G.R. No.

204160, September 22, 2014 to do so would authorize Citihomes to consider the

contract as cancelled.
SPOUSES MICHELLE M. NOYNAY AND NOEL S.
NOYNAY, Petitioners, v. CITIHOMES BUILDER On June 15, 2009, Citihomes sent its final demand letter
AND DEVELOPMENT, INC., Respondent. asking Spouses Noynay to vacate the premises due to
their continued failure to pay the arrears. Spouses
DECISION Noynay did not heed the demand, forcing Citihomes to
file the complaint for unlawful detainer before the
MENDOZA, J.: MTCC on July 29, 2009.

In this petition for review on certiorari1 under Rule 45 of In the said complaint, Citihomes alleged that as per
the Rules of Court, Spouses Noel and Michelle Noynay Statement of Account as of March 18, 2009, Spouses
(Spouses Noynay) assail the July 16, 2012 Decision2 of Noynay had a total arrears in the amount of
the Court of Appeals (CA) and October 15, 2012 P272,477.00, inclusive of penalties. Thus, Citihomes
Resolution,3 which affirmed with modification the prayed that Spouses Noynay be ordered to vacate the
September 17, 2010 Decision4 of the Regional Trial subject property and pay the amount of P8,715.97 a
Court, Branch 21, Malolos, Bulacan (RTC). Earlier, the month as a reasonable compensation for the use and
RTC reversed the March 26, 2010 Decision5 of the occupancy to commence from January 8, 2007 until
Municipal Trial Court for Cities, San Jose Del Monte, Spouses Noynay vacate the same.
Bulacan (MTCC), which dismissed the complaint6 for
unlawful detainer filed by Citihomes Builder and In its March 26, 2010 Decision,10 the MTCC dismissed
Development, Inc. (Citihomes) against Spouses Noynay the complaint. It considered the annotation in the
for lack of cause of action. certificate of title, which was dated prior to the filing of
the complaint, which showed that Citihomes had
The Facts: executed the Assignment favor of UCPB, as having the
legal effect of divesting Citihomes of its interest and
On December 29, 2004, Citihomes and Spouses Noynay right over the subject property. As far as the MTCC was
executed a contract to sell7 covering the sale of a house concerned, Citihomes did not have a cause of action
and lot located in San Jose Del Monte, Bulacan, and against Spouses Noynay.
covered by Transfer Certificate of Title (TCT) No. T-
43469. Under the terms of the contract, the price of the The RTC, however, reversed the ruling of the MTCC. In
property was fixed at P915,895.00, with a downpayment its September 17, 2010 Decision,11 the RTC stated that
of P183,179.00, and the remaining balance to be paid in the MTCC erred in interpreting the deed of assignment
120 equal monthly installments with an annual interest as having the effect of relinquishing all of Citihomes
rate of 21% commencing on February 8, 2005 and every rights over the subject property. The RTC explained that
8th day of the month thereafter. the assignment was limited only to the installment
accounts receivables due from Spouses Noynay and did
Subsequently, on May 12, 2005, Citihomes executed the not include the transfer of title or ownership over the
Deed of Assignment of Claims and Accounts8 property. It pointed out that Citihomes remained as the
(Assignment) in favor of United Coconut Planters Bank registered owner of the subject property, and so it had
(UCPB) on May 12, 2005. Under the said agreement, the right to ask for the eviction of Spouses Noynay. As
UCPB purchased from Citihomes various accounts, to the issue of who had the better right of possession, the
including the account of Spouses Noynay, for a RTC ordered that the records be remanded to the MTCC
consideration of P100,000,000.00. In turn, Citihomes for the proper determination.
assigned its rights, titles, interests, and participation in
various contracts to sell with its buyers to UCPB. Spouses Noynay then went to the CA. On July 16, 2012,
the CA affirmed the conclusion of the RTC that
In February of 2007, Spouses Noynay allegedly started Citihomes still had the right and interest over the
to default in their payments. Months later, Citihomes property in its capacity as the registered owner.
decided to declare Spouses Noynay delinquent and to Moreover, the issue on who, between the parties had a
cancel the contract considering that nine months of better possessory right over the property, was resolved in
agreed amortizations were left unpaid. On December 8, favor of Citihomes.
2007, the notarized Notice of Delinquency and
Cancellation of the Contract To Sell,9 dated November In disposing the issue of possession, the CA primarily
21, 2007, was received by Spouses Noynay. They were recognized the relevance of Republic Act (R.A.) No.
given 30 days within which to pay the arrears and failure 6552, otherwise known as the Realty Installment Buyer

