Mongao v. Pryce Properties Corp.
REITERATIONFacts
The Antecedents: This case concerns a dispute arising from a Memorandum of Agreement (MOA) executed on December 20, 1993, between petitioner Pesane Animas Mongao and respondent Pryce Properties Corporation. Under the MOA, petitioner Mongao agreed to sell a parcel of land in Polomolok, South Cotabato, for P5,028,800.00. Respondent corporation paid P550,000.00 as earnest money. The core of the dispute lies in the respondent's alleged refusal to pay the balance of the purchase price solely to petitioner Mongao, instead offering to issue a check payable to both petitioner Mongao and her mother, Nellie Animas. Petitioner Mongao rejected this offer, asserting her sole right to receive the payment. Consequently, petitioners filed a complaint for rescission of the MOA and damages, also denying the execution of a Deed of Absolute Sale dated November 15, 1994, which purportedly led to the cancellation of petitioner Mongao's title and the issuance of a new one in the respondent's name. Procedural History: The petitioners, Spouses Pesane Animas Mongao and Benhur Mongao, initiated this case by filing a complaint for rescission and damages against Pryce Properties Corporation before the Regional Trial Court (RTC) in General Santos City on February 14, 1995. The respondent corporation filed an answer, disputing the petitioners' allegations and presenting its own version of the facts, including affirmative defenses. The petitioners then moved for a judgment on the pleadings, arguing that the respondent's answer admitted the material allegations of the complaint and failed to tender an issue. The RTC granted this motion, rendering a decision on November 13, 1995, which declared the MOA and the Deed of Absolute Sale rescinded and ordered reconveyance of the property and payment of damages. The respondent corporation appealed this decision to the Court of Appeals (CA). The CA, in a decision promulgated on March 22, 2001, reversed the RTC's ruling, finding that the respondent's answer did raise genuine issues requiring a trial on the merits, and remanded the case back to the RTC. The CA subsequently denied the petitioners' motion for reconsideration in a resolution dated November 25, 2002. The Petition: The petitioners are now before the Supreme Court via a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, assailing the decision and resolution of the Court of Appeals. They argue that the CA erred in reversing the trial court's judgment on the pleadings. The primary issues raised are whether the respondent's deposit of a check payable to two parties, one of whom was a third party, constituted a valid consignation, and whether a judgment on the pleadings was indeed proper in this case. The petitioners contend that the respondent's answer admitted the material allegations of their complaint, particularly the existence of the MOA and the respondent's breach of contract by refusing to pay the balance solely to petitioner Mongao, thus warranting a judgment on the pleadings without the need for further trial.
Issue(s)
Whether the mere deposit of a check payable to two persons, one of whom is a third party, and whose release is subject to conditions, constitutes consignation. Whether judgment on the pleadings is proper when the answer admits material averments and fails to tender an issue.
Ruling
The petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 52753 is REVERSED and SET ASIDE and the Decision of the Regional Trial Court, Branch 35, General Santos City in Civil Case No. 5545 is REINSTATED. Costs against respondent. The trial court's judgment on the pleadings and its rescission of the contract, reconveyance directive, and award of attorney's fees and costs were upheld.
Ratio Decidendi
On Whether the deposit of a check constituted consignation: The Court held that the mere deposit of the check with the Clerk of Court, without the filing of a formal action for consignation, did not produce the effect of payment under Articles 1256 to 1257 of the New Civil Code. The Court reasoned that consignation as a mode of payment requires compliance with the mandatory procedural and substantive requisites set by law, including instituting a formal complaint for consignation to allow the court to determine the propriety of the tender. The record showed no formal consignation suit was filed; instead respondent transmitted the deposit by letter and failed to invoke the consignation procedure prescribed by law. Because the deposit was conditional and subject to release only by court order, the Court found that no effective payment had been made and the obligor was not released from its obligation. Therefore, consignation was not established and could not be used to defeat petitioners' claim for rescission. On Whether judgment on the pleadings was proper: The Court explained that judgment on the pleadings is proper when the answer fails to tender an issue by not specifically denying material averments in the complaint as required by Rule 8, Section 10, or when the answer otherwise admits the material allegations. The Court found that respondent's answer expressly admitted paragraph 5 of the complaint (the existence and genuineness of the Memorandum of Agreement) and did not specifically deny key allegations that supported petitioners' cause of action for rescission. The Court further explained that affirmative defenses must be of such a nature that, if established, they would bar recovery; respondent's pleaded defenses did not meet this standard because they essentially amounted to claims against third parties and did not negate the contractual breach pleaded. Citing Vergara, Sr. v. Suelto, the Court emphasized that an answer that omits to deal with material allegations or admits them admits the cause of action, justifying judgment on the pleadings. The Court concluded that there was no genuine issue of fact that precluded judgment on the pleadings and therefore the trial court properly resolved the case on the pleadings.
Main Doctrine
Judgment on the pleadings is proper where the answer fails to specifically deny material averments or otherwise fails to tender an issue; mere deposit of a check with a court clerk without instituting an action for consignation does not effect payment under Articles 1256-1257 of the New Civil Code.