SALES: EXAM REVIEWER
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E.) REMEDIES IN CASES OF IMMOVABLES
1) Remedies of Seller
k No installment payment made by a buyer in a subdivision or
a) Anticipatory Breach
Article 1591. Should the vendor have reasonable
grounds to fear the loss of immovable property sold and its
price, he may immediately sue for the rescission of the sale.
Should such ground not exist, the provisions of article 1191
shall be observed.
• We have discussed that under the said article,
where there is anticipatory breach, if the seller has
reasonable grounds to fear the loss of the
immovable property sold and its price, he may
immediately sue for the rescission of the sale.
b) Failure of Buyer to Pay Price
Rescission under Article 1191
Art. 1191. The power to rescind obligations is
implied in reciprocal ones, in case one of the obligors should
not comply with what is incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter
should become impossible.
The court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the
rights of third persons who have acquired the thing, in
accordance with Articles 1385 and 1388 and the Mortgage
Law. (1124)
Rescission under Article 1592
Article 1592. In the sale of immovable property,
even though it may have been stipulated that upon failure to
pay the price at the time agreed upon the rescission of the
contract shall of right take place, the vendee may pay, even
after the expiration of the period, as long as no demand for
rescission of the contract has been made upon him either
judicially or by a notarial act. After the demand, the court
may not grant him a new term.
◦ Take note in this article that in the sale of immovable
property, it should not be sale on instalment. If it is a sale
on instalment, then we apply a different law. This is not
stipulation of automatic rescission, the vendee may still
pay as long as there is no demand for rescission either
judicially or a notarial act.
◦ Remember, 1592, the requirement for rescission,
demand for a notarial act or a judicial act but it is solely
applicable to a contract of sale and not to a contract to
sell.
2) Remedies of Buyer
1) Suspension of Payment
Article 1590. Should the vendee be disturbed in the
possession or ownership of the thing acquired, or should he
have reasonable grounds to fear such disturbance, by a
vindicatory action or a foreclosure of mortgage, he may
suspend the payment of the price until the vendor has caused
the disturbance or danger to cease, unless the latter gives
security for the return of the price in a proper case, or it has
been stipulated that, notwithstanding any such contingency,
the vendee shall be bound to make the payment. A mere act
of trespass shall not authorize the suspension of the payment
of the price
• Now in case of real properties, remedies available
to the buyer, we have also discussed under the
Condominium Act, the buyer may suspend payment
if the real estate developer fails to comply with the
obligations according to the approved plan, or the
buyer may even demand for rescission.
2) In Case of Subdivision or Condominium Projects
Section 23, PD 957. Non-Forfeiture of Payments. –
condominium project for the lot or unit he contracted to buy
shall be forfeited in favor of the owner or developer when the
buyer, after due notice to the owner or developer, desists
from further payment due to the failure of the owner or
developer to develop the subdivision or condominium project
according to the approved plans and within the time limit for
complying with the same. Such buyer may, at his option, be
reimbursed
the total amount paid including amortization interests but
excluding delinquency interests, with interest thereon at the
legal rate.
Section 24, PD 957. Failure to pay installments. –
The rights of the buyer in the event of this failure to pay the
installments due for reasons other than the failure of the
owner or developer to develop the project shall be governed
by Republic Act No. 6552.
Where the transaction or contract was entered into
prior to the effectivity of Republic Act No. 6552 on August 26,
1972, the defaulting buyer shall be entitled to the
corresponding refund based on the installments paid after the
effectivity of the law in the absence of any provision in the
contract to the contrary.
1. Notice Required under Section 23 of PD 957
Section 23 of PD 957 does not require that
a notice be given first by the buyer to the seller
notice and demand can be made in the same letter
or communication.
2. Retroactive Application of PD 957
PD 957 did not expressly provide for
retroactivity in its entirety, but such can be plainly
inferred from the unmistakable intent of the law.