1
Act (Maceda Law), in determining the limits of the right owner despite the assignment of rights it made to UCPB.
to possess of Spouses Noynay in their capacity as It believes that because Spouses Noynay failed to pay at
defaulting buyers in a realty installment scheme. Under least two (2) years of installments, the cancellation
the said law, the cancellation of a contract would only became effective upon the expiration of the 30-day
follow if the requirements set forth therein had been period following the receipt of the notice of delinquency
complied with, particularly the giving of a notice of and cancellation notice and without the need for the
delinquency and cancellation of the contract to the payment of the cash surrender value under Section 3(b)
defaulting party and, in some cases, the payment to the of the Maceda Law.
buyer of the cash surrender value if at least two years of
installments had been paid. The CA noted that Spouses Ruling of the Court
Noynay failed to complete the minimum two (2) years of
installment, despite the allegation that three (3) years of Cause of action has been defined as an act or omission
amortizations had already been paid. As an effect, the by which a party violates a right of another.12 It requires
CA pronounced that the termination of the contract was the existence of a legal right on the part of the plaintiff, a
validly effected by the expiration of the 30-day period correlative obligation of the defendant to respect such
from the time the notice of cancellation was received by right, and an act or omission of such defendant in
Spouses Noynay. From that moment, the CA treated violation of the plaintiffs rights.13 A complaint should
Spouses Noynay to have lost the right to possess the not be dismissed for insufficiency of cause of action if it
property. In addition, the CA made Spouses Noynay appears clearly from the complaint and its attachments
liable for the payment of monthly rentals from the time that the plaintiff is entitled to relief. 14 The complaint,
their possession became illegal. however, may be dismissed for lack of cause of action
later after questions of fact have been resolved on the
Spouses Noynay moved for reconsideration, but the CA basis of stipulations, admissions or evidence
denied their motion. presented.15cralawred

Hence, this petition. Relative thereto, a plaintiff in an unlawful detainer case

which seeks recovery of the property must prove ones
ISSUE legal right to evict the defendant, a correlative obligation
on the part of such defendant to respect the plaintiffs
The lone issue presented for resolution is whether right to evict, and the defendants act or omission in the
Citihomes has a cause of action for ejectment against form of refusal to vacate upon demand when his
Spouses Noynay. In effect, Spouses Noynay would have possession ultimately becomes illegal.
this Court determine whether Citihomes may rightfully
evict them. At first glance, the main thrust of the discussion in the
lower courts is the issue on whether Citihomes had such
Position of Spouses Noynay right to evict Spouses Noynay. At its core is the ruling of
the MTCC that the right to demand the eviction of
Spouses Noynay insist that by virtue of the assignment Spouses Noynay was already transferred to UCPB from
of rights which Citihomes executed in favor of UCPB, the moment the Assignment was executed by Citihomes,
Citihomes did not have a cause of action against them which was done prior to the institution of the unlawful
because it no longer had an interest over the subject detainer case. Thus, based on the evidence presented
property. Contrary to the findings of the CA, the during the trial, the MTCC held that Citihomes did not
monthly installments amounting to three years were have a cause of action against Spouses Noynay. The
already paid, by reason of which, Section 3(b) of the RTC held otherwise justifying that Citihomes may still
Maceda Law should apply. This means that for the be the right party to evict Spouses Noynay in its capacity
cancellation to be effective, the cash surrender value as the registered owner of the property. The CA affirmed
should have been paid first to them by Citihomes; and the RTC on this point.
that because no payment was made, it follows that no
valid cancellation could also be effected. This allegedly The Court, however, agrees with the MTCC.
strengthened their right to the possession of the property
even to this day. The determination of whether Citihomes has a right to
ask for the eviction of Spouses Noynay entirely depends
Position of Citihomes on the review of the Assignment of Claims and
Accounts it executed in favor of UCPB. If it turns out
Citihomes counters that it has the right to ask for the that what was assigned merely covered the collectible
eviction of the petitioners in its capacity as the registered amounts or receivables due from Spouses Noynay,

