Sales - Blue 3rd Exam.docx

SALES: EXAM REVIEWER BlueTeam

E.) REMEDIES IN CASES OF IMMOVABLES

1) Remedies of Seller k a) Anticipatory Breach Article 1591. Should the vendor have reasonable grounds to fear the loss of immovable property sold and its price, he may immediately sue for the rescission of the sale. Should such ground not exist, the provisions of article 1191 shall be observed. • We have discussed that under the said article, where there is anticipatory breach, if the seller has reasonable grounds to fear the loss of the immovable property sold and its price, he may immediately sue for the rescission of the sale. b) Failure of Buyer to Pay Price Rescission under Article 1191 Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124) Rescission under Article 1592 Article 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term. ◦ Take note in this article that in the sale of immovable property, it should not be sale on instalment. If it is a sale on instalment, then we apply a different law. This is not stipulation of automatic rescission, the vendee may still pay as long as there is no demand for rescission either judicially or a notarial act. ◦ Remember, 1592, the requirement for rescission, demand for a notarial act or a judicial act but it is solely applicable to a contract of sale and not to a contract to sell. 2) Remedies of Buyer 1) Suspension of Payment Article 1590. Should the vendee be disturbed in the possession or ownership of the thing acquired, or should he have reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may suspend the payment of the price until the vendor has caused the disturbance or danger to cease, unless the latter gives security for the return of the price in a proper case, or it has been stipulated that, notwithstanding any such contingency, the vendee shall be bound to make the payment. A mere act of trespass shall not authorize the suspension of the payment of the price • Now in case of real properties, remedies available to the buyer, we have also discussed under the Condominium Act, the buyer may suspend payment if the real estate developer fails to comply with the

1

obligations according to the approved plan, or the buyer may even demand for rescission. 2) In Case of Subdivision or Condominium Projects Section 23, PD 957. Non-Forfeiture of Payments. – No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate. Section 24, PD 957. Failure to pay installments. – The rights of the buyer in the event of this failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552. Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to the corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary. 1. Notice Required under Section 23 of PD 957 Section 23 of PD 957 does not require that a notice be given first by the buyer to the seller notice and demand can be made in the same letter or communication. 2. Retroactive Application of PD 957 PD 957 did not expressly provide for retroactivity in its entirety, but such can be plainly inferred from the unmistakable intent of the law. 3. Right to Grace Period Stipulated When a grace period is provided for in the contract of sale, it should be construed as a right, not an obligation of the debtor, and when unconditionally conferred, the grace period is effective without further need of demand either calling for the payment of the obligation or for honoring the right.

F) MACEDA LAW (RA 6552): SALE OF REAL ESTATE ON INSTALLMENTS Under sec 2 of RA 6552 thereof you have the purpose: for public policy, to protect the buyers of real estate in installment payments against onerous and oppressive conditions. So it is known as The Sale Of Real Estate On Installment or also known as the Realty Installment Buyer Act. REPUBLIC ACT NO. 6552 AN ACT TO PROVIDE PROTECTION TO BUYER OF REAL ESTATE ON INSTALLMENT PAYMENTS Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: SECTION 1. This Act shall be known as the “Realty Installment Buyer Protection Act.” SECTION 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions. 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 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:

2

SALES: 1ST EXAM REVIEWER Emille Dane S. Viola

To pay, without additional interest, the unpaid installments due within the total 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. 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 percent 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 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 buyers a grace period of not less than sixty days from the date the installment become 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. SECTION 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act. SECTION 6. The buyer shall have the right to pay in advance any installments or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property. SECTION 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void. SECTION 8. If any provisions of this Act is held invalid or unconstitutional no other provision shall be affected thereby. SECTION 9. This Act shall take effect upon its approval. Approved August 26, 1972.