3. Right to Grace Period Stipulated
When a grace period is provided for in the
contract of sale, it should be construed as a right,
not an obligation of the debtor, and when
unconditionally conferred, the grace period is
effective without further need of demand either
calling for the payment of the obligation or for
honoring the right.
F) MACEDA LAW (RA 6552): SALE OF REAL ESTATE ON
INSTALLMENTS
Under sec 2 of RA 6552 thereof you have the purpose: for
public policy, to protect the buyers of real estate in installment
payments against onerous and oppressive conditions. So it is known as
The Sale Of Real Estate On Installment or also known as the Realty
Installment Buyer Act.
REPUBLIC ACT NO. 6552
AN ACT TO PROVIDE PROTECTION TO BUYER OF REAL
ESTATE ON
INSTALLMENT PAYMENTS
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
SECTION 1. This Act shall be known as the “Realty
Installment Buyer Protection Act.”
SECTION 2. It is hereby declared a public policy to protect
buyers of real estate on installment payments against onerous and
oppressive conditions.
SECTION 3. In all transactions or contracts, involving the
sale or financing of real estate on installment payments, including
residential condominium apartments but excluding industrial lots,
commercial buildings and sales to tenants under Republic Act
Numbered Thirty-Eight hundred forty-four as amended by Republic
Act Sixty-three hundred eighty-nine, where the buyer has paid at
least two years of installments, the buyer is entitled to the following
rights in case he defaults in the payment of succeeding installments:
 SALES: 1ST EXAM REVIEWER
2 Emille Dane S. Viola
To pay, without additional interest, the unpaid installments due
within the total grace period for every one year of installment
payments made; provided, That this right shall be exercised by
the Buyer only once in every five years of the life of the contract
and its extensions, if any.
If the contract is cancelled, the seller shall refund to the buyer
the cash surrender value of the payments on the property
equivalent to fifty percent of the total payments made and,
after five years of installments, an additional five per cent every
year but not to exceed ninety per cent of the total payments
made; provided, that the actual cancellation or the demand for
rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall
be included in the computation of the total number of installment
payments made.
SECTION 4. In case where less than two years of
installments were paid the seller shall give the buyers a grace period
of not less than sixty days from the date the installment become 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.
SECTION 5. Under Section 3 and 4, the buyer shall have the
right to sell his rights or assign the same to another person or to
reinstate the contract by updating the account during the grace
period and before actual cancellation of the contract. The deed of
sale or assignment shall be done by notarial act.
SECTION 6. The buyer shall have the right to pay in advance
any installments or the full unpaid balance of the purchase price any
time without interest and to have such full payment of the purchase
price annotated in the certificate of title covering the property.
SECTION 7. Any stipulation in any contract hereafter
entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall
be null and void.
SECTION 8. If any provisions of this Act is held invalid or
unconstitutional no other provision shall be affected thereby.
SECTION 9. This Act shall take effect upon its approval.
Approved August 26, 1972.
1) Role of Maceda Law
The law declares as a public policy to protect buyers of real
estate on installment payments against onerous and oppressive
conditions. (Section 2, RA 6552)
2) Retroactive Application of law
In Siska Dev. Corp. vs. Office of the President, the Court extended
the formal requirements of rescission under the Maceda Law to
apply even to contracts entered into prior to the effectivity of the
Maceda Law.
However, in People’s Industrial vs. CA, the Court held that RA 6552
does not expressly provide for its retroactive application and,
therefore, it could not have encompassed the cancellation of the
contracts to sell pursuant to an automatic cancellation clause
which had become operational long before the approval of the law.
a) Transactions Covered
- Does not cover all sales of realty on installments but
primary residential real estate.
- Covers not only “sale” on installments of real estate but
also “financing” of such acquisitions.
