Lazo v Sps Villas
G.R. No. 221792. January 30, 2019
FACTS:
1. Lagrimas Dela Rosa Lazo (petitioner), who was in need of money, offered for sale to
Rosario Yap Bautista (Bautista) a parcel of land with an area of two hundred fifty (250)
square meters, situated at Amparo Subdivision, Novaliches, Caloocan City, for the
amount of One Hundred Thousand Pesos (P100,000.00). Petitioner represented to
Bautista that she was the absolute owner thereof. Bautista acceded but informed
petitioner that she would initially pay Thirty-Five Thousand Pesos (P35,000.00) in cash
which petitioner accepted. Thus, on March 6, 1991, petitioner executed a deed of
conditional sale over the said property in favor of Bautista. They agreed that petitioner
would execute a deed of absolute sale once Bautista completed payment of the
purchase price.
2. After full payment of the purchase price, Bautista asked petitioner to execute a deed of
absolute sale over the said property. However, despite several demands, petitioner
failed to do so.
3. Bautista subsequently learned that the property sold to her by petitioner was part of a
seven hundred seventy-seven (777)-square meter parcel of land covered by Transfer
Certicate of Title (TCT) No. 56774 registered in the name of Republic Planter's Bank
(now Maybank Philippines, Inc.). Apparently, on October 20, 1986, the bank sold the
entire property to petitioner. On September 30, 1987, petitioner entered into a
transaction concerning a part thereof with Eleuterio Villas (Eleuterio). Petitioner gave
the owner's duplicate copy of TCT No. 56774 to Eleuterio through a certain Atty. Eden F.
Dandal (Atty. Dandal). Bautista then filed the instant complaint for specific performance
against petitioner, Republic Planter's Bank, and Spouses Eleuterio and Clarita Villas
4. RTC held that the 1987 transaction between petitioner and Eleuterio is in the nature of
an equitable mortgage and not a sale with right to repurchase. It noted that the
purchase price is way below the market value of the property. Under the equitable
mortgage, petitioner bound herself to pay her loan within two (2) years. It held that she
was able to discharge this obligation when she remitted to Eleuterio, through Atty.
Dandal, the amount of her loan plus the agreed interest prior to the expiration of the
said two-year period. pouses Villas had no reason to foreclose the mortgage and should
immediately return the title of the property to petitioner. The mortgage had long been
extinguished when petitioner entered into another contract with Bautista. CA affirmed.
ISSUE: Whether the equitable mortgage was extinguished. YES.
RATIONALE:
1. Petitioner's payment to Atty. Dandal, Eleuterio's authorized representative,
extinguished the equitable mortgage.
a. There is no merit to the Spouses Villas' contention that only payment to the
person in whose favor the obligation was constituted extinguishes an obligation.
The Civil Code is unequivocal that payment itself extinguishes an obligation.
Payment may be made to the person in whose favor the obligation was
constituted, his successor-in- interest, or to any person authorized to receive it.
Thus, when an obligee makes payment to any of the persons enumerated in Art.
1240 of the Civil Code, his/her obligation is extinguished in accordance with Art.
1231 of the Civil Code. To rule otherwise would be to nullify the express
provisions of the Civil Code.
b. In the instant case, petitioner asseverates that her obligation under the
equitable mortgage was extinguished when she made payment to Atty. Dandal,
the authorized representative of Eleuterio, before the expiration of the two-year
period. In turn, the Spouses Villas contend that no valid payment was made
because they did not actually receive the money paid. In fact, Atty. Dandal and
petitioner admitted that the amount paid was returned by Atty. Dandal to
petitioner.
c. Curiously, the Spouses Villas do not dispute Atty. Dandal's authority to receive
the payment on behalf of Eleuterio. They did not refute the testimonies of Atty.
Dandal and petitioner concerning the arrangement. They both testied that the
arrangement between petitioner and Eleuterio was that all communications and
payments shall be coursed through Atty. Dandal.
d. Accordingly, the Court finds that petitioner's obligation under the equitable
mortgage has been extinguished. She validly made payment to Atty. Dandal,
Eleuterio's authorized representative, within the two-year period. This payment
was sufficient to extinguish her obligation under the equitable mortgage. The
fact that Atty. Dandal was instructed by Eleuterio to give the payment he
received to Clarita and that he failed to do so because of Clarita's refusal to
accept it is irrelevant in determining whether petitioner complied with her
obligation under the equitable mortgage so as to extinguish the same.
Petitioner's obligation was to make payment to Eleuterio through Atty. Dandal
within the prescribed two-year period, which she did. Hence, she discharged her
obligation and the equitable mortgage was accordingly extinguished.
2. With regard the Spouses Villas' contention that petitioner should have made use of the
provisions in the Civil Code concerning tender of payment and consignation, suffice to
say that these provisions only apply to situations where the creditor refuses without just
cause to accept the tender of payment. Herein, no refusal of the tender of payment
occurred because Eleuterio's authorized representative, Atty. Dandal, accepted
petitioner's tender of payment. Clearly, the Civil Code provisions on tender of payment
and consignation do not apply.
3. Atty. Dandal's return of the payment to petitioner did not revive her obligation under
the equitable mortgage.
a. Since the original obligation was extinguished by virtue of petitioner's payment,
any revival or renewal thereof would be in the form of a new contract entered
into by the parties. In such case, all requisites for a valid contract must be
present.
b. Consent of the contracting parties is essential for the existence of a contract. In
the instant case, neither petitioner nor Eleuterio consented to the revival or
renewal of the equitable mortgage. There is no indication in the records that
petitioner knew, much less agreed, that her acceptance of the returned money
from Atty. Dandal would mean a renewal of the equitable mortgage. It also
appears that Eleuterio, being incommunicado, had no prior knowledge of Atty.
Dandal's actions. Atty. Dandal was not authorized by Eleuterio to enter into
another equitable mortgage on his behalf. Atty. Dandal's act of returning the
payment to petitioner, specifically for the purpose of safekeeping, could not bind
Eleuterio to a new contract because Eleuterio did not give him authority to do
so. The equitable mortgage was extinguished and was not renewed or revived by
Atty. Dandal's return of the payment to petitioner.
c. The Court finds, however, that petitioner is obligated to return to Eleuterio the
money she received from Atty. Dandal on the basis of the principle of unjust
enrichment. Unjust enrichment exists "when a person unjustly retains a benet
to the loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good conscience."
There is unjust enrichment under Article 22 of the Civil Code when (1) a person is
unjustly benefitted, and (2) such benefit is derived at the expense of or with
damages to another.