1) Role of Maceda Law The law declares as a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions. (Section 2, RA 6552) 2) Retroactive Application of law In Siska Dev. Corp. vs. Office of the President, the Court extended the formal requirements of rescission under the Maceda Law to apply even to contracts entered into prior to the effectivity of the Maceda Law. However, in People’s Industrial vs. CA, the Court held that RA 6552 does not expressly provide for its retroactive application and, therefore, it could not have encompassed the cancellation of the contracts to sell pursuant to an automatic cancellation clause which had become operational long before the approval of the law. a) Transactions Covered - Does not cover all sales of realty on installments but primary residential real estate. - Covers not only “sale” on installments of real estate but also “financing” of such acquisitions. - It expressly covers “all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments. (Section 3, RA 6552) - Includes in its provisions both contract of sale and contract to sell with the use by the law of the twin terms of “notice of cancellation or the demand for rescission” of the contract. b) Transactions Excluded from Coverage 1) Sales covering industrial lots, 2) Sales covering commercial buildings (and commercial lots by implication), and

3) Sales to tenants under agrarian reform laws (RA 3844, as amended by RA 6389). The enumeration is not exclusive. An example would be the sale on installment of commercial or office condominium units. 1. Maceda Law Cannot be Invoked by Highest Bidder in Foreclosure Proceedings Such person or entity, although binding itself to the terms of the contracts of sale, is not the real party to the original installment sales, and more importantly, does not have any rights promoted under the Maceda Law which contains provisions for the benefits of real estate buyers on installments. (Lagandao vs. CA) c) Rights Granted (i) At Least 2 Years Installments Paid o To pay, without additional interest, the unpaid installments due within the total grace period for every 1 year of installment payments made; provided, That this right shall be exercised by the Buyer only once in every 5 years of the life of the contract and its extensions, if any. o If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to 50% of the total payments made and, after 5 years of installments, an additional 5% every year but not to exceed 90% of the total payments made; provided, that the actual 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 3, RA 6552) (ii) Less than 2 Years Installments paid In case where less than 2 years of installments were paid the seller shall give the buyers a grace period of not less than 60 days from the date the installment become due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after 30 days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act. (Section 4, RA 6552) (iii) Compensation Rule on Amortization Payments When the buyer fails to pay any monthly amortization, he is under Article 1169 already in default and liable for the damages stipulated in the contract. Nevertheless, the Court held that the default committed by the buyer in respect of the obligation could be compensated by the interest and surcharges imposed upon the buyer under the contract. (Leano vs. CA) (iv) Formula to Compute the Installment Mode The proper formula to apply in determining how many installments have been made is to include any payment made as downpayment or reservation fee as part of the installments made, and then to divide them by the stipulated mode of payment (monthly, quarterly, semi-annual or annual). d) Interpretation of Grace Period and Modes of Cancellation The case of McLaughin vs. CA provides for two grace periods: 1) 1st Grace Period o expressly provided by the law, which is a minimum of 60 days.

SALES: EXAM REVIEWER BlueTeam

o availment of the right to update the installment payments is without interest and penalties, even when these are stipulated in the contract. 2) 2nd Grace Period

o the period before rescission or cancellation actually takes place. o the buyer would be liable for and would have to include in his payments the stipulated interests and penalties incurred. e) Other Rights Granted to Buyer The buyer shall have the right to pay in advance any installments or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property. (Section 6, RA 6552)

3

HELD: No. Not applicable. It is clear from the abovequoted provisions that the parties intended their agreement to be a Contract to Sell: Dela Cruz retains ownership of the subject lands and does not have the obligation to execute a Deed of Absolute Sale until petitioners’ payment of the full purchase price. The Maceda Law applies to contracts of sale of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants. The subject lands, comprising five (5) parcels and aggregating 69,028 square meters, do not comprise residential real estate within the contemplation of the Maceda Law. Moreover, even if we apply the Maceda Law to the present case, petitioners’ offer of payment to Dela Cruz was made a year and a half after the stipulated date. This is beyond the sixty-day grace period under Section 4 of the Maceda Law. Petitioners still cannot use the second sentence of Section 4 of the Maceda Law against Dela Cruz for Dela Cruz’s alleged failure to give an effective notice of cancellation or demand for rescission because Dela Cruz merely sent the notice to the address supplied by petitioners in the Contract to Sell.