- It expressly covers “all transactions or contracts involving
the sale or financing of real estate on installment
payments, including residential condominium
apartments. (Section 3, RA 6552)
- Includes in its provisions both contract of sale and
contract to sell with the use by the law of the twin terms
of “notice of cancellation or the demand for rescission”
of the contract.
b) Transactions Excluded from Coverage
1) Sales covering industrial lots,
2) Sales covering commercial buildings (and commercial
lots by implication), and
3) Sales to tenants under agrarian reform laws (RA 3844, as
amended by RA 6389).
The enumeration is not exclusive. An example would be the
sale on installment of commercial or office condominium
units.
1. Maceda Law Cannot be Invoked by Highest Bidder
in Foreclosure Proceedings
Such person or entity, although binding
itself to the terms of the contracts of sale, is not the
real party to the original installment sales, and
more importantly, does not have any rights
promoted under the Maceda Law which contains
provisions for the benefits of real estate buyers on
installments. (Lagandao vs. CA)
c) Rights Granted
(i) At Least 2 Years Installments Paid
o To pay, without additional interest, the unpaid installments
due within the total grace period for every 1 year of
installment payments made; provided, That this right shall be
exercised by the Buyer only once in every 5 years of the life of
the contract and its extensions, if any.
o If the contract is cancelled, the seller shall refund to the buyer
the cash surrender value of the payments on the property
equivalent to 50% of the total payments made and, after 5
years of installments, an additional 5% every year but not to
exceed 90% of the total payments made; provided, that the
actual cancellation or the demand for rescission of the
contract by a notarial act and upon full payment of the cash
surrender value to the buyer.
Down payments, deposits or options on the contract
shall be included in the computation of the total number of
installment payments made. (Section 3, RA 6552)
(ii) Less than 2 Years Installments paid
In case where less than 2 years of
installments were paid the seller shall give the
buyers a grace period of not less than 60 days from
the date the installment become due. If the buyer
fails to pay the installments due at the expiration of
the grace period, the seller may cancel the contract
after 30 days from receipt by the buyer of the notice of
cancellation or the demand for rescission
of the contract by a notarial act. (Section 4, RA
6552)
(iii) Compensation Rule on Amortization Payments
When the buyer fails to pay any monthly
amortization, he is under Article 1169 already in
default and liable for the damages stipulated in the
contract. Nevertheless, the Court held that the
default committed by the buyer in respect of the
obligation could be compensated by the interest
and surcharges imposed upon the buyer under the
contract. (Leano vs. CA)
(iv) Formula to Compute the Installment Mode
The proper formula to apply in determining how
many installments have been made is to include any
payment made as downpayment or reservation fee
as part of the installments made, and then to divide
them by the stipulated mode of payment (monthly,
quarterly, semi-annual or annual).
d) Interpretation of Grace Period and Modes of
Cancellation
The case of McLaughin vs. CA provides for two grace
periods:
1) 1st Grace Period
o expressly provided by the law, which is a minimum of 60
days.

o availment of the right to update the installment
payments is without interest and penalties, even when
these are stipulated in the contract.
2) 2nd Grace Period
o the period before rescission or cancellation actually takes
place.
o the buyer would be liable for and would have to include in
his payments the stipulated interests and penalties
incurred.
e) Other Rights Granted to Buyer
The buyer shall have the right to pay in advance any
installments or the full unpaid balance of the purchase price
any time without interest and to have such full payment of
the purchase price annotated in the certificate of title
covering the property. (Section 6, RA 6552)
f) Effect of Contrary Stipulations
Any stipulation in any contract hereafter entered
into contrary to the provisions of Sections 3, 4, 5 and 6, shall
be null and void. (Section 7, RA 6552)
g) Maceda Law Cannot Be Availed of by Developer
The Maceda law has no application to protect the
develop or one who succeeds the developer, since “the policy
of that law, as embodied in its title, is 'to provide protection
to buyers on real estate on installment payments.' against
onerous and oppressive conditions.” (Lagandaon vs. CA)
Section 3(b) of the same law does not grant the
developer any legal ground to cancel the contracts to sell;
rather, it prescribes the responsibiity of the seller in case the
'contracts are canceled.' (Lagandaon vs. CA)
3) Cancellation of Judicial Sale
Where a judicial sale is voided is without fault of the
purchaser, the latter is entitled to reimbursement of the purchase
money paid by him. A judicial sale can only be set aside upon the
return to the buyer of the purchase price with simple interest,
together with all sums paid out by him in improvements introduced
on the property, taxes, and other expenses by him. (Seven Brothers
Shipping vs. CA)
Valarao vs.CA
ISSUES: WON they entered into a contract of sale wherein
Art 1592 is applicable?
