G.R. No. 72806 . January 9, 1989.
EPIFANIO CRUZ and EVELINA CRUZ, petitioners, vs. INTERMEDIATE APPELLATE COURT, CALIXTRO O. ADRIATICO, RUFINO J. SANTIAGO and GODOFREDO VALMEO, respondents.

FACTS

Petitioners Epifanio and Evelina Cruz mortgaged properties to private respondents. Due to non-payment, a judicial foreclosure suit was filed. During the proceedings, the parties entered into a compromise agreement, which was adopted as a judgment by the Regional Trial Court (RTC) of Bulacan. The agreement stipulated specific payment schedules for the petitioners. Crucially, it provided that upon the petitioners’ failure to pay the sums within the stipulated periods, the respondents would be entitled to a writ of execution directing the foreclosure of the mortgages, with specific amounts for attorney’s fees.
The petitioners failed to comply with the terms of the compromise judgment. Consequently, the respondents moved for and obtained a writ of execution. The mortgaged properties were foreclosed and sold at a public auction, where the respondents were the highest bidders. The RTC later issued an order confirming the foreclosure sale. The petitioners challenged these proceedings via a petition for certiorari in the Intermediate Appellate Court (IAC), arguing the compromise judgment was void for depriving them of the statutory 90-day equity of redemption period under Rule 68. The IAC dismissed their petition.

ISSUE

Whether the judgment based on the compromise agreement is valid despite not providing the 90-day period for the exercise of the equity of redemption prescribed under Section 2, Rule 68 of the Rules of Court.

RULING

The Supreme Court denied the petition and upheld the validity of the judgment on compromise. The legal logic is clear: the statutory procedure under Section 2, Rule 68, which mandates a trial to ascertain the debt and grants a minimum 90-day period to pay into court, applies in the absence of an agreement between the parties. This period is for the exercise of the equity of redemption. However, this procedure is not inflexible and can be validly modified by a compromise agreement freely entered into by the parties.
A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. Once judicially approved, it becomes a judgment that has the force of res judicata and is immediately executory. In this case, the petitioners, through the compromise, voluntarily agreed to specific payment deadlines and the consequences of default, including immediate foreclosure. By doing so, they effectively waived the statutory 90-day period. The Court emphasized that the rules on foreclosure cannot substantially apply when the parties have validly agreed on the amounts, the payment schedule, and the effects of non-payment. The petitioners cannot now repudiate the terms of the agreement they voluntarily entered into simply because it proved disadvantageous to them. The subsequent foreclosure and confirmation of sale, being in strict implementation of the compromise judgment, were therefore valid.