G.R. No.

195619, September 5, 2012

Planters Development Bank, vs Julie Chandumal

FACTS:

BF Homes and Julie Chandumal entered into a contract to sell a parcel of land
located in Las Pinas. Later, BF Homes sold to PDB all its rights over the contract.

Chandumal paid her monthly amortizations until she defaulted in her payments.
So, PDB sent a notice to Chandumal with a demand to vacate the land within
30days, otherwise all of her rights will be extinguished and the contract will be
terminated and deemed rescinded. In spite of the demand, Chandumal failed to
settle her account.

PDB filed an action for judicial confirmation of notarial rescission and delivery of
possession but still Chandumal refused to do so. Summons were then issued
and served by deputy sheriff Galing but its was unavailing as she was always out
of her house on the dates the summons were served.

RTC then issued an order granting the motion of PDB. Chandumal filed an
urgent motion to set aside order of default and to admit attached answer.
Chandumal said that she did not receive the summons and was not notified of
the same and her failure to file an answer within the reglementary period was
due to fraud. RTC denied Chandumal's motion to set aside the order of default.

Chandumal appealed to the CA. CA nullified the RTC's decision.

ISSUE: (1) Whether there was valid substituted service of summons? (2)
Whether Chandumal voluntarily submitted to the jurisdiction of the RTC? (3)
Whether there was proper rescission by notarial act of the contract to sell?

HELD:

(1) Correctly ruled that the sheriffs return failed to justify a resort to substituted
service of summons. According to the CA, the Return of Summons does not
specifically show or indicate in detail the actual exertion of efforts or any positive
step taken by the officer or process server in attempting to serve the summons
personally to the defendant.

(2) The Court notes that aside from the allegation that she did not receive any
summons, Chandumals motion to set aside order of default and to admit
attached answer failed to positively assert the trial court lack of jurisdiction. In
fact, what was set forth therein was the substantial claim that PDB failed to
comply with the requirements of R.A. No. 6552 on payment of cash surrender
value, which already delves into the merits of PDBs cause of action. In addition,
Chandumal even appealed the RTC decision to the CA, an act which
demonstrates her recognition of the trial courts jurisdiction to render said
judgment.

(3) R.A. No. 6552 recognizes the right of the seller to cancel the contract but any
such cancellation must be done in conformity with the requirements therein
prescribed. In addition to the notarial act of rescission, the seller is required to
refund to the buyer the cash surrender value of the payments on the property.
The actual cancellation of the contract can only be deemed to take place upon
the expiry of a thirty (30)-day period following the receipt by the buyer of the
notice of cancellation or demand for rescission by a notarial act and the full
payment of the cash surrender value.

Petition is denied.
G.R. No. 189145 December 4, 2013
OPTIMUM DEVELOPMENT BANK
vs.
SPOUSES BENIGNO V. JOVELLANOS and LOURDES R. JOVELLANOS

FACTS: On April 26, 2005, Sps. Jovellanos entered into a Contract to Sell 6 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 P1,015,000.00. Pursuant to the
contract, Sps. Jovellanos took possession of the subject property upon a down
payment of P91,500.00, undertaking to pay the remaining balance of the contract
price in equal monthly installments of P13,107.00 for a period of 10 years starting
June 12, 2005.
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.
On April 10, 2006, Optimum issued a Notice of Delinquency and Cancellation of
Contract to Sell for Sps. Jovellanoss failure to pay their monthly installments
despite several written and verbal notices.
In a final Demand Letter dated May 25, 2006, 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 detainer before the MeTC, docketed as Civil Case
No. 06-28830. Despite having been served with summons, together with a copy
of the complaint, Sps. Jovellanos failed to file their answer within the prescribed
reglementary period, thus prompting Optimum to move for the rendition of
judgment.
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.

