Songcuan vs. Intermediate Appellate Court

The Court held that a final judgment granting alternative periods for redemption constitutes the law between the parties and cannot be collaterally attacked; thus, the vendors-a-retro validly redeemed the property within the extended period. The Court also held that the lessee's remedy for the vendors' failure to execute the lease contract after redemption is specific performance, not rescission of the redemption right, as the lease obligation was a separate and independent covenant arising only after the repurchase was consummated.

Victoriano Alviar and his son Mariano Alviar (with his wife Belen) sold two parcels of land and a building to Saturnino Songcuan in 1966. The sale was accompanied by a "Deed of Repurchase" granting the Alviars a 10-year right to repurchase. An additional, undated condition ("P.S.") stipulated that upon repurchase, the Alviars were obligated to lease the premises actually occupied by Songcuan at the time of the sale back to him for 25 years at a fixed monthly rental. In 1969, the original building burned down, and Songcuan constructed a new one. The Alviars later filed a case for redemption (Civil Case No. 2621), which culminated in a final 1981 decision granting them a specific period to redeem. After redemption was effected, a dispute arose over the scope of the leaseback obligation, leading Songcuan to file a new complaint for rescission (Civil Case No. 3213).

• In 1966, the Alviars sold two parcels of land and a building to Saturnino Songcuan for P34,026.09.
• A simultaneous "Deed of Repurchase" granted the Alviars a 10-year right to repurchase.
• An undated "P.S. (Additional Condition)" obligated the Alviars, upon repurchase, to lease the "premises actually occupied by [Songcuan] at the time of the execution of this instrument" to him for 25 years at P390/month.
• At the time of the contract, Songcuan admittedly occupied only one-third of the ground floor of the building.
• In 1969, the building burned down; Songcuan rebuilt it at his own expense.
• In 1974, the Alviars sued to redeem the property (Civil Case No. 2621). The final 1981 judgment gave them an option to redeem within 30 days from finality or within the remaining original period (1 year, 10 months, 18 days).
• The Alviars tendered payment via manager's check, which Songcuan refused, demanding reimbursement for the new building and registration costs, and insisting on a lease contract.
• In 1981, Songcuan filed a new action for rescission (Civil Case No. 3213), arguing the Alviars forfeited their right by not redeeming within 30 days and by refusing to execute the lease.
• The Clerk of Court executed a Deed of Reconveyance to the Alviars on July 17, 1981.

• Songcuan argued that the Alviars forfeited their right to repurchase by failing to exercise it within thirty (30) days from the finality of the judgment in Civil Case No. 2621, as provided in Article 1606 of the Civil Code.
• He contended that the October 10, 1966 contract created a reciprocal obligation: his duty to reconvey was dependent on the Alviars' duty to lease. Their refusal to execute the lease entitled him to rescind the entire contract under Article 1191 of the Civil Code.
• He claimed the lease should cover the entire property, as he was the registered owner with constructive possession over the whole.

• The Alviars argued that the final judgment in Civil Case No. 2621, which granted them an alternative redemption period, was the law between the parties and could not be amended.
• They asserted that the obligation to lease was not reciprocal to the obligation to reconvey; it was a separate obligation that arose only after repurchase was completed. Therefore, Article 1191 on rescission was inapplicable.
• They maintained that the "P.S." clause clearly referred to the premises Songcuan actually occupied in 1966, which was only one-third of the building.

• Procedural Issues: N/A
• Substantive Issues:
  1. Whether the Alviars forfeited their right to repurchase by not complying with the 30-day redemption period under Article 1606 of the Civil Code, notwithstanding the alternative period granted in the final judgment in Civil Case No. 2621.
  2. Whether the Alviars' obligation to execute a 25-year lease contract was a reciprocal obligation to Songcuan's obligation to reconvey, such that its non-performance entitled Songcuan to rescind the repurchase right under Article 1191 of the Civil Code.
  3. What specific area Songcuan was entitled to lease under the "P.S. (Additional Condition)."

• Procedural: N/A
• Substantive:
  1. The Court ruled against forfeiture. The final judgment in Civil Case No. 2621, which became the law between the parties, validly granted the Alviars an alternative redemption period. Limiting them to 30 days would violate the rule on the immutability of final judgments.
  2. The Court ruled that rescission under Article 1191 was improper. The obligations were not reciprocal. The lease obligation was a separate and independent covenant that arose only after the Alviars repurchased and obtained possession of the properties. Songcuan's proper remedy for non-compliance was specific performance, which he had alternatively sought and was granted.
  3. The Court ruled that the leased area was limited to one-third of the ground floor of the building. The "P.S." clause referred to the premises Songcuan actually occupied at the time of the contract's execution in 1966, which he admitted at pre-trial was only one-third of the building.

• Immutability of Final Judgments — A final and executory judgment can no longer be modified or amended, even if the modification is meant to correct an erroneous conclusion of fact or law. The Court applied this to reject Songcuan's attempt to shorten the redemption period granted by the final decision in Civil Case No. 2621.
• Reciprocal Obligations under Article 1191 — Reciprocal obligations are those where the obligation of one party is a resolutory condition for the obligation of the other. The Court distinguished the case, holding that the obligation to reconvey and the obligation to lease were independent; the latter was merely a subsequent condition, not a reciprocal counterpart. Thus, non-performance did not trigger the power to rescind under Article 1191.

• "A final judgment is the law between the parties to a case and controls their relation with respect to the controversy there presented." — This underscores the Court's emphasis on the immutability of judgments as the basis for upholding the extended redemption period.
• "In reciprocal obligations the obligation of one is a resolutory condition of the obligation of the other... In the case at bar, there are two separate and distinct obligations, each independent of the other." — This articulates the doctrinal distinction that defeated Songcuan's rescission theory.

• Ong Chua v. CARR, 53 Phil. 975 — Cited by the trial court in Civil Case No. 2621 as authority for suspending the redemption period during the pendency of the litigation.

• Article 1606, Civil Code — Provides that a vendor-a-retro may exercise his right to repurchase within thirty days from the time final judgment is rendered in a civil action holding the contract to be a true sale with right to repurchase. The Court held this was superseded by the specific terms of the final judgment in the prior case.
• Article 1191, Civil Code — Provides the power to rescind reciprocal obligations in case of non-compliance. The Court held this was inapplicable because the obligations in the "P.S." clause were not reciprocal.
• Article 2208, Civil Code — Governs the award of attorney's fees as damages. The Court of Appeals applied this to delete the award, finding no bad faith on the part of the Alviars.

• N/A (The decision was rendered by a Division with all other members concurring; no separate opinions were noted.)

• N/A (No dissenting opinion is recorded in the provided text.)