GR 191336; (January, 2012) (Digest)
G.R. No. 191336 ; January 25, 2012
CRISANTA ALCARAZ MIGUEL, Petitioner, vs. JERRY D. MONTANEZ, Respondent.
FACTS
On February 1, 2001, respondent Jerry Montanez secured a loan of ₱143,864.00 from petitioner Crisanta Alcaraz Miguel, payable in one year and secured by a house and lot. Due to Montanez’s failure to pay, Miguel filed a complaint before the Lupong Tagapamayapa. The parties entered into a “Kasunduang Pag-aayos” (amicable settlement) wherein Montanez agreed to pay in monthly installments of ₱2,000.00 and to settle the balance in full upon the sale of the collateral. Montanez still failed to pay, prompting the Lupong Tagapamayapa to issue a certification to file action. On April 7, 2005, Miguel filed a Complaint for Collection of Sum of Money before the Metropolitan Trial Court (MeTC) of Makati. Montanez raised the defense of improper venue. The MeTC ruled in favor of Miguel, ordering Montanez to pay the obligation with interest and attorney’s fees. The Regional Trial Court (RTC) affirmed the MeTC decision on appeal. The Court of Appeals (CA) reversed the RTC, dismissing the collection complaint. The CA ruled that the “Kasunduang Pag-aayos” did not novate the original loan agreement but merely supplemented it. It held that since more than six months had elapsed from the date of settlement, Miguel’s proper remedy was to file an action to enforce the “Kasunduang Pag-aayos” in court, not a collection case. The CA deemed it unnecessary to resolve the venue issue.
ISSUE
1. Whether a complaint for sum of money is the proper remedy for the petitioner, notwithstanding the “Kasunduang Pag-aayos.”
2. Whether the CA should have decided the case on the merits rather than remanding it for the enforcement of the “Kasunduang Pag-aayos.”
RULING
The Supreme Court ruled in favor of the petitioner.
1. Yes, a complaint for collection of sum of money is the proper remedy. The Court held that while an amicable settlement like the “Kasunduang Pag-aayos” has the force and effect of res judicata and is immediately executory, its enforcement by execution (either by the Barangay Lupon within six months or by court action thereafter) is only applicable if the settlement has not been repudiated. Citing Article 2041 of the New Civil Code, the Court ruled that if one party fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. Since respondent Montanez failed to comply with the terms of the “Kasunduang Pag-aayos,” said agreement is deemed rescinded, and petitioner Miguel can revert to her original demand under the loan agreement. Therefore, filing a complaint for collection of sum of money was the correct remedy.
2. Given the ruling on the first issue, the question of whether the CA should have decided on the merits is moot. The Supreme Court, having determined that the collection case was proper, effectively decided the case on the merits by upholding the right to pursue the original loan obligation.
DISPOSITIVE PORTION:
The Supreme Court GRANTED the petition. The Decision of the Court of Appeals was REVERSED and SET ASIDE. The Decision of the Regional Trial Court affirming the Metropolitan Trial Court’s judgment ordering respondent Jerry D. Montanez to pay the loan amount with legal interest and attorney’s fees was REINSTATED.