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be extinguished and the contract will be terminated and deemed rescinded.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 sheriff’s 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,
Chandumal’s 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 PDB’s cause of action. In addition, Chandumal even
appealed the RTC decision to the CA, an act which demonstrates her recognition of the trial court’s
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 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 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. Jovellanos’s 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 seller’s 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 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 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
personnel’s 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 former’s 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 respondent’s 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
MeTC’s Decision to the RTC, and finding no compelling reason to warrant the reversal of the MeTC’s
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 respondent’s 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
respondent’s office through registered mail, however, respondent failed to pick up summons.

The case was dismissed by the Trial Court on account of petitioner’s 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 respondent’s
address but no avail. In his handwritten annotation, he stated that respondent’s 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 Court’s 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 judge’s 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.