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  • Chieng vs. Spouses Santos, GR 169647, August 21, 2007 Facts

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    1) Petitioner Antonio Chieng loaned money to respondent spouses Eulogio and Teresita Santos, secured by a mortgage on a piece of land. Eulogio failed to comply with the payment terms of a compromise agreement regarding the loan. 2) Petitioner filed a foreclosure case in 1993, claiming Rspondents owed ₱600,000. Respondents argued the true debt was only ₱200,000 as stated in their compromise agreement. 3) The RTC ordered repayment of ₱600,000. The CA then reversed, finding the criminal cases filed against Eulogio in 1990 for non-payment implied a collection suit, barring foreclosure. However

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    1) Petitioner Antonio Chieng loaned money to respondent spouses Eulogio and Teresita Santos, secured by a mortgage on a piece of land. Eulogio failed to comply with the payment terms of a compromise agreement regarding the loan. 2) Petitioner filed a foreclosure case in 1993, claiming Rspondents owed ₱600,000. Respondents argued the true debt was only ₱200,000 as stated in their compromise agreement. 3) The RTC ordered repayment of ₱600,000. The CA then reversed, finding the criminal cases filed against Eulogio in 1990 for non-payment implied a collection suit, barring foreclosure. However

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    24 views2 pages

    Chieng vs. Spouses Santos, GR 169647, August 21, 2007 Facts

    Uploaded by

    kaye choi
    1) Petitioner Antonio Chieng loaned money to respondent spouses Eulogio and Teresita Santos, secured by a mortgage on a piece of land. Eulogio failed to comply with the payment terms of a compromise agreement regarding the loan. 2) Petitioner filed a foreclosure case in 1993, claiming Rspondents owed ₱600,000. Respondents argued the true debt was only ₱200,000 as stated in their compromise agreement. 3) The RTC ordered repayment of ₱600,000. The CA then reversed, finding the criminal cases filed against Eulogio in 1990 for non-payment implied a collection suit, barring foreclosure. However

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    © All Rights Reserved
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    of 2

    Chieng vs.

    Spouses Santos, GR 169647, August 21, 2007


    FACTS:
    Petitioner Antonio Chieng extended a loan in favor of respondent spouses Eulogio and Teresita
    Santos. As security for such loan, the respondents executed in favor of petitioner a Deed of Real
    Estate Mortgage over a piece of land.
    agreement.
    Under the compromise agreement, they came to an agreement that the total indebtedness of Mr.
    Santos as of today, July 15, 1991 amounts to Two Hundred Thousand (₱200,000.00) Pesos
    including interest since the beginning and excluding those already paid for.
    Respondent Eulogio failed to comply with his obligation in the compromise agreement.
    On 17 June 1993, petitioner filed with the RTC, an action for foreclosure of mortgage constituted
    on respondents’ real property. Petitioner alleged that he extended a loan of ₱600,000.00 in favor
    of respondents for which respondents executed the Deed of Real Estate Mortgage dated 17
    August 1987 in his favor. Despite his repeated demands, respondents failed to pay the loan.
    Respondents sought the dismissal of the case on the ground of lack of cause of action claiming
    that the Deed of Real Estate Mortgage did not reflect the parties’ true intention or agreement
    because the total amount of their indebtedness was only around ₱200,000.00, not ₱600,000.00 as
    stated in the Deed. Respondents and petitioner supposedly agreed to make it appear that
    respondents’ loan amounted to ₱600,000.00 to protect the latter from the claims of their other
    creditors who were trying to attach or levy their property. Respondents further averred that they
    had partly paid their loan but petitioner refused to issue them receipts and to render an
    accounting of their remaining obligation.
    RTC ordered the respondents to pay petitioner their loan obligation amounting to ₱600,000.00,
    plus interests and attorney’s fees.
    A reconsideration had change this to ₱377,000.00 with interest, plus attorney’s fees and costs
    instead.
    CA reversed the RTC decision and dismissed the complaint. It rationalized that the criminal case
    fled, although were not strictly in the nature of ordinary actions for collection/payment of debts
    or loans, the resulting compromise agreement in the said cases between petitioner and respondent
    Eulogio, on the matter of payment of the loan, had the effect of settling respondents’
    indebtedness to petitioner. This is pursuant to Section 1, Rule 111 of the 1985 Rules on Criminal
    Procedure which provides that the civil action for the recovery of civil liability is impliedly
    instituted in the criminal actions. Having been impliedly instituted in the criminal cases, any
    separate civil action for the collection or payment of the loan, like the action for foreclosure of
    real estate mortgage, can no longer be availed of by petitioner. This is in accordance the facf that
    a mortgagor-creditor has two choices of action: he may either file an ordinary action to recover
    the indebtedness or foreclose the mortgage. In short, once a collection suit is filed, the action to
    foreclose the mortgage is barred.
    ISSUE:
    WON the petitioner, by filing Criminal Cases No. 612-90 to No. 615-90 for violation of Batas
    Pambansa Blg. 22 against respondent Eulogio, was already barred or precluded from availing
    himself of the other civil remedy of the foreclosure of the real estate mortgage.
    HELD:
    For reasons of justice and equity, we rule in favor of petitioner.
    When petitioner filed Criminal Cases No. 612-90 to No. 615-90, he was deemed to have already
    availed himself of the remedy of collection suit. Following the rule on the alternative remedies of
    a mortgage-creditor, petitioner is barred from subsequently resorting to an action for foreclosure.
    However, it should be stressed that respondents have not yet fully paid the loan.1awphi1 In fact,
    respondents themselves admitted that they still owe petitioner the balance of the loan.

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