Case Summary (G.R. No. L-31934)
One Supreme Court and the Prohibition Against Repeated Reagitation
The Court stressed that a party is entitled to only one Supreme Court determination and cannot indefinitely keep a case pending by resubmitting the same arguments in hope of changed personnel. The second motion raised arguments already fully considered in the January 31, 1972 decision and the August 18, 1972 resolution denying the first motion. Because no new grounds were presented, the motion was treated as pro forma and denied to prevent undue delay and prejudice to the Court’s docket.
Assessment of Whether the Second Motion Raised New Grounds
The Court found the second motion did not present fresh matters unavailable at the time of the first motion; it merely reiterated and amplified arguments earlier considered and rejected. The Court articulated the established pro forma doctrine and the purpose of procedural rules (including the omnibus-motion policy) to avoid multiplicity of motions and piecemeal litigation. The Court cited prior authorities and its own consistent practice in treating repetitious motions as deserving of denial.
Stare Decisis and the 39-Year Jurisprudence on Contracts to Sell
The Court invoked the doctrine of stare decisis as central to legal stability, noting precedential rulings that distinguish contracts to sell (with reserved title) from absolute sales. Under the long-standing doctrine (39 years), where title is expressly reserved in the vendor until full payment, failure to pay installments is treated as non-fulfillment of a suspensive condition that prevents transfer of ownership rather than a mere breach subject to rescission protocols applicable to unconditional sales. The Court declined to overturn those precedents.
Contractual Nature — Conditional Sale with Reserved Title and Contract Terms
The Court summarized the contractual provisions: the contract was a conditional sale (contract to sell) with title expressly reserved in Myers until full punctual payment; the contract included an automatic cancellation clause upon failure to pay any installment and an acceleration clause making the unpaid balance immediately due upon default. Given these stipulations, Myers was entitled to declare termination and retain prior payments as rentals upon Maritime’s default.
Inapplicability of Article 1592 to Contracts to Sell (as Previously Held)
Relying on prior decisions (e.g., Manuel v. Rodriguez and others), the Court reiterated that Article 1592 (formerly Article 1504) — which allows the vendee of immovable property to pay after expiration of the stipulated time unless a judicial or notarial demand for rescission has been made — does not apply to contracts to sell in which title is reserved. Thus, the vendor’s extrajudicial cancellation right remains valid under such conditional-sale agreements.
Maritime’s Breach: Character and Consequences
The Court characterized Maritime’s default as willful and in bad faith. Maritime stopped paying P5,000 monthly installments beginning March 1961 despite collecting P10,000 monthly rentals from the lessee and had ample funds. Maritime sought suspension of payments, which Myers rejected “under any condition,” and then withheld payments while asserting an unrelated claim against the estate of F.H. Myers. The Court found Maritime’s breach to be serious and deliberate, resulting in Myers’s lawful cancellation and retention of prior payments as rentals.
Alternative Doctrinal Bases — Rescission and Substantial Performance
The Court addressed alternative arguments: (a) if Article 1592 applied, Myers’s judicial answer in an interpleader suit constituted a demand for rescission, after which the court may not extend a further term; (b) even under Article 1191 (rescission for non-performance of reciprocal obligations), no “just cause” existed to fix a new period; and (c) Article 1234 (substantial performance) could not benefit Maritime because there was no substantial performance and Maritime acted in bad faith.
Effect of Republic Act No. 6552 (Maceda law)
The Court observed that Congress, by enacting RA 6552 in 1972, adopted into law the core 39-year jurisprudence with respect to industrial lots and commercial buildings: it preserved the vendor’s right to cancel a conditional sale of such properties upon default and retain prior payments. The Court held that this statutory adoption places the prior doctrine beyond judicial overturning with respect to industrial and commercial properties, and therefore Myers’s contractual right of cancellation was affirmed and reinforced by statute.
Plea for Equity Rejected — Clean Hands and Business Context
The Court rejected Maritime’s plea for equitable relief. It found no basis for eq
...continue readingCase Syllabus (G.R. No. L-31934)
Procedural History
- The case originated from pleadings filed, with the suit's filing date noted as June 17, 1961.
- The Supreme Court rendered its decision on January 31, 1972 (reported 43 SCRA 93), affirming the Court of First Instance of Manila judgment of November 26, 1965.
- Appellant Maritime Building Co., Inc. filed a first motion for reconsideration; this was denied by an extended Resolution of August 18, 1972 (reported 46 SCRA 381).
- Appellant filed a Second Motion for Reconsideration dated October 7, 1972; the Court acted upon that second motion in the present Resolution dated November 16, 1978.
- The Court ultimately denied the second motion for reconsideration and declared the denial final.
- The Resolution records multiple intra-Court proceedings, tentative votes over the six-year pendency of the second motion, and references to motions, denials, and extended memoranda prepared intra-Court.
Facts (Contractual and Commercial Background)
- The parties entered into a contract to sell (conditional sale) executed on April 30, 1949, whereby Myers Building Co., Inc. (Myers) was vendor and Maritime Building Co., Inc. (Maritime) was vendee; Luzon Brokerage Co., Inc. was the lessee of the subject property.