f) Effect of Contrary Stipulations Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void. (Section 7, RA 6552) g) Maceda Law Cannot Be Availed of by Developer The Maceda law has no application to protect the develop or one who succeeds the developer, since “the policy of that law, as embodied in its title, is 'to provide protection to buyers on real estate on installment payments.' against onerous and oppressive conditions.” (Lagandaon vs. CA) Section 3(b) of the same law does not grant the developer any legal ground to cancel the contracts to sell; rather, it prescribes the responsibiity of the seller in case the 'contracts are canceled.' (Lagandaon vs. CA) 3) Cancellation of Judicial Sale Where a judicial sale is voided is without fault of the purchaser, the latter is entitled to reimbursement of the purchase money paid by him. A judicial sale can only be set aside upon the return to the buyer of the purchase price with simple interest, together with all sums paid out by him in improvements introduced on the property, taxes, and other expenses by him. (Seven Brothers Shipping vs. CA) Valarao vs.CA ISSUES: WON they entered into a contract of sale wherein Art 1592 is applicable? WON Arellano should forfeit the amount already paid and WON she committed breach? HELD: Article 1592 of the Civil Code applies only to contracts of sale, and not to contracts to sell or conditional sales. Furthermore, in order to enforce the automatic forfeiture clause in a deed of conditional sale, Valarao has the burden of proving a contractual breach by Arellano. In the present case, the Deed of Conditional Sale is of the same nature as a sale on installment or a contract to sell. It is clear that petitioners were not justified in refusing to accept the tender of payment made by Arellano on December 30 and 31, 1990. Had they accepted it on either of said dates, she would have paid all three monthly installments due. The fact is, Valarao refused to accept payment and failed and thus have no reason to demand the enforcement of the automatic forfeiture clause. Under Sec 3 of RA 6552 or the Maceda Law, Arellano was entitled to a 1-month grace period for every year of installments paid, which means that she had a total grace period of 3 months from December 31, 1990.

GARCIA, vs.CA ISSUE: Whether or not Maceda Law is applicable in this case.

Active Realty & Dev’t Corp v Daroya DOCTRINE: RA 6552, Section 3. Rights of the buyer in case of default in the payment of succeeding installments, where he’s already paid at least 2 years of installments: (a) To pay, without additional interest, the unpaid installments due within total grace period (1 month for every1 year of installment payments made; (b) If contract is cancelled, seller shall refund to buyer the cash surrender value of the payments on property equivalent to 50% of total payments made; provided, that actual cancellation of contract shall take place after 30 days from receipt by 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.

HELD: The Contract to sell remains valid and subsisting. RA 6552, Section 3(a) a applies. RA 6552: The Realty Installment Buyer Protection Act, more popularly known as the Maceda Law, governs in this case. It came into effect in Sept. 1972. Its declared policy is to protect buyers of real estate on installment basis against onerous and oppressive conditions. The law seeks to address the acute housing shortage problem that has prompted many middle and lower class buyers of houses/lots/condominium units who sign contracts of adhesion with private housing developers involving installment schemes, where they are entrapped by onerous default clauses (where all payments are forfeited upon failure to pay installments) in fine print and those that require hefty cash deposits for reservation agreements, which is iniquitous to the low income buyers. Lot buyers, mostly low income earners eager to acquire a lot upon which ti build their homes, readily affix their signatures on these contracts, w/o an opportunity to Q the onerous provisions therein as the contracts are offered in a “take it or leave it” basis. Section 3of RA No. 6652 provided for the rights of the buyer in case of default in the payment of succeeding installments, where he has already paid at least 2 years of installments. (See: Doctrine box for provision) In this case, Daroya has already paid, in 4 years, a total of P313,860 (about 90k more than contract price of P224k). She was only in delay for P15, 282 (worth 3 monthly amortizations). And not only did petitioner refuse to accept Daroya’s subsequent tender of payment of the outstanding balance & alleged that they already cancelled the contract and sold the lot to someone else, they also failed to comply with the mandatory twin requirements for a valid and effective cancellation: o o

(1) notarized notice of cancellation and (2) refund of cash surrender value.

There was no formal notice of cancellation or court action to rescind the contract. It was only after HLURB preliminary hearing HLURB did they offer to pay the cash surrender value. Even if Daroya was mostly abroad, that didn’t stop them from sending her written notices to pay her installment arrears in her last known address.

