RULE 5 - BRGY

CRISANTA MIGUEL v. JERRY MONTANEZ

GR 191336
January 25, 2012

FACTS:

- MONTANEZ secured a loan P 143,864
- Payable in 1 year OR until Feb 1, 2002
- From MIGUEL
- Collateral house and lot located at Caloocan
- Failure to pay the loan
- MIGUEL filed before the Lupong tagapamayapa of Brgy San
Jose, Rodriguez, Rizal
- Entered into a KASUNDUANG PAGAAYOS
o Respondent agreed to pay
o Installments
o 2K/month
o Fail settle in full
- Res failed to pay
- Lupong issued a CERTIFICATION to file action in court in
favor of MIGUEL
- Filed before MTC Makati Collection of sum of money
- ANSWER: Improper venue (petitioner was resident of
Caloocan while he lived in Rizal)
- MTC: ordered JERRY to pay
- Appeal to RTC of MAKATI
o Respondent raised the same issue
- RTC affirmed MTC
- Appeal to CA
o Whether or not venue was improperly laid AND
o Whether kasunduang pag-aayos effectively
novated the loan agreement
- CA: Reversed and set aside RTC
o No novation
o Merely supplemented the old agreement
o Such pagaayos has the force and effect of a court
judgment
- Filed with SC

ISSUES:
a. Whether complaint for sum of money is the proper remedy
for the petitioner, notwithstanding the Kasunduang
Pagaayos
b. Whether CA should have decided the case on the merits
rather the case for the enforcement of the Kasunduan

HELD:
a. Respondent failed to comply with the kasunduan, agreement
is deemed RESCINDED (Art 2041)
i. Can enforce action for collection of sum
of money
b. Cause of action arose from the loan agreement not the
pagaayos.
i. Compromise: effect and authority of res
judicata but there shall be no execution
except in compliance with a judicial
compromise
ii. Even if not judicially approved
iii. Akin to a judgment that is subject to
execution
iv. Enforced within 6 months from date of
settlement by filing an action to enforce
inappropriate city or municipal court, IF
BEYOND 6 MONTH PERIOD.
c. 1
ST
: Under the LOCAL GOVT CODE and KATARUNGANG
PAMBARANGAY IRR
i. Punong barangay is called to hear and
determine solely the fact of non-
compliance of the terms and settlement
and to give the defaulting party another
chance to VOLUNTARILY COMPLY with
his obligation
d. 2
ND
: proceedings are governed by the ROC
i. Cause of action is the amicable
settlement itself, by operation of law,
has the force and effect of a final
judgment.
e. Enforcement by execution of amicable settlement is only
applicable if the contracting parties have not repudiated such
settlement within 20 days from date thereon
i. Accordance with: Sec 416 of the LGC or
ROC
ii. Considered rescinded and insist upon his
original demand
iii. Fail to abide by the compromise, the
other party may either enforce the
compromise or regard it as rescinded
and insist upon his original demand
iv. 2041: consider it rescinded; authority to
insits on the original demand
1. No action for rescission is
required
2. Pursue suit as if there had
never been any compromise
3. Without bringing an action for
rescission
4. Need not ask for judicial
declaration of rescission
5. Regrard compromise
agreement as rescinded
v. 2039: cause of annulment or rescission
f. 2-TIERED MODE OF ENFORCEMENT OF AN AMICABLE
SETTLEMENT:
i. Execution by the punong barangay
(quasi-judicial and summary in nature)
AND
ii. Action in regular form, which remedy is
judicial
g. Petitioners noncompliance paved way for application of
2041, enforce compromise
i. Following the procedure of Revised
Katarungang Pambarangay Law OR
ii. Regard as rescinded and insist on his
original demand
h. Respondent choose the latter option when instituted the
case
i. Non-compliance considered as REPUDIATION
i. Did not intend to be bound by the terms
thereof
ii. Petition has the option
j. Having instituted a collection for sum of money, petitioner
obviously chose to rescind the agreement
k. CA erred when it remanded the case to the trial court
i. Fact that petitioner opted it to be
rescinded, CA should decide on the
merits of the case
ii. Kasunduang Pagaayos well nigh
incontrovertible proof of the
respondents indebtedness with the
petitioner as it was executed precisely to
give the repspndent a second chance to
make good on his undertaking.
l. PETITION GRANTED.