Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82654:56491&catid=1577&Itemid=566
Timestamp: 2019-04-20 08:51:17+00:00

Document:
G.R. No. 189145, December 04, 2013 - OPTIMUM DEVELOPMENT BANK, Petitioner, v. SPOUSES BENIGNO V. JOVELLANOS AND LOURDES R. JOVELLANOS, Respondents.
OPTIMUM DEVELOPMENT BANK, Petitioner, v. SPOUSES BENIGNO V. JOVELLANOS AND LOURDES R. JOVELLANOS, Respondents.
Assailed in this petition for review on certiorari1 are the Decision2 dated May 29, 2009 and Resolution3 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.
On April 10, 2006, Optimum issued a Notice of Delinquency and Cancellation of Contract to Sell9 for Sps. Jovellanos’s failure to pay their monthly installments despite several written and verbal notices.10 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 Thereafter, Sps. Jovellanos filed their opposition with motion to admit answer, questioning the jurisdiction of the court, among others. Further, they filed a Motion to Reopen and Set the Case for Preliminary Conference, which the MeTC denied.
Undaunted, Optimum moved for reconsideration which was denied in a Resolution26 dated August 10, 2009. Hence, the instant petition, submitting that the case is one for unlawful detainer, which falls within the exclusive original jurisdiction of the municipal trial courts, and not a case incapable of pecuniary estimation cognizable solely by the regional trial courts.
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.
where the resolution of the issue of possession hinges on a determination of the validity and interpretation of the document of title or any other contract on which the claim of possession is premised, the inferior court may likewise pass upon these issues.
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 The full payment of the purchase price in a contract to sell is a suspensive condition, the non–fulfillment of which prevents the prospective seller’s obligation to convey title from becoming effective,39 as in this case.
(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.
Pertinently, since Sps. Jovellanos failed to pay their stipulated monthly installments as found by the MeTC, the Court examines Optimum’s compliance with Section 4 of RA 6552, as above–quoted and highlighted, which is the provision applicable to buyers who have paid less than two (2) years–worth of installments. Essentially, the said provision provides for three (3) requisites before the seller may actually cancel the subject contract: first, the seller shall give the buyer a 60–day grace period to be reckoned from the date the installment became due; second, the seller must give the buyer a notice of cancellation/demand for rescission by notarial act if the buyer fails to pay the installments due at the expiration of the said grace period; and third, the seller may actually cancel the contract only after thirty (30) days from the buyer’s receipt of the said notice of cancellation/demand for rescission by notarial act.
In the present case, the 60–day grace period automatically operated42 in favor of the buyers, Sps. Jovellanos, and took effect from the time that the maturity dates of the installment payments lapsed. With the said grace period having expired bereft of any installment payment on the part of Sps. Jovellanos,43 Optimum then issued a notarized Notice of Delinquency and Cancellation of Contract on April 10, 2006. Finally, in proceeding with the actual cancellation of the contract to sell, Optimum gave Sps. Jovellanos an additional thirty (30) days within which to settle their arrears and reinstate the contract, or sell or assign their rights to another.44 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.
2 Id. at 171–177. Penned by Associate Justice Juan Q. Enriquez, Jr., with Associate Justices Celia C. Librea–Leagogo and Antonio L. Villamor, concurring.
4 Id. at 107–111. Penned by Presiding Judge Eleanor R. Kwong.
5 Id. at 73–74. Penned by Judge Mariam G. Bien.
7 Id. at 45, 108, and 172.
8 Id. at 26 and 51–54.
12 Id. at 57–60. Dated October 11, 2006.
22 Id. at 142–157. See Memorandum for the Petitioners dated December 21, 2008.
27Fernando v. Spouses Lim, 585 Phil. 141, 155 (2008).
29Manila Electric Company v. Heirs of Spouses Dionisio Deloy and Praxedes Martonito, G.R. No. 192893, June 5, 2013.
31 358 Phil. 616 (1998).
33 G.R. No. 190071, August 15, 2012, 678 SCRA 539.
34 327 Phil. 982, 1006 (1996).
35Union Bank of the Philippines v. Maunlad Homes, Inc., supra note 33, at 547–548.
36 See Pagtalunan v. Dela Cruz Vda. de Manzano, 559 Phil. 658, 668 (2007).
37 See Union Bank of the Philippines v. Maunlad Homes, Inc., supra note 33, at 548–549.
38 See Coronel v. CA, 331 Phil. 294, 309 (1996).
39 See Montecalvo v. Heirs of Eugenia T. Primero, G.R. No. 165168, July 9, 2010, 624 SCRA 575, 587.
40 G.R. No. 125347, June 19, 1997, 274 SCRA 461.
A grace period is a right, not an obligation, of the debtor. When unconditionally conferred, such as in this case, the grace period is effective without further need of demand either calling for the payment of the obligation or for honoring the right. The grace period must not be likened to an obligation, the non–payment of which, under Article 1169 of the Civil Code, would generally still require judicial or extrajudicial demand before “default” can be said to arise.
Sec. 5. Under Sections 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

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