Dimatulac v. Coronel
REITERATIONFacts
The Antecedents: Luciano Vitug Dimatulac (plaintiff-appellee) sold several parcels of land with improvements to Dolores Coronel (defendant-appellant) on June 30, 1911, for P9,000, with a five-year period for repurchase (pacto de retro). The contract stipulated that Dimatulac would remain in possession as a lessee, paying annual rent in January and February, and that failure to pay rent for any year would result in the loss of the right to repurchase. Dimatulac failed to pay rent for at least three years, starting in 1912. Procedural History: Due to the default, Coronel filed a civil action (No. 1092) to compel Dimatulac to surrender the property and pay past-due rent. This action was settled by a compromise agreement approved by the Court of First Instance on April 9, 1915. Under the compromise, Dimatulac agreed to surrender the property, including crops, and Coronel was authorized to arrange the sale of growing cane to satisfy the past-due rent. Dimatulac surrendered possession of most, but not all, of the parcels. The Petition: In May 1916, before the five-year redemption period expired, Dimatulac offered to redeem the entire property under the original contract. Coronel refused, asserting absolute ownership due to the prior default. Dimatulac then filed the present action to compel redemption.
Issue(s)
Whether the stipulation for the forfeiture of the right to repurchase upon failure to pay rent in a sale with pacto de retro is lawful. Whether Dolores Coronel waived the forfeiture of the right to repurchase by entering into the compromise agreement and recognizing the past-due rent as a subsisting debt. Whether the obligation for future rent ceased when Dolores Coronel took possession of the property.
Ruling
The Court affirmed the judgment of the trial court, ordering the defendant to permit the redemption and surrender the property in her possession. The plaintiff's right to repurchase was deemed to be still subsisting.
Ratio Decidendi
On the lawfulness of the forfeiture stipulation: The Court held that the clause in the contract of sale with pacto de retro providing for the extinction of the plaintiff's right to repurchase in case of default in paying rent was lawful. Parties to such contracts may legitimately fix a period for redemption not exceeding ten years, and the determination of this right can be made to depend upon the delinquency of the vendor-lessee in paying the stipulated rent. This is supported by jurisprudence from the Supreme Court of Spain. While such a provision may involve hardship, it is not inherently unlawful. On the waiver of forfeiture: The Court found that Dolores Coronel waived the forfeiture by entering into the compromise agreement in 1915. By making provision for the payment of past-due rent and recognizing it as a subsisting debt, she elected to treat the rent as a debt rather than enforcing the forfeiture. Under Article 1153 of the Civil Code, a creditor cannot claim for the rent during the whole period and at the same time assert ownership to the whole property, as these positions are mutually inconsistent. By pursuing the debt, she waived the penalty (forfeiture). On the cessation of future rent obligation: The Court ruled that when Dolores Coronel assumed possession of the property, Dimatulac's obligation for future rent ceased. This is consistent with the principle that a lessee's obligation for rent ends when they are ousted or when the landlord takes possession before the expiration of the lease term. The ruling in Municipality of Moncada vs. Cajuigan was cited, stating that a landlord cannot recover rent from the date of ouster, even if rent was due and in arrears prior to that date.
Main Doctrine
A vendor who defaults in paying rent under a sale with pacto de retro, where the contract stipulates forfeiture of the right to repurchase upon such default, may still be allowed to redeem if the vendee, by subsequently entering into a compromise agreement that recognizes the rent as a subsisting debt, waives the forfeiture. Furthermore, the vendor's obligation for future rent ceases upon the vendee taking possession of the property.