ISSUE: w/n there was a valid and effective cancellation of the Contract to Sell in
accordance with Section 4 of RA 6552

RULING: YES. 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.The full payment of the
purchase price in a contract to sell is a suspensive condition, the non-fulfillment
of which prevents the prospective sellers obligation to convey title from
becoming effective, as in this case.
Further, it is significant to note that given that the Contract to Sell in this case is
one which has for its object real property to be sold on an installment basis, the
said contract is especially governed by and thus, must be examined under the
provisions of RA 6552, or the Realty Installment Buyer Protection Act, which
provides for the rights of the buyer in case of his default in the payment of
succeeding instalments.

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.:
(1) Where he has paid at least two years of installments,
(a) To pay, without additional interest, the unpaid installments due within the total
grace period earned by him, which is hereby fixed at the rate of one month grace
period for every one year of installment payments made:
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.
Down payments, deposits or options on the contract shall be included in the
computation of the total number of installments made.
(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)
Pertinently, since Sps. Jovellanos failed to pay their stipulated monthly
installments as found by the MeTC, the Court examines Optimums 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 buyers
receipt of the said notice of cancellation/demand for rescission by notarial act. In
the present case, the 60-day grace period automatically operated 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, 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.
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.
OPTIMA REALTY CORPORATION vs. HERTZ PHIL.EXCLUSIVE CARS, INC.
G.R. No. 183035 January 9, 2013
SERENO, CJ.:

FACTS:

On 12 December 2002, Optima entered into a Contract of Lease with Hertz Phil
over a 131-square-meter office unit and a parking slot in the Optima Building for
a period of three years commencing on 1 March 2003 and ending on 28
February 2006. On 9 March 2004, the parties amended their lease agreement by
shortening the lease period to two years and five months, commencing on 1
October 2003 and ending on 28 February 2006.
Renovations in the Optima Building commenced in January and ended in
November 2005. As a result, Hertz alleged that it experienced a 50% drop in
monthly sales and a significant decrease in its personnels productivity. It then
requested a 50% discount on its rent for the months of May, June, July and
August 2005. Optima granted the request of Hertz. However, the latter still failed
to pay its rental for seven months and utility bills for four months.
On 8 December 2005, Optima wrote another letter to Hertz, reminding the latter
that the Contract of Lease could be renewed only by a new negotiation between
the parties and upon written notice by the lessee to the lessor at least 90 days
prior to the termination of the lease period. As no letter was received from Hertz
regarding its intention to seek negotiation and extension of the lease contract
within the 90-day period, Optima informed it that the lease would expire on 28
February 2006 and would not be renewed.
On 21 December 2005, Hertz wrote a letter belatedly advising Optima of the
formers desire to negotiate and extend the lease. However, as the Contract of
Lease provided that the notice to negotiate its renewal must be given by the
lessee at least 90 days prior to the expiration of the contract, petitioner no longer
entertained respondents notice.
On 1 March 2006, Optima, through counsel, wrote Hertz a letter requiring the
latter to surrender and vacate the leased premises in view of the expiration of the
Contract of Lease on 28 February 2006. It likewise demanded payment of the
sum of 420,967.28 in rental arrearages, unpaid utility bills and other charges.
Hertz, however, refused to vacate the leased premises. As a result, Optima were
constrained to file before the MeTC a Complaint for Unlawful Detainer and
Damages with Prayer for the Issuance of a TRO and/or Preliminary Mandatory
Injunction (Unlawful Detainer Complaint) against Hertz.
The MeTC ruled that petitioner Optima had established its right to evict Hertz
from the subject premises due to nonpayment of rentals and the expiration of the
period of lease. Hertz appealed the MeTCs Decision to the RTC, and finding no
compelling reason to warrant the reversal of the MeTCs Decision, the RTC
affirmed it by dismissing the appeal. On appeal to the CA, it ruled that, due to the
improper service of summons, the MeTC failed to acquire jurisdiction over the
person of respondent Hertz.
Aggrieved by the ruling of the appellate court, petitioner then filed the instant
petition.
ISSUE:
Whether or not the expiry of the period agreed upon by the parties is a ground for
judicial ejectment
HELD:
The pertinent provision of the Contract of Lease reads:
x x x. The lease can be renewed only by a new negotiation between the parties
upon written notice by the LESSEE to be given to the LESSOR at least 90 days
prior to termination of the above lease period.
As the lease was set to expire on 28 February 2006, Hertz had until 30
November 2005 within which to express its interest in negotiating an extension of
the lease with Optima. However, Hertz failed to communicate its intention to
negotiate for an extension of the lease within the time agreed upon by the
parties. Thus, by its own provisions, the Contract of Lease expired on 28
February 2006.
Under the Civil Code, the expiry of the period agreed upon by the parties is
likewise a ground for judicial ejectment.
 Arnel Sagana vs. Richard Francisco
G.R. No.161952 (October 2, 2009)

