Facts:

The case involves petitioners Tung Hui Chung and Tong Hong Chung, both Australian citizens, against respondent Shih Chiu Huang, also known as James Shih. The events leading to the case began on September 6, 2001, when the petitioners filed an amended complaint in the Regional Trial Court (RTC), Branch 49, in Manila, seeking to recover a sum of money and damages from the respondent. The complaint was rooted in a contract to sell dated October 30, 2000, wherein the respondent, as the vendor, was obligated to deliver shares of stock worth P10,606,266.00 in Island Information and Technology, Inc. to the petitioners. The petitioners alleged that they had remitted the total amount of P10,606,266.00 to the respondent in March 2000, but the respondent failed to deliver the shares by the agreed date, which was February 22, 2001.

On October 10, 2001, the RTC granted the petitioners' application for a writ of preliminary attachment. Subsequently, on December 27, 2001, the responde...

Facts:

1. Contract to Sell: On October 30, 2000, the respondent, Shih Chiu Huang (a.k.a. James Shih), entered into a contract to sell with the petitioners, Tung Hui Chung and Tong Hong Chung, both Australian citizens. The contract stipulated that the respondent would deliver shares of stock worth P10,606,266.00 in Island Information and Technology, Inc., a publicly listed corporation, to the petitioners. The shares were to be delivered either upon SEC approval of an increase in the corporation's shares or four months after the contract's signing.

2. Failure to Deliver Shares: The petitioners alleged that the respondent failed to deliver the shares as agreed. They filed an amended complaint on September 6, 2001, in the Regional Trial Court (RTC) of Manila, seeking to recover the amount of P10,606,266.00 plus damages.

3. Writ of Attachment: On October 10, 2001, the RTC granted the petitioners' application for a writ of preliminary attachment against the respondent's properties.

4. Compromise Agreement: On August 19, 2003, the parties entered into a compromise agreement, wherein the respondent acknowledged his obligation to pay the petitioners $250,000.00 in installments. The agreement was judicially approved by the RTC on October 20, 2003.

5. Partial Payment and Subsequent Default: The respondent paid the first installment of $20,000.00 but failed to pay the second installment due on November 15, 2004. The petitioners then sought the execution of the judgment based on the compromise agreement.

6. Annulment of Judgment: The respondent filed a petition for annulment of judgment in the Court of Appeals (CA), claiming that the compromise agreement was fraudulent and that his consent was vitiated. The CA annulled the compromise agreement on September 30, 2005, citing fraud and lack of valid consent.

7. Appeal to the Supreme Court: The petitioners appealed the CA's decision, arguing that the compromise agreement was valid and that the CA erred in annulling it.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Nature of Compromise Agreements: A compromise agreement is a contract where parties make reciprocal concessions to avoid litigation. Once approved by the court, it becomes a judgment that is final and executory, and it can only be annulled on grounds that vitiate consent, such as fraud, mistake, or duress.

2. Proper Remedy for Annulment: The proper remedy to annul a judgment based on a compromise agreement is an action under Rule 47 of the Rules of Court, which allows for annulment based on extrinsic fraud or lack of jurisdiction. Certiorari is not the appropriate remedy for such annulment.

3. Burden of Proof for Fraud: The party alleging fraud in the execution of a compromise agreement bears the burden of proving such fraud. In this case, the respondent failed to provide sufficient evidence to support his claim of fraud or vitiated consent.

4. Doctrine of Immutability: The doctrine of immutability of final judgments is a fundamental principle in the administration of justice. It ensures that judgments become final at some definite date, promoting the stability of judicial decisions and preventing endless litigation.

5. Public Policy Considerations: The Court emphasized that public policy favors the finality of judgments and the enforcement of compromise agreements, as they promote the efficient resolution of disputes and reduce the burden on the courts.

Conclusion:

The Supreme Court reinstated the RTC's judgment based on the compromise agreement, holding that the CA erred in annulling the agreement. The Court emphasized the finality of compromise agreements and the importance of the doctrine of immutability in ensuring the stability of judicial decisions.