- Maritime paid a P50,000.00 down payment and agreed to pay a balance of P950,000.00.
- The instalment arrangement involved monthly payments; at some point the monthly instalments were P10,000.00 and later reduced to P5,000.00, with an agreed increase in interest from 5% to 5-1/2% per annum when installments were reduced.
- Rentals from the lessee initially were P13,000.00 monthly, later P10,000.00 monthly; Maritime collected rentals and applied them to its obligations.
- Maritime willfully and in bad faith failed to pay the P5,000.00 monthly instalments beginning March 1961 despite collecting rentals from Luzon Brokerage.
- By the time of Maritime’s refusal, Maritime had collected approximately P1,500,000.00 in rentals from the property and had paid Myers P973,000.00 on account of principal and stipulated interest, leaving an unpaid principal balance of P319,300.65.
- Maritime gave Myers notice it would “withhold any further payments” unless heirs of the late F.H. Myers honored an alleged, unrelated personal promise to indemnify Maritime for an alleged liability to a labor union on a wholly separate transaction.
- Luzon Brokerage, the lessee, filed an interpleader proceeding in the trial court; Myers answered and sought cancellation and restitution/relief consistent with the contract’s express terms.
- Maritime’s request for suspension of payments until the close of 1961 had been expressly rejected by Myers “under any condition.”
Contractual Terms and Clauses at Issue
- The contract to sell expressly reserved title in vendor Myers until full and punctual payment of the full price; ownership was not to pass until complete payment.
- The contract contained an automatic cancellation clause: failure to pay any monthly instalment when due would render the deed of Conditional Sale “automatically and without any further formality, null and void,” and all sums previously paid would be considered rentals and retained by the vendor; vendor could re-enter, repossess, or sell the properties to others.
- The contract included an acceleration clause: failure to pay any instalment or interest when due would ipso facto cause the whole unpaid balance of principal and interest to become immediately due and payable.
- The reduction of monthly instalments from P10,000.00 to P5,000.00 yielded a yearly reduction benefit to Maritime of P60,000.00 but an increase of interest liability of P4,750.00 per year (per the Resolution’s arithmetic).
Legal Issues Presented to the Court
- Whether Article 1592 (formerly Article 1504) of the New Civil Code — permitting the vendee of immovable property to pay after lapse of the agreed period unless a demand has been made — applies to contracts to sell (conditional sales) with title reserved in vendor.
- Whether Myers’ extrajudicial declaration of cancellation and retention of sums previously paid as rentals was lawful and enforceable under the contract and prevailing jurisprudence.
- Whether Maritime’s breach was “casual” or “serious,” and whether that characterization affects the vendor’s right to cancel.
- Whether Articles 1191 and 1234 of the Civil Code (rescission of reciprocal obligations; substantial performance) could justify relief in Maritime’s favor.
- Whether equitable considerations should mitigate or reduce the contractual forfeiture or otherwise justify relief to Maritime.
- Whether the enactment of Republic Act No. 6552 (Maceda Law, Sept. 14, 1972) alters the applicable law or bars the enforcement of Myers’ contractual right of cancellation in the context of industrial lots and commercial buildings.
- Whether the second motion for reconsideration raised new grounds sufficient to warrant reopening the decision after the first motion had been denied and after considerable lapse of time and changes in Court composition.
Holdings / Disposition
- The Supreme Court denied appellant Maritime Building Co., Inc.’s Second Motion for Reconsideration of October 7, 1972; the denial is declared final.
- The Court held that:
- The contract between the parties was a contract to sell (conditional sale) with title expressly reserved in Myers, subject to the suspensive condition of full and punctual payment; nonpayment entitled Myers to declare the contract terminated and cancel it, retaining sums previously paid as rentals.
- Article 1592 (formerly Article 1504) of the Civil Code does not apply to contracts to sell or conditional sales where title is reserved in the vendor; the trial court did not err in refusing to extend periods for payment.
- It is irrelevant whether Maritime’s infringement was casual or serious for the legal effect: a positive suspensive condition (full payment) unaccomplished prevents the vendor’s obligation to convey from acquiring binding force.
- Maritime’s conduct constituted bad faith and a serious breach; Maritime had substantial collections of rentals, refused to perform, and sought to offset an unrelated alleged personal promise of indemnity by the late F.H. Myers.
- Even if Article 1592 or Article 1191 were deemed applicable, Myers’ judicial answer seeking rescission constituted a judicial demand for rescission, and by the codal article’s own terms the court thereafter may not grant a new term.
- Article 1234 (substantial performance) did not avail Maritime because there was no substantial performance and Maritime acted in bad faith.
- The enactment of Republic Act No. 6552 (Maceda Law) reaffirms and places the long-standing doctrine recognizing the vendor’s right to cancel upon buyer’s default (without refund of previous payments) into statutory law insofar as industrial lots and commercial buildings are concerned; the Court may no longer overturn that doctrine with respect to