G.R. No. 156474 . August 16, 2005
PESANE ANIMAS MONGAO, joined by her husband BENHUR MONGAO, Petitioners, vs. PRYCE PROPERTIES CORPORATION, Respondent.

FACTS

Petitioners, Spouses Mongao, filed a complaint for rescission and damages against respondent Pryce Properties Corporation. They alleged that Pesane Mongao and respondent executed a Memorandum of Agreement for the sale of her land. Respondent paid earnest money but later offered to pay the balance with a check payable to Pesane and her mother, which was rejected. Petitioners claimed respondent refused to pay the balance solely to Pesane and denied she executed a subsequent Deed of Absolute Sale, which led to the cancellation of her title.
Respondent, in its Answer, admitted the Agreement’s execution but presented a different factual backdrop. It claimed the land was part of properties negotiated with the Animas family to prevent foreclosure, and that Pesane held title merely as a trustee. Respondent asserted the earnest money was used to redeem family properties from the bank and that payment was rightly made jointly to Pesane and her mother, representing the family interest. It also stated it had consigned the balance with the court due to conflicting demands.

ISSUE

Whether the Court of Appeals correctly reversed the trial court’s grant of judgment on the pleadings and ordered a trial on the merits.

RULING

Yes, the Court of Appeals was correct. A judgment on the pleadings is proper only when the answer fails to tender any genuine issue of fact, either by not denying the material allegations of the complaint or by admitting them. Here, respondent’s Answer did tender genuine issues. While it admitted the existence of the Memorandum of Agreement, it specifically denied material allegations such as Pesane Mongao’s exclusive ownership of the property and her execution of the Deed of Absolute Sale. It alleged new matter—that the sale was part of a larger transaction with the Animas family and that Pesane was merely a trustee—which, if proven, would constitute a valid defense barring petitioners’ recovery for rescission based on a purported breach by respondent.
These allegations in the Answer, including the claim of trust and the proper payees under the agreement, are material facts that require presentation of evidence for resolution. They go to the very heart of the parties’ rights and obligations under the contract. Therefore, the case involves substantial factual controversies that cannot be resolved solely on the pleadings. A full-blown trial is necessary to ascertain the true agreement of the parties, the nature of Pesane Mongao’s ownership, and the validity of respondent’s consignation. The Supreme Court affirmed the appellate court’s decision to remand the case for trial on the merits.