Pamintuan v. Yarisantos
REITERATIONFacts
The Antecedents: The underlying dispute concerns a contract of lease for two lots in Sampaloc, Manila, entered into on October 10, 1951. The lease stipulated a monthly rental of P15.00 per lot, payable promptly at the end of each month, with a term of twenty years at the lessee's discretion. A crucial provision stated that failure to pay rentals for six consecutive months would automatically annul the contract. The lessors, private respondents herein, alleged that the lessees, petitioners herein, failed to pay rentals for twelve months on one lot and eight months on the other. Procedural History: The private respondents, who succeeded the original lessor, filed a complaint for rescission of the lease contract on November 12, 1959, citing the lessees' failure to pay rent as stipulated. The trial court ruled in favor of the private respondents, rescinding the contract. The petitioners appealed this decision to the respondent Court of Appeals, which affirmed the lower court's judgment. The petitioners then filed a petition for review with the Supreme Court. The Petition: The petitioners seek review of the Court of Appeals' decision affirming the rescission of the lease contract. They argue that the lessors were not entitled to rescission due to their refusal to recognize the lease and that principles of res judicata should apply based on prior favorable decisions in a consignation case and an ejectment suit. The petitioners contend that the Court of Appeals erred in upholding the rescission, asserting that their failure to pay was not a ground for rescission under the circumstances presented and that the contract's provision for automatic annulment after six months of non-payment should have precluded rescission by the lessor for lesser periods of default. The petition is filed under Rule 45 of the Rules of Court.
Issue(s)
Whether the lessors have the right to ask for judicial rescission under Article 1659 despite the existence of a contractual clause for automatic annulment after six months of arrears. Whether the lessors' refusal to recognize the lease contract excuses the petitioners' failure to pay rentals. Whether the principle of res adjudicata applies based on previous consignation and ejectment cases.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, upholding the rescission of the contract of lease. The Court found no error of law in the appellate court's ruling.
Ratio Decidendi
On Issue 1: The Court held that the right to seek rescission under Article 1659 of the Civil Code is distinct from a contractual clause for automatic annulment. Article 1659 categorically grants the aggrieved party the right to ask for rescission if the other party fails to comply with the obligations set forth in Article 1654 and 1657. The petitioners' failure to pay the monthly rental 'promptly at the end of every month' as required by Paragraph 2 of the contract constituted a clear violation of their obligation. The automatic annulment clause in Paragraph 3, which triggers after six months, does not deprive the lessor of the right to judicially rescind the contract for a breach of the prompt monthly payment requirement. As established in Malicsi v. Carpizo (G.R. No. L-17493), the failure to pay stipulated monthly rentals gives the lessor the right to bring an action for rescission. Thus, the lower courts did not err in enforcing the plain command of the law. On Issue 2: The Court ruled that the lessors' refusal to recognize the lease or accept payments did not justify the petitioners' default. If a lessor refuses to accept rental payments, the lessee's proper legal remedy is to make a tender of payment and, if that is refused, to make a consignation thereof in court. Instead of utilizing this remedy, the petitioners simply stopped making monthly payments, which they formally admitted during the proceedings. Their failure to perform consignation meant they remained in default of their contractual and statutory obligations. A lessee cannot unilaterally cease payments due to the lessor's hostile stance; they must still demonstrate a willingness and effort to comply with the payment terms through legal channels. On Issue 3: The Court found the defense of res adjudicata to be without merit. It affirmed the Court of Appeals' finding that the subject matter and causes of action in the previous consignation and ejectment cases were distinct from those in the current action for rescission. For res adjudicata to bar a suit, there must be identity of parties, subject matter, and cause of action. The independent cause of action for rescission under Article 1659 based on specific months of arrears was not litigated in the earlier suits. Consequently, those prior decisions did not preclude the lessors from seeking the rescission of the lease based on the petitioners' subsequent and continued failure to pay rent.
Main Doctrine
Failure of the lessee to pay rentals promptly at the end of every month, as stipulated in the contract of lease, entitles the lessor to ask for rescission of the contract under Article 1659 of the Civil Code, notwithstanding a provision for automatic annulment upon failure to pay for six consecutive months. The right to rescind and the automatic annulment arise from different grounds and cases.