2
Citihomes would necessarily have the right to demand Clearly, the conclusion of the MTCC had factual and
the latters eviction as only an aspect of the contract to legal bases. Evident from the tenor of the agreement was
sell passed on to UCPB. Simply put, because an the intent on the part of Citihomes, as assignor, to assign
assignment covered only credit dues, the relation all of its rights and benefits in favor of UCPB.
between Citihomes as the seller and Spouses Noynay as Specifically, what Citihomes did was an assignment or
the buyer under their Contract to Sell remained. If on the transfer of all contractual rights arising from various
other hand, it appears that the assignment covered all of contracts to sell, including the subject contract to sell,
Citihomes rights, obligations and benefits in favor of with all the rights, obligations and benefits appurtenant
UCPB, the conclusion would certainly be different. thereto in favor of UCPB for a consideration of
P100,000,000.00. Indeed, the intent was more than just
Under the provisions of the Assignment, it was an assignment of credit. This intent to assign all rights
stipulated that:ChanRoblesVirtualawlibrary under the contract to sell was even fortified by the
delivery of documents such as the pertinent contracts to
NOW, THEREFORE, for and in consideration of the sell and the TCTs. Had it been the intent of Citihomes to
foregoing premises, the ASSIGNOR hereby agrees as assign merely its interest in the receivables due from
follows: Spouses Noynay, the tenor of the deed of assignment
The ASSIGNOR hereby assigns, transfers and sets over would have been couched in very specific terms.
unto the ASSIGNEE all its rights, titles and interest in
and to, excluding its obligations under the Contract/s to Included in those matters which were handed over to
Sell enumerated and described in the List of Assigned UCPB were the provisions outlined in Section 6 of the
Receivables which is hereto attached and marked as Contract to Sell. In the said provision, Citihomes, as the
Annex A hereof, including any and all sum of money seller has been given the right to cancel the contract to
due and payable to the ASSIGNOR, the properties sell in cases of continuing default by Spouses Noynay, to
pertaining thereto, all replacements, substitution, wit:ChanRoblesVirtualawlibrary
increases and accretion thereof and thereto which the
ASSIGNOR has executed with the Buyers, as defined in SECTION 6. If for any reason, whatsoever, the BUYER
the Agreement, and all moneys due, or which may grow fails to pay three (3) consecutive monthly installments,
upon the sales therein set forth. the provision of RA No. 6552 shall apply.

