G.R. No. L-72694 - Del Banco vs. Intermediate Appellate Court

On February 1, 2001, respondent Jerry D. Montanez obtained a loan of One Hundred Forty-Three Thousand Eight Hundred Sixty-Four Pesos (P143,864.00) from petitioner Crisanta Alcaraz Miguel.
The loan was payable within one year, i.e., until February 1, 2002.
Montanez gave his house and lot located at Block 39 Lot 39 Phase 3, Palmera Spring, Bagumbong, Caloocan City as collateral.

Due to failure to pay the loan, Miguel filed a complaint before the Lupong Tagapamayapa of Barangay San Jose, Rodriguez, Rizal.
The parties entered into a Kasunduang Pag-aayos (amicable settlement) where Montanez agreed:

Montanez again failed to fulfill his payment duties.
On December 13, 2004, the Lupong Tagapamayapa issued a certification allowing the filing of a court action.

On April 7, 2005, Miguel filed a Complaint for Collection of Sum of Money before the Metropolitan Trial Court (MeTC) of Makati City, Branch 66.
Montanez answered and filed a counterclaim, asserting improper venue (Miguel residing in Caloocan City, Montanez in San Mateo, Rizal).
On August 16, 2006, MeTC rendered judgment ordering Montanez to pay:

P147,893.00 representing principal with legal interest from February 1, 2002 until full payment.
P10,000.00 attorney’s fees.
Costs of suit.

Montanez appealed to the Regional Trial Court (RTC) of Makati City, Branch 146.
On March 14, 2007, RTC affirmed the MeTC decision, dismissing Montanez’s appeal for lack of merit.
Montanez further appealed to the Court of Appeals (CA), raising:

On September 17, 2009, the CA reversed and set aside the RTC decision, dismissing Miguel’s complaint for collection of money without prejudice to enforce the Kasunduang Pag-aayos.

The Kasunduang Pag-aayos did not effect novation; it supplemented but did not replace the original obligation since the original one-year term expired long before the agreement.
Amicable settlement has the force of a court judgment and may be enforced by execution within six months after the settlement or by court action after six months.
Since more than six months had elapsed, Miguel’s proper remedy was to enforce the Kasunduang Pag-aayos through court action rather than a collection suit.
The CA deemed venue issue unnecessary to resolve.

Miguel filed a Petition for Review on Certiorari before the Supreme Court.
Grounds included: proper remedy is collection suit (not enforcement of Kasunduang Pag-aayos), and the CA erred in remanding the case for enforcement.

Whether the complaint for sum of money is the proper remedy despite the existence of the Kasunduang Pag-aayos.
Whether the Court of Appeals should decide the case on the merits rather than remand it for enforcement of the Kasunduang Pag-aayos.