539 Phil. 53
YNARES-SANTIAGO, J.:
IN THE LIGHT of all the foregoing considerations, for lack of legal and factual basis to demand consolidation of ownership over the subject property, the above-entitled case is hereby ordered dismissed.The Lawilao spouses appealed before the Regional Trial Court which reversed the Municipal Circuit Trial Court and declared the ownership of the subject property consolidated in favor of the Lawilao spouses.[8]
No pronouncement as to damages on the ground that no premium should be assessed on the right to litigate.
No costs.
SO ORDERED.[7]
WHEREFORE, the petition for review is DISMISSED for lack of sufficient merit. The decision rendered by the Regional Trial Court, Branch 35, Bontoc, Mountain Province in Civil Case No. 1091 on 1 July 2003, reversing the decision of the Municipal Circuit Trial Court of Bauko-Sabangan, Mountain Province in (Civil Case No.) 314, is AFFIRMED.The appellate court denied petitioners' motion for reconsideration, hence, the instant petition on the following assignment of errors:
SO ORDERED.[9]
4.0.It was error for the Regional Trial Court and, subsequently, the Court of Appeals to rule that respondents can consolidate ownership over the subject property.The Benos spouses argue that consolidation is not proper because the Lawilao spouses violated the terms of the contract by not paying the bank loan; that having breached the terms of the contract, the Lawilao spouses cannot insist on the performance thereof by the Benos spouses; that the contract was actually an equitable mortgage as shown by the inadequacy of the consideration for the subject property; and that respondent-spouses' remedy should have been for recovery of the loan or foreclosure of mortgage.
4.1.It was likewise error for said lower courts not to have ruled that the contract between the parties is actually an equitable mortgage.[10]
As matters stand, no valid tender of payment and/or consignation of the P150,000.00 which the Appellant (Lawilaos) still owes the Appellee (Benos) has been effected by the former. The amount of P159,000.00 deposited with the MCTC is in relation to Civil Case No. 310 earlier dismissed by said court, and not to the instant action. Hence, this Court cannot automatically apply such sum in satisfaction of the aforesaid debt of the Appellant and order the Appellee creditor to accept the same.[12] (Emphasis supplied)The Lawilao spouses did not appeal said finding, and it has become final and binding on them. Although they had repeatedly alleged in their pleadings that the amount of P159,000.00 was still with the trial court which the Benos spouses could withdraw anytime, they never made any step to withdraw the amount and thereafter consign it. Compliance with the requirements of tender and consignation to have the effect of payment are mandatory. Thus –
Tender of payment is the manifestation by debtors of their desire to comply with or to pay their obligation. If the creditor refuses the tender of payment without just cause, the debtors are discharged from the obligation by the consignation of the sum due. Consignation is made by depositing the proper amount to the judicial authority, before whom the tender of payment and the announcement of the consignation shall be proved. All interested parties are to be notified of the consignation. Compliance with these requisites is mandatory.[13] (Emphasis supplied)In the instant case, records show that the Lawilao spouses filed the petition for consignation against the bank in Civil Case No. 310 without notifying the Benos spouses. The petition was dismissed for lack of cause of action against the bank. Hence, the Lawilao spouses failed to prove their offer to pay the balance of the purchase price and consignation. In fact, even before the filing of the consignation case, the Lawilao spouses never notified the Benos spouses of their offer to pay.
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.In the instant case, while the Benos spouses did not rescind the Pacto de Retro Sale through a notarial act, they nevertheless rescinded the same in their Answer with Counterclaim where they stated that:
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 of the Mortgage Law.
Art. 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.
They also prayed that the Municipal Circuit Trial Court render judgment "[d]eclaring the Pacto de Retro Sale rescinded or ineffective or void for lack of, or insufficient consideration."[15]With the filing of this answer, defendants pray that this serves as a notice of tender of payment, and they shall consign the amount with the proper court as soon as it is legally feasible.[14]
- Plaintiffs did not perform their obligation as spelled out in the Pacto de Retro Sale (ANNEX "A"), particularly the assumption of the obligation of defendants to the Rural Bank of Bontoc. Defendants were the ones who paid their loan through their son, ZALDY BENOS. As a result, ANNEX "A" is rendered null and of no effect. Therefore, the VENDEE a retro who is one of plaintiffs herein cannot consolidate her ownership over the property subject of the null and ineffective instrument.
