Let it be resolved that, Force of a Contract should

prevail over a New law
Jefflyn Nicole Seguep Aishan Suarez
Kenneth Villanueva Dax Xenos P. Llorente
Ann Margaret Abando

July 26. dispenses with those agreed upon or withdraws remedies for the enforcement of the rights of the parties. parties may freely stipulate their duties and obligations which perforce would be binding on them. A can demand for B’s departure. A demanded B to vacate the property. the high court stressed that: “Article 1159 of the Civil Code of the Philippines state that obligations arising from contract have the force of law between the contracting parties and should be complied with in good faith. 2010. B intended to use the Maceda Law as his shield in covering his delinquency. hence. However. Verily.” No less than Article III. There is impairment if a subsequent law changes the terms of a contract between the parties. abridging or in any manner changing the intention of the parties. POSITION: The Agreement enshrined in the Provisions of a Contract should prevail over the claims of an alleged right created by a new law. on the sixth year. he became delinquent.FACTS OF THE CASE: A & B entered into a Contract to sell involving a residential House and Lot to be paid in Ten years with Monthly Amortizations. . There is no question in the good intentions of the law. B diligently paid his dues for Five years. the agreement entered into between petitioner and respondent must be respected and given the force of law between them. In Metropolitan Bank and Trust Company vs Larry Marias. A cited the contract provision that upon the third month of delinquency. however. B refused and used the Maceda Law or RA 6552 or AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS as his point of defense. GR 179105. opening the gates open for greater evil putting the force and effects of contracts in ridicule. imposes new conditions. Not being repugnant to any legal proscription. The law was passed years AFTER the contract was already in effect. to give the law a retroactive effect in order to impair a contract is abhorring to the constitution. Section 10 of the 1987 Philippine Constitution provide that: “No law impairing the obligation of contracts shall be passed.” The non-impairment clause is limited in application to laws that derogate from prior acts or contracts by enlarging.

Comelec and Lee G. when petitioner failed to abide by its obligation to pay the installments in accordance with the contracts to sell. 1996) In People’s Industrial vs CA.. b. If the laws are remedial in nature. The protection it provides to buyers of real estate is commendable. CA and MAR-ICK INVESTMENT CORPORATION. these decrees cannot be applied to a situation that occurred years before their promulgation. 120295. Thus. laws should be prospective not retroactive.G. Hence. G. If the laws are of an emergency nature and are authorized by the police power of the government.R. Consequently. there are some exceptions: 1. provision No. Alvarez 44 O.” Nowhere in the provisions of RA 6552 expressly state that it shall be given a retroactive effect. In case of PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION vs. 4259) 5. This kind of law to be valid must not impair vested rights nor affect final judgments. 4 Civil Code). 9 of the agreements or contracts to sell and cancelled these in October 1971. (Santos vs. granting that said decrees indeed provide for a retroactive application. (Frivaldo vs. Moreover. still. However. it is necessary that an express provision for its retroactive application must be made in the law.D. The accused or convict is not a habitual delinquent as defined in Art. 112733. 957 and 1344. provided: a. Nos. 1997. 2. 4.R. however. 18 Article 4 of the Civil Code provides that laws shall have no retroactive effect unless the contrary is provided. It is favorable to the accused or convict.. 22 of the Revised Penal Code. No. In general. were not yet in existence when private respondent invoked provision No. If the laws themselves provide for their retro-activity (Art. 9 automatically took effect. If the statute is penal in nature. If the law is curative (necessarily retroactive for the precise purpose to cure errors or irregularities). The high court refused the malicious use of the Maceda Law whereas: “These decrees. these may not be applied in this case. the Force of a contract should prevail over a New Law. But nowhere in the law that it state that contracts entered prior its passage should be dishonored. June 28. . October 24. 3. If we apply the principle of STARE DECISIS. 19 There being no such provision in both P.

Republic Act No. The PURCHASER shall be deemed for all legal purposes to take possession of the parcel of land upon payment of the down or first payment. those imposed by the authorities. the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded. when B failed to abide by its obligation to pay the installments in accordance with the contracts to sell. Inc. and those contained in Clauses Nos. by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price. A can demand for B’s departure and its automatically took effect. That the agreements of 1961 are contracts to sell is clear from the following provisions thereof: 3. in a contract to sell. stones. Republic Act No. Article 1592 of the Civil Code which requires rescission either by judicial action or notarial act is not applicable. 6552 does not expressly provide for its retroactive application and. or gravel from it or any other lots belonging to the OWNER. such payment being a positive suspensive condition and failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. A’s cancellation of the agreements without a duly notarized demand for rescission did not mean that it violated said provision of law. at which time the OWNER agrees to execute a final deed of sale in favor of the PURCHASER and cause the issuance of a certificate of title in the name of the latter. "CONTRACT TO SELL. In a contract of sale. The distinction between these contracts is graphically depicted in Adelfa Properties. The distinction between the two is important for in a contract of sale. Thus. provided. and he shall not be entitled to take or remove soil.***Apparently. nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. At this juncture. Hence. title is retained by the vendor until the full payment of the price. However. A cited the contract’s provision that upon the third month of delinquency. that his/her possession under this section shall be only that of a tenant or lessee and subject to ejectment proceedings during all the period of this agreement. Five (5) and Six (6) of this agreement. 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. 1972. therefore. the title passes to the vendee upon the delivery of the thing sold.” That section provides that "If the buyer fails to pay the installments due at the expiration of the grace period. Court of Appeals. whereas in a contract to sell. Title to said parcel of land shall remain in the name of the OWNER until complete payment by the PURCHASER of all obligations herein stipulated. . 21 as follows: . . The parcel of land subject of this agreement shall be used by the PURCHASER exclusively for legal purposes. the "Realty Installment Buyer Protection Act. the law was passed years AFTER the contract was already in effect and the contracts to sell had become automatically operational. 4. it provides: . ." While the title of a contract is not controlling. v. whereas. 5. however. free from liens and encumbrances except those provided in the Land Registration Act. A failed to observe Section 4 of Republic Act No. a deed of sale is considered absolute in nature where there is neither a stipulation in the deed that title to the property sold is reserved in the seller until the full payment of the price. its stipulations confirm the nature of that contract. 6552. Thus. being contracts to sell. it is apropos to stress that the 1961 agreements are contracts to sell and not contracts of sale. 6552 was approved on August 26. it could not have any effects in the cancellation of the contracts to sell in this case.

the OWNER agrees to execute a final deed of sale in favor of the PURCHASER and cause the issuance of certificates of title in the name of the latter. and those contained in the stipulations that follow. those imposed by the authorities. .5. at which time. Title to said parcels of land shall remain in the name of the OWNER until complete payment by the PURCHASER of all obligations herein stipulated. free from all liens and encumbrances except those provided in the Land Registration Act.