Luzon Brokerage Co. v. Maritime Building Co.
REITERATIONFacts
The Antecedents: Luzon Brokerage Co., Inc. (plaintiff-appellee) was the lessee of a property owned by Maritime Building Co., Inc. (Maritime, defendant-appellant). Maritime had entered into a contract to sell the property to Myers Building Co., Inc. (Myers). Maritime failed to pay its monthly installments to Myers starting March 1961, despite collecting substantial rentals from Luzon Brokerage Co., Inc. Myers, in turn, cancelled the contract to sell. Procedural History: The case reached the Supreme Court, which rendered a decision on January 31, 1972, affirming the trial court's decision, and a resolution on August 18, 1972, denying Maritime's first motion for reconsideration. Maritime filed a second motion for reconsideration. The Petition: Maritime filed a second motion for reconsideration of the Court's decision and resolution, arguing for reconsideration of the denial of its first motion.
Issue(s)
Whether the Second Motion for Reconsideration is pro forma and should be denied to prevent speculation on changes in the Court's composition. Whether Article 1592 of the Civil Code applies to a contract to sell. Whether the breach of contract by Maritime was merely 'casual' such that rescission should not be allowed. Whether Republic Act (RA) No. 6552 (Maceda Law) affects the Court's authority to overturn its doctrine on contracts to sell for commercial properties.
Ruling
The Supreme Court denied Maritime's second motion for reconsideration. The denial is final. The Court affirmed its previous rulings that the contract was a contract to sell, that Maritime's breach was not casual but a serious one, and that the vendor's right to cancel the contract upon default, with retention of payments, is valid and has been codified by R.A. 6552 for industrial and commercial properties.
Ratio Decidendi
On Issue 1: The Court ruled that the Second Motion for Reconsideration was patently pro forma and dilatory. A party is entitled to only one Supreme Court to adjudicate his suit and should not be permitted to keep a case pending by reiterating the same contentions. The Court emphasized that litigation must end at a definite time fixed by law to promote stability. Speculating on changes in the Court's composition over the six years the motion was pending is a practice the Court strongly discourages. Public policy demands that judgments become final and not be left hanging indefinitely. On Issue 2: Article 1592 of the Civil Code is not applicable to contracts to sell or conditional sales where title is reserved. The Court reiterated that Article 1592 refers specifically to a contract of sale where ownership is transferred, but subject to a resolutory condition. In a contract to sell, the full payment is a positive suspensive condition; until it is met, the obligation of the vendor to convey title does not acquire binding force. Therefore, no judicial or notarial demand is required for the vendor to treat the contract as terminated upon default. This has been the consistent doctrine of the Court for nearly four decades. On Issue 3: The distinction between a 'casual' or 'serious' breach is irrelevant in a contract to sell. Because the payment is a suspensive condition, its non-fulfillment is not a breach of an existing obligation but an event that prevents the obligation from arising. Regardless, the Court found Maritime's breach to be serious and in bad faith. Maritime willfully defaulted despite having the funds from collected rentals and attempted to offset the debt with a totally unrelated personal claim. Such conduct excludes Maritime from claiming equitable relief or substantial performance under Article 1234. On Issue 4: The enactment of Republic Act (RA) No. 6552 (Maceda Law) codified and reaffirmed the existing jurisprudence for industrial and commercial properties. The law specifically excludes such properties from the grace periods and refund requirements mandated for residential buyers. By excluding these categories, Congress recognized the vendor's right to unqualifiedly cancel the sale upon default. The Court noted that it cannot overturn the doctrine because doing so would effectively involve overturning a statute. This reinforces the binding force of the contract as the law between the parties.
Main Doctrine
A second motion for reconsideration that raises no new grounds but merely reiterates arguments already rejected is considered pro forma, dilatory, and should be denied in the interest of public policy and sound practice, which demand that judgments become final at a definite time. The Maceda Law (R.A. 6552) codified the existing jurisprudence on contracts to sell real estate on installment, particularly affirming the vendor's right to cancel such contracts for industrial and commercial properties upon default, without refund of payments made.