WON Arellano should forfeit the amount already paid and
WON she committed breach?
HELD: Article 1592 of the Civil Code applies only to
contracts of sale, and not to contracts to sell or conditional
sales. Furthermore, in order to enforce the automatic
forfeiture clause in a deed of conditional sale, Valarao has
the burden of proving a contractual breach by Arellano.
In the present case, the Deed of Conditional Sale is of the
same nature as a sale on installment or a contract to sell. It
is clear that petitioners were not justified in refusing to
accept the tender of payment made by Arellano on
December 30 and 31, 1990. Had they accepted it on either
of said dates, she would have paid all three monthly
installments due. The fact is, Valarao refused to accept
payment and failed and thus have no reason to demand
the enforcement of the automatic forfeiture clause.
Under Sec 3 of RA 6552 or the Maceda Law, Arellano was
entitled to a 1-month grace period for every year of
installments paid, which means that she had a total grace
period of 3 months from December 31, 1990.
GARCIA, vs.CA
ISSUE: Whether or not Maceda Law is applicable in this
case.
SALES: EXAM REVIEWER
BlueTeam 3
HELD: No. Not applicable. It is clear from the abovequoted
provisions that the parties intended their agreement
to be a Contract to Sell: Dela Cruz retains ownership of the
subject lands and does not have the obligation to execute a
Deed of Absolute Sale until petitioners’ payment of the full
purchase price.
The Maceda Law applies to contracts of sale of real estate
on installment payments, including residential
condominium apartments but excluding industrial lots,
commercial buildings and sales to tenants. The subject
lands, comprising five (5) parcels and aggregating 69,028
square meters, do not comprise residential real estate
within the contemplation of the Maceda Law. Moreover,
even if we apply the Maceda Law to the present case,
petitioners’ offer of payment to Dela Cruz was made a year
and a half after the stipulated date. This is beyond the
sixty-day grace period under Section 4 of the Maceda
Law. Petitioners still cannot use the second sentence of
Section 4 of the Maceda Law against Dela Cruz for Dela
Cruz’s alleged failure to give an effective notice of
cancellation or demand for rescission because Dela Cruz
merely sent the notice to the address supplied by
petitioners in the Contract to Sell.
Active Realty & Dev’t Corp v Daroya
DOCTRINE:
RA 6552, Section 3.
Rights of the buyer in case of default in the payment of succeeding
installments, where he’s already paid at least 2 years of installments:
(a) To pay, without additional interest, the unpaid installments due
within total grace period (1 month for every1 year of installment payments
made;
(b) If contract is cancelled, seller shall refund to buyer the cash
surrender value of the payments on property equivalent to 50% of total
payments made; provided, that actual cancellation of contract shall take
place after 30 days from receipt by buyer of the notice of cancellation or
the demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.
HELD: The Contract to sell remains valid and subsisting. RA 6552, Section
3(a) a applies.
RA 6552: The Realty Installment Buyer Protection Act, more popularly
known as the Maceda Law, governs in this case.
- It came into effect in Sept. 1972.
- Its declared policy is to protect buyers of real estate on
installment basis against onerous and oppressive conditions.
