Case Digest: SPS. DANILO ESPARAGERA, et al., v. J. Y. REALTY & DEVELOPMENT CORPORATION

SPS. DANILO ESPARAGERA, et al., v. J. Y. REALTY & DEVELOPMENT CORPORATION

452 SCRA 335 (2005)

It is a general rule in this country that compromises are to be favored, without regard to the nature of the controversy compromised, provided that such settlement is made free from fraud or mistake.

Danilo Esparagera and Enrique Gonzales, brother-in-laws, entered a parcel of land owned by Eugenio Rodil (Rodil) and Young by tolerance sometime 1960 and 1955. Esparagera and Gonzales were able to plant coconuts, corn and bananas and shared the produce with Rodil. After a few years Rodil issued a notice of eviction to Esparagera and Gonzales. Later, Rodil and Young sold the land to J.Y. Realty Corporation (JY Realty).

Esparagera and Gonzales filed two separate complaints against Toribio Rodil (Rodil) and Salud Young (Young) for Preservation of Tenancy Status which was later consolidated into one case by the Regional Trial Court. Both Esparagera and Gonzales also claimed to be tenants of a portion of the same landholding. Gonzales and Esparageras sought to establish that the landholding in question is an agricultural land. The sale of the land was put on hold by JY Realty.

The Provincial Agrarian Reform Adjudicator (PARAD) ruled in favor of the Robil and Young and dismissed the complaint. On appeal with the Department of Agrarian Reform Adjudication Board (DARAB), the decision of PARAD was reversed and set aside.

Before the execution of said decision, Spouses Esparagera, et al. executed a compromise agreement between JY Realty. Esparagera, et al agreed to recognize the land as residential in exchange for JY Realty to purchase the land. Rodil and JY Realty filed Motion for Reconsideration to DARAB alleging that the Spouses Esparagera and JY Realty had already reached a compromise agreement. DARAB then denied the motion for reconsideration. The Court of Appeals (CA) held that the Spouses Esparagera, et al. were not tenants of the farm, thus reversing and setting aside the decision of DARAB and dismissing the said complaint.

ISSUE:

1) Whether or not the land disputed is Residential rather than Agricultural
2) Whether or not the action of the compromise agreement of Spouses Esparagera and JY Realty takes precedence in importance compared to the decision of DARAB

HELD:

By the Certification, Esparagera, et al unconditionally declared that the subject land is residential, not agricultural; that they received P50,000.00 each “for whatever improvements they introduced thereon; that they would remove their houses and those of their children; and that they “have nothing whatsoever to do with the land and that they no longer are interested to pursue the DARAB case. Parenthetically, it is informed by respondent in its Comment to the present petition that Esparagera, et al had after the execution of the Certification vacated the landholding, which information was not denied by Esparagera, et al.

Since, unquestionably, the Certification was voluntarily accomplished by petitioners, that it was not submitted before the Adjudicator and was submitted to the DARAB only after its decision had been promulgated does not violate any rules. For it is a general rule in this country that compromises are to be favored, without regard to the nature of the controversy compromised. . . . If settlement be made . . . , free from fraud or mistake, whereby there is a surrender or satisfaction, in whole or in part, of a claim upon one side in exchange for or in consideration of a surrender or satisfaction of a claim in whole or in part, or of something of value, upon the other, however baseless may be the claim upon either side or harsh the terms as to either of the parties, the other cannot successfully impeach the agreement in a court of justice . . .

The settlement reflected in the Certification executed by Esparagera, et al, whether it is in the nature of a compromise agreement bereft of court approval, albeit it is more in the nature of a quitclaim the voluntariness of its execution of which has not been raised, is binding on the parties and may not, on account of alleged procedural or substantive legal infirmity, be denied evidentiary value to affect the outcome of the case. It thus has the effect of res judicata, following Art. 2037 of the Civil Code.