Capalungan v. Medrano
REITERATIONFacts
The Antecedents: Francisco Capalungan executed two deeds denominated "compraventa con pacto de retro" in favor of Fulgencio Medrano and Pedro Medrano, transferring parcels of land for P1,200.00 and with a right to repurchase within ten years. The contracts stipulated that the vendee a retro could not dispose of the land but could enjoy possession. On May 22, 1944, Francisco Capalungan paid P1,800.00 for the redemption of both parcels. Subsequently, Fulgencio and Pedro Medrano filed a suit to annul the repurchase from Pedro and declare ownership consolidated in them. The Court of First Instance found the contracts to be equitable mortgages, declared the redemption from Pedro valid, and the redemption from Fulgencio invalid. The Court of Appeals affirmed this decision. Procedural History: Francisco Capalungan filed a new action against Fulgencio Medrano, alleging he attempted to redeem the land by tendering P1,200.00, which was refused. He prayed for an order compelling Medrano to accept the payment, execute a deed of release, deliver palay received, and pay damages. The lower court ordered Medrano to deliver palay or its value and pay moral damages. The decision was later amended to order Capalungan to ask for the issuance of a writ of execution for the satisfaction of the Court of Appeals' decision in Civil Case No. 235. The Petition: Fulgencio Medrano appealed, assigning errors concerning the lower court's order to seek execution of the Court of Appeals' decision, its conclusion that his refusal to accept payment was unjustified, its determination of the redemption price, and its order to deliver palay and pay damages.
Issue(s)
Whether the lower court erred in ordering the appellee to ask for the issuance of a writ of execution for the satisfaction of the Court of Appeals' decision. Whether the appellant was justified in refusing the offer of payment. Whether the redemption price should be P1,205.50 instead of P1,200.00. Whether the appellant should be ordered to deliver palay and pay moral damages.
Ruling
The appealed decision is modified. The appellant is not liable for damages or for the delivery of products received from the time payment was tendered. However, he is ordered to accept payment and execute the proper release paper upon payment by the appellee of the sum of P1,200.00.
Ratio Decidendi
On whether the lower court erred in ordering the appellee to ask for the issuance of a writ of execution for the satisfaction of the Court of Appeals' decision: The Supreme Court held that the Court of Appeals' decision in Civil Case No. 235 merely specified the nature of the contract as an equitable mortgage and defined the parties' rights thereunder. It did not order the appellant to do anything or pay any amount to the appellee. Therefore, there was nothing to be executed under that decision, and the lower court erred in directing the appellee to seek its execution. On whether the appellant was justified in refusing the offer of payment: The Court found that under the contract, the appellee was still obligated to pay P1,200.00. While tender of payment was made, the appellee never consigned the sum due with the court. Article 1256 of the Civil Code provides that if the creditor refuses without just cause to accept tender of payment, the debtor is released from responsibility by consignation. Since consignation was not effected, payment was not validly made, and the indebtedness was not discharged. Consequently, the appellant, as the mortgage creditor, retained the right to possess the land and enjoy its fruits until the debt was paid. On whether the redemption price should be P1,205.50 instead of P1,200.00: The Court found no basis for the appellant's contention that the appellee should pay P1,205.50, with the P5.50 representing expenses for the execution of the deed. While the contract provided for the appellee to pay such expenses, and the record showed that P5.50 was spent for registering the document, there was no showing that the appellant was the one who paid for these expenses. Therefore, the appellee could not be ordered to reimburse him for them. On whether the appellant should be ordered to deliver palay and pay moral damages: Since the appellee's indebtedness was not extinguished due to the lack of valid consignation, the appellant, as the mortgage creditor, had the right to possess the land and enjoy its fruits as stipulated in the contract. He could not be made liable for the fruits he received from the time tender of payment was made, nor for other damages resulting from his non-acceptance of the proffer of payment. Liability for damages would only arise from the moment of valid consignation.
Main Doctrine
Tender of payment without consignation does not extinguish an obligation, particularly in cases involving debts secured by equitable mortgages, and the creditor is not liable for fruits received or damages until valid consignation is made. However, in cases of legal redemption or repurchase by a vendor a retro, tender of payment within the prescribed period, without the necessity of consignation, is sufficient to preserve the right.