G.R. No. L-23616 September 30, 1976
Rodrigo Enriquez, Aurea Soriano de Dizon and Urbano Dizon, Jr., plaintiffs-appellants, vs. Socorro A. Ramos, defendant-appellee.

FACTS

This is a second appeal concerning the foreclosure of a real estate mortgage securing a balance of P200,000 from the sale of subdivision lots. In a prior case (G.R. No. L-18077), the Supreme Court affirmed the trial court’s finding that the two-year period for payment would commence only upon the completion of roads on the lots, as per a separate “Explanation” document where vendors agreed to construct roads using a portion of the purchase price. The Court also deemed the defendant’s non-payment of 1959 realty taxes and non-registration of a mortgage on a Bulacan property as minor and sufficiently explained at that time.
In the present case, the plaintiffs-appellants filed a new action for foreclosure, alleging that the roads were completed on May 9, 1960, yet the defendant-appellee still failed to pay the P200,000 balance. They further cited her continued non-payment of realty taxes from 1959 to 1963 and the non-registration of the Bulacan mortgage. The defendant-appellee admitted non-payment but argued res judicata, contending the tax and registration issues were already settled. She also claimed the roads were not completed in accordance with Quezon City Ordinance No. 2999, which required additional improvements like curbs, gutters, drainage, and tree planting.

ISSUE

The primary issue is whether the defendant-appellee’s obligation to pay the balance became due and demandable, warranting foreclosure, based on the completion of the roads and her other alleged breaches.

RULING

The Supreme Court ruled in favor of the plaintiffs-appellants, ordering payment and authorizing foreclosure. The legal logic centered on the interpretation of the contractual condition and the application of the doctrine of res judicata. The Court held that the condition for payment—the construction of roads—was fulfilled. It interpreted the contractual and “Explanation” document as referring only to road construction, not the full suite of subdivision improvements mandated by the city ordinance. The planting of trees and installation of water facilities were deemed segregable activities not contemplated by the parties as part of the condition. Thus, the completion of the road pavement satisfied the contractual term, making the obligation due.
Regarding the defense of res judicata, the Court clarified that the prior judgment only resolved the status of the breaches as of that earlier case. The defendant’s subsequent and continued failure to pay taxes and register the mortgage for new years (1960-1963) constituted fresh breaches not barred by the earlier decision. These repeated failures, coupled with the non-payment of the principal debt now that the condition was fulfilled, justified foreclosure. The filing of the complaint itself served as a valid demand for payment, and the effects of fulfilling the conditional obligation retroacted to the date the roads were completed, making the debt immediately payable.