G.R. No. 78315 January 2, 1989 COMMERCIAL CREDIT CORPORA CORPOR ATION CAGAYAN CAGAYAN DE ORO, petitioner, vs. TE CO!RT O" APPEAL# an$ TE CAGAYAN DE ORO COLI#E!M, INC., respondents Respon esponden dentt Cagaya Cagayan n de Oro Oro Colise Coliseum um execu executed ted a promi promiss ssory ory note note in favor favor of petitioner Commercial Credit Corp., payable in 36 monthly installments, which was secur secured ed by a real real estate estate mortga mortgage. ge. Upon Upon failur failure e of the respond responden entt to pay the monthly installments due, petitioner proceeded with the extra udicial foreclosure foreclosure of the real estate mortgage. !eanwhile, "ve of the minority stoc#holders of the respondent instituted a special civil civil action action $uest $uestion ioning ing the power power of the respo responde ndent nt to execu execute te a real estate estate mortgage without the consent of its stoc#holders. %n due course, a compromise agreement was entered into by the parties, on the basis of which, a compromise udgment was rendered rendered by by the trial court. One One of the provisions provisions in the stipulations in in the compromise udgment is that upon failure of the respondent to pay any of the inst instal allm lmen ents ts as they they shal shalll beco become me due, due, the the tota totall outs outsta tand ndin ing g bala balanc nce e shal shalll immediately become due, and the overdue and unpaid installments shall earn a 3% interest per month as penalty charge, plus 5% interest of the outstanding balance as additional attorney’s fee. &hen respondent respondent failed to comply with the terms of the udgment, petitioner "led a motion for the issuance of a writ of execution, which was granted by the trial court. 'hus, a writ of execution execution was issued, however, the provincial provincial sheri( failed to push through with the scheduled auction sale due to some internal problems problems in the o)ce of the sheri(. Respondent "led a special civil action in the C* to annul said compromise udgment. 'he C* denied the petition, but modi"ed the compromise compromise udgment pursuant to *rt. +- of the Civil Code. %t reduced the penalty charge from 3 to +./, and the additional attorney0s fee from / to . * motion for reconsideration was "led by both parties, but to no avail. 1ence, the present present petition "led by Commercial Commercial Credit Corporation
I%%u&' &hether or not *rt. +- is applicable in the instant case Ru()n*' NO. * compromise udgment is "nal and immediately executor. Once a udgment becomes "nal and executor, it cannot be modi"ed or amended. 'he modi"cation of said compromise compromise udgment by the respondent appellate court is predicated on the provision of *rticle +- of the Civil Code which provides as follows2 *R' *R'. +-. 'he udge udge shall shall e$uitabl e$uitably y reduce reduce the penalty penalty when the principa principall obligation has been partly or irregularly complied with by the debtor. 4ven if there has been no performance, the penalty may also be reduced by the courts if it is ini$uitous or unconscionable.
'he foregoing provision of the law applies only to obligations or contract, subect of a litigation, the condition being that the same has been partly or irregularly complied with by the debtor. 'he provision also applies even if there has been no performance, as long as the penalty is ini$uituous or unconscionable. %t cannot apply to a "nal and executory udgment.