4

SALES: 1ST EXAM REVIEWER Emille Dane S. Viola

In disregard of basic equitable principles, Active Realty’s stance would enable it to resell the property, keep the installment payments which is actually higher than the consideration stated in the contract, not to mention the cash surrender value it was obligated to return. PAGTALUNAN vs. VDA. DE MANZANO ISSUE: Whether or not the cancellation of the contract complied with what is required under the Maceda law. HELD: No. R.A. No. 6552, otherwise known as the "Realty Installment Buyer Protection Act," recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. The Court agrees with petitioner that the cancellation of the Contract to Sell may be done outside the court particularly when the buyer agrees to such cancellation. However, the cancellation of the contract by the seller must be in accordance with Sec. 3 (b) of R.A. No. 6552, which requires a notarial act of rescission and the refund to the buyer of the full payment of the cash surrender value of the payments on the property. Actual cancellation of the contract takes place after 30 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. Based on the records of the case, the Contract to Sell was not validly cancelled or rescinded under Sec. 3 (b) of R.A. No. 6552. First, Patricio, the vendor in the Contract to Sell, died on September 17, 1992 without canceling the Contract to Sell. Second, petitioner also failed to cancel the Contract to Sell in accordance with law. The Court, however, finds that the letter dated February 24, 1997, which was written by petitioner’s counsel, merely made formal demand upon respondent to vacate the premises in question. Clearly, the demand letter is not the same as the notice of cancellation or demand for rescission by a notarial act required by R.A No. 6552. Petitioner cannot rely on Layug v. Intermediate Appellate Court to support his contention that the demand letter was sufficient compliance since the seller therein filed an action for annulment of contract, which is a kindred concept of rescission by notarial act. Evidently, the case of unlawful detainer filed by petitioner does not exempt him from complying with the said requirement. In addition, Sec. 3 (b) of R.A. No. 6552 requires refund of the cash surrender value of the payments on the property to the buyer before cancellation of the contract. The provision does not provide a different requirement for contracts to sell which allow possession of the property by the buyer upon execution of the contract like the instant case. Hence, petitioner cannot insist on compliance with the requirement by assuming that the cash surrender value payable to the buyer had been applied to rentals of the property after respondent failed to pay the installments due. There being no valid cancellation of the Contract to Sell, the CA correctly recognized respondent’s right to continue occupying the property subject of the Contract to Sell and affirmed the dismissal of the unlawful detainer case by the RTC. Planters vs. Chandumal 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: 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.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. 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. Optimum vs. Spouses Jovellanos 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. Verily, in a contract to sell, 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.The full payment of the purchase price in a contract to sell is a suspensive condition, the non-fulfillment of which prevents the prospective seller’s obligation to convey title from becoming effective, as in this case. Further, 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, the said contract is especially governed by — and thus, must be examined under the provisions of — RA 6552, or the “Realty Installment Buyer Protection Act”, which provides for the rights of the buyer in case of his default in the payment of succeeding instalments. Given the nature of the contract of the parties, the respondent court correctly applied Republic Act No. 6552. Known as the Maceda Law, R.A. No. 6552 recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. It also provides the right of the buyer on installments in case he defaults in the payment of succeeding installments, viz.: (1) Where he has paid at least two years of 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 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 installments made. (2) Where he has paid less than two years in installments, Sec. 4. 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. 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. (Emphasis and underscoring supplied) Pertinently, since Sps. Jovellanos failed to pay their stipulated monthly installments as found by the MeTC, the Court examines Optimum’s compliance with Section 4 of RA 6552, as abovequoted and highlighted, which is the provision applicable to buyers who have paid less than two (2) years-worth of installments. Essentially, the said provision provides for three (3) requisites before the seller may actually cancel the subject contract: first, the seller shall give the buyer a 60-day grace period to be reckoned from the date the installment became due; second, the seller must give the buyer a notice of cancellation/demand for rescission by notarial act if

SALES: EXAM REVIEWER BlueTeam

the buyer fails to pay the installments due at the expiration of the said grace period; and third, 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. In the present case, the 60-day grace period automatically operated in favor of the buyers, Sps. Jovellanos, and took effect from the time that the maturity dates of the installment payments lapsed. With the said grace period having expired bereft of any installment payment on the part of Sps. Jovellanos, Optimum then issued a notarized Notice of Delinquency and Cancellation of Contract on April 10, 2006. Finally, in proceeding with the actual cancellation of the contract to sell, Optimum gave Sps. Jovellanos an additional thirty (30) days within which to settle their arrears and reinstate the contract, or sell or assign their rights to another. 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, 2006. Thus, based on the foregoing, 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. Jovellanos had already lost their right to retain possession of the subject property as a consequence of such cancellation, their refusal to vacate and turn over possession to Optimum makes out a valid case for unlawful detainer as properly adjudged by the MeTC.

