Compromise Agreement that may Jeopardize a Family | Zulueta vs. Pan Am Digest

G.R. No. L-28589 January 8, 1973

Complete Names of Parties
RAFAEL ZULUETA, ET AL., plaintiffs-appellees,
vs.
PAN AMERICAN WORLD AIRWAYS, INC., defendant-appellant.

THESIS STATEMENT

Pan American World Airways insists that the COMPROMISE AGREEMENT they made with Mrs. Carolina Zulueta IS VALID on the grounds that THE DAMAGES DID NOT arise from CONJUGAL PROPERTY and therefore no need for husband’s consent. 

The RELIEFS sought by PANAM:

(1) Enforce the compromise agreement they made with Mrs Zulueta where she agreed to withdraw the case for P50,000

(2) Mrs. Zulueta filed a motion “having received P50,000 without prejudice to the deduction from the award made in the previous decision

FACTS

• AT the airport of one of the islands of Hawaii (Wake Island) , a public commotion happened between Rafael Zulueta and Capt Zentner of PanAm because the former caused one hour delay to the flight’s take off from Wake Island to Manila
• Damages caused:
  • The captain then ordered Rafael Zulueta, his wife and children, and their luggage to be off-loaded. Rafael requested that the ladies be allowed to continue the trip. 
  • The aiport manager sent him a note stating that he will stay in the island for a minimum of 1 week and the charge would be $13.30/day. But Rafael secured an earlier flight, and was able to return to Manila.
• In its motion for reconsideration, Pan Am raised 3 arguments, but in relation to Persons and Family, we focus on #3. 
  • Pan Am assails the Court’s non-enforcement of the compromise agreement between Pan Am  and Mrs. Zulueta wherein Mrs. Zulueta agreed to withdraw the case for P50.000.
    • Mrs. Zulueta filed a motion for the dismissal of the case, as far as she was concerned, having  received P50,ooo, “without prejudice to this sum being deducted from the award made in the  previous decision.”
  • The question revolved around Article 172 of CC: “(t)he wife cannot bind the conjugal partnership without the husband’s consent, except in cases provided by law,”

Who filed to SC: Pan Am + Motion for Reconsideration

Issues

ISSUE 1: Is the P50,000 compromise agreement EFFECTIVE insofar as COMPROMISE AGREEMENT is CONCERNED?
RULING: No. Court’s Answer:  P50,000 was deductible from the award was EFFECTIVE. But, the compromise  agreement is ineffective, insofar as the conjugal partnership is concerned.

The law favors settlement of litigations by compromise agreement between the contending parties, BUT it does not favour a settlement with one of the spouses in defense of their conjugal rights, even if indirect, since the compromise may jeopardize the solidarity of the family.

ISSUE 2: Pan Am: asserts that the damages in this case are not among those forming part of the  conjugal partnership pursuant to Article 153 of the Old Civil Code (NOW  ARTICLE 117, which is in the syllabus).
RULING/RATIO 2: No. 
(1) The damages arose from Pan Am’s breach of CONTRACT of CARRIAGE with the Zuluetas. The Ticket was PRESUMABLY bought by funds belonging to CONJUGAL PARTNERSHIP. 
(2) Falls under Par 1 of Art 152 “acquired by onerous title during marriage”
(3) Bolstered by Art 148 – the exclusive properties of each spouse. The tickets do not fall under this list
ART. 148. The following shall be the exclusive property of each spouse:(1) That which is brought to the marriage as his or her own;(2) That which each acquires, during the marriage, by lucrative title;(3) That which is acquired by right of redemption or by exchange with other property belonging to only one of the spouses;(4) That which is purchased with exclusive money of the wife or of the husband.
(4) PANAM insists that conjugal property does not exist if the RIGHT OF REDEMPTION belongs to the wife. But the Court said that IN THE ABSENCE of such claim, the property or rights from it, form part of the conjugal property.

Ponente:

Concepcion

SUPREME COURT RULING:

DENIED the motions for reconsideration