JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION,
- versus -
DANIEL PONCE PACIFICO, represented by his attorney-in-fact Jordan M. Pizarras,
G.R. No. 167452
QUISUMBING, J., Chairperson,
VELASCO, JR., JJ.
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D E C I S I O N
CARPIO MORALES, J.:
On June 5, 1996, Daniel Ponce Pacifico (Pacifico) signed a Reservation Application with
Fil-Estate Marketing Association for the purchase of a house and lot located at
Lot 28, Block 3, Phase II, Jestra Villas, Barangay La Huerta, Municipality of
Paraaque, Metro Manila (the property), and paid the reservation fee of
Under the Reservation Application, the total purchase price of the
P2,500,000, and the down payment equivalent to 30% of the
purchase price or P750,000 was to be paid interest-free in six monthly
installments due every fifth of the month starting July 1996 until December
1996. As the P20,000
reservation fee formed part of the down payment, the monthly installment on the
down payment was fixed at P121,666.66.
Also under the Reservation Application, upon full payment of the 30% down
payment by Pacifico, he was to sign a contract to sell with the owner and
developer of the property, Joprest Development and Management Corporation (now
Jestra Development and Management Corporation, hereafter Jestra). And the 70% balance on the purchase price or
was to be payable in 10 years, to bear interest at 21% per annum, at a monthly
installment of P34,982.50. When
the payment of the installments on the 70% balance should commence, the Reservation
Application was silent.
Unable to comply with the schedule of payments, Pacifico requested Jestra to allow him to make periodic payments on the down payment in an amount that he could afford, to which Jestra acceded provided that late payment penalties/surcharges are paid.
With still a remaining balance
P260,000 on the down payment, Pacifico and Jestra executed on
Under the Contract to Sell, Pacifico should have had on November 5,
1996, or one month prior to the deadline stated under the Reservation Application,
fully paid the 30% down payment, and that the 120 monthly installments for the
70% balance or
have had commenced on December 7, 1996, viz:
SECTION 2. TERMS OF PAYMENT. The PURCHASER agrees to pay the aforecited purchase price [of P2,500,000.00] in the following manner, namely:
2.1 The total amount of SEVEN HUNDRED FIFTY
THOUSAND PESOS ONLY (P750,000.00) Philippine Currency as down payment on or
balance of ONE MILLION SEVEN HUNDTED FIFTY THOUSAND PESOS ONLY (P1,750,00.00),
Philippine Currency, shall be paid in One Hundred Twenty (120) equal monthly
installments at THIRTY FOUR THOUSAND NINE HUNDRED EIGHT THREE PESOS ONLY
(P34,983.00) Philippine Currency, to
commence on December 7, 1996, with interest at the rate of Twenty One
Percent (21%) per annum. The PURCHASER
shall issue One Hundred Twenty (120) postdated checks in favor of the
OWNER/DEVELOPER for each of the monthly installments, which checks shall be
delivered to the latter upon signing of this CONTRACT. The PURCHASER shall be subject to the
pre-qualification requirements of COCOLIFE for the Mortgage Redemption
Insurance (MRI) and the Building Insurance on the UNIT. Interest re-pricing shall be effected on the
6th Year, to commence on
x x x x (Underscoring supplied)
By letter of
P846,600, P76,600 of which
Jestra applied as penalty charges for the belated settlement
of the down payment.
By letter of
the total of 11 installments due on the 70% balance of the purchase price, inclusive
of 21% interest per annum and add-on interest at the rate of P384.81 per
day, counted from P73,750
representing penalties for the [belated settlement of the] down payment. And it reminded Pacifico that as provided
in Section 5 of the said contract, [Jestra] reserves its right to automatically
cancel or rescind the same on account of [his] failure/refusal to comply with
the terms thereof.
Pacifico later requested
Jestra, by letter of
P224,396.37 would be added to the 70% balance on the purchase price; and that
Pacifico issue 12 postdated checks beginning each year to cover his amortization
In light of the restructured scheme, the monthly amortization on the 70%
balance was from
increased to P39,468, to commence on
Pacifico thus issued to Jestra 12 postdated Security Bank checks to cover his monthly amortizations from January to December 1998. The checks for January and February 1998 were, however, dishonored due to insufficiency of funds.
By letter of
Jestra, by letter of
Thereafter, Jestra sent Pacifico a notarial Notice of Cancellation, dated
In a separate move, Jestra through its
Credit and Collection Manager sent Pacifico a letter dated
P209,377.75 covering monthly
amortizations from January 30 to
Pacifico further claimed in his complaint that upon learning of the double sale, he, through his lawyer, demanded that Jestra deliver the property to him but it failed to do so without just and valid cause.
Pacifico thus prayed that, among others things, judgment be rendered declaring
the second sale a nullity, ordering Jestra to deliver the property to him and to
P11,000 a month from July 1997 until
By Decision of March 15, 2000, the Housing and Land Use Arbiter held Jestra liable for failure to comply with Section 3 of Republic Act (RA) No. 6552 (Realty Installment Buyer Protection Act) requiring payment by the seller of the cash surrender value of the buyers payments and Section 17 of Presidential Decree No. 957 (REGULATING THE SALE OF SUBDIVISION LOTS AND CONDOMINIUMS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF) requiring it to register the Contract to Sell in the Office of the Register of Deeds.