Petitioner: Arnel Sagana

Respondent: Richard Francisco

Facts:
Petioner filed a Complaint, before Regional Trial Court of Quezon City, to
recover damages alleging that on November 20, 1992, respondent with intent to
kill him and without justifiable reason, shot him with a gun hitting him on the
right thigh.

On January 31, 1995, Process Server Manuel Panlasigue attempted to

personally serve summons at respondents address at No. 36 Sampaguita Street,
Baesa Q.C., but was unsuccessful. In his Servers Return, he stated that the
occupant in that house refused to give his identity and that respondent is
unknown at said residence. The Trial Court also attempted to serve summons to
the respondents office through registered mail, however, respondent failed to
pick up summons.

The case was dismissed by the Trial Court on account of petitioners lack
of interest to prosecute that he did not take action since the filing of the Servers
Return. Petitioner filed a Motion for Reconsideration, contended that he exerted
efforts to locate the respondent, it was confirmed that respondent indeed lived at
No. 36 Sampaguita Street, Bausa, Q.C. Trial Court granted the Motion with a
condition upon the service of summon on the respondent within 10 days from
the receipt of the Order.

On August 25, 1995, Process Server Jarvis Iconar tried to serve summons
at respondents address but no avail. In his handwritten annotation, he stated
that respondents brother, Michael Francisco, told him that respondent no longer
lived at the said address, however, Iconar left a copy of the summons to Michael
Francisco.

Petitioner filed a Motion to Declare Respondent in Default for failure off

respondent to file Answer despite the service of summons. Trial Court declared
that the summons was validly served to respondent, declared that respondent in
default and allowed petitioner to present his evidence ex parte.

Michael Francisco, through his lawyer filed a Manifestation and Motion, he

denied that he received the summons and he was authorized to receive on
behalf of his brother. He prayed his name to be stricken off the records as
having received the copy of summons. In his Affidavit of Merit, he asserted that
he was 19 y/o, and respondent had left the house since 1993 and respondent
would only write or call them without informing his whereabouts. On the other
hand, petitioner attached in his Rejoinder, the Affidavit prepared by respondent
dated December 23, 1992, where declared he was a resident of No. 36
Sampaguita St. Bausa Q.C. and the lawyer who notarized the affidavit was the
same lawyer who represented his brother.
 Trial Court denied the Manifestation and Motion for lack of merit, it
rendered a judgment infavor of the petitioner, ordered respondent to pay the
damages.

Respondent received the copy of the Trial Courts Decision, he then filed a
Notice of Appeal to Court of Appeals. The appellate court directed the parties to
file respective briefs, a copy of which was sent by respondent at No. 36
Sampaguita St. Bausa Q.C. Respondent prayed that the trial court erred in
assuming jurisdiction over the person, despite the irregularity of the substituted
service of summons by the court Process Server and in awarding of damages to
petitioner. Court of Appeals rendered decision granting the Appeal of respondent
and setting aside the decision of the trial court for the irregularity of the service
of summons.

Petitioner filed Petition for Review on Certiorari to Supreme Court.

Issue:

Whether the substituted service of summons was validly made upon

respondent through his brother.

Held:

The Petition for Review on Certiorari was granted, Court of Appeals

decision was reversed and set aside, and the Trial Court decision was reinstated
and affirmed.

Although, in general, the statutory requirement of substituted service

must be followed strictly, faithfully and fully and that any substituted service
other than that authorized by Rules is considered ineffective. The Supreme Court
ruled that strict application of the Rules is not warranted to this case as it would
clearly frustrate the spirit of laws as well as do injustice to the parties waiting
almost 15 years for resolution of this case.

