JESTRA DEVT & MGT CORP. v.

PACIFICO
G.R. No. 167452 | January 30, 2007
FACTS:
Daniel Pacifico signed a Reservation application with Fil-Estate Marketing for the purchase of
a house and lot and paid the reservation fee. The Reservation application contained the
amounts to be paid in installments with interest. Unable to comply with the schedule of
payments, Pacifico requested Jestra (owner and developer of property) to allow him to make
periodic payments which the latter granted. With still a remaining balance of P260,000 on
the down payment, Pacifico and Jestra executed a Contract to Sell over the property. The
said contract was silent on the unsettled balance on the down payment. Pacifico requested
twice for a restructuring of his unsettled obligation which Jestra granted subject to certain
conditions of additional penalties. As compliance to the condition, Pacifico issued 12
postdated checks; however, he was unable to pay so he requested that he be allowed to
dispose the property to recover his interest and he could recover the 12 post dated checks,
which was this time was denied by Jestra. Jestra then sent a notarial notice of cancellation
that they are giving him until a certain date to pay or else the contract will be automatically
cancelled.
Pacifico then filed a complaint before the HLURB claiming that despite his full payment of
the downpayment, Jestra failed to deliver to him the property and instead sold it to another
buyer. HRLURB Arbiter decided in Pacificos favor finding Jestra liable.
The Board of Commissioners of the HLURB only modified the award. The Office of the
President adopted the findings of facts and conclusions of law by the Board thus were
elevated to the CA which likewise affirmed the decision of the OP. Hence, the case at bar.
ISSUE: W/N Pacifico has paid at least 2 years of installments
HELD:
No. Pacifico was able to pay the downpayment in 11 months after the last monthly
installment was due. But he failed to pay at least 2 years of installments therefore he is not
entitled to a refund of the cash surrender value of his payments under Sec. 3 of RA 6552.
What is applicable is Sec 4 which provides that the buyer should be given a grace period of
not less than 60 days and if he should still fail to do so, the seller may cancel the contract
after 30 days from receipt of the buyer of the notice of cancellation. Pacifico admitted that
the under the restructured scheme, the 1st installment on the 70% balance of the purchase
was due on Jan 5, 1998. Although he issued checks to cover for them, the 1st 2 were
dishonored. When he was notified of the dishonor, he took no action hence the 60 day
grace period lapsed. Hence, the cancellation was justified.

SPS. NOYNAY V. CITIHOMES BUILDER AND DEVELOPMENT INC

G.R. No. 204160 | September 22, 2014
FACTS:
On Dec. 29, 2004, Citihomes and Spouses Noynay executed a contract to sell covering the
sale of a house and lot. Under the terms of the contract, the price of the property was fixed
at P915,895, with a downpayment of P183,179, and the remaining balance to be paid in
120 equal monthly installments with an annual interest rate of 21%. Subsequently,
Citihomes executed the Deed of Assignment of Claims and Accountsin favor of UCPB. Under
the said agreement, UCPB purchased from Citihomes various accounts, including the
account of Spouses Noynay, for a consideration of P100,000,000.00. In turn, Citihomes
assigned its rights, titles, interests, and participation in various contracts to sell with its
buyers to UCPB.
In February 2007, Spouses Noynay allegedly started to default in their payments. Months
later, Citihomes decided to declare Spouses Noynay delinquent and to cancel the contract
considering that nine months of agreed amortizations were left unpaid. The notarized
Notice of Delinquency and Cancellation of the Contract to Sell was received by Spouses
Noynay. They were given 30 days within which to pay the arrears and failure to do so would
authorize Citihomes to consider the contract as cancelled. Citihomes sent its final demand
letter asking Spouses Noynay to vacate the premises due to their continued failure to pay
the arrears.
Spouses Noynay insist that by virtue of the assignment of rights which Citihomes executed
in favor of UCPB, Citihomes did not have a cause of action against them because it no
longer had an interest over the subject property. The monthly installments amounting to
three years were already paid, by reason of which, Section 3(b) of the Maceda Law should
apply. This means that for the cancellation to be effective, the cash surrender value should
have been paid first to them by Citihomes. Citihomes counters that it has the right to ask
for the eviction of the petitioners in its capacity as the registered owner despite the
assignment of rights it made to UCPB. It believes that because Spouses Noynay failed to
pay at least 2 years of installments, the cancellation became effective upon the expiration
of the 30-day period following the receipt of the notice of delinquency and cancellation
notice and without the need for the payment of the cash surrender value.
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.

