GR 158920; (November, 2012) (Digest)
G.R. No. 158920 , November 28, 2012
Republic of the Philippines (represented by the Social Security System), Petitioner, vs. Marawi-Marantao General Hospital, Inc. and Atty. Macapanton K. Mangondato, Respondents.
FACTS
Respondent Marawi-Marantao General Hospital, Inc. (MMGHI) obtained a loan from the Social Security System (SSS), secured by a mortgage on its property. Due to MMGHI’s failure to pay, the SSS extrajudicially foreclosed the mortgage. The property was sold at a public auction on March 8, 1991, with the SSS as the highest bidder, and the certificate of sale was registered on October 16, 1991. The one-year redemption period thus expired on October 16, 1992. Subsequently, Atty. Mangondato, representing MMGHI, negotiated with the SSS for a repurchase. The Social Security Commission (SSC) approved the repurchase via Resolution No. 984-s.96 dated December 10, 1996, and a Deed of Conditional Sale was executed on January 16, 1997. When the SSS later refused to consummate the sale, respondents filed a complaint for specific performance.
ISSUE
Whether the Deed of Conditional Sale executed after the expiration of the statutory redemption period is valid and enforceable.
RULING
Yes, the Deed of Conditional Sale is valid and enforceable. The Court ruled that while the right of legal redemption under the foreclosure statute had expired, the parties were not precluded from entering into a new, separate contract of sale over the same property. The SSC Resolution and the subsequent Deed of Conditional Sale constituted a distinct and voluntary agreement, essentially a contract to sell, which was governed by the law on contracts and the mutual consent of the parties. The SSS, through the SSC, unequivocally approved the repurchase offer and executed the deed, thereby binding itself to the new terms. The Court emphasized the principle of mutuality of contracts under Article 1308 of the Civil Code, which holds that a contract is binding upon both parties and its validity or compliance cannot be left to the will of one of them. The SSS’s unilateral attempt to rescind the deed without legal cause, after respondents had partially performed their obligation by making a down payment, was impermissible. Therefore, the SSS was ordered to specifically perform its obligation under the deed by executing the final deed of sale upon respondents’ payment of the balance.