GR 129713; (December, 1999) (Digest)
G.R. No. 129713 December 15, 1999
CAGAYAN DE ORO COLISEUM, INC., petitioner, vs. COURT OF APPEALS, MAXIMIANO MABANAG, JR. and RICHARD GO KING, respondents.
FACTS
Petitioner Cagayan de Oro Coliseum, Inc. obtained a loan secured by a mortgage on its property. After petitioner defaulted, the creditor initiated foreclosure. Five stockholders filed an injunction case, which was settled via a Compromise Judgment approved by the trial court on March 11, 1980. This judgment obligated petitioner to pay its debt in monthly installments, stipulating that default on any installment would make the entire balance immediately due and executory. Petitioner subsequently defaulted. The creditor then sought execution, and the property was sold at a sheriff’s auction in 1987 to respondents Mabanag and Goking. Petitioner later filed a separate civil case seeking to annul the foreclosure sale, arguing the Compromise Judgment had been novated by a subsequent agreement and that the execution was invalid.
ISSUE
The core issue was whether the foreclosure sale based on the execution of the 1980 Compromise Judgment was valid, or whether said judgment had been novated or satisfied.
RULING
The Supreme Court upheld the validity of the foreclosure sale and reinstated the trial court’s decision dismissing petitioner’s complaint. The Court ruled that the 1980 Compromise Judgment had the force of res judicata and was immediately executory upon petitioner’s default, as expressly stipulated in the agreement itself. Petitioner’s claim of a subsequent novating agreement was unsubstantiated by clear and convincing evidence. A compromise, once approved by the court, becomes a final judgment that can only be set aside on grounds of vitiated consent, fraud, mistake, or duress, which petitioner failed to prove. Consequently, the creditor had a clear legal right to seek a writ of execution. The sheriff’s sale, conducted after proper notice, was a valid enforcement of this final and executory judgment. The Court of Appeals’ reversal was therefore erroneous.