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ASSOCIATED MARINE OFFICERS v. NORIEL DECENA

FACTS:

The petitioner is a labor organization engaged in a Shelter Program that offers residential lots and houses to its members-seafarers. The respondent entered into a contract under the Shelter Program with the petitioner, which required him to make 180 equal monthly payments to reimburse the petitioner for the cost of the house and lot in Cavite. The contract also stated that failure to remit three monthly payments would result in the revocation of the contract and the respondent would be obliged to vacate the premises. The respondent failed to pay twenty-five monthly reimbursements and the petitioner cancelled the contract. The petitioner sent notices to the respondent to fulfill his obligation and vacate the premises, but the respondent did not comply. The petitioner filed a complaint for unlawful detainer, which was granted by the lower courts. However, the Court of Appeals reversed the decision, stating that the contract was a contract to sell and the action for ejectment was premature. The petitioner's motion for reconsideration was also denied. Subsequently, the petitioner appealed the case to the Supreme Court for review.

ISSUES:

  1. Whether the contractual relations between the parties are more than that of a lessor-lessee.

  2. Whether the contract to sell has been validly cancelled or rescinded.

  3. Whether or not the transaction between petitioner and its members constitutes a sale within the meaning of the law.

  4. Whether or not the petitioner is required to secure a Certificate of Registration and License to Sell for its subdivision project.

RULING:

  1. The contractual relations between the parties are more than that of a lessor-lessee. The Shelter Contract Award has not been converted into one of lease.

  2. The contract to sell has not been validly cancelled or rescinded in accordance with Section 3(b) of R.A. No. 6552. Hence, the action for ejectment must fail.

  3. The Court held that the transaction between petitioner and its members constitutes a sale within the meaning of the law. The HLURB's argument that there is no valuable consideration involved in the transaction was found to be without basis. Therefore, respondent, as a buyer, is entitled to the protection of the law.

  4. The Court affirmed the HLURB's requirement for petitioner to secure a Certificate of Registration and License to Sell for its subdivision project. This effectively brings petitioner under the jurisdiction of the HLURB.

PRINCIPLES:

  • The contractual relations between the parties may go beyond that of a lessor-lessee, depending on the nature and terms of their agreement.

  • In transactions or contracts involving the sale or financing of real estate on installment payments, the cancellation of the contract by the seller must be in accordance with Section 3(b) of R.A. No. 6552, which requires a notarial act of rescission and the refund to the buyer of the full payment of the cash surrender value of the payments on the property.

  • The definition of "sale" under Section 2(b) of P.D. 957 includes every disposition, or attempt to dispose, for a valuable consideration, of a subdivision lot or condominium unit.

  • The transaction involving the right of participation in or right to any land in consideration of payment of membership fees or dues is considered a sale.

  • Buyers of real estate properties are entitled to protection under the law.

  • A developer is required to secure a Certificate of Registration and License to Sell for its subdivision project.