FRANCISCO CAPALUNGAN, PLAINTIFF AND APPELLEE, VS. FULGENCIO MEDRANO, DEFENDANT AND APPELLANT.

This is an appeal by defendant Fulgencio Medrano from a decision of the Court of First Instance of IIocos Norte.

On May 3, 1931, Francisco Capalungan executed in favor of Fulgencio
Medrano a deed denominated “compraventa con pacto de retro” whereby he
transferred to the latter for P1,200.00 a parcel of land in San
Laureano, No. 18, Dingras, IIocos Norte, with right to repurchase
within ten years from the sale. The contract provided further that the
vendee a retro shall have no right to dispose of the land
while the contract was in force but would only have the right to enjoy
possession thereof. On January 31, 1933, Francisco Capalungan executed
in favor of Pedro Medrano a deed over another parcel of land in the
same sitio, which deed was similarly denominated and
contained substantially the same provisions as the first mentioned
contract. On May 22, 1944, Francisco Capalungan paid and delivered to
Pedro Medrano the total sum of P1,800.00 for the redemption and/or
repurchase of the two parcels of land subject matter of the two deeds.

Fulgencio and Pedro Medrano then filed in the Court of First
Instance of Ilocos Norte a suit against Francisco and Paciano
Capalungan to annul the repurchase of the lands made from Pedro Medrano
and to secure judgment declaring that Francisco Capalungan has lost the
right to repurchase said lands, and that ownership over them had been
consolidated in the plaintiffs. The trial court, after finding the two
contracts to be equitable mortgages, declared valid the redemption of
the land mortgaged to Pedro Medrano and invalid the redemption of the
land mortgaged to Fulgencio Medrano, ordered the defendants to receive
from the clerk of court the redemption price of P1,200.00 deposited
there by Fulgencio Medrano and ordered Pedro Medrano to receive from
the clerk of court the redemption price of P600.00 he had deposited
there, and to deliver to defendants possession of the land redeemed
from him. On appeal, the Court of Appeals affirmed the lower court’s
decision.

On June 23, 1954, Francisco Capalungan filed in the same court,
Court of First Instance of Ilocos Norte, the present action against
Fulgencio Medrano, alleging substantially the facts outlined above, and
further averring that he tried to redeem the land from defendant by
tendering the sum of P1,200.00 but defendant refused to accept it and
to execute the corresponding deed of redemption; and therefore prayed
that defendant be ordered to receive said amount from plaintiff and to
execute the proper deed of release; to deliver to plaintiff the palay
he received for the agricultural year 1953-1954 and all other palay he
may have received from that time until actual execution of the deed of
release; and to pay plaintiff P2,500.00 as actual and moral damages
resulting from his unwarranted refusal. After trial, the lower court
ordered defendant to give plaintiff 10 ½ uyones of palay or
their total value in the amount of P577.50; and to pay moral damages of
P100.00 and the costs. The court subsequently amended its decision by
ordering plaintiff “to ask for the issuance of the corresponding writ
of execution for the satisfaction of the decision of the Court of
Appeals rendered in Civil Case No. 235”.

Defendant Fulgencio Medrano appealed to this Court, alleging that
the lower court erred (1) in ordering appellee to ask for the issuance
of a writ of execution for the satisfaction of the decision of the
Court of Appeals in Civil Case No. 235; (2) in concluding that
appellant was not justified in refusing the offer of payment; (3) in
not finding that the redemption price should be P1,205.50 and not
P1,200.00 only; and (4) in ordering appellant to deliver to appellee 10
½ uyones of palay and moral damages in the amount of P100.00.

As declared in the appellate court’s decision in Civil Case No. 235,
the contract between the parties is an equitable mortgage. Appellee
still owes appellant the sum of P1,200.00, which indebtedness is
secured by the mortgage on the property of appellee located in San
Laureano, No. 18, Dingras, Ilocos Norte. The decision of the Court of
Appeals did not order appellant to do anything for or to pay any amount
to appellee. It merely specified the nature of the contract between the
parties and defined their rights thereunder. Consequently, there was
nothing to be executed under said decision, and the lower court erred
in directing appellee to ask for execution thereof.

Under the contract, appellee is still under obligation to pay the
indebtedness of P1,200.00. One of the modes by which an obligation is
extinguished is tender of payment and consignation. This is a kind of
payment. In May, 1953, appellee personally approached appellant and
offered to pay him the sum of P1,200.00, but the latter refused to
accept the money. If the creditor to whom tender of payment has been
made refused without just cause to accept it, the debtor shall be
released from responsibility by the consignation of the thing due
(Article 1256, N.C.C.). Inasmuch as appellee never consigned the sum
due with the court, payment was never effected.

The contract expressly provided that the mortgage creditor, the
appellant, has the right to possess the land and to enjoy the fruits
thereof, as long as the sum of P1,200.00 has not been paid to him.
Consignation not having been made, the indebtedness was not discharged
and the effects of payment cannot take place. Hence appellant still has
the right to enjoy the property, and he cannot be made liable to
appellee for the fruits he may have received from the time tender of
payment was made. Neither can he be made liable for other kinds of
damages which may have resulted from his non-acceptance of the proffer
of payment. He would have been liable only from the moment valid
consignation had been made.

We have to distinguish the case of a mortgage debtor attempting to
redeem the mortgaged property, from the cases of the legal redemptioner
and the vendor a retro trying to repurchase the property. In
the first case, the mortgage debtor is discharging an obligation. In
the latter two cases, the legal redemptioner and the vendor a retro
are exercising a privilege. So, in order to preserve their right, all
they have to do is to tender payment within the prescribed period.
Should the repurchase price be refused, they do not have to effectuate
consignation. [De Jesus vs. Garcia (CA), 47 Off. Gaz. 2406; Rosales vs.
Reyes, 25 Phil. 495], whereas with respect to debts, tender of payment
without consignation does not constitute valid payment (Paez vs. Magno, 83 Phil., 104, 46 Off. Gaz. 5425).

There is no basis for appellant’s contention that appellee should
pay him P1,205.50, the P5.50 representing the expenses incurred by
reason of the execution of the deed. The contract indeed provides that
appellee should pay for such expenses. And it is also true that the
record discloses that said sum of P5.50 was spent for registering the
document in the registry of deeds. However, there is no showing that it
was appellant who paid for the same, so we cannot order appellee to
reimburse him therefore.

Wherefore, the appealed decision is hereby modified. Appellant does
not have to pay damages nor does he have to deliver to appellee the
products he received from the time payment was tendered. He is ordered,
however, to accept payment and to execute the proper release paper upon
payment to him by appellee of the sum of P1,200.00. Without costs.

Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, and Barrera, JJ., concur.
Concepcion, J., reserved his vote.