Cagayan De Oro Coliseum v. Court Of Appeals

YNARES-SANTIAGO, J.:

In this petition for review, petitioner Cagayan de Oro Coliseum, Inc. assails the decision of the Court of Appeals in CA-G.R. CV No. 437821 which reversed and set aside the decision dated August 5, 1993 of the Regional Trial Court, Branch 19, Cagayan de Oro City in two consolidated cases, Civil Case No. 89-098 and Special Civil Action No. 6811. Spanning a period of more than twenty (20) years, this case involves a long drawn-out struggle for ownership over a valuable piece of real property in Cagayan de Oro City. In 1977, petitioner Cagayan de Oro Coliseum, Inc., a domestic corporation domiciled in Cagayan de Oro City, obtained from one Santiago Maceren a loan in the amount of P149,253.73.2 As security for the loan, petitioner executed a promissory note and a mortgage over all its assets and properties, including a parcel of land situated in the poblacion of the City and registered in its name under Transfer Certificate of Title (TCT) No. T-3383.

The land, which has an area of 4,025 Square meters with two (2) commercial buildings thereon respectively measuring 1,606 and 379 square meters,3 is more particularly described as follows: A parcel of land [Lot 845-B-2-B of the subdivision plan (LRC) Psd-19292, being a portion of Lot 845-B-2, described on (sic) plan Psd-34454, LRC (GLRO) Cad. Rec. No. 1562], situated in the Poblacion, City of Cagayan de Oro, Island of Mindanao.

Bounded on the NE. and SE., points 3 to 4 and points 4 to 1 by Lot 845-B-2-F; on the SW., points 1 to 2 by Lot 845-B-2-C; and on the NW., points 2 to 3 by Lot 845-B-2-E all of the subdivision plan. .

. . containing an area of FOUR THOUSAND AND TWENTY FIVE (4,025) SQUARE METERS more or less.4 The loan, together with the promissory note and the mortgage, were later assigned by Maceren to the Commercial Credit Corporation of Cagayan de Oro (Commercial Credit).5 Petitioner failed to pay the loan when it became due, hence, the Commercial Credit commenced foreclosure proceedings on the said parcel of land.

On October 23, 1979, five stockholders of petitioner corporation instituted before the then Court of First Instance (CFI) of Misamis Oriental, Branch IV, a petition for injunction against Commercial Credit, the City Sheriff of Cagayan de Oro and herein-petitioner corporation, entitled "Ralph Lou I. Willkom, Benber B. Apepe, Bernardo Roa, Marcos Balarias and Teresita Macale, Petitioners versus Rufo J. Waminal, City Sheriff of Cagayan de Oro, Commercial Credit Corporation and Cagayan de Oro Coliseum, Inc., Respondents," docketed as Special Civil Action No. 6811. The five stockholders sought to enjoin the public sale of the corporate property alleging that the loan was contracted by Diego Imperio, the president of the corporation, without authority from the stockholders; and that the creditor, Santiago Maceren, was corporate treasurer and a member of the Board of Directors of petitioner corporation at the time the loan was obtained.6 Eventually, the parties, assisted by their respective counsel, entered into a compromise agreement which became the basis of a judgment rendered by the trial court on March 11, 1980, whereby the five stockholders ratified the loan of the corporation to Commercial Credit in the amount of P249,263.23, computed as of February 15, 1980; the corporation bound itself to pay the loan in equal monthly installments of P11,000.00 and agreed that failure to pay any of the installments shall render the judgment immediately executory, with penalty on overdue and unpaid installments at the rate of three per cent (3%) per month plus five per cent (5%) of the outstanding balance as additional attorney's fees.

The Compromise Judgment reads as follows: The parties in the above-entitled case assisted by their respective counsel, submitted for approval the following Compromise Agreement, to wit: COMES NOW, Parties, Petitioners and Respondents, represented by their respective counsels, unto this Honorable Court, most respectfully submit for approval the following Compromise Agreement: 1. That, petitioners herein hereby state that they ratified and approved the loan and real estate mortgage entered into and assigned by the Cagayan de Oro Coliseum, Inc. to the Commercial Credit Corporation of Cagayan de Oro and as such therefore, the issue raised by the herein petitioners in the above entitled case has become moot and academic; 2. That, by virtue of the aforementioned, the Cagayan de Oro Coliseum, Inc., thru its Board of Directors and represented by its President, Mr. Johnny Wilson, hereby admits its total outstanding obligation to herein Respondent Commercial Credit Corporation of Cagayan de Oro in the amount of TWO HUNDRED FORTY NINE THOUSAND TWO HUNDRED SIXTY THREE & 23/100 PESOS (P249,263.23), as of February 15, 1980, including therein the sum of P10,000.00 representing attorney's fees for Respondent Commercial Credit Corporation of Cagayan de Oro; 3.

That, the Cagayan de Oro Coliseum, Inc. has agreed to pay the above obligation plus interest on diminishing balance computed yearly at sixteen (16%) per cent per annum, thus: Total Account P249,263.23 Total Interest 76,138.60