Noynay v. Citihomes
REITERATIONFacts
The Antecedents: Spouses Michelle and Noel Noynay (Spouses Noynay) entered into a contract to sell with Citihomes Builder and Development, Inc. (Citihomes) for a house and lot. Spouses Noynay made a downpayment and agreed to pay the balance in 120 monthly installments with interest. Subsequently, Citihomes executed a Deed of Assignment of Claims and Accounts in favor of United Coconut Planters Bank (UCPB), assigning various accounts, including that of Spouses Noynay, for a consideration. Spouses Noynay allegedly defaulted in their payments starting February 2007. Citihomes declared them delinquent and, on November 21, 2007, sent a notarized Notice of Delinquency and Cancellation of the Contract to Sell, giving them 30 days to pay arrears. After their continued failure to pay, Citihomes sent a final demand letter on June 15, 2009, to vacate the premises. Spouses Noynay failed to heed the demand, prompting Citihomes to file a complaint for unlawful detainer. Procedural History: The Municipal Trial Court for Cities (MTCC) dismissed the complaint, ruling that the Deed of Assignment divested Citihomes of its interest and right over the property, thus lacking a cause of action. The Regional Trial Court (RTC) reversed the MTCC, holding that the assignment only covered receivables and not the title, and that Citihomes, as the registered owner, retained the right to evict. The Court of Appeals (CA) affirmed the RTC, finding that Citihomes had the right and interest as the registered owner and that Spouses Noynay, having paid less than two years of installments, were not entitled to a cash surrender value, making the contract cancellation valid. The CA ordered Spouses Noynay to pay monthly rentals. The Petition: Spouses Noynay assailed the CA decision, arguing that the assignment divested Citihomes of its interest and that they had paid more than two years of installments, entitling them to the cash surrender value under the Maceda Law, thus making the cancellation invalid.
Issue(s)
Whether Citihomes has a cause of action for ejectment against Spouses Noynay. Whether the Deed of Assignment of Claims and Accounts divested Citihomes of its right to file an unlawful detainer case. Whether the cancellation of the contract to sell was valid under the Maceda Law.
Ruling
The petition is GRANTED. The July 16, 2012 Decision and October 15, 2012 Resolution of the Court of Appeals are REVERSED and SET ASIDE. The March 26, 2010 Decision of the Municipal Trial Court for Cities is REINSTATED.
Ratio Decidendi
On whether Citihomes has a cause of action for ejectment against Spouses Noynay and whether the Deed of Assignment divested Citihomes of its right to file an unlawful detainer case: The Court ruled that Citihomes did not have a cause of action for unlawful detainer. The Deed of Assignment, by its tenor, clearly indicated the intent of Citihomes to assign all of its rights, titles, and interests in favor of UCPB, not merely the collectible amounts. This was fortified by the delivery of documents such as the contracts to sell and the Transfer Certificates of Title (TCTs) to UCPB. The assignment effectively relegated Citihomes to the status of a stranger to the jural relations established under the contract to sell, as the assignee (UCPB) is deemed subrogated to the rights and obligations of the assignor. Consequently, Citihomes ceased to have any right to cancel the contract to sell with Spouses Noynay, and without this right, it had no cause of action against them. While Citihomes remained the registered owner, this fact was immaterial in an unlawful detainer case, which concerns physical possession independent of ownership claims. On whether the Deed of Assignment of Claims and Accounts divested Citihomes of its right to file an unlawful detainer case (continued): (Continued from above) Citihomes ceased to have any right to cancel the contract to sell with Spouses Noynay, and without this right, it had no cause of action against them. While Citihomes remained the registered owner, this fact was immaterial in an unlawful detainer case, which concerns physical possession independent of ownership claims. On whether the cancellation of the contract to sell was valid under the Maceda Law: The Court found that even if the assignment did not divest Citihomes of its cause of action, the cancellation of the contract to sell was not validly effected due to Citihomes' failure to comply with the procedures prescribed by the Maceda Law (Republic Act No. 6552). The lower courts erred in concluding that Spouses Noynay had not completed the two-year minimum period of paid amortizations. The Contract to Sell itself, dated December 29, 2004, indicated that the downpayment was made upon signing, and the monthly installments were to commence on February 8, 2005. Crucially, Spouses Noynay judicially admitted during the preliminary conference that they had been paying the monthly amortization for more than three years and stopped payment only by January 8, 2008. This admission established that they had paid for at least two years of installments, entitling them to the payment of the cash surrender value. Section 3(b) of the Maceda Law requires notarial rescission and full payment of the cash surrender value for actual cancellation. Since no payment of the cash surrender value was made to Spouses Noynay, the cancellation was not valid, and their possession of the property remained legal.
Main Doctrine
The assignment of all rights, titles, and interests in a contract to sell, including the right to cancel the contract and the obligation to refund the cash surrender value, divests the assignor of the cause of action for unlawful detainer. Furthermore, even if the assignment did not divest the assignor of the cause of action, failure to comply with the procedural requirements of the Maceda Law for the cancellation of the contract renders the termination invalid, entitling the buyer to continued possession.