- The law seeks to address the acute housing shortage problem
that has prompted many middle and lower class buyers of
houses/lots/condominium units who sign contracts of adhesion with
private housing developers
involving installment schemes, where they are entrapped by onerous
default clauses (where all payments are forfeited upon failure to pay
installments) in fine print and those that require hefty cash deposits for
reservation agreements, which is iniquitous to the low income buyers.
- Lot buyers, mostly low income earners eager to acquire a lot
upon which ti build their homes, readily affix their signatures on these
contracts, w/o an opportunity to Q the onerous provisions therein as the
contracts are offered in a “take it or leave it” basis.
Section 3of RA No. 6652 provided for the rights of the buyer in case of
default in the payment of succeeding installments, where he has already
paid at least 2 years of installments. (See: Doctrine box for provision)
- In this case, Daroya has already paid, in 4 years, a total of
P313,860 (about 90k more than contract price of P224k). She was only in
delay for P15, 282 (worth 3 monthly amortizations).
- And not only did petitioner refuse to accept Daroya’s
subsequent tender of payment of the outstanding balance & alleged that
they already cancelled the contract and sold the lot to someone else, they
also failed to comply with the mandatory twin requirements for a valid and
effective cancellation:
o (1) notarized notice of cancellation and
o (2) refund of cash surrender value.
- There was no formal notice of cancellation or court action to
rescind the contract. It was only after HLURB preliminary hearing HLURB did
they offer to pay the cash surrender value. Even if Daroya was mostly
abroad, that didn’t stop them from sending her written notices to pay her
installment arrears in her last known address.
 SALES: 1ST EXAM REVIEWER
4 Emille Dane S. Viola
- In disregard of basic equitable principles, Active Realty’s stance
would enable it to resell the property, keep the installment payments which
is actually higher than the consideration stated in the contract, not to
mention the cash surrender value it was obligated to return.
PAGTALUNAN vs. VDA. DE MANZANO
ISSUE:
Whether or not the cancellation of the contract complied
with what is required under the Maceda law.
HELD:
No. R.A. No. 6552, otherwise known as the "Realty
Installment Buyer Protection Act," recognizes in conditional sales of all
kinds of real estate (industrial, commercial, residential) the right of the
seller to cancel the contract upon non-payment of an installment by
the buyer, which is simply an event that prevents the obligation of the
vendor to convey title from acquiring binding force. The Court agrees
with petitioner that the cancellation of the Contract to Sell may be
done outside the court particularly when the buyer agrees to such
cancellation.
However, the cancellation of the contract by the seller must
be in accordance with Sec. 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.
Actual cancellation of the contract takes place after 30 days from
receipt by the buyer of the notice of cancellation or the demand for
rescission of the contract by a notarial act and upon full payment of
the cash surrender value to the buyer.
Based on the records of the case, the Contract to Sell was
not validly cancelled or rescinded under Sec. 3 (b) of R.A. No. 6552.
First, Patricio, the vendor in the Contract to Sell, died on
September 17, 1992 without canceling the Contract to Sell.
Second, petitioner also failed to cancel the Contract to Sell in
accordance with law.
The Court, however, finds that the letter dated February 24,
1997, which was written by petitioner’s counsel, merely made formal
demand upon respondent to vacate the premises in question.
Clearly, the demand letter is not the same as the notice of
cancellation or demand for rescission by a notarial act required by R.A
No. 6552. Petitioner cannot rely on Layug v. Intermediate Appellate
Court to support his contention that the demand letter was sufficient
compliance since the seller therein filed an action for annulment of
contract, which is a kindred concept of rescission by notarial act.
Evidently, the case of unlawful detainer filed by petitioner does not
exempt him from complying with the said requirement.
In addition, Sec. 3 (b) of R.A. No. 6552 requires refund of the
cash surrender value of the payments on the property to the buyer
before cancellation of the contract. The provision does not provide a
different requirement for contracts to sell which allow possession of
the property by the buyer upon execution of the contract like the
instant case.
