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G.R. No.

195619, September 5, 2012
Planters Development Bank, vs Julie Chandumal
FACTS:
BF Homes and Julie Chandumal entered into a contract to sell a parcel of land located in Las Pinas.
Later, BF Homes sold to PDB all its rights over the contract.
Chandumal paid her monthly amortizations until she defaulted in her payments. So, PDB sent a notice to
Chandumal with a demand to vacate the land within 30days, otherwise all of her rights will be
extinguished and the contract will be terminated and deemed rescinded. In spite of the demand,
Chandumal failed to settle her account.
PDB filed an action for judicial confirmation of notarial rescission and delivery of possession but still
Chandumal refused to do so. Summons were then issued and served by deputy sheriff Galing but its was
unavailing as she was always out of her house on the dates the summons were served.
RTC then issued an order granting the motion of PDB. Chandumal filed an urgent motion to set aside
order of default and to admit attached answer. Chandumal said that she did not receive the summons and
was not notified of the same and her failure to file an answer within the reglementary period was due to
fraud. RTC denied Chandumal's motion to set aside the order of default.
Chandumal appealed to the CA. CA nullified the RTC's decision.
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:
(1) 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.
(2) 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.
(3) 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.
Petition is denied.

Hence. 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. 2005. JOVELLANOS FACTS: On April 26. 06-28830. Jovellanos filed their opposition with motion to admit answer. Jovellanos to vacate and deliver possession of the subject property within seven (7) days which.R. Verily. undertaking to pay the remaining balance of the contract price in equal monthly installments of P13. docketed as Civil Case No. 189145 December 4. Jovellanos entered into a Contract to Sell 6 with Palmera Homes. questioning the jurisdiction of the court. In a final Demand Letter dated May 25. title and interest in the Contract to Sell in favor of petitioner Optimum Development Bank (Optimum) through a Deed of Assignment of even date. Despite having been served with summons. Further.00.G. 2005. together with a copy of the complaint. a complaint for unlawful detainer before the MeTC. 2006. Palmera Homes assigned all its rights. Jovellanos failed to file their answer within the prescribed reglementary period. 2006. which the MeTC denied. the non-fulfillment of which prevents the prospective seller’s obligation to convey title from becoming effective. among others.00. (Palmera Homes) for the purchase of a residential house and lot situated in Block 3. On April 10. however. Jovellanos took possession of the subject property upon a down payment of P91. Further. 2013 OPTIMUM DEVELOPMENT BANK vs. must be examined under the provisions of — RA 6552. Sps. Caloocan City (subject property) for a total consideration of P1. 2006.500. Sps. On August 22. SPOUSES BENIGNO V. in a contract to sell. Sps.The full payment of the purchase price in a contract to sell is a suspensive condition. or the “Realty Installment Buyer Protection . Villa Alegria Subdivision. thus prompting Optimum to move for the rendition of judgment.000. JOVELLANOS and LOURDES R. 2006. Thereafter. Lot 14. remained unheeded. as in this case. Pursuant to the contract. No. the said contract is especially governed by — and thus.015. Optimum required Sps. 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. Jovellanos’s failure to pay their monthly installments despite several written and verbal notices. they filed a Motion to Reopen and Set the Case for Preliminary Conference.107. 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. on November 3.00 for a period of 10 years starting June 12. Optimum issued a Notice of Delinquency and Cancellation of Contract to Sell for Sps. Optimum filed. Sps. Inc.

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. and took effect from the time that the maturity dates of the installment payments lapsed. or sell or assign their rights to another. 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. as above-quoted and highlighted. Finally. viz. . Jovellanos failed to pay their stipulated monthly installments as found by the MeTC. Sec. With the said grace period having expired bereft of any installment payment on the part of Sps. since Sps. residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer. the Court examines Optimum’s compliance with Section 4 of RA 6552. It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments. the said provision provides for three (3) requisites before the seller may actually cancel the subject contract: first. 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. (b) If the contract is cancelled. and third. the 60-day grace period automatically operated in favor of the buyers. 6552 recognizes in conditional sales of all kinds of real estate (industrial. 6552. Down payments. which is the provision applicable to buyers who have paid less than two (2) years-worth of installments. (2) Where he has paid less than two years in installments. Jovellanos. deposits or options on the contract shall be included in the computation of the total number of installments made. Jovellanos. 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. which provides for the rights of the buyer in case of his default in the payment of succeeding instalments. Sps. 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. an additional five per cent every year but not to exceed ninety per cent of the total 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. Optimum gave Sps. R. No. in proceeding with the actual cancellation of the contract to sell. after five years of installments.: (1) Where he has paid at least two years of installments. Known as the Maceda Law. Optimum then issued a notarized Notice of Delinquency and Cancellation of Contract on April 10. the unpaid installments due within the total grace period earned by him. Jovellanos an additional thirty (30) days within which to settle their arrears and reinstate the contract.A. In the present case. Essentially. Given the nature of the contract of the parties. which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided. 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. the seller shall give the buyer a 60-day grace period to be reckoned from the date the installment became due. second. if any. 4. which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. the respondent court correctly applied Republic Act No.Act”. commercial. without additional interest. If the buyer fails to pay the installments due at the expiration of the grace period. (Emphasis and underscoring supplied) Pertinently. (a) To pay. 2006.

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. their refusal to vacate and turn over possession to Optimum makes out a valid case for unlawful detainer as properly adjudged by the MeTC. . Thus. 2006.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. based on the foregoing. Jovellanos had already lost their right to retain possession of the subject property as a consequence of such cancellation.