For purposes of this ASSIGNMENT, the ASSIGNOR Where the BUYER has paid less than two (2) years of
hereby delivers to the ASSIGNEE, which hereby installments and defaults in the payment of three (3)
acknowledges receipt of the following documents consecutive monthly installment, he shall be given a
evidencing the ASSIGNORs title, right, interest, grace period of not less than sixty (60) days from the
participation and benefit in the assigned Installment date the installment payments became due and payable
Account Receivables listed in Annex A and made as within which to pay the installments and/or make
integral part hereof. payments in arrears together with the installments
corresponding to the months of the grace period. In the
a) Original Contracts to Sell event the BUYER continues to default in the payment of
b) Transfer Certificates of Title the installments within or at the expiration of the grace
period herein provided, the SELLER shall have the right
The ASSIGNOR, hereby irrevocably appoints the to cancel this agreement thirty (30) days from the
ASSIGNEE to be its true and lawful agent or BUYERs receipt of the notice of cancellation or
representative for it and in its name and stead, but for demand for rescission by a notarial act. Thereafter, the
such ASSIGNEEs own benefit: (1) to sell, assign, SELLER may dispose of the residential house and lot
transfer, set over, pledge, compromise or discharge the subject of this agreement in favor of other persons as if
whole, or any part, of said assignment; (2) to do all acts this agreement had never been entered into.
and things necessary, or proper, for any such purpose;
(3) to ask, collect, receive and sue for the moneys due, or WHERE the BUYER has paid at least two (2) years of
which may grow due, upon the said Assignment; and (4) installments and he defaults in the payment of three (3)
to substitute one person, or more, with like powers; consecutive monthly installments, the SELLER shall be
hereby ratifying and confirming all that said agent or entitled:ChanRoblesVirtualawlibrary
representative, or his substitute, or substitutes, shall
lawfully do, by virtue hereof.16cralawred To pay, without additional interest, the unpaid
installment due within the total grace period earned by
[Emphases supplied] the BUYER which is fixed at the rate of one (1) month
grace period for every one (1) year of installment

3
payment made; Provided, that this right shall be the assignor becomes a complete stranger to all the
exercised by the BUYER only once for every five (5) matters that have been conferred to the assignee.
years of the life of this agreement.
In this case, the execution of the Assignment in favor of
If this agreement is cancelled, the SELLER shall refund UCPB relegated Citihomes to the status of a mere
to the BUYER the cash surrender value of the payments stranger to the jural relations established under the
equivalent to fifty percent thereof and, after five years of contract to sell. With UCPB as the assignee, it is clear
installments, an additional five percent (5%) for every that Citihomes has ceased to have any right to cancel the
year but not to exceed ninety (90%) of the total contract to sell with Spouses Noynay. Without this
payments made; Provided, that the actual cancellation of right, which has been vested in UCPB, Citihomes
this agreement shall take place after thirty (30) days undoubtedly had no cause of action against Spouses
from receipt by the BUYER of the notice of cancellation Noynay.
or demand for rescission by a notarial act and upon full
payment of the cash surrender value to the BUYER. This is not to say that Citihomes lost all interest over the
property. To be clear, what were assigned covered only
xxx xxx xxx the rights in the Contract to Sell and not the property
rights over the house and lot, which remained registered
The BUYER, at the termination of the contract, shall under Citihomes name. Considering, however, that the
promptly surrender the said property to the SELLER, unlawful detainer case involves mere physical or
and should the former fail to comply with the provision, material possession of the property and is independent of
on top of the remedy provided for above, the BUYER any claim of ownership by any of the parties,19 the
hereby expressly appoints the SELLER as their duly invocation of ownership by Citihomes is immaterial in
authorized attorney-in-fact with power and authority to the just determination of the case.
open, enter and take full possession of the property in
the presence of any peace officer and to take an Granting that the MTCC erred in ruling that Citihomes
inventory of the equipment, furniture, merchandise and had no cause of action by reason of the Assignment it
effect. In case the BUYER fails to claim the said made in favor of UCPB, the Court still upholds the right
equipment, furniture, merchandise and effects and/or of the Spouses Noynay to remain undisturbed in the
liquidate their liabilities with the SELLER within thirty possession of the subject property. The reason is simple
(30) days from the date of transfer of possession of the Citihomes failed to comply with the procedures for the
property to the latter, the SELLER is hereby given the proper cancellation of the contract to sell as prescribed
right to dispose of said property in a private or public by Maceda Law.
sale and to apply the proceeds to whatever expenses it
may have incurred in line with the warehousing of the In Pagtalunan v. Manzano,20 the Court stressed the
equipment, furniture, merchandise and effects.17 importance of complying with the provisions of the
Maceda Law as to the cancellation of contracts to sell
The exercise of such right to cancel necessarily involving realty installment schemes. There it was held
determines the existence of the right to evict Spouses that the cancellation of the contract by the seller must be
Noynay. The existence of the right to evict is the first in accordance with Section 3 (b) of the Maceda Law,
constitutive element of the cause of action in this which requires the notarial act of rescission and the
unlawful detainer case. Considering, however, that the refund to the buyer of the full payment of the cash
right to cancel was already assigned prior to the surrender value of the payments made on the property.
commencement of this controversy with the execution of The actual cancellation of the contract takes place after
the Assignment, its legal consequences cannot be thirty (30) days from receipt by the buyer of the notice
avoided. of cancellation or the demand for rescission of the
contract by a notarial act and upon full payment of the
Well-established is the rule that the assignee is deemed cash surrender value to the buyer, to
subrogated to the rights as well as to the obligations of wit:ChanRoblesVirtualawlibrary
the seller/assignor. By virtue of the deed of assignment,
the assignee is deemed subrogated to the rights and (b)
obligations of the assignor and is bound by exactly the If the contract is cancelled, the seller shall refund to the
same conditions as those which bound the assignor.18 buyer the cash surrender value of the payments on the
What can be inferred from here is the effect on the status property equivalent to fifty percent of the total payments
of the assignor relative to the relations established by a made and, after five years of installments, an additional
contract which has been subsequently assigned; that is, five percent every year but not to exceed ninety percent
of the total payments made: Provided, That the actual