Hence, petitioner cannot insist on compliance with the
requirement by assuming that the cash surrender value payable to the
buyer had been applied to rentals of the property after respondent
failed to pay the installments due.
There being no valid cancellation of the Contract to Sell, the
CA correctly recognized respondent’s right to continue occupying the
property subject of the Contract to Sell and affirmed the dismissal of
the unlawful detainer case by the RTC.
Planters vs. Chandumal
ISSUE:
(1) Whether there was valid substituted service of summons?
(2) Whether Chandumal voluntarily submitted to the jurisdiction of
the RTC?
(3) Whether there was proper rescission by notarial act of the contract
to sell?
HELD:
Correctly ruled that the sheriff’s return failed to justify a resort to
substituted service of summons. According to the CA, the
Return of Summons does not specifically show or indicate in detail the
actual exertion of efforts or any positive step taken by the officer or
process server in attempting to serve the summons personally to the
defendant.The Court notes that aside from the allegation that she did
not receive any summons, Chandumal’s motion to set aside order of
default and to admit attached answer failed to positively assert the
trial court lack of jurisdiction. In fact, what was set forth therein was
the substantial claim that PDB failed to comply with the requirements
of R.A. No. 6552 on payment of cash surrender value, which already
delves into the merits of PDB’s cause of action. In addition,
Chandumal even appealed the RTC decision to the CA, an act which
demonstrates her recognition of the trial court’s jurisdiction to render
said judgment.
R.A. No. 6552 recognizes the right of the seller to cancel the
contract but any such cancellation must be done in conformity with
the requirements therein prescribed. In addition to the notarial act of
rescission, the seller is required to refund to the buyer the cash
surrender value of the payments on the property. The actual
cancellation of the contract can only be deemed to take place upon
the expiry of a thirty (30)-day period following the receipt by the
buyer of the notice of cancellation or demand for rescission by a
notarial act and the full payment of the cash surrender value.
Optimum vs. Spouses Jovellanos
ISSUE: W/N there was a valid and effective cancellation of the
Contract to Sell in accordance with Section 4 of RA 6552
RULING:
YES. Verily, in a contract to sell, the prospective seller binds
himself to sell the property subject of the agreement exclusively to
the prospective buyer upon fulfillment of the condition agreed upon
which is the full payment of the purchase price but reserving to
himself the ownership of the subject property despite delivery thereof
to the prospective buyer.The full payment of the purchase price in a
contract to sell is a suspensive condition, the non-fulfillment of which
prevents the prospective seller’s obligation to convey title from
becoming effective, as in this case.
Further, it is significant to note that given that the Contract
to Sell in this case is one which has for its object real property to be
sold on an installment basis, the said contract is especially governed
by — and thus, must be examined under the provisions of — RA 6552,
or the “Realty Installment Buyer Protection Act”, which provides for
the rights of the buyer in case of his default in the payment of
succeeding instalments. Given the nature of the contract of the parties, the
respondent court correctly applied Republic Act No. 6552. Known as
the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all
kinds of real estate (industrial, commercial, residential) the right of the
seller to cancel the contract upon non-payment of an installment by
the buyer, which is simply an event that prevents the obligation of the
vendor to convey title from acquiring binding force. It also provides
the right of the buyer on installments in case he defaults in the
payment of succeeding installments, viz.:
(1) Where he has paid at least two years of
installments,
(a) To pay, without additional interest, the unpaid
installments due within the total grace period earned by
him, which is hereby fixed at the rate of one month grace
period for every one year of installment payments made:
Provided, That this right shall be exercised by the
buyer only once in every five years of the life of the contract
and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the
buyer the cash surrender value of the payments on the
property equivalent to fifty per cent of the total payments
made and, after five years of installments, an additional five
per cent every year but not to exceed ninety per cent of the
total payments made:
Provided, That the actual cancellation of the
contract shall take place after cancellation or the demand
for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.
