Case Summary (G.R. No. 191336)
Antecedent Facts
On February 1, 2001, Montanez acquired a loan from Miguel, which was due on February 1, 2002. Following his failure to repay, Miguel sought the intervention of the Lupong Tagapamayapa in Barangay San Jose, resulting in a settlement agreement (Kasunduang Pag-aayos) where Montanez committed to monthly payments of P2,000 and agreed to settle the loan by selling his collateral in case of default. Despite this agreement, Montanez did not comply, prompting Miguel to file a collection complaint in the Metropolitan Trial Court (MeTC) of Makati City.
Legal Proceedings
The MeTC rendered a decision on August 16, 2006, ordering Montanez to pay Miguel the outstanding amount plus attorney's fees. Montanez appealed to the Regional Trial Court (RTC), which affirmed the MeTC decision. The issues on appeal to the RTC involved venue and the validity of the Kasunduang Pag-aayos.
Court of Appeals Decision
Montanez subsequently sought relief from the Court of Appeals, raising the same issues. The CA, in its September 17, 2009 decision, granted Montanez's petition, reversing the RTC’s ruling and dismissing Miguel's collection complaint. The CA held that the Kasunduang Pag-aayos did not produce a novation of the original loan and that since the six-month period for enforcement had lapsed, the proper remedy for Miguel was to enforce the amicable settlement in court rather than pursue a collection action.
Supreme Court's Ruling
On further appeal, the Supreme Court ruled in favor of Miguel. It clarified that Montanez's non-compliance with the Kasunduang Pag-aayos constituted a repudiation of that agreement as per Article 2041 of the New Civil Code, allowing Miguel to insist on his original loan demand. The Court stated that the CA's ruling was erroneous in suggesting that enforcement through the Kasunduang Pag-aayos was the appropriate remedy, as the petitioner had opted to rescind the settlement by filing a complaint for collection.
Implications of the Ruling
The Court emphasized that a party may regard an amicable settlement as rescinded without needing a separate action for rescission if the other party
...continue readingCase Syllabus (G.R. No. 191336)
Case Background and Factual Antecedents
- On February 1, 2001, respondent Jerry D. Montanez obtained a loan amounting to One Hundred Forty-Three Thousand Eight Hundred Sixty-Four Pesos (₱143,864.00) from petitioner Crisanta Alcaraz Miguel, payable within one year, i.e., until February 1, 2002.
- The respondent provided as collateral his house and lot situated at Block 39 Lot 39 Phase 3, Palmera Spring, Bagumbong, Caloocan City.
- Failure by the respondent to repay the loan prompted the petitioner to file a complaint with the Lupong Tagapamayapa of Barangay San Jose, Rodriguez, Rizal.
- Subsequently, both parties entered into a Kasunduang Pag-aayos (amicable settlement) where the respondent agreed to pay the loan in monthly installments of ₱2,000.00, with the understanding that if the collateral property was sold, full settlement of the outstanding balance was required.
- Despite this agreement, the respondent failed to comply with the payments, and the Lupong Tagapamayapa issued a certification to file action in court on December 13, 2004.
- On April 7, 2005, the petitioner filed a complaint for Collection of Sum of Money before the Metropolitan Trial Court (MeTC) of Makati City.
- The respondent challenged the venue of the case, asserting improper venue on the basis that the petitioner resided in Caloocan City while he resided in San Mateo, Rizal.
- The MeTC rendered a decision on August 16, 2006, ordering the respondent to pay the principal amount with legal interest and attorney’s fees.
- The Regional Trial Court (RTC) of Makati City affirmed the MeTC decision on March 14, 2007.
- Dissatisfied, the respondent appealed to the Court of Appeals (CA), raising two main issues: improper venue and whether the Kasunduang Pag-aayos novated the original loan agreement.
- On September 17, 2009, the CA reversed and set aside the RTC decision, dismissing the complaint for collection without prejudice to the petitioner’s right to file an action enforcing the Kasunduang Pag-aayos.
- The CA ruled that there was no novation of the loan agreement and that the Kasunduang Pag-aayos merely supplemented the original contract.
- The CA deemed the proper remedy to be enforcement of the amicable settlement, considering the lapse of six months from the settlement date, and found the venue issue unnecessary to resolve.