JOSE A. V. CORPUS, PETITIONER, VS. HON. FEDERICO C. ALIKPALA, AS PRESIDING JUDGE OF BRANCH XXII, COURT OF FIRST INSTANCE OF MANILA; AND ACME MANUFACTURING CO., INC., RESPONDENTS…

In a suit for foreclosure of a real estate mortgage filed by Jose
A. V. Corpus against Acme Steel Manufacturing Co., Inc. in the Court of First
Instance of Manila (docketed as Civil Case No. 56047) judgment was rendered on 26 May 1964 upon a compromise,
stipulating the following terms and conditions:

“(1)  That the parties hereto mutually agreed that
the unpaid balance of the purchase price of the ‘Maria Dolores Building’ now
known as the ‘Nestor de Castro Building’ including the two (2) lots on which
said building is erected, is ONE HUNDRED THOUSAND PESOS (P100,000.00);

“(2)  That defendant will pay the said balance of
P100,000.00 at any time between the period from the signing of this compromise
agreement up to December 15, 1965 subject to the following terms and
conditions:

[a]  The interest on the aforesaid balance of ONE
HUNDRED THOUSAND PESOS (P100,000.00) for the period from December 1, 1963 to
December 15, 1964 at the rate of one (1%) per cent per month or a total of
TWELVE THOUSAND PESOS (P12,000.00) shall be paid in advance by the defendant as
follows:  P6,500.00 on May 30, 1964 and
P6,000.00, on or before June 15, 1964; provided, however, that in case
defendant will pay any sum on the principal amount thereby correspondingly
reducing the unpaid principal, the excess interest already paid shall likewise
be credited to the unpaid principal which will therefore be correspondingly
reduced further.

[b]  The interest for the period from December 16,
1964 to December 15, 1965 on whatever principal balance remains, at the rate of
one (1%) per cent per month shall likewise be paid in advance as follows:  one half (1/2) on or before December 15, 1964
and the other one half (1/2) on or before January 31, 1965 subject to the same
proviso stated in sub-paragraph (a) above;

“(3)  That the parties hereto waive their claim for
attorney’s fees and damages, each party to shoulder his own expenses.

“(4)  That failure of the defendant to pay the
plaintiff of any of the amounts stated above, the latter shall be entitled to
the issuance of a writ execution of the entire balance, including
interests.”

compliance with
which was enjoined in the judgment.

The defendant Acme Steel Manufacturing Co., Inc. issued to
plaintiff Corpus, which he accepted, two checks, one for P6,500.00,
dated 30 May 1964, and the
other for P6,000.00, postdated 16 June
1964.

The first check was duly cashed, but the second check was
dishonored for insufficiency of funds; whereupon, on 25 June 1964, plaintiff Corpus, invoking the
defendant’s failure to pay on time the sum of P6,000.00
on 15 June 1964 moved for
execution for the entire balance.  The
defendant corporation opposed the motion on the ground that, in issuing checks
after the said postdated check, it failed to detect, through oversight and
mathematical error in computation, that its funds in the bank will run short by
about a few hundred pesos to cover the amount of the dishonored check; that
immediately after it learned that the check was dishonored, it informed the
plaintiff that he may re-deposit the check and the same would be
honored; but instead of doing so, the plaintiff filed the motion for execution;
that the delayed payment was not a substantial violation of the compromise
agreement because all that plaintiff had to do was to re-deposit the postdated
check and, at any rate, the amount of P6,000.00 was only as advance payment of
interest.

After the parties had submitted their respective memoranda, the
trial court, on 18 August 1964
ordered the issuance of a writ of execution for the payment of P100,000.00 with interest of 1% per month from 16 December 1983 until fully paid.

On 26 August 1964,
the defendant corporation filed a notice of appeal from the order of execution,
dated 18 August 1964, to
the Supreme Court on questions of law, and an appeal bond and then a record on
appeal, which was later amended.  Corpus
opposed the record on appeal and moved to dismiss the appeal; and the defendant
opposed the motion to dismiss its appeal. 
In view of the steps taken by the defendant to appeal, the trial court
on 31 August 1964 ordered
the suspension of the enforcement of the writ of execution.

On 7 October 1964,
the trial court allowed the appeal. 
Plaintiff Corpus moved for reconsideration but was denied on 17 October 1964.  The appeal is now before this Court as case
No. L-23720. 
The amended record on appeal was forwarded to this Court by the Clerk of
Court of the Court of First Instance of Manila on 26 October 1964.

Meanwhile, on 23 October 1964, even before the transmittal of the
amended record on appeal from the trial court, Corpus filed in this Supreme
Court a petition for certiorari,
prohibition and mandamus, with preliminary
injunction, praying for the nullification of the allowance of the appeal
(orders of 7 and 17 October 1964); that the respondent judge be prohibited from
allowing any further appeal from the decision and the order of execution and to
command him to give due course to the writ of execution.  This petition is docketed in this Court as
case No. L-23707 (Corpus vs. Judge Alikpala
et al).

The procedural issue in these cases is whether, under the facts,
the order of execution is appealable or not or, whether
some discretion may yet be exercised by the Court below.  If no discretion is left to be exercised, the
issuance of the order of execution is ministerial and non-appealable;
otherwise, it is appealable.  If ministerial, issuance of execution is
compellable by mandamus; if
discretionary, mandamus will not lie.