The Arbiter found that while
Pacifico had paid a total amount of
P846,600 which is more or less
equivalent to 24 monthly installments under the contract to sell . . . wherein
the monthly amortization is P34,983, he could
no longer demand the delivery of the property, its title having already been
transferred in the name of another buyer.
Thus the Arbiter disposed:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant and ordering respondent:
1. To pay and/or reimburse to the complainant the total payments made amounting to Eight Hundred Forty Six Thousand Six Hundred Pesos (P846,600.00) with interest thereon at twelve percent (12%) per annum to be computed from the filing of the complaint on 24 February 1999 until fully paid; and
2. To pay complainant the amount of Fifty
Thousand Pesos (
P50,000.00) as damages and attorneys fees
plus the costs of litigation.
On appeal, the Board of
Commissioners of the HLURB modified the decision of the Arbiter by deleting the
P50,000 damages and ordering Jestra to pay P20,000 as attorneys fees and P10,000
administrative fine for failure to register the Contract to Sell in the Office
of the Register of Deeds.
By Resolution of
petition for review under Rule 43 of the Rules of Court, the Court of Appeals
(CA), by Decision
for reconsideration having been denied by CA Resolution
I. . . . adopting the OPs conclusion that penalty payments should be included in computing the total number of installment payments made by a buyer (in relation to the payment of a cash surrender value upon cancellation of a contract to sell) in spite of its exclusion from the items to be included in computing the two (2) years installment payments as provided in RA 6552
II. . . . adopting the OPs conclusion that petitioner failed to deliver possession of the subject property to respondent upon his full payment of the downpayment [sic] and that petitioners act of canceling the contract to sell was unconscionable despite being allowed under RA 6552.
RA No. 6552 was enacted to protect buyers of real estate on installment against onerous and oppressive conditions. While the seller has under the Act the option to cancel the contract due to non-payment of installments, he must afford the buyer a grace period to pay them and, if at least two years installments have already been paid, to refund the cash surrender value of the payments. Thus Section of the Act provides:
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.
As the records indicate, the total
payments made by Pacifico (hereafter respondent) amounted to
P846,600. The appellate court, in concluding that
respondent paid at least two years of installments, adopted the formula used by
the HLURB by dividing the amount of P846,600 by the monthly amortization
of P34,983 to thus result to a quotient of 24.2 months.
the computation, however. It claims that
the amount of
P76,600 represents penalty payment and is a separate item
to answer for its lost income as a seller due to the delay in the payment
of the 30% down payment. It thus submits
that the amount of P76,600 does not form part of the purchase price and should
thus be excluded in determining the total number of installments made.
claims that the proper divisor is not
P34,983 but P39,468 since the
parties agreed to restructure the amortizations owing to respondents inability
to comply with the schedule of payments previously agreed upon in the Contract
to Sell, and that if respondents total payments less the penalty is to be divided
by P39,468, the total installments paid would only cover 19.5 months, hence,
it was not obliged under RA No. 6552 to pay the cash surrender value of such
This Court finds that neither of the parties computations is in order.
purchase price of the property is
P2,500,000. As provided in the Reservation Application, the
30% down payment on the purchase price or P750,000 was to be paid in six
monthly installments of P121,666.66. Under the Contract to Sell, the 70% balance of
P1,750,000.00 on the purchase price was to be paid in 10 years through
monthly installments of P34,983, which was later increased to P39,468
in accordance with the agreement to restructure the same.
under the above-quoted Section 3 of RA No. 6552, the down payment is included
in computing the total number of installment payments made, the proper divisor
P34,983 nor P39,468, but P121,666.66, the
monthly installment on the down payment.
down payment was to be paid in six monthly installments. If the down payment of P750,000 is to
be deducted from the total payment of P846,600, the remainder is only P96,600.
Since respondent was able to pay the
down payment in full eleven (11) months after the last monthly installment was
due, and the sum of P76,600 representing penalty for delay of payment is
deducted from the remaining P96,600, only a balance of P20,000
As respondent failed to pay at least two years of installments, he is not, under above-quoted Section 3 of RA No. 6552, entitled to a refund of the cash surrender value of his payments. What applies to the case instead is Section 4 of the same law, viz:
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. (Underscoring supplied)
admits that under the restructured scheme, the first installment on the 70% balance
of the purchase price was due on
While respondent was notified of the dishonor of the checks, he took no action thereon, hence, the 60 days grace period lapsed. Respondent made no further payments thereafter. Instead, he requested for suspension of payment and for time to dispose of the property to recover his investment.
that petitioner was justified in canceling the contract to sell via the notarial
Notice of Cancellation which he received on
petition is GRANTED. The assailed Decision and Resolution
CONCHITA CARPIO MORALES
LEONARDO A. QUISUMBING
ANTONIO T. CARPIO
DANTE O. TINGA
PRESBITERO J. VELASCO, JR.
I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
LEONARDO A. QUISUMBING
Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the Courts Division.
REYNATO S. PUNO Chief Justice
 Rollo, p. 48.
 Id. at 6.
 Id. at 51.
 Id. at 59.
 Duplicate File, Housing and Land Use Regulatory Board.
 Rollo, p. 68.
 Id. at 81-89.
 Id. at 86.
 Id. at 88-89.
 Id. at 95-97.
 Id. at 98-99.
 Id. at 100-101.
 CA rollo, pp. 178-194. Penned by Justice Renato C. Dacudao with the concurrence of Justices Edgardo F. Sundiam and Japar B. Dimaampao.
 Rollo, p. 20.
 G.R. No. 152346,
 Rollo, p. 110.