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[G.R. No. 133907.October 18, 1999]

MCI REALTY ESTATE AND DEV'T. CORP. vs. KEPPEL MONTE BANK

FIRST DIVISION

Gentlemen:

Quoted hereunder, for your information is a resolution of this Court dated OCT 18 1999.

G.R. No. 133907(MCI Real Estate and Development Corporation vs. Court of Appeals and Keppel Monte Bank (formerly Monte de Piedad.))

On February 20, 1990, Keppel Monte Bank (Keppel for breylty) and MCI Real Estate Development Corporation (MCI for brevity) entered into a contract of loan, whereby Keppel would grant a Developmental Loan to MCI in the amount of 12 million pesos to be secured by. a real estate mortgage on one hundred eleven parcels of land owned by MCI.

To facilitate payment of the loan they entered into a memorandum of agreement whereby MCI would cede, assign and transfer to Keppel all the receivables due from the initial sale of sixty nine (69) units of townhouse of Las Villas Del Cielo, the subdivision project of MCI which was financed though the developmental loan secured from Keppel.

As a security for the remittance of the payment by MCI to Keppel, MCI delivered the original duplicate copies of the Transfer Certificates of Title (TCT) of the 69 units to Keppel.

MCI alleged that Keppel refused to return to MCI the TCTs' of the town home units that were already paid in accordance with their Memorandum of Agreement (MOA). On June 6, 1996, MCI filed with the Regional Trial Court of Quezon City, an action against Keppel for breach of contract.

On July 15, 1996, Keppel filed its answer to the complaint.

On October 9, 1996, Keppel sent a letter of demand to MCI for it to settle its past due loans in the amount of P306,206,782.20.MCI instead of complying with the bank's demand sent notice that the entire mortgage had been cancelled.On October 28, 1996, a notice of sheriff's sale was sent to MCI notifying them of the foreclosure sale scheduled on November 26, 1996.MCI filed a supplemental complaint seeking temporary restraining order and writ of preliminary injunction to enjoin the bank for foreclosing on the properties.The same was granted.

On appeal to the Court of Appeals, the said court reversed the decision of the RTC, hence, the present petition.

However, on August 4, 1999, petitioners and respondent filed a joint manifestation withdrawing their petition and signifying that they have entered into a compromise agreement and seek the approval thereof.

A perusal of the compromise agreement entered into by MCI and Keppel will reveal that it includes the settlement of a pending criminal case with the Regional Trial Court of Quezon City, Branch 97, docketed as Criminal Case No. Q-99-82748 (I.S. No. 95-2217) entitled People of the Philippines vs. Amable R. Aguiluz V.

The rule is that a compromise should not be contrary to law, public morals, good customs, public order or public policy. Under Art. 2034 and 2035 of the Civil Code, the following may not be a subject of a compromise:

1. Criminal liability of an accused in a criminal action, 2. Civil status of persons, 3. Validity of marriage or legal separation, 4. Any ground for legal separation, 5. Future support, 6. Jurisdiction of courts, 7. Future legitime.

WHEREFORE, the compromise agreement is approved only as to its civil aspect, but the dismissal of the pending criminal case can not be allowed as a part of the compromise, the same being contrary to law.

KAPUNAN and YNARES-SANTIAGO, JJ ., are on official leave.

Very truly yours,

(Sgd.) VIRGINIA ANCHETA-SORIANO
Clerk of Court

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