Pesane Animas Mongao, joined by her husband Benhur Mongao v.

Pryce Properties Corporation

Topic: Kinds of Defenses: negative defenses; affirmative defenses
Facts:
1. The instant petition originated from a complaint for rescission and damages filed on February
14, 1995 by petitioners, Spouses Pesane Animas Mongao (hereafter referred to as petitioner
Mongao) and Benhur Mongao, against respondent Pryce Properties before RTC General Santos.
2. The complaint alleged that petitioner Mongao and respondent corporation executed a MOA on
December 20, 1993, wherein the former agreed to sell to the latter for P5,028,800 a parcel of
land in Polomolok, South Cotabato registered in the name of petitioner Mongao only.
3. Pryce allegedly paid petitioners P550,000 as earnest money considered as part of the purchase
price.
4. The complaint further alleged that after considerable delay, Pryce offered to pay the balance by
issuing a check payable to petitioner Mongao and her mother, Nellie Animas, which the former
rejected. Allegedly, Pryce continuously refused to heed petitioners' written and oral demands to
pay the balance solely to petitioner Mongao.
5. The complaint also denied that petitioner Mongao executed a Deed of Absolute Sale dated Nov
15, 1994 in favor of respondent corporation, the registration of which caused the cancellation of
TCT No. T-22186 in the name of petitioner Mongao and the issuance of TCT No. T-62944. In
addition to petitioners' prayer for the rescission of the Memorandum of Agreement and the
Deed of Absolute Sale and the forfeiture of the earnest money paid by respondent corporation.
The complaint also asked for the award of moral and exemplary damages and attorney's fees.
6. Respondent corporation filed an answer refuting petitioner’s allegations with a narration of
factual antecedents leading to the perfection of the contract of sale. It claimed that a certain
Pedro Animas approached Sonito Mole an officer of Pryce and negotiated the sale of properties
belonging to Animas family which were on the verge of being foreclosed. Pryce claimed that
subject property was one of those two parcels of land selected for purchase. Said property
allegedly belonged to petitioner Mongao’s parents but was registered in petitioner Mongao’s
name as trustee thereof.
7. Pryce admitted execution of MOA but qualified that Pryce did not pay earnest money directory
and solely to petitioner Mongao. Said earnest money was allegedly part of the amount paid to
DBP to redeem properties of the Animas property which was foreclosed and sold at a public
auction.
8. The answer also admitted that due to the demands of both petitioner Mongao and the Animas
family, respondent corporation was constrained to deposit the payment with the Clerk of Court
of the RTC of Davao City. By way of a compulsory counterclaim, respondent corporation prayed
that petitioners be adjudged liable for attorney's fees for their hasty and unjustified institution
of the case.
9. The trial court granted petitioner’s motion for judgment and rendered a decision declaring the
MOA as well as the Deed of Absolute Sale declared rescinded. As a consequence thereof, Pryce
is directed to execute a Deed of Reconveyance of the property in favor of Pesane Animas. On
the other hand, Pesane Animas Mongao is likewise directed to return to Pryce what she had
received.
10. Respondent corporation elevated the case to CA which reversed the trial court’s decision and
remanded the case for trial on the merits.
11. On the main issue of WON judgment on the pleadings was proper, the CA ruled in the negative,
finding that there were actual issues raised in the answer requiring the presentation and
assessment of evidence. The appellate court opined that aside from the amount of damages
claimed by both parties, the following were also put in issue:
 (1) the genuineness of the Deed of Sale purportedly executed by petitioner Mongao, and
(2) the nature of petitioner Mongao's title to the subject property.
The Court of Appeals also ruled against the trial court's interference with the consignation case
pending before the RTC of Davao City but did not find petitioners guilty of forum-shopping in
filing the action for rescission despite the pendency of the consignation case with the RTC of
Davao City.
Issues:
1. WON the trial court’s judgment on the pleadings on the ground that respondent corporation’s
allegation did not tender an issue was proper YES, it was proper.
Held:
I. Yes, trial court’s judgment was proper.
Judgment on the pleadings is governed by Section 1, Rule 34 of the 1997 Rules of Civil Procedure,
essentially a restatement of Section 1, Rule 19 of the 1964 Rules of Court then applicable to the
proceedings before the trial court. Section 1, Rule 19 of the Rules of Court provides that where an
answer "fails to tender an issue, or otherwise admits the material allegations of the adverse party's
pleading, the court may, on motion of that party, direct judgment on such pleading." The answer would
fail to tender an issue, of course, if it does not comply with the requirements for a specific denial set out
in Section 10 (or Section 8) of Rule 8; and it would admit the material allegations of the adverse party's
pleadings not only where it expressly confesses the truthfulness thereof but also if it omits to deal with
them at all.
