Enriquez v. Ramos
REITERATIONFacts
The Antecedents: Rodrigo Enriquez and the spouses Urbano Dizon and Aurea Soriano de Dizon sold eleven parcels of land in Bago Bantay, Quezon City, to Socorro A. Ramos for P101,000.00. Ramos paid P5,000.00 as down payment (P2,500.00 in cash and P2,500.00 by check) and agreed to pay the balance of P96,000.00 within ninety (90) days. To secure the balance, Ramos executed a mortgage on the eleven parcels and, as attorney-in-fact for her children and guardian for her minor child, mortgaged an additional lot (Lot No. 409 of the Malinta Estate). Procedural History: The vendors-mortgagees filed an action for foreclosure of the mortgage on April 29, 1959, due to the vendee-mortgagor's failure to comply with mortgage conditions. Prior to this, on February 24, 1959, the vendors had filed a separate action in the Court of First Instance of Manila for the recovery of P2,500.00 paid by check, which was part of the down payment. Defendant Ramos moved to dismiss the foreclosure case, alleging splitting of a single cause of action. The Court of First Instance of Quezon City denied the motion but allowed the defense to be pleaded in the answer. After trial, the court rendered judgment against Ramos, ordering her to pay P96,000.00 with 12% interest from February 24, 1959, 10% attorney's fees, costs, and decreed foreclosure in case of non-payment within ninety (90) days. The Appeal: Socorro Ramos appealed directly to the Supreme Court, arguing that the action should be dismissed for splitting the cause of action and that the court below should have set a maturity date for the P96,000.00 obligation since no period was explicitly fixed, despite an intended one.
Issue(s)
Whether the filing of a prior action for P2,500.00 based on a dishonored check constitutes splitting a single cause of action with the subsequent foreclosure case for the P96,000.00 balance. Whether the mortgage contract, which stipulated 12% interest in case of default, lacked a fixed maturity date for the P96,000.00 balance, thus requiring the court to set one.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance of Rizal. The appeal was found to be without merit. The Court ordered the payment of P96,000.00 with 12% interest from February 24, 1959, until payment, 10% of the amount due as attorney's fees, and costs. The mortgaged properties were decreed to be foreclosed in case of non-payment within ninety (90) days.
Ratio Decidendi
On Issue 1: The Supreme Court held that the action for foreclosure of the mortgage was not barred by the prior action for P2,500.00 based on a dishonored check. The Court reasoned that the claim for P2,500.00 was for a distinct debt not covered by the mortgage security. Furthermore, the mortgage was constituted on lands situated in Quezon City, and the appellees could not have sought its foreclosure in the Manila courts where the first suit was filed. Since the two causes of action were different and could not have been joined in a single suit in the same court, Section 4 of Rule 2 of the Rules of Court, prohibiting the splitting of a single cause of action, was not applicable. The Court emphasized that the prior suit was for a specific amount representing a portion of the down payment that was dishonored, while the present suit was for the recovery of the principal balance of the sale price secured by the mortgage. On Issue 2: The Supreme Court found no merit in the contention that the obligation lacked a fixed maturity date. The Court pointed to the stipulation in the mortgage contract which stated that the obligation for P96,000.00 was to be payable within ninety (90) days from the date of the contract, and in case of default, it shall bear interest at the rate of 12% per annum. The Court clarified that the stipulated twelve percent (12%) interest in case of default was nothing more than a penalty intended to induce the debtor to pay on or before the expiration of the ninety (90) days. Therefore, the obligation had a clear maturity date, and there was no necessity for the court to set another due date.
Main Doctrine
The Supreme Court affirmed the decision of the lower court, holding that the action for foreclosure of mortgage was distinct from a prior action for the recovery of a dishonored check payment, thus not constituting a splitting of a single cause of action. The Court also clarified that a stipulation for 12% interest upon default in a mortgage contract is a penalty, and the obligation has a fixed maturity date of ninety (90) days as stated in the contract.