G.R. No. L-46953 February 29, 1988
JOSE N. MAYUGA, ET AL., petitioners-appellants, vs. THE COURT OF APPEALS, MACONDRAY FARMS, INC., REALTY SALES ENTERPRISE, INC., ET AL., respondents-appellees.

FACTS

This case involves motions for reconsideration of a prior Supreme Court decision concerning a 1977 compromise agreement. The petitioners, the Mayuga family, sought damages from respondent Realty Sales Enterprise, Inc., alleging that Realty acted in bad faith and with malice in evading its obligations under the agreement. They argued that due to the decline in the peso’s purchasing power and the quadrupling of the disputed property’s value, justice demanded compensation for their losses and unrealized profits. They proposed damages based on the property’s increased value, the peso’s devaluation, or legal interest from 1977.
Realty opposed the claim for damages, contending that the compromise agreement had the effect of res judicata and was therefore conclusive, barring any additional claims like interest. Separately, Realty also filed its own motion for reconsideration regarding the payment period. It conceded liability but argued that the Court erred in ordering payment upon the finality of judgment. Realty invoked Article 1197 of the Civil Code, asserting that a court-fixed period must be prospective and consider attendant circumstances, such as its corporate size, financial resources, and a related pending case. It prayed for a six-month extension from the resolution of that other case to fulfill its obligation.

ISSUE

The primary issues were: (1) whether the petitioners were entitled to an award of damages for alleged bad faith in the enforcement of the compromise agreement, and (2) whether the respondent Realty was entitled to a modification of the payment period fixed by the Court.

RULING

The Supreme Court denied both motions for reconsideration. On the claim for damages, the Court held that it could not grant the petitioners’ prayer. While it clarified that the interest being claimed was in the concept of damages for alleged malicious evasion of contract and not merely contractual interest, such an award would require a factual finding of bad faith and malice. The Court emphasized that it is not a trier of facts, and no such factual determination had been properly established to support the claim for damages.
Regarding Realty’s motion on the payment period, the Court found no merit. It held that the period it fixed—payment upon the finality of judgment—was indeed prospective, as it commenced from the promulgation of the decision. The Court rejected Realty’s cited circumstances as valid reasons for further delay. It reasoned that the compromise agreement, entered into to terminate litigation commenced in 1959, was intended to resolve the dispute promptly. Granting an extension would contradict this intent and unjustly prolong an obligation already overdue for more than ten years. Thus, both motions were denied with finality.