JUDICIAL DEMAND FOR RESCISSION BY WAY OF CROSS-CLAIM

Doctrine: The cross - claim found in the answer filed in the trial court constitutes judicial demand for
rescission that satisfies the requirements of Article 1592, NCC. (Luzon Brokerage Co., Inc. vs.
Maritime Building Co., Inc., GR 25855, January 31, 1972)

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TICKLER

Case Title
G.R. No., 25855 Date January 31, 1972
JBL REYES, J.

FACTS:

A Motion for Reconsideration was filed before the Supreme Court

Defendant Myers Building Co. entered into a Deed of Conditional Sale, in favor of Maritime Building
Co. over parcels of land. The balance was to be paid in monthly. The parties further agreed that: a. If
Maritime defaults, the contract would be annulled at Myers’ option; b. All payments already made shall
be forfeited; and c. Myers shall have the right to re-enter the property and take possession. Moreover,
if Maritime refuses to peacefully deliver the possession of the properties subject of this contract to the
Myers in case of rescission, a suit should be brought in court by the Myers to seek judicial declaration
of rescission.

Maritime failed to pay the installment for March 1961, for which the Vice-President, George Schedler,of
the Maritime Building Co., Inc., wrote a letter to the President of Myers requesting for a moratorium on
the monthly payment of the installments until the end of the year. Myers made a demand upon
Maritime for the unpaid installments; also, Myers advised Maritime of the cancellation of the Deed of
Conditional Sale and demanded the return of the property, holding Maritime liable for rentals. Myers
thereafter demanded from its lessee, Luzon Brokerage, to avoid paying to the wrong party, filed an
action for interpleader. After the filing of this action, the Myers Building Co., Inc. in its answer filed a
cross-claim against the Maritime Building Co., Inc. praying for the confirmation of its right to cancel the
said contract.

ISSUE:
Whether or not Myers Company is entitled to extra-judicially rescind the Deed of Conditional Sale.

HELD:
Yes. Respondent can extra-judicially rescind the Deed of Conditional Sale

Under Art. 1592 where vendee in default can continue to make payments as long as no
judicial/notarial demand for rescission has been made

A judicial action for the rescission of a contract is not necessary where the contract provides that it
may be revoked and cancelled for violation of any of its terms. The party who deems the contract
violated may consider it resolved or rescinded without previous court action, but it proceeds at its own
risk. For it is only the final judgment of the corresponding court that will conclusively and finally settle
whether the action taken was or was not correct in law. But the law definitely does not require that the
contracting party who believes itself injured must first file suit and wait for a judgment before taking
extrajudicial steps to protect its interest. Neither can Maritime invoke Civil Code Art. 1592 because the
cross-claim filed by Myers constitutes a judicial demand for rescission that satisfies the said article.

Thus, The cross - claim found in the answer filed in the trial court constitutes judicial demand for
rescission that satisfies the requirements of Article 1592, NCC.