insofar as it is not contrary to law, good morals, good customs, public order and public policy (Article 1306, New Civil Code). It is generally favored in law (Amoranto vs. CA, 231 SCRA 104). As consistently held by the Supreme Court, compromise agreements being a by-product of mutual concessions and good faith of the parties governs their relationships and has the effect and authority of res judicata even if not judicially approved (Republic vs. Sandiganbayan, 226 SCRA 314).Westmont Bank sought the reconsideration of the said resolution alleging deprivation of its right over the amount deposited with the bank subject matter of the appeal. The appellate court denied the same in the second challenged resolution dated July 8, 1997, adding that :
"Not having discovered any irregularity or defect in the execution of the said agreement, the same must be respected. The record shows that defendant-appellee Westmont Bank is without personality to question the compromise agreement not having any participation in it. A person who is not a party or privy to an agreement cannot seek the amendment or modification of the same (Periquet vs. IAC, 238 SCRA 697).
Accordingly, the motion is hereby GRANTED. This is without prejudice to the resolution of the case on appeal.
SO ORDERED."[8]
"Mere allegations of deprivation or impairment of defendant-appellant's right without proof to substantiate its claim of interest in the subject matter of the compromise do not merit serious consideration.xxx."[9]Hence, the instant petition on the ground that :
"THE COURT OF APPEALS ERRED IN APPROVING THE COMPROMISE AGREEMENT WHICH HAS PRE-EMPTED WESTMONT'S APPEAL AND WILL ADVERSELY AFFECT ITS RIGHTS AND INTERESTS."[10]Westmont Bank points out that paragraph four (4) of the agreement is inconsistent with paragraph three (3) of the dispositive portion of the decision, subject matter of Westmont's appeal. Paragraph three (3) of the dispositive portion of the decision orders the Bank to release/deliver to defendant Habaluyas Enterprises, Inc. the interest on the sum of US$290,297.96 at the rate of 8% per annum from April 28, 1974 until the sum is fully released/delivered to plaintiff Shuya Noda. On the other hand, the corresponding paragraph in the agreement states that the interest earned on Shuya Noda's dollar deposit with the bank covered by Certificates of Deposit Nos. 1611,1612 and 1613 all dated April 26 ,1974 and awarded in the Decision (paragraph 3) dated January 6, 1995 in Civil Case No. R-82-3305 shall belong to Shuya Noda, considering that he is the owner of the US$400,000.00 principal of said time deposits.