Optimum Development Bank v. Jovellanos
REITERATIONFacts
The Antecedents: Sps. Jovellanos entered into a Contract to Sell with Palmera Homes, Inc. for a residential property. They took possession after a down payment and agreed to pay the balance in installments. Palmera Homes assigned its rights to Optimum Development Bank (Optimum). Sps. Jovellanos failed to pay their monthly installments despite notices. Optimum issued a Notice of Delinquency and Cancellation of Contract and later a final demand to vacate. Procedural History: Optimum filed an unlawful detainer complaint before the Metropolitan Trial Court (MeTC). Sps. Jovellanos failed to file an answer within the reglementary period, leading Optimum to move for judgment. Sps. Jovellanos opposed, questioning the court's jurisdiction and seeking to admit their answer. The MeTC denied their motions and ruled in favor of Optimum, ordering them to vacate. The Regional Trial Court (RTC) affirmed the MeTC's decision. The Court of Appeals (CA) reversed the RTC, dismissing the complaint for lack of jurisdiction, finding that the case involved issues incapable of pecuniary estimation, such as the validity of the contract cancellation under Republic Act No. 6552 (Maceda Law). The Petition: Optimum filed a petition for review on certiorari, arguing that the case is an unlawful detainer suit falling within the MeTC's jurisdiction, not a case incapable of pecuniary estimation cognizable by the RTC.
Issue(s)
Whether the Metropolitan Trial Court (MeTC) has jurisdiction over this unlawful detainer case, considering the need to interpret the Contract to Sell and assess the validity of its cancellation. Whether Optimum Development Bank validly and effectively cancelled the Contract to Sell in accordance with the requirements of Republic Act No. 6552 (Maceda Law), thereby impacting the right to possess the property.
Ruling
The petition is granted. The Decision of the Court of Appeals is set aside, and the Decision of the Metropolitan Trial Court is reinstated.
Ratio Decidendi
On the jurisdiction of the MeTC: The Court held that the determinative factor for jurisdiction is the allegations in the complaint and the character of the relief sought, not the defenses raised in the answer. An unlawful detainer complaint sufficiently alleges a cause of action if it establishes that possession was initially lawful, became illegal upon notice of termination, the defendant remained in possession, and the complaint was filed within one year from the last demand. The sole issue in unlawful detainer is physical possession, independent of ownership claims. Metropolitan Trial Courts are vested with authority to resolve ownership questions as an incident in ejectment cases, which includes the authority to interpret contracts upon which possession claims are premised. Therefore, the MeTC had jurisdiction to interpret the Contract to Sell to determine the issue of possession. On the validity of the cancellation of the Contract to Sell: The Court found that Optimum validly cancelled the Contract to Sell in accordance with Section 4 of Republic Act No. 6552 (Maceda Law). Since Sps. Jovellanos had paid less than two years of installments, the applicable provision required a 60-day grace period from the due date of the installment, followed by a notice of cancellation or demand for rescission by notarial act if payment was still not made, and actual cancellation only after 30 days from the buyer's receipt of such notice. Optimum complied with these requisites by issuing a notarized Notice of Delinquency and Cancellation on April 10, 2006, and treating the contract as effectively cancelled only after the expiration of the subsequent 30-day period, culminating in the final demand to vacate on May 25, 2006. Consequently, Sps. Jovellanos lost their right to retain possession.
Main Doctrine
The Metropolitan Trial Courts (MeTCs) have jurisdiction over unlawful detainer cases, even if the resolution of the issue of possession requires the interpretation of a contract, as the determination of ownership in such cases is merely provisional and for the sole purpose of resolving the issue of possession.