Down payments, deposits or options on the
contract shall be included in the computation of the total
number of installments made.
(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. (Emphasis and
underscoring supplied)
Pertinently, since Sps. Jovellanos failed to pay their
stipulated monthly installments as found by the MeTC, the Court
examines Optimum’s compliance with Section 4 of RA 6552, as
abovequoted
and highlighted, which is the provision applicable to buyers
who have paid less than two (2) years-worth of installments.
Essentially, the said provision provides for three (3) requisites before
the seller may actually cancel the subject contract: first, the seller
shall give the buyer a 60-day grace period to be reckoned from the
date the installment became due; second, the seller must give the
buyer a notice of cancellation/demand for rescission by notarial act if

the buyer fails to pay the installments due at the expiration of the said
grace period; and third, the seller may actually cancel the contract
only after thirty (30) days from the buyer’s receipt of the said notice of
cancellation/demand for rescission by notarial act.
In the present case, the 60-day grace period automatically
operated in favor of the buyers, Sps. Jovellanos, and took effect from
the time that the maturity dates of the installment payments lapsed.
With the said grace period having expired bereft of any installment
payment on the part of Sps. Jovellanos, Optimum then issued a
notarized Notice of Delinquency and Cancellation of Contract on April
10, 2006. Finally, in proceeding with the actual cancellation of the
contract to sell, Optimum gave Sps. Jovellanos an additional thirty (30)
days within which to settle their arrears and reinstate the contract, or
sell or assign their rights to another.
It was only after the expiration of the thirty day (30) period
did Optimum treat the contract to sell as effectively cancelled –
making as it did a final demand upon Sps. Jovellanos to vacate the
subject property only on May 25, 2006. Thus, based on the foregoing,
the Court finds that there was a valid and effective cancellation of the
Contract to Sell in accordance with Section 4 of RA 6552 and since Sps.
Jovellanos had already lost their right to retain possession of the
subject property as a consequence of such cancellation, their refusal
to vacate and turn over possession to Optimum makes out a valid case
for unlawful detainer as properly adjudged by the MeTC.
Noynay vs. Citihomes
ISSUE:
W/N the the cancellation of the contract to sell was valid.
RULING:
No. The Contract to Sell dated December 29, 2004 is
enlightening on the matter. The amount of P183,179, representing full
down payment shall be paid upon signing of the contract. Citihomes
claimed that the period of the payment of the amortizations started
from May 31, 2005. As can be gleaned from the contract to sell,
however, it appears that the payment of the down payment started
from the signing thereof on December 29, 2004. Moreover, based on the
Statement of Account, 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 down payment, 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 3 years, there is no reason to doubt Spouses
Noynay's 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 selI could be considered as validly effected.
ASSOCIATED MARINE OFFICERS AND SEAMEN'S UNION OF THE
PHILIPPINES PTGWO-ITF, Petitioner, v. NORIEL DECENA,
As we emphasized in Pagtalunan, "R.A. No. 6552, otherwise known as the
Realty Installment Buyer Protection Act, recognizes in conditional sales of
all kinds of real estate (industrial, commercial, residential) the right of the
seller to cancel the contract upon non-payment of an installment by the
buyer, which is simply an event that prevents the obligation of the vendor
to convey title from acquiring binding force." While we agreed that the
cancellation of a contract to sell may be done outside of court, however,
"the cancellation by the seller must be in accordance with Sec. 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."27ςrνll In the present case, as aptly pointed out by the
appellate court, petitioner failed to prove that the Shelter Contract Award
had been cancelled in accordance with R.A. No. 6552, which would have
been the basis for the illegality of respondent's possession of the subject
premises. Hence, the action for ejectment must necessarily fail.
