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Optimum v. Jovellanos
Optimum v. Jovellanos
189145
SECOND DIVISION
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated
May 29, 2009 and Resolution 3 dated August 10, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 104487 which reversed the Decision4
dated December 27, 2007 of the Regional Trial Court of Caloocan City,
Branch 128 (RTC) in Civil Case No. C-21867 that, in turn, affirmed the
Decision5 dated June 8, 2007 of the Metropolitan Trial Court, Branch 53
of that same city (MeTC) in Civil Case No. 06-28830 ordering
respondents-spouses Benigno and Lourdes Jovellanos (Sps. Jovellanos) to,
inter alia, vacate the premises of the property subject of this case.
The Facts
On April 26, 2005, Sps. Jovellanos entered into a Contract to Sell6 with
Palmera Homes, Inc. (Palmera Homes) for the purchase of a residential
house and lot situated in Block 3, Lot 14, Villa Alegria Subdivision,
Caloocan City (subject property) for a total consideration of
₱1,015,000.00. Pursuant to the contract, Sps. Jovellanos took possession
of the subject property upon a down payment of ₱91,500.00, undertaking
to pay the remaining balance of the contract price in equal monthly
installments of ₱13,107.00 for a period of 10 years starting June 12, 2005.7
On August 22, 2006, Palmera Homes assigned all its rights, title and
interest in the Contract to Sell in favor of petitioner Optimum
Development Bank (Optimum) through a Deed of Assignment of even
date.8
In a final Demand Letter dated May 25, 2006,11 Optimum required Sps.
Jovellanos to vacate and deliver possession of the subject property within
seven (7) days which, however, remained unheeded. Hence, Optimum
filed, on November 3, 2006, a complaint for unlawful detainer12 before
the MeTC, docketed as Civil Case No. 06-28830. Despite having been
served with summons, together with a copy of the complaint,13 Sps.
Jovellanos failed to file their answer within the prescribed reglementary
period, thus prompting Optimum to move for the rendition of judgment.14
They also assailed the jurisdiction of the MeTC, claiming that the case did
not merely involve the issue of physical possession but rather, questions
arising from their rights under a contract to sell which is a matter that is
incapable of pecuniary estimation and, therefore, within the jurisdiction of
the RTC.18
In a Decision19 dated December 27, 2007, the RTC affirmed the MeTC’s
judgment, holding that the latter did not err in refusing to admit Sps.
Jovellanos’ s belatedly filed answer considering the mandatory period for
its filing. It also affirmed the MeTC’s finding that the action does not
involve the rights of the respective parties under the contract but merely
the recovery of possession by Optimum of the subject property after the
spouses’ default.20
(b) the jurisdiction of the MeTC over the complaint for unlawful
detainer.22
The CA Ruling
In an Amended Decision23 dated May 29, 2009, the CA reversed and set
aside the RTC’s decision, ruling to dismiss the complaint for lack of
jurisdiction. It found that the controversy does not only involve the issue
of possession but also the validity of the cancellation of the Contract to Sell
and the determination of the rights of the parties thereunder as well as the
governing law, among others, Republic Act No. (RA) 6552.24
(d) within one year from the last demand on defendant to vacate the
property, plaintiff instituted the complaint for ejectment.28
In its complaint, Optimum alleged that it was by virtue of the April 26,
2005 Contract to Sell that Sps. Jovellanos were allowed to take possession
of the subject property. However, since the latter failed to pay the
stipulated monthly installments, notwithstanding several written and
verbal notices made upon them, it cancelled the said contract as per the
Notice of Delinquency and Cancellation dated April 10, 2006. When Sps.
Jovellanos refused to vacate the subject property despite repeated
demands, Optimum instituted the present action for unlawful detainer on
November 3, 2006, or within one year from the final demand made on
May 25, 2006.
While the RTC upheld the MeTC’s ruling in favor of Optimum, the CA, on
the other hand, declared that the MeTC had no jurisdiction over the
complaint for unlawful detainer, reasoning that the case involves a matter
which is incapable of pecuniary estimation – i.e., the validity of the
cancellation of the Contract to Sell and the determination of the rights of
the parties under the contract and law – and hence, within the jurisdiction
of the RTC. The Court disagrees. Metropolitan Trial Courts are
conditionally vested with authority to resolve the question of ownership
raised as an incident in an ejectment case where the determination is
essential to a complete adjudication of the issue of possession.30
Concomitant to the ejectment court’s authority to look into the claim of
ownership for purposes of resolving the issue of possession is its authority
to interpret the contract or agreement upon which the claim is premised.
