FACTS OF THE CASE

 Priscilla Zafra Orbe (Orbe) entered into a purchase agreement with respondent
Filinvest Land, Inc. (Filinvest) over a 385-square-meter lot at Highlands Pointe,
Taytay, Rizal with a total contract price of ₱2,566,795, payable on installment
basis. The terms of the contract are as follows:
a.  August 04, 2001 – April 04, 2002: ₱54,818 monthly
b.  May 08, 2002 – April 08, 2009 
First year: ₱27,936.84 monthly
Second year: ₱39,758.84 monthly
Third year: ₱41,394.84 monthly
Fourth year to Seventh year: ₱42,138.84 monthly

 From June 17, 2001 to July 14, 2004, Orbe was able to pay a total of
₱608,648.20. Orbe was unable to make further payments allegedly on account of
financial difficulties.
 On October 4, 2004, Filinvest sent a notice of cancellation which was received by
Orbe on October 18, 2004.
 Priscilla Zafra Orbe filed against Filinvest a complaint for refund with damages
before the HLURB Field Office.

a. Orbe emphasized that she had made payments beginning June, 2001 up

to October, 2004
b. She further asserted that the October 4, 2004 Notice did not amount to an
"effective cancellation by notarial act.
c. Filinvest argued that Priscilla Orbe failed to make 24 monthly amortization
payments on her account, and thus, could not benefit from Section 3 of
Republic Act No. 6552. Pertinent provisions of the Maceda law shown
below:
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 Numbered 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:

(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 thirty 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.
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 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.

d. The P608,648.20 paid by Orbe from June 17, 2001 to July 14, 2004
covered only the reservation fee, down payment, and late payment
charges, exclusive of the monthly amortization payments stipulated in the
Purchase Agreement.

 HLURB Field Office ruled in favour of Orbe. Filinvest appealed to HLURB

Board of Commissioners, but the latter affirmed the HLURB Field office decision,
but argued that “equity” should come in play and concluded that Orbe was still
entitled to a 50% refund.
a. Filinvest appealed to the Office of the President. Office of the President
sustained the conclusion that Orbe was entitled to a 50% refund.
b. Filinvest made an appeal to the CA. CA reversed the rulings of the
Office of the President, and dismissed Orbe’s complaint. Hence, this case
to the SC.

ISSUE
 Whether or not the notice of cancellation from Filinvest Land, Inc. is valid?
 Whether or not Priscilla Orbe is entitled to a refund?
 Whether or not Priscilla Orbe’s right to refund is based from section 3 of the
Maceda Law?
 RULING
1. No, The notice was invalid because the notice sent by Filinvest was made with a
Jurat which does not make a formal agreement about the authority of the
representative, and it must be by acknowledgement and not by a jurat. Another
cause of invalidity of the notice is because the proof was a community tax
certificate which does not satisfy the requisite.

2. Yes, The Court sided with Priscilla Zafra Orbe and was granted a refund
amounting to P608,648.20 that will earn a legal interest at 12% per annum, from
November 17, 2004 to June 30, 2013 and 6% per annum from July 1, 2013 until it
is fully paid due to the fact that the notice of cancellation was not valid and this
situation falls under the Sec. 4 of the Maceda Law. This order was mandated to
the House and Land Use Regulatory Board Expanded National Capital Regional
Field Office for the execution of the order.

3. Yes, The court concluded that Orbe was entitled of the refund because the
Contract to Sell between the parties remained valid due to the developer’s failure
to send a notarized notice of cancellation as based on Maceda Law under Section
4. The defaulting buyer thus had the right to offer to pay the balance of the
purchase price, and the developer had no choice but to accept payment.
However, Orbe was unable to exercise this right because Filinvest sold the
subject lot.

BASIS OF RULUNG
ISSUE 1: The notice of cancellation was accompanied by a jurat; however, this is not
the valid notarial act contemplated by the Maceda Law.

In ordinary circumstances, "notarization of a private document converts the document

into a public one making it admissible in court without further proof of its authenticity."
To enable this conversion, Rule 132, Section 19 of the Revised Rules of Evidence
specifically requires that a document be "acknowledged before a notary public."

Rule II, Section 1 of A.M. No. 02-8-13-SC, the 2004 Rules on Notarial Practice, defines
an acknowledgement, as follows:
SECTION 1. Acknowledgment. - "Acknowledgment" refers to an act in which an
individual on a single occasion:
(a) appears in person before the notary public and presents an integrally complete
instrument or document;
(b) is attested to be personally known to the notary public or identified by the notary
public through competent evidence of identity as defined by these Rules; and
(c) represents to the notary public that the signature on the instrument or document was
voluntarily affixed by him for the purposes stated in the instrument or document,
declares that he has executed the instrument or document as his free and voluntary act
and deed, and, if he acts in a particular representative capacity, that he has the
authority to sign in that capacity.

Respondent's notice of cancellation here was executed by an individual identified only

as belonging to respondent's Collection Department. It was also accompanied not by an
acknowledgement, but by a jurat.

A jurat is a distinct notarial act, which makes no averment concerning the authority of a
representative. It is defined by Rule II, Section 6 of the 2004 Rules on Notarial Practice,
as follows:

SECTION 6. Jurat. - "Jurat" refers to an act in which an individual on a single occasion:

(a) appears in person before the notary public and presents an instrument or document;
(b) is personally known to the notary public or identified by the notary public through
competent evidence of identity as defined by these Rules;
(c) signs the instrument or document in the presence of the notary; and
(d) takes an oath or affirmation before the notary public as to such instrument or
document.

ISSUE 2: Contrary to petitioner's allegations, she did not pay "at least two years of
installments" as to fall within the protection of Section 3 of the Republic Act No. 6552 or
the Maceda Law.

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 Numbered 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:
(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 thirty 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.

Down payments, deposits or options on the contract shall be included in the

computation of the total number of installment payments made.

ISSUE 3: The refund granted to Orbe was not based on Section 3 of the Maceda Law,
but in Section 4 since the needed installment to be included in Section 4 is that equal to
24 months of installment and not the date or duration wherein the buyer was able to
pay.

Section 4. In case where less than two years of installments were paid, 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.