The respondents actively attempt to frustrate the proper service of

summons by refusing to give their identity, rebuffing requests to sign for or
receive documents or eluding the officers of court. Respondent tried to avoid the
service of summons, prompting the court to declare that sheriff must be
resourceful, but sheriffs cannot be faulted of the respondent themselves engage
in deception to thwart the orderly administration of justice.
Ernesto Orbe vs Judge Manolito Gumarang

PERALTA, J.:

Before us is an administrative complaint[1] filed by complainant Ernesto Z. Orbe

(Orbe) against Judge Manolito Y. Gumarang (respondent), Pairing Judge, Municipal
Trial Court (MTC), Imus, Cavite for Violation of the Rule of Procedure for Small Claims
Cases and the Code of Judicial Conduct.

The antecedent facts are as follows:

Orbe is the plaintiff of a small claims case docketed as Civil Case No. ICSCC 09-65
entitled E.Z. Orbe Tax Accounting Services, thru, Ernesto Z. Orbe v. L.G.M. Silver Star
Credit Corporation, represented by Librado Montano, filed before the MTC of Imus,
Cavite, presided by Judge Emily A. Geluz.
 During the hearing of the case on February 9, 2010, the parties failed to reach an
amicable settlement. On the same day, the case was assigned to respondent Judge
Manolito Y. Gumarang, Assisting Judge of the MTC of Imus, Cavite, for the continuation
of the trial.

Complainant alleged that the case was scheduled for hearing on March 4, 2010,
but was postponed by respondent to March 11, 2010 because of power interruption. On
March 11, 2010, again the hearing was reset by respondent Judge Gumarang to March
25, 2010 as he was due for medical check-up. On March 25, 2010, respondent conducted
another Judicial Dispute Resolution (JDR), and again reset the hearing to April 15, 2010
when the parties failed to reach an amicable agreement.

Complainant argued that Judge Gumarang violated the Rule of Procedure for Small
Claims Cases for failure to decide the civil case within five (5) days from receipt of the
order of reassignment.

On August 2, 2010, the Office of the Court Administrator (OCA) directed Judge
Gumarang to submit his comment on the complaint against him.[2]

In his Comment[3] dated September 13, 2010, Judge Gumarang explained that as
Assisting Judge in the MTC of Bacoor, Cavite, he tried small claims cases only on
Thursdays. He admitted that he failed to decide the case within five (5) working days
from receipt of the order, as mandated by the Rule. However, he pointed out that the
Rule needed clarification since, as in his case, the five (5) working days should be
construed to refer to five (5) calendared trial dates falling on Thursdays only, considering
that he allotted only one day, that is Thursday, to hear and try small claims cases.

On May 10, 2011, the OCA, in its Memorandum,[4] recommended that the instant
matter be redocketed as a regular administrative complaint. It likewise found Judge
Gumarang guilty of Gross Ignorance of the Law, but recommended that he be fined in
the amount of Five Thousand Pesos (P5,000.00) only for violating the Rule of Procedure
for Small Claims Cases.

We agree with the findings and recommendation of the OCA.

Indeed, Section 22 of the Rule of Procedure for Small Claims Cases clearly
provided for the period within which judgment should be rendered, to wit:

Section 22. Failure of Settlement If efforts at settlement fail, the hearing shall proceed
in an informal and expeditious manner and be terminated within one (1) day. Either
party may move in writing to have another judge hear and decide the case. The
reassignment of the case shall be done in accordance with existing issuances.

The referral by the original judge to the Executive Judge shall be made within the
same day the motion is filed and granted, and by the Executive Judge to the designated
judge within the same day of the referral. The new judge shall hear and decide the case
within five (5) days from the receipt of the order of reassignment.[5]

In this case, it is undisputed that it took more than two (2) months for respondent
to render a decision on the subject case as he himself admitted the series of
postponements which occurred during the pendency of the case. His lone argument was
that he hears small claims cases on Thursdays only, hence, he claimed that, in his case,
the period of five (5) working days being referred to by Section 22 of the Rule should
pertain only to Thursdays.

