RILLO VS.

CA
GR 125347 (June 19, 1997)
FACTS:
CORB REALTY executed Contract to sell
of Condominium unit with RILLO. The
contract price was P150,000.00, one half of
which was paid upon its execution, while the
balance of P75,000.00 was to be paid in
twelve (12) equal monthly installments
of P7,092.00. RILLO defaulted in his
payment and the contract was restructured
several times but RILLO was only able to
pay less than 2 years in installments.
ISSUE:
WON Rillo is entitled for the refund
amounting to the 50% of the total payment
he made
HELD:
NO. Under RA 6552 (Maceda Law):
(2) Where he has paid less than two
years in installments,
"Sec. 4. x x x the seller shall give the buyer
a grace period of not less than sixty days
from the date the installment became
due. If the buyer fails to pay the
installments due at the expiration of the
grace period, the seller may cancel the
contract after thirty days from receipt by the
buyer of the notice of cancellation or the
demand for rescission of the contract by a
notarial act."
Under Republic Act No. 6552, the right of
the buyer to a refund accrues only when he
has paid at least two (2) years of
installments. Petitioner RILLO paid less
than two years in installment payments,
hence, he is only entitled to a grace period
of not less than sixty (60) days from the due
date within which to make his installment
payment. CORB REALTY, on the
otherhand, has the right to cancel the
contract after thirty (30) days from receipt by

RILLO of the notice of cancellation. Hence,

the respondent court did not err when it
upheld CORB REALTY's right to cancel the
subject contract upon repeated defaults in
payment by RILLO.
LEVY HERMANOS INC. VS. GERVACIO
GR L-43606 (Oct. 27, 1939)
FACTS:
LEVY HERMANOS INC. (LHI) sold to
defendant GERVACIO A Packard Car.
GERVACIO , after making the initial
payment, executed a promissory note for
the balance of P2,400, payable on or before
June 15, 1937, with interest at 12 per cent
per annum, to secure the payment of the
note, he mortgaged the car to the plaintiff.
GERVACIO failed to pay the note it its
maturity. Wherefore, LHI foreclosed the
mortgage and the car was sold at public
auction, at which plaintiff was the highest
bidder for P1,800. The present action is for
the collection of the balance of P1,600 and
interest.
ISSUE:
WON lower court correctly applied Act. No.
4122, inserted as articles 1454-A of the Civil
Code
HELD:
NO. Article 1454-A of the Civil Code reads
as follows:
In a contract for the sale of personal property payable
in installments shall confer upon the vendor the right
to cancel the sale or foreclose the mortgage if one
has been given on the property, without
reimbursement to the purchaser of the installments
already paid, if there be an agreement to this effect.
However, if the vendor has chosen to foreclose the
mortgage he shall have no further action against the
purchaser for the recovery of any unpaid balance
owing by the same and any agreement to the contrary
shall be null and void.

The contract, in the instant case, while a

sale of personal property, is not, however,
one on installments, but on straight term, in

which the balance, after payment of the

initial sum, should be paid in its totality at
the time specified in the promissory note.
The transaction is not, therefore, the one
contemplated in Act No. 4122 and
accordingly the mortgagee is not bound by
the prohibition therein contained as to the
right to the recovery of the unpaid balance.
Undoubtedly, the law is aimed at those
sales where the price is payable in several
installments, for, generally, it is in these
cases that partial payments consist in
relatively small amounts, constituting thus a
great temptation for improvident purchasers
to buy beyond their means. There is no
such temptation where the price is to be
paid in cash, or, as in the instant case,
partly in cash and partly in one term, for, in
the latter case, the partial payments are not
so small as to place purchasers off their
guard and delude them to a miscalculation
of their ability to pay.
The suggestion that the cash payment
made in this case should be considered as
an installment in order to bring the contract
sued upon under the operation of the law, is
completely untenable. A cash payment
cannot be considered as a payment by
installment, and even if it can be so
considered, still the law does not apply, for it
requires non-payment of two or more
installments in order that its provisions may
be invoked. Here, only one installment was
unpaid.

LAGANDAON VS. CA
GR 102526 (MAY 21, 1998)
FACTS:
Pacweld Steel Corporation (Pacweld) a now
defunct domestic corporation executed in
favor of several purchasers a Contract to
Sell pieces of lots payable in installment
which payments started to be made.
Eventuallty, DBP acquired ownership of the
property from PACWELD thru foreclosure

sale. Later on, the property was sold to

Lagandaon spouses.
The above-mentioned defendant[s]purchasers deferred/refused further
payments on their amortization to Pacweld
because of [the] refusal of Lorenzo V.
Lagandaon, then President of Pacweld
officials [sic] to undertake the development
of the areas bought.
Defendants/Purchasers, together with other
lot buyers filed an action for Specific
Performance.
ISSUE:
WON RA6552 (MACEDA LAW) can be
used by the Lagandaon spouses to cancel
the contracts to sell
HELD:
NO. The Maceda Law has no application to
the present case. The policy of that law, as
embodied in its title, is "to provide protection
to buyers of real estate on installment
payments." As clearly specified in Section 3,
the declared public policy espoused by
Republic Act No. 6552 is "to protect buyers
of real estate on installment payments
against onerous and oppressive conditions."
In this case, petitioners did not buy the
property on installment; private respondents
did. And thus, if the Maceda Law has any
relevance at all, it is to protect the said
respondents, not the petitioners.
Furthermore, Section 3(b) of the same law
does nor grant petitioners any legal ground
to cancel the contracts to sell; rather, it
prescribes the responsibility of the seller in
case the "contract[s are] cancelled." Clearly,
Respondent Court was correct in refusing to
apply the Maceda Law and in not cancelling
the contracts to sell.