4
cancellation of the contract shall take place after thirty To this end, the factual admissions made by the parties
days from receipt by the buyer of the notice of during the preliminary conference would shed light on
cancellation or the demand for rescission of the contract the matter. It must be remembered that these judicial
by a notarial act and upon full payment of the cash admissions are legally binding on the party making the
surrender value to the buyer. admissions. Similar to pre-trial admissions in a pre-trial
order in ordinary civil cases, the contents of the record of
[Emphases supplied] a preliminary conference control the subsequent course
of the action, thereby, defining and limiting the issues to
According to the lower courts, Spouses Noynay failed to be tried. A contrary ruling would render useless the
complete the two-year minimum period of paid proceedings during the preliminary conference and
amortizations, thus, the cancellation of the contract to would, in fact, be antithetical to the very purpose of a
sell no longer required the payment of the cash surrender preliminary conference, which is, among others, to allow
value. This conclusion rests on the allegation that the the parties to admit and stipulate on a given set of facts
amortization payments commenced only on May 31, and to simplify the issues involved.23cralawred
2005. If indeed it were true that the payments started
only on that date, Spouses Noynay would not have The fairly recent case of Oscar Constantino v. Heirs of
completed the required two-year period to be entitled to Oscar Constantino,24 is most
the payment of cash surrender value. Records, however, instructive:ChanRoblesVirtualawlibrary
show otherwise. The Contract to Sell, dated December
29, 2004, was very particular on the matter. It stipulated In Bayas, et al. v. Sandiganbayan, et al., this Court
as follows:ChanRoblesVirtualawlibrary emphasized that:
Once the stipulations are reduced into writing and signed
SECTION 1. NOW, THEREFORE, for and in by the parties and their counsels, they become binding
consideration of the sume of NINE HUNDRED on the parties who made them. They become judicial
FIFTEEN THOUSAND EIGHT HUNDRED NINETY admissions of the fact or facts stipulated. Even if placed
FIVE PESOS ONLY, (?915,895.00) Philippine at a disadvantageous position, a party may not be
Currency, inclusive of miscellaneous charges hereunder allowed to rescind them unilaterally, it must assume the
set forth, and of the foregoing premises, the SELLER consequences of the disadvantage.(citations omitted)
hereby agrees to sell, cede and convey to the BUYER, Moreover, in Alfelor v. Halasan, this Court declared
their heirs, administrators, and successors-in-interest, the that:ChanRoblesVirtualawlibrary
aforedescribed residential house and lot or lot only under
the following terms and A party who judicially admits a fact cannot later
conditions:ChanRoblesVirtualawlibrary challenge the fact as judicial admissions are a waiver of
proof; production of evidence is dispensed with. A
a. The amount of ONE HUNDRED EIGHTY THREE judicial admission also removes an admitted fact from
THOUSAND ONE HUNDRED SEVENTY NINE the field of controversy. Consequently, an admission
PESOS ONLY (P183,179.00), Philippine Currency, made in the pleadings cannot be controverted by the
representing full downpayment shall be paid upon party making such admission and are conclusive as to
signing of this contract. such party, and all proofs to the contrary or inconsistent
therewith should be ignored, whether objection is
b. The balance of the total purchase price in the amount interposed by the party or not. The allegations,
of SEVEN HUNDRED THIRTY TWO THOUSAND statements or admissions contained in a pleading are
SEVEN HUNDRED SIXTEEN PESOS ONLY, conclusive as against the pleader. A party cannot
(P732,716..00), Philippine Currency shall be paid by the subsequently take a position contrary of or inconsistent
BUYER in 120 equal monthly installments in the with what was pleaded. (Citations omitted)
amount of P14,649.31 per month with an interest of 21%
per annum to commence on 02.08.05 and every 8th day [Emphases supplied]
of the month thereafter.21
Here, Spouses Noynay proposed for stipulation the
Citihomes claimed that the period of the payment of the factual allegation that they had been paying Citihomes
amortizations started from May 31, 2005.22 As can be the monthly amortization of the property for more than
gleaned from the contract to sell, however, it appears three (3) years and only stopped payment by January 8,
that the payment of the downpayment started from the 2008. In the Preliminary Conference Order,25 dated
signing thereof on December 29, 2004. January 28, 2010, the MTCC noted the said fact as
admitted, to wit:ChanRoblesVirtualawlibrary

