G.R. No. 201892 - NORLINDA S. MARILAG, VS. MARCELINO B. MARTINEZ.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, it ordered Rafael to pay petitioner the amount of P229,200.00, consisting of the principal of P160,000.00 and accrued interest of P59,200.00 from July 30, 1992 to September 30, 1995. [10] Records do not show that this Decision had already attained finality. Meanwhile, prior to Rafael's notice of the above decision, respondent agreed to pay Rafael's obligation to petitioner which was pegged at P689,000.00. After making a total payment of P400,000.00, [11] he executed a promissory note [12] dated February 20, 1998 (subject PN), binding himself to pay on or before March 31, 1998 the amount of P289,000.00, "representing the balance of the agreed financial obligation of [his] father to [petitioner]." [13] After learning of the January 30, 1998 Decision, respondent refused to pay the amount covered by the subject PN despite demands, prompting petitioner to file a complaint [14] for sum of money and damages before the court a quo on July 2, 1998, docketed as Civil Case No. 98-0156 (collection case). Respondent filed his answer, [15] contending that petitioner has no cause of action against him. He averred that he has fully settled Rafael's obligation and that he committed a mistake in paying more than the amount due under the loan, i.e. , the amount of P229,200.00 as adjudged by the RTC-Imus in the judicial foreclosure case which, thus, warranted the return of the excess payment. He therefore prayed for the dismissal of the complaint, and interposed a compulsory counterclaim for the release of the mortgage, the return of the excess payment, and the payment of moral and exemplary damages, attorney's fees and litigation expenses. [16] The Court A Quo's Ruling In a Decision [17] dated August 28, 2003 (August 28, 2003 Decision), the court a quo denied recovery on the subject PN. It found that the consideration for its execution was Rafael's indebtedness to petitioner, the extinguishment of which necessarily results in the consequent extinguishment of the cause therefor. Considering that the RTC-Imus had adjudged Rafael liable to petitioner only for the amount of P229,200.00, for which a total of P400,000.00 had already been paid, the court a quo found no valid or compelling reason to allow petitioner to recover further on the subject PN. There being an excess payment of P171,000.00, it declared that a quasi-contract (in the concept of solutio indebiti ) exists between the parties and, accordingly, directed petitioner to return the said amount to respondent, plus 6% interest p.a. [18] reckoned from the date of judicial demand [19] on August 6, 1998 until fully paid, and to pay attorney's fees and the costs of suit. [20] In an Order [21] dated November 3, 2003 (November 3, 2003 Order), however, the court a quo granted petitioner's motion for reconsideration, and recalled and set aside its August 28, 2003 Decision. It declared that the causes of action in the collection and foreclosure cases are distinct, and respondent's failure to comply with hi