Now, if an answer does in fact specifically deny the material averments of the complaint in the manner
indicated by said Section 10 of Rule 8, and/or asserts affirmative defenses (allegations of new matter
which, while admitting the material allegations of the complaint expressly or impliedly, would
nevertheless prevent or bar recovery by the plaintiff) in accordance with Sections 4 and 5 of Rule 6, a
judgment on the pleadings would naturally not be proper.
Thus, there is joinder of issues when the answer makes a specific denial of the material allegations in the
complaint or asserts affirmative defenses which would bar recovery by the plaintiff. Where there is
proper joinder of issues, the trial court is barred from rendering judgment based only on the pleadings
filed by the parties and must conduct proceedings for the reception of evidence. On the other hand, 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. In either case, there is no genuine issue and judgment on
the pleadings is proper.
Petitioners' action for rescission is mainly based on the alleged breach by respondent corporation of its
contractual obligation under the Memorandum of Agreement when respondent refused to effect
payment of the purchase price solely to petitioner Mongao.
The complaint pertinently alleged the following:
a. Plaintiff Mongao is the registered owner in fee simple of a parcel of land…
b. In a MOA, plaintiff Mongao agreed to sell the aforesaid parcel of land to defendant.
c. As earnest money, defendant paid to plaintiff Mongao, and in her sole name, P550,000.
On the other hand, nothing from the allegations in respondent corporation's answer makes out a proper
joinder of issues. Petitioners' cause of action for rescission is founded mainly on a perfected contract of
sale allegedly entered into between petitioners and respondent corporation as embodied in the MOA
attached to the complaint.
First, the allegations in respondent corporation's answer do not make out a specific denial that a
contract of sale was perfected between the parties.
Second, respondent corporation does not contest the due execution and/or genuineness of said MOA.
Respondent corporation offered the affirmative defense that the separate demands of petitioner
Mongao and the Animas family compelled it to issue the check payable to both petitioner Mongao and
her mother.
Effectively, the averments imply an admission by respondent corporation that it effected payment
contrary to the express terms of the contract of sale. Nowhere in the terms of the Memorandum of
Agreement does it state that the payment of the purchase price be tendered to any person other than
petitioner Mongao. The averment virtually admits petitioners' allegation that respondent corporation
committed a breach of its contractual obligation to petitioners and supports their cause of action for
rescission. Indeed, the drawing of the check payable to the order of petitioner Mongao and Nellie Vda.
de Animas would deprive petitioner Mongao of the exclusive benefit of the payment, thereby sharply
deviating from the terms of the contract of sale.
As earlier stated, an answer may allege affirmative defenses which may strike down the plaintiff's cause
of action. An affirmative defense is one which is not a denial of an essential ingredient in the plaintiff's
cause of action, but one which, if established, will be a good defense — i.e. an "avoidance" of the
claim. Affirmative defenses include fraud, statute of limitations, release payment, illegality, statute of
frauds, estoppel, former recovery, discharge in bankruptcy, and any other matter by way of confession
and avoidance. When the answer asserts affirmative defenses, there is proper joinder of issues which
must be ventilated in a full-blown trial on the merits and cannot be resolved by a mere judgment on the
pleadings. Allegations presented in the answer as affirmative defenses are not automatically
characterized as such. 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.
In essence, respondent corporation justifies its refusal to tender payment of the purchase price solely to
petitioner Mongao by alleging that the latter was a mere trustee and not the beneficial owner of the
property subject of the sale and therefore not the proper party to receive payment. Such defense
cannot prevent petitioners from seeking the rescission of the contract of sale. The express terms of the
MOA, the genuineness and due execution of which are not denied, clearly show that the contract of sale
was executed only between petitioner Mongao and respondent corporation. Where there is an
apparent repudiation of the trust by petitioner Mongao, such claim or defense may properly be raised
only by the parties for whose benefit the trust was created. Respondent corporation cannot assert said
defense in order to resist petitioners' claim for rescission where it has been sufficiently shown by the
allegations of the complaint and answer that respondent corporation has breached its contractual
obligation to petitioners.
There being no material allegation in the answer to resist petitioners' claim, the trial court correctly
rendered judgment based on the pleadings submitted by the parties.
WHEREFORE, the instant petition for review 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 hereby REINSTATED. Costs against respondent.