MOLDEX REALTY INC. V. SABERON

G.R. No.176289 | April 8, 2013
FACTS:
Interested in acquiring a lot, Flora asked Moldex to reserve the lot for her as shown by a
Reservation Application dated April 11, 1992. While the cash purchase price for the land is
P396,000.00, the price if payment is made on installment basis is P583,498.20 at monthly
amortizations of P8,140.97 payable in five years with 21% interest per annum based on the
balance and an additional 5% surcharge for every month of delay on the monthly
installment due. Flora opted to pay on installment and began making aperiodical payments
from 1992 to 1996 in the total amount of P375,295. In April, August, and October 1996,
Moldex sent Flora notices reminding her to update her account. Upon inquiry, however,
Flora was shocked to find out that as of July 1996, she owed Moldex P247,969.10. In
November 1996, the amount ballooned to P491,265.91.
As of April 1997, Moldex computed Floras unpaid account at P576,569.89. It then sent Flora
a Notarized Notice of Cancellation of Reservation Application and/or Contract to Sell. Flora,
on the other hand, filed before the Housing and Land Use Regulatory Board (HLURB)
Regional Field Office IV a Complaint for the annulment of the contract to sell, recovery of all
her payments with interests, damages, and the cancellation of Moldexs license to sell.
Aside from imputing bad faith on the part of Moldex in bloating her unpaid balance, Flora
alleged that the contract to sell between her and Moldex is void from its inception.
According to Flora, Moldex violated Section 5 of Presidential Decree (PD) No. 95711 when it
sold the subject lot to her on April 11, 1992 or before it was issued a license to sell on
September 8, 1992.
In its defense, Moldex averred that Flora was only able to pay P228,201.03 and thereafter
defaulted in her in payment from April 1994 to May 1997. Hence, Floras subsequent
payments were applied to her delinquencies. As regards the alleged bloating, Moldex
explained that the amount reflected in Floras Statement of Account included the arrears
and surcharges incurred due to her non-payment of the monthly installments. And since
Flora was not able to settle her account, Moldex exercised its right under Republic Act (RA)
No. 6552, or the Maceda Law, by cancelling the reservation Agreement/Contract to Sell and
forfeiting all payments made. Finally, Moldex alleged that since Flora was at fault, the latter
cannot be heard to make an issue out of Moldexs lack of license or demand relief from it.
ISSUE: W/N Flora is entitled to the cash surrender value of her payments.
RULING:
Yes. Under the Maceda Law, the defaulting buyer who has paid at least two years of
installments has the right of either to avail of the grace period to pay or, the cash surrender
value of the payments made, including the down payments, deposits or options on the
contract.
It is on record that Flora had already paid more than two years of installments (from March
11, 1992 to July 19, 1996) in the aggregate amount of P375,295.49. Her last payment was
made on July 19, 1996. It is also shown that Flora has defaulted in her succeeding
payments. Thereafter, Moldex sent notices to Flora to update her account but to no avail.
She could thus no longer avail of the option provided in Section 3(a) of the Maceda Law
which is to pay her unpaid installments within the grace period. Besides, Moldex already
sent Flora a Notarized Notice of Cancellation of Reservation Application and/or Contract to

Sell. Hence, the only option available is Section 3(b) whereby the seller, in this case, Moldex
shall refund to the buyer, Flora, the cash surrender value of the payments on the property
equivalent to 50% of the total payments made.

ACTIVE REALTY V. DAROYA

G.R. No. 141205 | May 9, 2002
FACTS:
Active Realty is the owner and developer of Town and Country Hills Executive Village. It
entered into a Contract to Sell with respondent Daroya whereby Daroya agreed to buy a
515 sq.m. lot for P224,025 in Active Realtys subdivision. The contract stipulated that the
Daroya shall pay an initial amount upon execution and the balance in 60 monthly
installments. Adding the down payment and installment payments made by Daroya, it
would appear that he has already paid an amount higher than that stated as the contract
price.
Respondent defaulted representing 3 monthly amortizations. Petitioner sent respondent a
notice of cancellation of their contract to sell, to take effect 30 days from receipt of the
letter. Daroya offered to pay for the balance of the contract price but Active Realty refused
as it has allegedly sold the lot to another buyer. Daroya then filed a complaint for specific
performance.
ISSUE: W/N Active Realty can be compelled to refund to the respondent the value of the lot
or to deliver a substitute lot at Daroya's option.
HELD:
Yes. The contract to sell in the case at bar is governed by RA 6552 more popularly known as
the Maceda Law. Daroya has already paid in 4 years a total amount exceeding the contract
price. Active Realty decided to cancel the contract when Daroya defaulted on three monthly
amortizations. However the records clearly show that the petitioner failed to comply with
the mandatory twin requirements for a valid and effective cancellation under the law. It
failed to send a notarized notice of cancellation and refund the cash surrender value. In
fact, the records disclose that it was only during the preliminary hearing of the case before
the court tribunal when petitioner offered to pay the cash surrender value.
The court finds it illegal that Active Realty without complying with the mandatory
requirements for cancelling the contract and forfeiting both Daroya's land and money after
Daroya has paid for not just the contract price but more than the consideration stated in the
contract to sell.
For failure to cancel the contract in accordance with the procedure provided by law, the
court held that the contract to sell between the parties remained valid and subsisting.
Daroya has the right to offer to pay for the balance of the purchase price without interest
which Daroya did in this case. However, Daroya can no longer exercise this right as the
subject lot was already sold by the petitioner to another buyer. Petitioner is now ordered to
refund to respondent the actual value to the lot resold or deliver a substitute lot at the
option of Daroya.