Petitioner nonetheless insists on the inapplicability of R.A. No. 6552 in this
case, capitalizing on the Decision28ςrνll of the Housing and Land Use
Regulatory Board in HLURB CASE No. IV6-090902-1842 entitled "Seamen's
Village Brotherhood Homeowners Association, Inc. v. Associated Marine
Officers And Seamen's Union of the Philippines (AMOSUP)" which held that
the transaction between petitioner and the residents of Seamen's Village
cannot be considered a sale within the purview of Presidential Decree (P.D.)
No. 957.29ςrνll It should be pointed out that the only issue resolved in
that case is "whether or not the respondent (petitioner herein) is engaged
in the business of selling real estate subdivisions, so as to fall under the
SALES: EXAM REVIEWER
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ambit of P.D. 957, the resolution of which would determine whether or not
respondent is required under the law to register with (the) Office and
procure a license to sell."30ςrνll
Section 2(b) of P.D. 957 defines a sale as follows:chanroblesvirtuallawlibrary
b.) Sale or Sell "sale" or "sell" shall include every disposition, or attempt to
dispose, for a valuable consideration, of a subdivision lot, including the
building and other improvements thereon, if any, in a subdivision project or
a condominium unit in a condominium project. "Sale" or "sell" shall include
a contract to sell, a contract of purchase and sale, an exchange, an attempt
to sell, an option of sale or purchase, a solicitation of a sale, or an offer to
sell, directly or by an agent, or by a circular letter, advertisement or
otherwise.
A privilege given to a member of a cooperative, corporation, partnership, or
any association and/or the issuance of a certificate or receipt evidencing or
giving the right of participation in, or right to any land in consideration of
payment of the membership fee or dues, shall be deemed a sale within the
meaning of this definition.
A reading of the Decision in its entirety reveals a vacillation on the part of
the HLURB in classifying the transaction between petitioner and its
members. While the HLURB held that there is no sale as contemplated
under the first paragraph of the aforequoted provision "for the reason that
there is no valuable consideration involved in the transaction,"31ςrνll yet
it went on to opine that the second paragraph of the same provision
"appears to have an apparent application in the instant case although the
same is not clear."32ςrνll Then, in its final disposition,33ςrνll the HLURB
required petitioner to secure a Certificate of Registration and License to Sell
for its subdivision project thereby effectively bringing it under the
jurisdiction of said office. Clearly, the argument of petitioner that
respondent is not a realty installment buyer that needs to be protected by
the law has no leg to stand on.
In the interest, however, of putting an end to the controversy between the
parties herein that had lasted for more than ten (10) years, as in the cited
case of Pagtalunan, the Court orders respondent to pay his arrears and
settle the balance of the full value of the subject premises. He had enjoyed
the use thereof since 1995. After defaulting in August 1999, respondent
had not made any subsequent reimbursement payments. Thus, for the
delay in his reimbursement payments, we award interest at the rate of 6%
per annum on the unpaid balance applying Article 220934ςrνll of the Civil
Code, there being no stipulation in the Shelter Contract Award for such
interest.35ςrνll For purposes of computing the legal interest, the
reckoning period should be the notice of final demand, conformably with
Articles 116936ςrνll and 158937ςrνll of the same Code, which, as found
by the MTC, was sent by petitioner to respondent on August 21,
2001.38ςrνll
In his Comment to the instant Petition, respondent claimed that he had
made payments in the amount of P 318,167.70.39ςrνll The total amount
for reimbursement for the subject house and lot is US$28,563, which the
Shelter Contract Award requires to be paid in "180 equal monthly periodic
reimbursements of US$159 or in equivalent Philippine Currency at the time
the same falls due."40ςrνll For lack of pertinent data with which to
determine how many months respondent's alleged total payment of P
318,167.70 is equivalent to, we direct petitioner to submit to the trial court
an accounting of the payments made by respondent particularly showing
the number of months he was able to make the required payments of
US$159 or its peso equivalent. The balance of the full value of the subject
premises shall then be computed on the basis of the following formula:
(180 months minus the number of months that respondent had already
paid) multiplied by US$159 or its peso equivalent at the time of payment.