View full case

PESANE ANIMAS MONGAO v. PRYCE PROPERTIES CORPORATION

FACTS:

The petitioners, Spouses Pesane Animas Mongao and Benhur Mongao, filed a complaint for rescission and damages against respondent Pryce Properties Corporation. The complaint alleged that the parties executed a Memorandum of Agreement wherein the petitioner agreed to sell a parcel of land to the respondent. The respondent allegedly paid an earnest money of P550,000.00 as part of the purchase price, but there was a delay in payment of the balance. The respondent offered to pay the balance through a check payable to the petitioner and her mother, which the petitioner rejected. The complaint also denied that the petitioner executed a Deed of Absolute Sale in favor of the respondent. The respondent, on the other hand, claimed that the true agreement was for the purchase of the properties belonging to the Animas family, but registered in the name of the petitioner. The respondent admitted the execution of the Memorandum of Agreement and the issuance of the check, but controversy arose when the petitioner demanded payment be made to her alone, excluding the rest of the Animas family. Respondent corporation claimed that it deposited the payment with the Clerk of Court due to the demands of the petitioner and the Animas family. The petitioners moved for judgment on the pleadings, while the respondent opposed, arguing that there were two material allegations in the complaint that were disputed.

In this case, the dispute revolves around the alleged breach of contractual obligations by respondent corporation, Pryce Properties Corporation. Petitioner, Pesane Animas Mongao, claims to be the registered owner of a parcel of land and entered into a Memorandum of Agreement to sell the said property to respondent. As part of the agreement, respondent paid petitioner an amount as earnest money. However, respondent refused to pay the full purchase price solely to petitioner, prompting petitioner to file an action for rescission.

The trial court granted petitioners' motion for judgment on the pleadings and declared the Memorandum of Agreement and the Deed of Absolute Sale rescinded. The trial court ordered respondent to execute a Deed of Reconveyance in favor of petitioner and to pay attorney's fees and costs of suit. On the other hand, petitioner was directed to return the amount she received from respondent.

Respondent appealed the decision to the Court of Appeals, which reversed the trial court's decision and remanded the case for trial on the merits. The Court of Appeals found that there were actual issues raised in the answer that required the presentation and assessment of evidence.

Petitioners filed a motion for reconsideration, but it was denied. Hence, this petition for review was filed with the Supreme Court, raising issues on the propriety of judgment on the pleadings and the nature of consignation.

The main issue for the Supreme Court's resolution is whether the trial court's judgment on the pleadings was proper, considering that there were actual issues raised in the answer. The Supreme Court explains that judgment on the pleadings is proper when the answer fails to tender an issue or admits the material allegations of the adverse party's pleading. In this case, if the answer specifically denies the material averments of the complaint or asserts affirmative defenses that would bar recovery, then judgment on the pleadings would not be proper. However, if the answer fails to address or admits the allegations in support of the plaintiff's cause of action, then there is no genuine issue and judgment on the pleadings is proper.

Ultimately, the Supreme Court emphasizes that the answer should make a specific denial of the material allegations or assert affirmative defenses to have a proper joinder of issues, which would preclude judgment on the pleadings based solely on the parties' pleadings.

it clear that petitioner corporation violated any contractual obligations or committed any wrongful acts that would justify the unilateral termination of their dealership agreement. Respondent corporation subsequently filed a complaint for collection of sum of money, damages, and attorney's fees against petitioner corporation, claiming outstanding obligations and losses due to the alleged termination of the agreement. Petitioner corporation filed a counterclaim, seeking damages for respondent's unjustified termination of the dealership agreement.

During the trial, petitioner corporation presented evidence to support its counterclaim and to dispute the claims of respondent corporation. The trial court ruled in favor of petitioner corporation, ordering respondent corporation to pay the outstanding balance and damages. On appeal, the Court of Appeals reversed the decision of the trial court, ruling that the dealership agreement was validly terminated by respondent corporation due to petitioner corporation's failure to comply with certain conditions in the agreement. Petitioner corporation then filed a petition for review with the Supreme Court, arguing that the Court of Appeals erred in its decision.

ISSUES:

  1. Whether or not there is a genuine issue as to the breach of the Memorandum of Agreement

  2. Whether the order of payment made by the defendant to both plaintiff Mongao and Nellie Vda. de Animas is in accordance with the terms of the contract of sale.

  3. Whether the complaint states a cause of action against the defendant.

  4. Whether the suit involves conflicting claims among members of the same family.

RULING:

  1. The allegations in respondent corporation's answer do not make a specific denial that a contract of sale was perfected between the parties. Furthermore, respondent corporation does not contest the due execution and/or genuineness of said Memorandum of Agreement. The drawing of the check payable to the order of petitioner Mongao and another person would deprive petitioner Mongao of the exclusive payment as stated in the Memorandum of Agreement. Therefore, there is no genuine issue as to the breach of the Memorandum of Agreement.

  2. The order of payment made by the defendant to both plaintiff Mongao and Nellie Vda. de Animas deviates from the terms of the contract of sale. The proper party entitled to the exclusive benefit of the payment should be determined.

  3. The court ruled that the complaint states a cause of action against the defendant. The contract of sale was executed only between the petitioner and the respondent corporation. The defense of the respondent corporation, which asserts that the petitioner was a mere trustee and not the beneficial owner of the property, cannot prevent the petitioner from seeking rescission of the contract. The trial court correctly rendered judgment based on the pleadings submitted by the parties.

  4. The court held that the determination of factual controversies regarding the execution of the Deed of Absolute Sale and ownership of the subject property is immaterial to the resolution of the main issue of whether there is a valid cause for rescission. The admissions made by the respondent corporation in their answer, together with the weakness of their affirmative defenses, sufficiently establish a case for rescission of the contract of sale.

PRINCIPLES:

  • Judgment on the pleadings is proper when there is no genuine issue as to any material fact and the movant is entitled to a judgment as a matter of law.

  • An answer fails to tender an issue where the allegations admit the allegations in support of the plaintiff's cause of action or fail to address them at all.

  • A genuine issue arises when the answer specifically denies the allegations in the complaint or alleges new matters amounting to a legal defense.

  • An affirmative defense is one which, if established, will be a good defense and is not a denial of an essential ingredient in the plaintiff's cause of action.

  • Before an allegation qualifies as an affirmative defense, it must be of such nature as to bar the plaintiff from claiming on his cause of action.

  • A complaint states a cause of action if it contains a concise statement of facts constituting the cause of action. (Issue 1)

  • The defense of a trust can only be raised by the parties for whose benefit the trust was created, not by a third party. (Issue 1)

  • Factual controversies can be resolved after the presentation of evidence, but if they are immaterial to the main issue, they need not be resolved to determine the case. (Issue 2)

  • The consignation of payment must comply with the procedures required by law in order to produce the effect of payment and release the obligor from the obligation. (Issue 2)