MANILA – The Court of Appeals (CA) has ruled that unfortunate events cannot be used as an excuse to evade payment of loans.
In a decision dated March 4, the appellate court’s 13th Division denied for lack of merit the petition filed by non-government organization Katipunan ng Samahang Magsasaka (Kasama), seeking for it to be excused from the payment of a loan it secured from the government nearly 30 years ago.
“Mere inconvenience, unexpected impediments, increased expenses, or even pecuniary inability to fulfill an engagement, will not relieve the obligor from an undertaking that it has knowingly and freely contracted,” the CA said in its ruling.
The ruling upheld the decision of the Quezon City Regional Trial Court Branch 216 ordering Kasama to pay the loan it incurred amounting to PHP3.7 million plus interest.
In 1990 the Department of Agrarian Reform (DAR), and Kasama signed a Memorandum of Agreement (MOA).
Under the MOA, DAR agreed to release project funds worth PHP4,065,855 to Kasama to support the implementation of its “Emergency Credit Assistance for Indigent Sugarcane Tenant-Households” project.
Under the MOA, PHP129,855 from the fund was treated as a “grant” while the remainder was treated as a “loan.”
On Oct. 17, 1990, DAR released the whole amount to Kasama. In 1996, Kasama executed a promissory note binding itself to make full payment on or Oct. 31, 1997.
After defaulting on payments, the government sued the group.
Kasama, among other things, claimed that its obligation is “extinguished considering the fundamental changes in the circumstances of the parties specifically the farmer members of Kasama.”
It said numerous natural calamities that beset its farmer-members render it legally unable and impossible to comply with its obligations under the MOA it entered into with the DAR. (ia/PNA)