Noynay vs. Citihomes 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. ASSOCIATED MARINE OFFICERS AND SEAMEN'S UNION OF THE PHILIPPINES PTGWO-ITF, Petitioner, v. NORIEL DECENA, As we emphasized in Pagtalunan, "R.A. No. 6552, otherwise known as the Realty Installment Buyer Protection Act, recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force." While we agreed that the cancellation of a contract to sell may be done outside of court, however, "the cancellation by the seller must be in accordance with Sec. 3(b) of R.A. No. 6552, which requires a notarial act of rescission and the refund to the buyer of the full payment of the cash surrender value of the payments on the property."27ςrνll In the present case, as aptly pointed out by the appellate court, petitioner failed to prove that the Shelter Contract Award had been cancelled in accordance with R.A. No. 6552, which would have been the basis for the illegality of respondent's possession of the subject premises. Hence, the action for ejectment must necessarily fail. Petitioner nonetheless insists on the inapplicability of R.A. No. 6552 in this case, capitalizing on the Decision28ςrνll of the Housing and Land Use Regulatory Board in HLURB CASE No. IV6-090902-1842 entitled "Seamen's Village Brotherhood Homeowners Association, Inc. v. Associated Marine Officers And Seamen's Union of the Philippines (AMOSUP)" which held that the transaction between petitioner and the residents of Seamen's Village cannot be considered a sale within the purview of Presidential Decree (P.D.) No. 957.29ςrνll It should be pointed out that the only issue resolved in that case is "whether or not the respondent (petitioner herein) is engaged in the business of selling real estate subdivisions, so as to fall under the

5

ambit of P.D. 957, the resolution of which would determine whether or not respondent is required under the law to register with (the) Office and procure a license to sell."30ςrνll Section 2(b) of P.D. 957 defines a sale as follows:chanroblesvirtuallawlibrary b.) Sale or Sell "sale" or "sell" shall include every disposition, or attempt to dispose, for a valuable consideration, of a subdivision lot, including the building and other improvements thereon, if any, in a subdivision project or a condominium unit in a condominium project. "Sale" or "sell" shall include a contract to sell, a contract of purchase and sale, an exchange, an attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell, directly or by an agent, or by a circular letter, advertisement or otherwise. A privilege given to a member of a cooperative, corporation, partnership, or any association and/or the issuance of a certificate or receipt evidencing or giving the right of participation in, or right to any land in consideration of payment of the membership fee or dues, shall be deemed a sale within the meaning of this definition. A reading of the Decision in its entirety reveals a vacillation on the part of the HLURB in classifying the transaction between petitioner and its members. While the HLURB held that there is no sale as contemplated under the first paragraph of the aforequoted provision "for the reason that there is no valuable consideration involved in the transaction,"31ςrνll yet it went on to opine that the second paragraph of the same provision "appears to have an apparent application in the instant case although the same is not clear."32ςrνll Then, in its final disposition,33ςrνll the HLURB required petitioner to secure a Certificate of Registration and License to Sell for its subdivision project thereby effectively bringing it under the jurisdiction of said office. Clearly, the argument of petitioner that respondent is not a realty installment buyer that needs to be protected by the law has no leg to stand on. In the interest, however, of putting an end to the controversy between the parties herein that had lasted for more than ten (10) years, as in the cited case of Pagtalunan, the Court orders respondent to pay his arrears and settle the balance of the full value of the subject premises. He had enjoyed the use thereof since 1995. After defaulting in August 1999, respondent had not made any subsequent reimbursement payments. Thus, for the delay in his reimbursement payments, we award interest at the rate of 6% per annum on the unpaid balance applying Article 220934ςrνll of the Civil Code, there being no stipulation in the Shelter Contract Award for such interest.35ςrνll For purposes of computing the legal interest, the reckoning period should be the notice of final demand, conformably with Articles 116936ςrνll and 158937ςrνll of the same Code, which, as found by the MTC, was sent by petitioner to respondent on August 21, 2001.38ςrνll In his Comment to the instant Petition, respondent claimed that he had made payments in the amount of P 318,167.70.39ςrνll The total amount for reimbursement for the subject house and lot is US$28,563, which the Shelter Contract Award requires to be paid in "180 equal monthly periodic reimbursements of US$159 or in equivalent Philippine Currency at the time the same falls due."40ςrνll For lack of pertinent data with which to determine how many months respondent's alleged total payment of P 318,167.70 is equivalent to, we direct petitioner to submit to the trial court an accounting of the payments made by respondent particularly showing the number of months he was able to make the required payments of US$159 or its peso equivalent. The balance of the full value of the subject premises shall then be computed on the basis of the following formula: (180 months minus the number of months that respondent had already paid) multiplied by US$159 or its peso equivalent at the time of payment.