Title
Araneta vs. Perez
Case
G.R. No. L-26117
Decision Date
Jul 17, 1980
Antonio Perez failed to pay a promissory note; courts ruled trust funds covered debt, dismissing counterclaims and affirming partial satisfaction.
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Case Digest (G.R. No. L-26117)

Facts:

Background of the Case

  • On June 16, 1961, Antonio M. Perez executed a promissory note agreeing to pay J. Antonio Araneta, or order, the sum of P3,700.00, with 9% interest per annum if unpaid after maturity, and P370.00 as attorney's fees.
  • The note matured on October 13, 1961, but Perez failed to pay despite demand. Araneta filed a complaint in the Municipal Court of Manila (Civil Case No. 92265) to collect the amount.

Defendant's Defense

  • Perez admitted executing the note and failing to pay but claimed the funds were used for his daughter Angela Perez y Tuason's medical treatment. He argued that the trust estate (administered by Araneta as trustee) should cover the expenses.
  • Perez also filed a counterclaim for moral damages, exemplary damages, and attorney's fees.

Lower Court Proceedings

  • The municipal court granted Araneta's motion for judgment on the pleadings, ordering Perez to pay the amounts claimed and dismissing his counterclaim. Perez appealed to the Court of First Instance (Civil Case No. 50707).
  • Meanwhile, Perez filed another case (Civil Case No. 50706) against Araneta as trustee, seeking reimbursement for the P3,700.00. This case was dismissed by the municipal court and affirmed by the Court of First Instance.

Supreme Court Decision

  • The Supreme Court affirmed the lower court's decision with modification, ruling that interest on the note should start from the date of extrajudicial demand (October 18, 1961).

Execution Proceedings

  • Araneta filed a motion for execution in Civil Case No. 50707, which was initially granted by the lower court but later reconsidered after Perez presented evidence of partial payment.
  • The lower court ordered Araneta to credit himself with P3,441.52 (from the trust estate) and withdraw P1,479.74 deposited with the Clerk of Court to satisfy the judgment.

Subsequent Motions

  • Araneta sought clarification and reconsideration of the lower court's orders, arguing that the court failed to specify the time when he was advised of the authority to apply the trust funds and omitted the attorney's fees awarded in the judgment.
  • The lower court denied the motion, stating the issues had already been resolved.

Issue:

  1. Whether the lower court acted with grave abuse of discretion in reconsidering its initial order granting execution and instead ordering Araneta to credit himself with the trust funds and withdraw the deposited amount.
  2. Whether the lower court erred in failing to specify the time when Araneta was advised of the authority to apply the trust funds and in omitting the attorney's fees awarded in the judgment.

Ruling:

The Supreme Court dismissed the petition, holding that:

  • The lower court did not act with grave abuse of discretion. Its orders were consistent with the facts, law, and justice, as the judgment had already been substantially satisfied through the crediting of the trust funds and the deposited amount.
  • The remaining issues raised by Araneta were insubstantial and did not warrant further judicial intervention.

Ratio:

  1. Finality of Judgment: Once a judgment becomes final and executory, it must be enforced as rendered. However, the lower court's reconsideration of its execution order was justified because the judgment had already been satisfied through the crediting of trust funds and the deposited amount.
  2. Substantial Compliance: The lower court's orders ensured substantial compliance with the judgment, making the issuance of a writ of execution unnecessary.
  3. Judicial Economy: The Supreme Court emphasized that minor discrepancies and procedural issues should be resolved by the parties without further burdening the courts, especially given the relationship and means of the parties involved.


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