G.R. No. 167452 – JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION, petitioner, vs. DANIEL PONCE PACIFICO, represented by his attorney-in-fact Jordan M. Pizarras, respondent.
CARPIO MORALES, J.
Rule Synopsis
Under the Maceda Law, a buyer of real estate who failed to complete two years of installment payments is entitled to grace period of 60 days from the date when the last installment became due.
Facts
Daniel Ponce Pacifico (buyer), purchase a house and lot from Jestra Development and Management Corporation (seller) for P2.5M. The terms of payment were: P750k downpayment (DP) payable in six monthly installments, the balance payable in 10 years (with 21% interest, p.a.). He paid a reservation fee of P20k which was considered part of the DP. Thus, the monthly installment on the DP was P121,666.67. Whereas, the monthly installment on the balance was P34,982.50 (later increased to P39,468, inclusive of penalties). A Contract to Sell was executed when P260k balance remained unpaid of the DP. After making a total of P846,600 installments (including late payment penalties of P76,600), he failed to make further payments despite demand from seller. Thus, the latter considered the contract cancelled and sold the subject property to another buyer (second sale).
The buyer then filed a complaint before the Housing and Land Use Regulatory Board (HLURB) praying, among others, for the nullification of the second sale and delivery of the property to him.
The Arbiter held the seller liable to return to the buyer the cash surrender value of the installments paid as provided under R.A. No. 6552, as the buyer can no longer demand the delivery of the subject property having been sold to another. In ruling so, the Arbiter found that the buyer was able to complete at least 24 months of installment (P846,600 total payments made, divided by P34,982.50 monthly installment on the balance, yields 24.2 months). The Board of Commissioners of the HLURB modified the decision of the Arbiter as to the award of damages. The Office of the President also denied the seller’s motion for reconsideration. The SC reversed. On its appeal, the seller claimed that the buyer was not able to complete at least 24 months installment. It argued that in applying the provisions of R.A. No. 6522, the amount to be considered as total payments made by the buyer shall exclude the penalties of P76,600. Furthermore, that the divisor shall be the increased amortization of P39,468. This will yield 19.5 months.
Issues
- Was the buyer, in this case, entitled to the rights under R.A. No. 6552 for buyers of real estate on installment who has paid at least two years of installment?
- Was the seller entitled to cancel the contract of sale?
Ruling and Discussion
- No. The buyer was not entitled to the rights under R.A. No. 6552 for buyers of real estate on installment who has paid at least two years of installment.
Sec.3 of R.A. No. 6552 gives the buyers of real property on installments certain rights in case it defaulted in making payments, provided that he was able to pay at least 2 years of installments. These rights, among others, include: 1) the right to a grace period, and 2) the right to the refund of the cash surrender value of the payments should the contract be cancelled.
For purposes of applying the provisions of R.A. No. 6552, the SC held that the proper divisor was P121,666.66, the monthly installment on the down payment. Thus, the Court found that the buyer failed to pay at least two years of installments. As such, he is not entitled to a refund of the cash surrender value of his payments under Sec. 3 of the said law. What is applicable in this case is Sec. 4 thereof which merely grants the buyer a 60-day grace period. - Yes. The seller was entitled to cancel the contract of sale.
Under Sec. 4 of R.A. No. 6552, the buyer of real estate who failed to pay at least 2 years installment is entitled to a grace period of not less than sixty days from the date the installment became due. Whereas, the seller is entitled to cancel the sale, 30 days after the buyer’s receipt of the notice thereof.
In this case, the first installment of the purchase price was due on Jan. 5, 1998. While the buyer issued post-dated checks as payment, the same were dishonored and for which the buyer made no further action. Thus, the 60-day grace period expired. Furthermore, the record shows that the buyer received the notarial Notice of Cancellation on May 13, 1998. Thus, the contract was deemed cancelled on Jun 12, 1998.
Dispositive
Petition granted, assailed decision and resolution reversed and set aside.