We are unconvinced.

Judge Gumarang must have missed the very purpose and essence of the creation of
the Rule of Procedure for Small Claims Cases, as his interpretation of the Rule is rather
misplaced. It is, therefore, imperative to emphasize what the Court sought to accomplish
in creating the Rule of Procedure for Small Claims Cases, to wit:
 x x x Thus, pursuant to its rule-making power, the Court, under the present
Constitution, can adopt a special rule of procedure to govern small claims cases and
select pilot courts that would empower the people to bring suits before them pro se to
resolve legal disputes involving simple issues of law and procedure without the need for
legal representation and extensive judicial intervention. This system will enhance access
to justice, especially by those who cannot afford the high costs of litigation even in cases
of relatively small value. It is envisioned that by facilitating the traffic of cases through
simple and expeditious rules and means, our Court can improve the perception of justice
in this country, thus, giving citizens a renewed stake in preserving peace in the land. x
x x[6

The theory behind the small claims system is that ordinary litigation fails to bring
practical justice to the parties when the disputed claim is small, because the time and
expense required by the ordinary litigation process is so disproportionate to the amount
involved that it discourages a just resolution of the dispute. The small claims process is
designed to function quickly and informally. There are no lawyers, no formal pleadings
and no strict legal rules of evidence.[7]

Thus, the intent of the law in providing the period to hear and decide cases falling
under the Rule of Procedure for Small Claims Cases, which is within five (5) days from
the receipt of the order of assignment, is very clear. The exigency of prompt rendition of
judgment in small claims cases is a matter of public policy. There is no room for further
interpretation; it does not require respondent's exercise of discretion. He is duty-bound
to adhere to the rules and decide small claims cases without undue delay.

The need for prompt resolution of small claims cases is further emphasized by
Section 19 of the Rule, which provides that:

SEC. 19. Postponement When Allowed. A request for postponement of a hearing may
be granted only upon proof of the physical inability of the party to appear before the
court on the scheduled date and time. A party may avail of only one (1) postponement.

In the instant case, it is noteworthy to mention that the postponements were not
attributed to any of the parties to the case. The numerous postponements, which in
some instances were upon respondent's initiative, were uncalled for and unjustified,
considering that it was already established that all efforts for amicable settlement were
futile. Thus, the postponements were clear violation of the Rule and defeat the very
essence of the Rule.

Time and again, we have ruled that when the rules of procedure are clear and
unambiguous, leaving no room for interpretation, all that is needed to do is to simply
apply it. Failure to apply elementary rules of procedure constitutes gross ignorance of
the law and procedure. In the instant case, neither good faith nor lack of malice will
exonerate respondent, as the rules violated were basic procedural rules.

We cannot countenance undue delay in the disposition of cases or motions,

especially now when there is an all-out effort to minimize if not totally eradicate the
problem of congestion long plaguing our courts. The requirement that cases be decided
within the reglementary period is designed to prevent delay in the administration of
justice. For obviously, justice delayed is justice denied. Delay in the disposition of cases
erodes the faith and confidence of our people in the judiciary, lowers its standards, and
brings it into disrepute.[8]

Section 9 (1), Rule 140 of the Revised Rules of Court, as amended, provides that
undue delay in rendering a decision or order is classified as a less serious charge, which
is punishable by suspension from office, without salary and other benefits for not less
than one (1) or more than three (3) months; or a fine of more than P10,000.00 but not
exceeding P20,000.00. Considering that the Rule on small claims is a new rule, and that
this is respondent judges first violation of the rule, we deem it proper to impose a fine in
the amount of P5,000.00.
 WHEREFORE, the Court finds Judge Manolito Y. Gumarang, Municipal Trial
Court, Imus, Cavite, GUILTY of Undue Delay in Rendering a Decision and Violation of
the Rule of Procedure for Small Claims Cases, and is hereby ORDERED to pay a fine of
Five Thousand Pesos (P5,000.00) and WARNED that a repetition of the same or similar
act shall be dealt with more severely.

SO ORDERED.