(40) G.R. No.
78315 January 2, 1989
COMMERCIAL CREDIT CORPORATION CAGAYAN DE
ORO, petitioner,
vs.
THE COURT OF APPEALS and THE CAGAYAN DE ORO COLISEUM,
INC., respondents.
Facts: In 1978 private respondent Cagayan De Oro Coliseum, Inc. (CDOCI)
executed a promissory note in the amount of P329,852.54 in favor of petitioner
Commercial Credit Corporation of Cagayan De Oro (CCCCDO), payable in 36
monthly installments. The note is secured by a real estate mortgage duly executed
by private respondent in favor of petitioner. Respondent then defaulted in the
payment and the petitioner proceeded with the extrajudicial foreclosure of the real
estate mortgage in September, 1979. Five minority stockholders of private
respondent then instituted Special Civil Action questioning the power of the
private respondent to execute the real estate mortgage without the consent of its
stockholders.
On March 11, 1980 a Compromise Agreement was entered into by the parties
wherein the minority stockholders ratified and approved the loan and real estate
mortgage, and as such, CDOCI hereby admits its total outstanding obligation to
Commercial Credit Corporation of Cagayan de Oro and agreed to pay the
obligation plus interest on diminishing balance computed yearly at sixteen (16) per
cent per annum. Furthermore, it agreed to pay the aforegoing obligation in equal
monthly installments of P11,000.00, the first installment shall be payable in
February, 1980 and every month thereafter until the whole account payable as
aforementioned is fully paid, and that, failure on the part of Respondent Cagayan
de Oro Coliseum, Inc. to pay any of the installments as they shall become due, the
whole amount then outstanding and unpaid shall immediately become due and
payable in its entirety and shall render the judgment herein to be immediately
final, unappealable and executory; and the overdue and unpaid installments shall
earn a three (3%) per cent per month penalty charge until fully paid, plus five
percent (5%) of the outstanding balance as additional attorney's fee. CCCCDO on
its part agreed to withdraw its application for the extra-judicial foreclosure of the
real estate mortgage subject of this complaint.
However, CDOCI failed to comply with the terms of the judgment for failure to
pay several installments which matured on July 13, 1982, petitioner
CCCCDO filed an ex-parte motion for the issuance of a writ of execution on
March 4, 1983. On March 10, 1983 the Court of First Instance granted the motion,
and a notice of auction sale was issued on March 11, 1983. After reviewing the
respondent’s motion for reconsideration and the petitioner’s reply, the trial court
accordingly denied the motion and issued the writ on December 4, 1986.
Private respondent then filed a special civil action in the Court of Appeals to annul
said compromise-judgment, alleging that the trial court acted in serious violation
of law and/or in grave abuse of discretion. In due course, a decision was rendered
by said appellate court denying the petition.
A motion for reconsideration of the decision was filed by petitioner but was
denied.
On the other hand, private respondent also filed a motion for reconsideration and
comment on the petitioner's motion for reconsideration. On May 19, 1987,
respondent Court issued a resolution DENYING said motion for lack of merit.
As to the said second part of petitioner's motion for reconsideration, for clarity, the
dispositive portion of the February 13, 1987 decision is re-worded to read as
follows:
“WHEREFORE, the present petition is GRANTED in the sense that
effective March 16, 1983, the overdue and unpaid installments shall earn one half
per cent (1/2%) per month penalty charge until fully paid, plus two per cent (2%)
of the outstanding balance as additional attorney's fees.”
Hence, the herein petition for review on certiorari.
Issue: Whether a compromise judgment which was found by the Court of Appeals
to be lawful may be modified by the same court.
Ruling: The Supreme Court granted the petition. The Court ruled that a
compromise judgment should not be disturbed except for vices of consent or
forgery. Such a final and executory judgment cannot be modified or amended. If
an amendment is to be made, it may consist only of supplying an omission,
striking out a superfluity or interpreting an ambiguous phrase therein in relation to
the body of the decision which gives it life. A compromise judgment should not be
disturbed except for vices in consent or forgery.
The appellate court cannot modify the compromise agreement which was
voluntarily entered into by the parties assisted by their counsels, duly approved by
the trial court and confirmed by the appellate court to be lawful. In the present
case, the compromise agreement was voluntarily entered into by the parties
assisted by their respective counsel and was duly approved by the trial court.
Indeed, it was confirmed by the respondent appellate court to be lawful. There
was, therefore, no cogent basis for the respondent appellate court to modify said
compromise agreement by reducing the penalty and attorney’s fees provided for
therein.
The appellate court has no authority to reduce the penalty and attorney’s fees
stipulated in the compromise agreement which is the law between the parties and
is res judicata. When the parties entered into the said compromise agreement and
submitted the same for the approval of the trial court, its terms and conditions
must be the primordial consideration why the parties voluntarily entered into the
same. The trial court approved it because it is lawful, and is not against public
policy or morals. Even the respondent Court of Appeals upheld the validity of the
said compromise agreement. Hence, the respondent court has no authority to
reduce the penalty and attorney’s fees therein stipulated which is the law between
the parties and is res judicata.
