EPIFANIO J. ALANO AND CECILIA PADING DE ALANO, PLAINTIFFS AND APPELLANTS VS. CLARO CORTES, DEFENDANT AND APPELLEE.

Alano versus Cortes

The Case

This is the case of Alano versus Cortes, a civil action that began as a complaint for the cancellation of certificates of title and ended as a dispute over the execution of a judgment based on a compromise agreement. The spouses Epifanio Alano and Cecilia Pading de Alano sued Claro Cortes to recover lands that had passed to him through mortgage foreclosure, but before trial the parties settled amicably and asked the court to render judgment in accordance with their stipulations. When the spouses later failed to pay the settlement amount, the trial court fixed a period for payment and added a forfeiture clause, and the spouses appealed. The case matters because it teaches how a court may implement, without amending, a compromise judgment that fixes no period for performance, and how reciprocal obligations and forfeiture operate in execution.

Procedural History

The spouses Alano filed a complaint before the Court of First Instance of Bulacan, praying for the cancellation of the certificates of title issued to Cortes and for the issuance of new ones in their names. Before trial, the parties filed a motion for amicable settlement, and the trial court rendered judgment approving the compromise and ordering the parties to comply with its terms and conditions. When the spouses failed to pay, Cortes filed a motion asking the court to fix a date for settlement, and the court, treating the motion as one for execution, issued a writ of execution. Cortes then filed motions praying that the right of the spouses to pay the judgment amount be sold at public auction. The trial court issued an order directing the spouses either to pay Cortes or to deposit the amount with the clerk of court within thirty days, failing which their right over the properties would be deemed forfeited and Cortes relieved of his obligation to execute the deed of reconveyance. The spouses moved for reconsideration, which was denied, and they appealed to the Supreme Court.

Facts

On April 6, 1953, the spouses Epifanio Alano and Cecilia Pading de Alano executed a promissory note in consideration of a loan of 65,000 pesos obtained from Claro Cortes. As security, they mortgaged several parcels of land in Bulacan, empowering the mortgagee to foreclose extrajudicially. On January 29, 1954, Cortes foreclosed the mortgage and the properties were sold to him at auction for 15,000 pesos. Cortes then filed a complaint in the Court of First Instance of Rizal for the collection of the balance.

To avoid embarrassment, the spouses requested Cortes to withdraw the complaint and to increase the loan to 74,000 pesos. Cortes acceded, and the spouses drew a new promissory note promising to pay that amount plus twelve percent interest on or before July 21, 1954, and executed at the same time a deed of mortgage over the same properties. On January 5, 1955, Cortes obtained from the Provincial Sheriff of Bulacan a deed of sale of the mortgaged lands after consolidating his ownership, and registered the document, causing new certificates of title to be issued in his name.

This prompted the spouses to institute a complaint on February 4, 1958, praying for cancellation of the certificates of title issued to Cortes and the issuance of another in their names. Before trial, the parties filed a motion for amicable settlement. They agreed that the spouses would pay Cortes 131,000 pesos in full settlement of all claims under the mortgages, and that Cortes would reconvey the properties to them free from all liens and encumbrances, with warranty against adverse claims of third parties. The amount would absorb attorney's fees and a claim of Lina S. Cortes for jewelries. The trial court rendered judgment in conformity with the settlement, ordering the parties to comply with its terms and conditions, without costs. The spouses failed to pay, and the execution proceedings and the challenged order followed.

Issues

• Whether or not the trial court erred in amending the judgment of July 29, 1958 by fixing a term for the payment of the spouses' obligation and adding a forfeiture clause in favor of Cortes.
• Whether or not the trial court erred in not requiring Cortes to comply first with the judgment before demanding the spouses' performance.
• Whether or not the trial court erred in not enforcing the judgment as it is, without amendment.

Applicable Provisions

Article 1197 of the Civil Code provides:

If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.

This provision supports the trial court's power to fix a period for the spouses' payment when the compromise agreement left the time of performance unstated.

Article 1169 of the Civil Code provides:

Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

This provision bears on the reciprocal obligations of the parties, which the Court held can be enforced only if one party is willing to do its share.

Section 6 of Rule 124 of the Rules of Court, as cited in the decision, provides:

If a judgment be for the payment of money, or for the performance of any other act, the court may, by an order, require the judgment debtor to perform the act or to pay the money within a specified time, and in default thereof, may enforce the judgment by execution.

This rule authorized the trial court to issue the order fixing a period and providing for forfeiture in default of payment.

Ruling

On the first issue, the Court held that the trial court did not amend the judgment but merely implemented it. The judgment being based on a compromise is immediately executory, and the obligations of the parties are demandable at once. While no period was fixed in the amicable settlement, it does not follow that no period was intended, for it is preposterous to presume that the parties intended to leave performance to the whim of either party and thereby frustrate the purpose of the agreement. The Court also upheld the forfeiture clause, because the spouses obliged themselves to pay as a condition for Cortes to reconvey the properties, a reciprocal obligation that can only be enforced if one party is willing to do its share. To induce the spouses to perform, the court found it necessary to include the forfeiture clause, which it can do under the rules.

On the second and third issues, the Court held that the trial court acted within its power in issuing the order, it being a step necessary to give force and effect to its decision. The Court quoted its settled doctrine:

Obviously a prevailing party in a civil action is entitled to a writ of execution of the final judgment obtained by him within five years from its entry. But it has been repeatedly held, and it is now well-settled in this jurisdiction, that when after judgment has been rendered and the latter has become final, facts and circumstances transpire which render its execution impossible or unjust, the interested party may ask the court to modify or alter the judgment to harmonize the same with justice and the facts.

Thus, the order fixing a period and providing for forfeiture was a valid implementation of the compromise judgment, not an amendment of it.

Doctrine

A judgment based on a compromise is immediately executory, and the obligations of the parties are demandable at once. When the compromise agreement fixes no period for performance, the court may fix the duration thereof under Article 1197 of the Civil Code, because it is presumed that a period was intended and it would be preposterous to leave performance to the whim of either party. Where the obligations are reciprocal, as when one party must pay before the other reconveys, the court may include a forfeiture clause to induce performance, and this is a step necessary to give force and effect to the decision under Section 6 of Rule 124. Finally, when after a judgment has become final, facts and circumstances transpire which render its execution impossible or unjust, the interested party may ask the court to modify or alter the judgment to harmonize it with justice and the facts.

Disposition

The Supreme Court affirmed the order of the trial court, without pronouncement as to costs. Cortes prevailed, and the order fixing a thirty-day period for payment and providing for forfeiture in default was upheld.

Remember This

The single line worth memorizing is that a compromise judgment is immediately executory, and the court may fix a period and add a forfeiture clause to implement it, not amend it. Examiners like to use this case on the execution of compromise judgments, the fixing of periods under Article 1197, and the enforcement of reciprocal obligations.