Can Out-of-Court Settlements End Criminal Cases?
Introduction
Out-of-court settlements are common when an alleged offense causes financial loss, property damage, or personal injury. The parties may agree on payment, restitution, or other concessions to resolve the injured party’s civil claims. However, that agreement does not ordinarily give private parties the power to terminate the State’s authority to prosecute a crime.
Philippine law therefore distinguishes between a valid compromise of civil liability and an invalid agreement to extinguish criminal liability. The distinction matters because a settlement may be enforceable as to damages while leaving the criminal case subject to investigation, prosecution, and adjudication.
What Is a Compromise Agreement?
Article 2028 of the Civil Code defines a compromise as a contract by which the parties, through reciprocal concessions, avoid litigation or end one already commenced. A compromise generally concerns private rights and obligations that the parties may lawfully dispose of.
In civil disputes, a valid compromise may settle claims for payment, restitution, damages, or other relief. Once approved by a court and embodied in a judgment, it generally has the force and effect of a final judgment between the parties and must be performed according to its terms.
In labor disputes, a compromise settlement voluntarily executed with the assistance of the Department of Labor and Employment or its regional office is generally final and binding, subject to the statutory exceptions for noncompliance or proof that the settlement was obtained through fraud, misrepresentation, or coercion under Article 233 of the Labor Code.
Can Civil Liability Arising from a Crime Be Settled?
Yes. The parties may compromise the civil liability arising from an offense. This may include payment for actual loss, restitution of property, medical expenses, repair costs, or other legally recoverable damages.
Article 2034 of the Civil Code expressly recognizes that there may be a compromise upon the civil liability arising from an offense. It also provides that such compromise does not extinguish the public action for the imposition of the legal penalty.
Thus, an accused and an offended party may agree that the accused will pay a specified amount or return property. The agreement may settle the offended party’s civil claim, but it does not, by itself, erase the alleged public offense or compel the dismissal of the criminal prosecution.
Why Cannot Criminal Liability Be Compromised?
Criminal liability is owed to the State, not merely to the private complainant. The offended party may be an important witness and may have a civil claim, but the criminal action concerns the alleged violation of a penal law and is prosecuted in the name of the People of the Philippines.
In Team Image Entertainment, Inc. v. Solar Team Entertainment, Inc., G.R. No. 191652, September 13, 2017, the Supreme Court held that criminal liability cannot be the subject of a compromise. The offended party cannot waive or extinguish the criminal liability imposed by law, and a private agreement cannot automatically require the dismissal of a criminal case.
The same rule was reiterated in Osental v. People of the Philippines, G.R. No. 225697, September 12, 2018. The Court emphasized that settlement of the civil aspect does not extinguish criminal liability because compromise is not a mode of extinguishing criminal liability under the Revised Penal Code.
Similarly, Diaz v. Davao Light and Power Co., Inc., G.R. No. 160959, October 9, 2007, explained that criminal liability is not affected by a civil compromise because a criminal offense is a public wrong prosecuted by the Government on its own motion.
What Does the Rule on Offers of Compromise Provide?
Section 28, Rule 130 of the 2019 Amendments to the Rules on Evidence generally provides that an offer of compromise in a civil case is not an admission of liability and is not admissible against the offeror. Conduct and statements made during compromise negotiations are likewise generally excluded, subject to specified exceptions.
In criminal cases, however, an offer of compromise by the accused may be received as an implied admission of guilt, except in cases involving quasi-offenses or offenses that the law allows to be compromised. The rule also protects a plea of guilty that was later withdrawn, an unaccepted offer to plead guilty to a lesser offense, and statements made during unsuccessful plea bargaining.
An offer to pay, or payment of, medical, hospital, or other expenses arising from an injury is not admissible as proof of civil or criminal liability for that injury. This evidentiary protection should not be confused with the separate rule that an executed settlement cannot extinguish the State’s criminal action.
Valid Civil Settlement Versus Illegal Compounding
| Valid civil compromise | Invalid compounding of a crime |
|---|---|
| Settles payment, restitution, or damages owed to the offended party. | Purports to erase the criminal offense or bind the State to dismiss the prosecution. |
| Creates contractual obligations between the parties. | Attempts to waive or extinguish public criminal liability through private agreement. |
| May be enforced through the proper civil or criminal court procedure. | Cannot automatically terminate a criminal case or prevent the prosecutor or court from acting. |
| May include a civil release, subject to its lawful scope. | Uses payment or a private affidavit as a substitute for the court’s determination of criminal liability. |
Does a Desistance Affidavit Automatically Dismiss the Case?