- Since plaintiffs did not perform their corresponding obligation under ANNEX "A", defendants have been all too willing to return the amount of ON[E] HUNDRED FIFTY THOUSAND PESOS (P150,000.00) and reasonable interest thereon to plaintiffs. But plaintiffs refused to accept the same.
How about the other obligations and/or rights owing to either party by virtue of the Pacto de Retro Sale? This, the court opines that it can not delve into without overstepping the limits of his functions there being appropriate remedies. It is hornbook in our jurisprudence that a right in law may be enforced and a wrong way be remedied but always through the appropriate action.[17]The issue of rescission having been put in issue in the answer and the same having been litigated upon without objections by the Lawilao spouses on grounds of jurisdiction, the Municipal Circuit Trial Court should have ruled on the same and wrote finis to the controversy.
Petitioners maintain that inasmuch as respondents-spouses Galang were not granted the right to unilaterally rescind the sale under the Deed of Sale with Assumption of Mortgage, they should have first asked the court for the rescission thereof before they fully paid the outstanding balance of the mortgage loan with the NHMFC. They claim that such payment is a unilateral act of rescission which violates existing jurisprudence.
WHEREFORE, the petition is GRANTED. The Decision dated December 5, 2005 and Resolution dated March 17, 2006 of the Court of Appeals in CA-G.R. SP No. 78845, affirming the Judgment dated July 1, 2003 of the Regional Trial Court of Bontoc, Mountain Province, Branch 35, in Civil Case No. 1091, are REVERSED and SET ASIDE. The Decision dated November 14, 2002 of the Municipal Circuit Trial Court of Bauko, Mountain Province in Civil Case No. No. 314 dismissing respondents' complaint for consolidation of ownership and damages is REINSTATED WITH THE MODIFICATION that the Pacto de Retro Sale dated February 11, 1999 is declared rescinded and petitioners are ordered to return the amount of P150,000.00 to respondents. No costs.In Tan v. Court of Appeals, this court said:It is evident that the contract under consideration does not contain a provision authorizing its extrajudicial rescission in case one of the parties fails to comply with what is incumbent upon him. This being the case, respondents-spouses should have asked for judicial intervention to obtain a judicial declaration of rescission. Be that as it may, and considering that respondents-spouses' Answer (with affirmative defenses) with Counterclaim seeks for the rescission of the Deed of Sale with Assumption of Mortgage, it behooves the court to settle the matter once and for all than to have the case re-litigated again on an issue already heard on the merits and which this court has already taken cognizance of. Having found that petitioners seriously breached the contract, we, therefore, declare the same is rescinded in favor of respondents-spouses.
. . . [T]he power to rescind obligations is implied in reciprocal ones in case one of the obligors should not comply with what is incumbent upon him is clear from a reading of the Civil Code provisions. However, it is equally settled that, in the absence of a stipulation to the contrary, this power must be invoked judicially; it cannot be exercised solely on a party's own judgment that the other has committed a breach of the obligation. Where there is nothing in the contract empowering the petitioner to rescind it without resort to the courts, the petitioner's action in unilaterally terminating the contract in this case is unjustified.
As a consequence of the rescission or, more accurately, resolution of the Deed of Sale with Assumption of Mortgage, it is the duty of the court to require the parties to surrender whatever they may have received from the other. The parties should be restored to their original situation.
The record shows petitioners paid respondents-spouses the amount of P75,000.00 out of the P120,000.00 agreed upon. They also made payments to NHMFC amounting to P55,312.47. As to the petitioners' alleged payment to CERF Realty of P46,616.70, except for petitioner Leticia Cannu's bare allegation, we find the same not to be supported by competent evidence. As a general rule, one who pleads payment has the burden of proving it. However, since it has been admitted in respondents-spouses' Answer that petitioners shall assume the second mortgage with CERF Realty in the amount of P35,000.00, and that Adelina Timbang, respondents-spouses' very own witness, testified that same has been paid, it is but proper to return this amount to petitioners. The three amounts total P165,312.47 -- the sum to be returned to petitioners.