5
The defendants proposed the following matters for ASIDE. The March 26, 2010 Decision of the Municipal
stipulations:ChanRoblesVirtualawlibrary Trial Court for Cities is REINSTATED.

That the defendants had already paid the plaintiff the SO ORDERED.cralawlaw library
total amount of Php 633,000.00 Not Admitted

That the defendants have been paying the plaintiff the

monthly amortization of the property for more than three
years and only stopped payment by January 8, 2008
Admitted.26cralawred

xxx xxx xxx [Emphasis supplied]

Moreover, based on the Statement of Account,27 dated

March 18, 2009, Spouses Noynay started defaulting
from January 8, 2008. This shows that prior to that date,
amortizations covering the 3-year period, which started
with the downpayment, had been paid. This is consistent
with the admission of Citihomes during the preliminary
conference. By its admission that Spouses Noynay had
been paying the amortizations for three (3) years, there is
no reason to doubt Spouses Noynays compliance with
the minimum requirement of two years payment of
amortization, entitling them to the payment of the cash
surrender value provided for by law and by the contract
to sell. To reiterate, Section 3(b) of the Maceda Law
requires that for an actual cancellation to take place, the
notice of cancellation by notarial act and the full
payment of the cash surrender value must be first
received by the buyer. Clearly, no payment of the cash
surrender value was made to Spouses Noynay.
Necessarily, no cancellation of the contract to sell could
be considered as validly effected.

Without the valid cancellation of the contract, there is no

basis to treat the possession of the property by Spouses
Noynay as illegal. In AMOSUP-PTGWO-ITF v.
Decena, 28 the Court essentially held that such similar
failure to validly cancel the contract, meant that the
possessor therein, similar to Spouses Noynay in this
case, remained entitled to the possession of the property.
In the said case, the Court
stated:ChanRoblesVirtualawlibrary

In the parallel case of Pagtalunan v. Dela Cruz Vda. De

Manzano, which likewise originated as an action for
unlawful detainer, we affirmed the finding of the
appellate court that, since the contract to sell was not
validly cancelled or rescinded under Section 3(b) of R.A.
No. 6552, the respondent therein had the right to
continue occupying unmolested the property subject
thereof.

WHEREFORE, the petition is GRANTED. The July 16,

2012 Decision and October 15, 2012 Resolution of the
Court of Appeals are hereby REVERSED and SET