Thus, in the case of Oronce v. CA,31 wherein the litigants’ opposing claims
for possession was hinged on whether their written agreement reflected
the intention to enter into a sale or merely an equitable mortgage, the
Court affirmed the propriety of the ejectment court’s examination of the
terms of the agreement in question by holding that, "because metropolitan
trial courts are authorized to look into the ownership of the property in
controversy in ejectment cases, it behooved MTC Branch 41 to examine the
bases for petitioners’ claim of ownership that entailed interpretation of the
Deed of Sale with Assumption of Mortgage."32 Also, in Union Bank of the
Philippines v. Maunlad Homes, Inc.33 (Union Bank), citing Sps. Refugia v.
CA,34 the Court declared that MeTCs have authority to interpret contracts
in unlawful detainer cases, viz.:35
The MeTC’s ruling on the rights of the parties based on its interpretation
of their contract is, of course, not conclusive, but is merely provisional and
is binding only with respect to the issue of possession. (Emphases
supplied; citations omitted)
In the case at bar, the unlawful detainer suit filed by Optimum against Sps.
Jovellanos for illegally withholding possession of the subject property is
similarly premised upon the cancellation or termination of the Contract to
Sell between them. Indeed, it was well within the jurisdiction of the MeTC
to consider the terms of the parties’ agreement in order to ultimately
determine the factual bases of Optimum’s possessory claims over the
subject property. Proceeding accordingly, the MeTC held that Sps.
Jovellanos’s non-payment of the installments due had rendered the
Contract to Sell without force and effect, thus depriving the latter of their
right to possess the property subject of said contract.36 The foregoing
disposition aptly squares with existing jurisprudence. As the Court
similarly held in the Union Bank case, the seller’s cancellation of the
contract to sell necessarily extinguished the buyer’s right of possession
over the property that was the subject of the terminated agreement.37
Verily, in a contract to sell, the prospective seller binds himself to sell the
property subject of the agreement exclusively to the prospective buyer
upon fulfillment of the condition agreed upon which is the full payment of
the purchase price but reserving to himself the ownership of the subject
property despite delivery thereof to the prospective buyer.38
Given the nature of the contract of the parties, the respondent court
correctly applied Republic Act No. 6552. Known as the Maceda Law, R.A.
No. 6552 recognizes in conditional sales of all kinds of real estate
(industrial, commercial, residential) the right of the seller to cancel the
contract upon non-payment of an installment by the buyer, which is
simply an event that prevents the obligation of the vendor to convey title
from acquiring binding force. It also provides the right of the buyer on
installments in case he defaults in the payment of succeeding installments,
viz.:
Provided, That this right shall be exercised by the buyer only once in
every five years of the life of the contract and its extensions, if any. (b)
If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per
cent of the total payments made and, after five years of installments, an
additional five per cent every year but not to exceed ninety per cent of
the total payments made:
Provided, That the actual cancellation of the contract shall take place
after cancellation or the demand for rescission of the contract by a
notarial act and upon full payment of the cash surrender value to the
buyer.
(2) Where he has paid less than two years in installments, Sec. 4. x x x
the seller shall give the buyer a grace period of not less than sixty days
from the date the installment became due. If the buyer fails to pay the
installments due at the expiration of the grace period, the seller may
cancel the contract after thirty days from receipt by the buyer of the
notice of cancellation or the demand for rescission of the contract by a
notarial act. (Emphasis and underscoring supplied)
It was only after the expiration of the thirty day (30) period did Optimum
treat the contract to sell as effectively cancelled – making as it did a final
demand upon Sps. Jovellanos to vacate the subject property only on May
25, 2006. Thus, based on the foregoing, the Court finds that there was a
valid and effective cancellation of the Contract to Sell in accordance with
Section 4 of RA 6552 and since Sps. Jovellanos had already lost their right
to retain possession of the subject property as a consequence of such
cancellation, their refusal to vacate and turn over possession to Optimum
makes out a valid case for unlawful detainer as properly adjudged by the
MeTC.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of
the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson’s Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
Footnotes
6 Id. at 45-50.
9 Id. at 55.
10 Id. at 58.
11 Id. at 56.
13 Id. at 62.
14 Id. at 63-65.
15 Id. at 73-74.
16 Id. at 74.
17 Id. at 80-81.
18 Id. at 85-86.
19 Id. at 107-111.
20 Id. at 111.
21 Id. at 140-141.
22 Id. at 142-157. See Memorandum for the Petitioners dated
December 21, 2008.
23 Id. at 171-177.
25 Id. at 176.
26 Id. at 205-206.
28 Id. at 155-156.
32 Id. at 636.
33 G.R. No. 190071, August 15, 2012, 678 SCRA 539.
36 See Pagtalunan v. Dela Cruz Vda. de Manzano, 559 Phil. 658, 668
(2007).
41 Id. at 467-468.