GR 178584; (October, 2012) (Digest)
G.R. No. 178584 ; October 8, 2012
ASSOCIATED MARINE OFFICERS AND SEAMEN’S UNION OF THE PHILIPPINES PTGWO-ITF, Petitioner, vs. NORIEL DECENA, Respondent.
FACTS
Petitioner AMOSUP, a labor union, entered into a Shelter Contract Award with its member, respondent Noriel Decena, under its Shelter Program. The contract allowed Decena to possess a house and lot in Cavite, obligating him to reimburse the cost in 180 monthly installments. A stipulation provided that failure to remit three monthly payments, even after a three-month grace period, would result in automatic revocation. Decena subsequently failed to pay twenty-five monthly installments. AMOSUP cancelled the contract, treated prior payments as rent, sent a notice of final demand and a notice to vacate, and eventually filed an unlawful detainer case before the Municipal Trial Court (MTC).
The MTC ruled in favor of AMOSUP, ordering Decena to vacate and pay rentals. The Regional Trial Court (RTC) affirmed, characterizing the contract as akin to a lease. On appeal, the Court of Appeals (CA) reversed the RTC. The CA held the agreement was a contract to sell, not a lease. Consequently, the issues transcended mere possession and involved the validity of the contract’s cancellation, placing the case beyond the MTC’s jurisdiction over ejectment. The CA further ruled the ejectment was premature as AMOSUP failed to comply with the mandatory cancellation requirements under the Maceda Law ( R.A. No. 6552 ).
ISSUE
Whether the Court of Appeals erred in dismissing the unlawful detainer complaint on the grounds that the contract was a contract to sell and that the action was premature for non-compliance with the Maceda Law.
RULING
The Supreme Court reversed the CA and reinstated the MTC decision. The Court clarified that the nature of a contract is determined by its stipulations and the law, not by its title. Examining the Shelter Contract Award, the Court found it was not a contract to sell. A contract to sell reserves ownership in the seller until full payment. The subject contract contained no such reservation of title; instead, it merely granted a “right to possess” and provided for automatic revocation upon default, with all payments considered as rent. These terms are characteristic of a lease, not a conditional sale. Since the contract was a lease, the Maceda Law, which governs installment sales of real estate, was inapplicable. Its notice and refund requirements did not govern the cancellation.
Therefore, the relationship was one of lessor and lessee. Upon default and proper notice, Decena’s right to possess terminated, and his continued occupancy became unlawful. The MTC correctly exercised jurisdiction over the unlawful detainer suit, which solely concerns the issue of physical possession derived from a terminated lease. The action was not premature, as the lease cancellation was valid under the contract’s own terms without need for the Maceda Law’s formalities.