In opposing the execution, the defendant corporation alleged that
plaintiff accepted the postdated check, even before the approval of the
compromise agreement, but that due to the defendant’s over­sight and
mathematical error in computation in issuing other checks, the postdated check
was dishonored for insufficiency of funds at the time of its presentment, which
occurred after the approval by the court of the compromise.

The defendant company relies on Cotton vs. Almeda-Lopez,
CA-G.R. No. 22875-R, 27 June 1958, which was affirmed by the Supreme Court in
case L-14113, 19 September 1961, to support its view that the trial court could
still exercise some discretion before issuing the order of execution, but the
facts therein are dissimilar to the case at bar.  In the Cotton case, the compromise agreement
was not complete, definite or certain and the obligation of the defendant to
perform certain acts seemed (the stipulations were not clear) to depend upon
some conditions precedent; thus, the compromise agreement in the aforesaid case
provided for a continuance of the administration of certain properties by the
defendant subject to his payment of encumbrances thereon, while at the same
time providing for the turn-over of the properties upon the expiration of
certain contracts to sell, without stating in the compromise agreement itself
the dates of expiration of the said contracts; and providing also for the
submission of receipts of payment “called for in the contracts” to
the judge.  There was, therefore, need
for the exercise of discretion in the interpretation of the terms of the
compromise agreement and the determination by the judge of whether the conditions
precedent were complied with or not was needed before execution could issue.

In the present case, the terms of the compromise agreement are
complete, definite and certain and no suspensive
condition is attached to any of them. 
Therefore, insofar as the judgment upon the compromise is concerned, there
was nothing left for judicial determination, unlike that in the Cotton case.

The case before us is an appeal from the order of execution, not
an appeal from the judgment.  And the
general rule is that an order of execution is not appealable;
otherwise, a case could never end (2 Moran 360, 1963 Ed.).  Two exceptions to this rule were announced in
Castro vs. Surtida, 87 Phil. 166, namely, where the
order of execution varies the tenor of the judgment and when the terms
of the judgment are not very clear and there is room for interpretation.  The present case does not fall under
either exception since the order of execution does not vary the tenor of
the judgment, but is in accord therewith; and the terms of the judgment, as
previously stated, are clear and definite; hence, the general rule of non-appealability applies.

But even if the order to issue execution were really appealable, the appeal (L-23720) is untenable.  As we view the compromise agree­ment, the
advance payment of the interest was plainly the main consideration for the
creditor’s assent to delay payment of the balance of the purchase price (P100,000.00) up to December
15, 1965, despite previous defaults of the
defendant-appellant.  On that basis, the
dishonor of the check representing the advance interest resulted in the
forfeiture of the period given to pay the principal, (as prescribed by Article
1198, paragraph 4 of the Civil Code of the Philippines (R.A. No. 386), which is
of the following tenor:

“ART. 1198 – The debtor shall lose every right to make use of
the period:

x        x          x          x          x

“(4) When the
debtor violates any undertaking in consideration of which the creditor agreed
to the period.”

The foregoing is the applicable legal rule, and not Article 1191,
since in asking for execution, the appellee was not
seeking the resolution of the compromise but its enforcement.  The appellee’s
acceptance of the check had suspended his action to enforce the payment of the
balance of the principal; but it was not a true payment until the value of the
check was realized (Civ. C. Art. 1249).  Since the check was dishonored, the appellant
automatically became in default and lost the right to the period for paying the
principal of P100,000.00.

The claim that the acceptance of the check in
question novated the original compromise is
untenable.  The check was issued
as a means to comply with the provisions of the compromise; hence, there was no
incompatibility from which a novation could possibly
be inferred (Inchausti vs. Yulo,
24 Phil. 978; Pablo vs. Sapungan, 71 Phil. 145; Ramos
vs. Gibbon, 67 Phil. 371; Zapanta vs. De Rotaeche, 21 Phil. 154).

Nor can we agree to the proposition that the failure to provide
funds for paying the value of the check at maturity constituted merely an
unsubstantial breach.  Whether a breach
is substantial or not depends on the attendant circumstances.  Here the appellant’s failure to provide
adequate funds to back its check resulted not only in a delay in payment, but
in positive injury to the credit of the appellee, who
had indorsed the check to a stranger. 
Appellant had the duty to foresee such eventuality, since the check
issued by it was negotiable.  That appellee the next day provided the requisite funds could
not cure the injury.  Further, after its
check was dis­honored, appellant could not expect or demand that appellee should re-deposit the check once more.  What assurance did the latter have that it
would not be dishonored again?

Also, whether the appellant’s breach was substantial or not is
primarily a question addressed to the discretion of the trial court; and in
deciding that execution should issue, the Court a quo was clearly
intimating that it regarded the breach as substantial.  We find that conclusion to be neither legally
erroneous nor in abuse of discretion.

The trial court therefore, did not err in issuing the order of
execution; it, however, gravely abused its discretion, or exceeded its
jurisdiction, in allowing the appeal from the same order.

For the foregoing reasons, the order to issue execution in
case L-23720 is affirmed, and in case L-23707, the writs prayed for in the
petition are granted.  Costs
in both cases against Acme Steel Manufacturing Co., Inc.

SO ORDERED.

Concepcion, C.J., Dizon,
Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Ruiz Castro, Angeles, and Fernando, JJ., concur.