JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION

vs.
DANIEL PONCE PACIFICO
G.R. No. 167452. January 30, 2007.

D O C T R I N E : 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 down payment
(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:
1. 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?
2. Was the seller entitled to cancel the contract of sale?
RULING:

1. NO. 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.

2. Yes. 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.

MCLAUGHLIN V. COURT OF APPEALS

G.R. No. L-57552, October 10, 1986

FACTS: Petitioner and private respondent, Flores, entered into a contract of conditional sale of
real property. When the private responded failed to pay the balance on the date stipulated, he
filed a petition to rescind the contract. They entered into a Compromise Agreement. Thereafter,
the petitioner made a demand. In response, the Flores sent a letter to the former signifying his
willingness and intention to pay the balance. Flores alleged that he tendered payment to
petitioner but the petitioner refused to accept it. Petitioner filed a motion for writ of execution,
to rescind and liquidate damages, alleging that Flores had failed to pay the installment due, as
stipulated in their compromise agreement. Flores filed a motion for reconsideration and
tendered a certified manager’s check covering the entire obligation, within seventeen days after
it was due. The trial court dismissed the motion for reconsideration. The CA nullified and set
aside the decision of the trial court. It contended that rescission will not be permitted in cases of
a slight or casual breach. The delay in payment of Flores is merely a slight breach.

ISSUE: WON the tender of payment restored the defendant’s right as vendee.
RULING: Yes. The tender made by private respondent of a certified bank manager’s check
payable to petitioner was a valid tender of payment. The certified check covered not only the
balance of the purchase price in the amount of P69,059.71, but also the arrears in the rental
payments from June to December 1980 in the amount of P7,000.00, or a total of P76,059.71. But
he is not released from the responsibility to pay the vendor. The vendee must first consign the
amount to the court. According to Article 1256 of the Civil Code of the Philippines, if the
creditor to whom tender of payment has been made refuses without just cause to accept it, the
debtor shall be released from responsibility by the consignation of the thing or sum due, and
that consignation alone shall produce the same effect in the five cases enumerated therein;
Article 1257 provides that in order that the consignation of the thing (or sum) due may release
the obligor, it must first be announced to the persons interested in the fulfillment of the
obligation; and Article 1258 provides that consignation shall be made by depositing the thing
(or sum) due at the disposal of the judicial authority and that the interested parties shall also be
notified thereof.