No. A desistance affidavit or affidavit of withdrawal may affect the private complainant’s participation, credibility, or willingness to testify, but it does not automatically extinguish criminal liability. The prosecutor and the court must still determine whether the evidence supports the continuation or dismissal of the case.
A private complainant also cannot compel the dismissal of a criminal action solely by asserting that the civil claim has been paid. The court must consider the nature of the offense, the evidence on record, the position of the prosecution, and the applicable procedural rules.
Payment may nevertheless have legal consequences. It may support restitution, affect the civil aspect, be considered in sentencing where the law permits, or contribute to a prosecutorial assessment of the evidence. Its effect depends on the offense and the stage of the proceedings.
Are There Exceptions?
Section 28, Rule 130 recognizes that certain offenses may be compromised when the law expressly allows it. It also excludes quasi-offenses, such as criminal negligence, from the ordinary rule that an offer of compromise may be treated as an implied admission of guilt.
These provisions concern the evidentiary treatment of an offer of compromise and the offenses in which compromise may be legally recognized. They do not create a general authority for private parties to settle every criminal charge.
Special laws may also provide particular mechanisms, such as settlement, restitution, mediation, or administrative compromise. Any such mechanism must be based on an express statutory grant and must be applied within its limits. A private agreement cannot override a specific penal statute or the State’s prosecutorial authority.
Effect of a Court-Approved Compromise
A court-approved compromise may have the force of res judicata as to the civil matters covered by its terms. In POTC, et al. v. Africa, et al., G.R. No. 184622, June 26, 2013, the Supreme Court recognized that a compromise sealed with court approval must be complied with according to its terms.
That binding effect remains limited to matters that may lawfully be settled and to the parties bound by the agreement. It does not convert a private settlement into an order extinguishing criminal liability, particularly where the criminal action concerns the People of the Philippines.
A compromise agreement should therefore state clearly that the parties are settling only the civil claims, without representing that the criminal case has been extinguished or that the prosecution is legally barred from continuing.
Typical Scenarios
Payment for damaged property. An accused pays the owner for property allegedly damaged during an incident. The owner may release the civil claim, but the payment does not automatically dismiss a criminal charge for the alleged offense.
Settlement of estafa-related losses. The accused returns the money or pays the claimed amount. The settlement may resolve the civil liability, but it does not necessarily extinguish estafa. The Supreme Court applied this principle in Osental v. People of the Philippines.
Agreement to withdraw a criminal complaint. The complainant signs an undertaking to withdraw the complaint in exchange for payment. The undertaking may evidence settlement of the civil claim, but the prosecutor or court is not automatically bound to terminate the criminal case.
Settlement of a civil case involving the same facts. The parties dismiss a civil action after reaching an agreement. Under Diaz v. Davao Light and Power Co., Inc., the civil compromise does not by itself prevent the subsequent filing or continuation of criminal proceedings arising from the same facts.
How Should a Settlement Be Drafted?
A settlement involving an alleged crime should identify the claims being resolved and avoid language suggesting that the private complainant can extinguish public criminal liability. The document should distinguish the civil obligations from the criminal proceedings.
It should preferably specify the amount, payment schedule, proof of payment, consequences of default, release of civil claims, treatment of property or documents, and whether the settlement is subject to court approval. If a criminal case is pending, the agreement should acknowledge that its continuation or dismissal remains subject to the applicable law and the action of the prosecutor or court.
Parties should also avoid admissions that may create unintended evidentiary consequences. Section 28, Rule 130 should be considered when preparing communications, settlement offers, and statements made during negotiations.
Recommendations for Parties and Counsel
- Define the settlement as an agreement concerning civil liability, restitution, or damages.
- Do not represent that payment automatically extinguishes the criminal case.
- State that any dismissal remains subject to the prosecutor’s and court’s authority.
- Record payment terms and preserve documentary proof of compliance.
- Assess the separate effects of the agreement on civil liability, evidence, plea bargaining, and criminal procedure.
Conclusion
Philippine law permits parties to settle civil liability arising from an alleged offense, but it generally prohibits them from privately extinguishing criminal liability. The principal distinction is between compensating the injured party and compounding the public offense.
A carefully drafted settlement may validly resolve financial claims, restitution, and damages. It should not, however, promise that the State will abandon prosecution or that a private complainant can unilaterally terminate a criminal case. Payment may be relevant to the case, but it is not, by itself, a substitute for the prosecutor’s and court’s lawful determination.
About Nicolas and De Vega Law Offices
Nicolas and de Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website https://ndvlaw.com.
