Case Summary (G.R. No. L-10104)
Key Dates
- July 24, 1990: Loan executed (₱400,000)
- August 10, 1990: Loan contract fixed interest at 2%, later increased to 3.5%
- August 17, 1993: Complaint for sum of money filed by Montemayor (Civil Case No. Q-93-17255)
- October 27, 1999: RTC decision ordering payment and set-off of attorney’s fees
- September 6, 2002 & October 2, 2003: RTC orders denying post-judgment motions
- May 19, 2005: CA decision denying certiorari
- July 27, 2011: Supreme Court decision
Applicable Law
- 1987 Constitution of the Philippines (judicial power and finality of judgments)
- Rules of Court: Rule 65 (certiorari), Rule 45 (review on certiorari), Rule 15 (motions)
- Civil Code, Articles 1278–1279 (compensation/set-off)
Factual Antecedents
Montemayor loaned Millora ₱400,000 evidenced by a promissory note. The parties agreed on monthly interest (initially 2%, later 3.5%). Millora paid only partial interest for four months and defaulted thereafter. Montemayor demanded payment without success and filed a complaint for sum of money on August 17, 1993. Millora answered and counterclaimed for at least ₱500,000 in attorney’s fees, alleging extensive legal services.
RTC Decision (October 27, 1999)
The trial court found Millora liable to pay Montemayor ₱300,000 plus 12% interest from filing until full payment. It also granted Millora’s counterclaim on quantum meruit grounds, awarding attorney’s fees “equivalent to whatever amount recoverable” from him. The court directed that Montemayor’s award be set off against Millora’s counterclaim.
Post-Judgment Proceedings in the RTC
- Millora filed a motion for writ of execution (March 15, 2000) for the attorney’s-fees portion, granted June 23, 2000.
- Montemayor filed motions for reconsideration and for writ of execution on the principal-debt portion; both were denied (September 6, 2002; October 2, 2003) for procedural noncompliance with Rule 15.
Court of Appeals Decision (May 19, 2005)
The CA denied Montemayor’s certiorari petition under Rule 65, affirming the RTC’s orders of September 6, 2002 and October 2, 2003 in toto.
Issue
Whether the RTC’s failure to specify the exact attorney’s-fees amount in its dispositive portion precludes valid set-off against the fixed sum of ₱300,000 plus interest.
Petitioner’s Arguments
Montemayor contends that without a specific monetary figure for the attorney’s fees, the judgment award is uncertain and cannot be executed; computation of fees is a judicial function beyond the sheriff’s authority.
Respondent’s Arguments
Millora asserts the October 27, 1999 decision attained finality without Montemayor’s appeal or motion for reconsideration, rendering it unchallengeable.
Supreme Court Ruling
- Finality and Immutability
- The RTC decision became final and executory on July 1, 2000 and is immutable under the doctrine of finality. Corrections or modifications are prohibited except for clerical errors or void judgments.
- Liquidation and Compensation
- Under Civil Code Articles 1278–1279, compensation (set-off) requires mutual, liquidated, and demandable debts.
- A debt is liquidated if its amount is determinable by simple arithmetic.
- The RTC rendered Montemayor’s debt (₱300,000 plus 12% interest from August 17, 1993) and Millora’s attorney’s fees liquidated: the latter is “equivalent to whatever amount recoverable” from Montemayor.
- Execution entails (a)
Case Syllabus (G.R. No. L-10104)
Facts
- On July 24, 1990, Vicente D. Millora obtained a loan of ₱400,000 from Jesus M. Montemayor, evidenced by a promissory note.
- A loan contract on August 10, 1990 fixed interest at 2% monthly; Vicente had paid ₱100,000 principal and ₱8,000 interest for July 24 to August 23, 1990.
- By agreement, the interest rate was later raised to 3.5% (₱10,500/month). From March 24 to July 23, 1991, Vicente owed ₱42,000 interest but paid only ₱24,000; no further payments followed.
- Christ demands for payment went unheeded; on August 17, 1993, Jesus sued Vicente in RTC Quezon City (Civil Case No. Q-93-17255) for sum of money.
- On October 19, 1993, Vicente answered and counterclaimed for attorney’s fees of at least ₱500,000, alleging he rendered legal services and was dismissed upon the present suit’s filing.
Trial Court Decision (RTC)
- October 27, 1999: RTC ordered Vicente to pay Jesus ₱300,000 plus 12% interest per annum from August 17, 1993 until fully paid.
- RTC found Vicente’s counterclaim meritorious and awarded him attorney’s fees “equivalent to whatever amount recoverable” from him, to be set off against the ₱300,000 obligation.
- No separate pronouncement on attorney’s fees or costs was included.
- December 8, 1999: Vicente filed a motion for reconsideration; RTC denied review on June 23, 2000, but granted a writ of execution on the attorney’s fees portion.
- July 6, 2000: Vicente’s notice of appeal was denied as the decision had become final and executory on July 1, 2000.
- Jesus filed motions for reconsideration and clarification (July 12, 2000) and for a writ of execution (September 22, 2000); both were denied by Orders dated September 6, 2002 and October 2, 2003 for procedural defects.
Court of Appeals Ruling
- Jesus petitio