FIRST
DIVISION
MANUEL C. PAGTALUNAN, G.R.
No. 147695
Petitioner,
Present:
PUNO,
C.J., Chairperson,
-
versus - SANDOVAL-GUTIERREZ,
AZCUNA,
and
GARCIA,
JJ.
RUFINA DELA CRUZ VDA. Promulgated:
DE MANZANO,
Respondent. September 13, 2007
x-----------------------------------------------------------------------------------------x
DECISION
AZCUNA, J.:
This is a petition for review on certiorari
under Rule 45 of the Rules of Court of the Court of Appeals’ (CA) Decision
promulgated on
The facts are as follows:
On
July 19, 1974, Patricio Pagtalunan (Patricio), petitioner’s stepfather and
predecessor-in-interest, entered into a Contract to Sell with respondent, wife of
Patricio’s former mechanic, Teodoro Manzano, whereby the former agreed to sell,
and the latter to buy, a house and lot
which formed half of a parcel of land, covered by Transfer Certificate of Title (TCT) No.
T-10029 (now TCT No. RT59929 [T-254773]), with an area of 236 square
meters. The consideration of P17,800
was agreed to be paid in the following manner:
P1,500 as downpayment upon execution of the Contract to Sell, and
the balance to be paid in equal monthly installments of P150 on or
before the last day of each month until fully paid.
It was also stipulated in the
contract that respondent could immediately occupy the house and lot; that in
case of default in the payment of any of the installments for 90 days after its
due date, the contract would be automatically rescinded without need of
judicial declaration, and that all payments made and all improvements done on
the premises by respondent would be
considered as rentals for the use and
occupation of the property or payment for damages suffered, and respondent was
obliged to peacefully vacate the premises and deliver the possession thereof to
the vendor.
Petitioner claimed that respondent
paid only P12,950. She allegedly
stopped paying after December 1979 without any justification or
explanation. Moreover, in a “Kasunduan”[1] dated November 18, 1979, respondent
borrowed P3,000 from Patricio payable in one year either in one lump sum
payment or by installments, failing which the balance of the loan would be
added to the principal subject of the monthly amortizations on the land.
Lastly, petitioner asserted that when
respondent ceased paying her installments, her status of buyer was
automatically transformed to that of a lessee.
Therefore, she continued to possess the property by mere tolerance of
Patricio and, subsequently, of petitioner.
On the other hand, respondent alleged
that she paid her monthly installments religiously, until sometime in 1980 when
Patricio changed his mind and offered to refund all her payments provided she
would surrender the house. She refused. Patricio then started harassing her and began demolishing the house
portion by portion. Respondent admitted
that she failed to pay some installments after December 1979, but that she
resumed paying in 1980 until her balance dwindled to P5,650. She claimed that despite several months of
delay in payment, Patricio never sued for ejectment and even accepted her late
payments.
Respondent also averred that on
Respondent did not deny that she
still owed Patricio P5,650, but claimed that she did not resume paying
her monthly installment because of the unlawful acts committed by Patricio, as
well as the filing of the ejectment case
against her. She denied having any
knowledge of the Kasunduan of
Patricio and his wife died on
On April 8, 1997, petitioner filed a
Complaint for unlawful detainer against respondent with the Municipal Trial
Court (MTC) of Guiguinto, Bulacan praying that, after hearing, judgment be
rendered ordering respondent to
immediately vacate the subject property and surrender it to petitioner;
forfeiting the amount of P12,950 in favor of petitioner as
rentals; ordering respondent to pay
petitioner the amount of P3,000 under the Kasunduan and the amount of P500 per month from January
1980 until she vacates the property, and to pay petitioner attorney’s fees and the
costs.
On
The MTC held that respondent’s
failure to pay not a few installments caused the resolution or termination of
the Contract to Sell. The last payment made by respondent was on
The dispositive portion of the MTC
Decision reads:
Wherefore,
all the foregoing considered, judgment is hereby rendered, ordering the
defendant:
a. to vacate the property covered by Transfer Certificate of Title No. T-10029 of the Register of Deeds of Bulacan (now TCT No. RT-59929 of the Register of Deeds of Bulacan), and to surrender possession thereof to the plaintiff;
b.
to pay the plaintiff the amount of P113,500
representing rentals from January 1980 to the present;
c.
to pay the plaintiff such amount of rentals, at P500/month,
that may become due after the date of judgment, until she finally vacates the
subject property;
d.
to pay to the plaintiff the amount of P25,000 as
attorney’s fees.
SO ORDERED.[2]
On appeal, the RTC of Malolos,
Bulacan, in a Decision dated
The dispositive portion of the RTC
Decision states:
WHEREFORE,
judgment is hereby rendered reversing the decision of the Municipal Trial Court
of Guiguinto, Bulacan and the ejectment case instead be dismissed for lack of
merit.[3]
The motion for reconsideration and
motion for execution filed by petitioner were denied by the RTC for lack of merit
in an Order dated
Thereafter, petitioner filed a
petition for review with the CA.
In a Decision promulgated on
WHEREFORE,
the petition for review on certiorari is Denied. The assailed Decision of the Regional Trial
Court of Malolos, Bulacan dated
SO
ORDERED. [4]
The CA found that the parties, as well as the
MTC and RTC failed to advert to and to apply Republic Act (R.A.) No. 6552, more
commonly referred to as the Maceda Law, which is a special law enacted in 1972
to protect buyers of real estate on installment payments against onerous and
oppressive conditions.
The CA held that the Contract to Sell
was not validly cancelled or rescinded under Sec. 3 (b) of R.A. No. 6552, and recognized respondent’s
right to continue occupying unmolested the property subject of the contract to
sell.
The CA denied petitioner’s motion for
reconsideration in a Resolution dated
Hence, this petition for review on certiorari.
Petitioner contends that:
A. Respondent Dela Cruz must bear the consequences of her deliberate withholding of, and refusal to pay, the monthly payment. The Court of Appeals erred in allowing Dela Cruz who acted in bad faith from benefiting under the Maceda Law.
B. The Court of Appeals erred in resolving the issue on the applicability of the Maceda Law, which issue was not raised in the proceedings a quo.
C. Assuming arguendo that the RTC was correct in ruling that the MTC has no jurisdiction over a rescission case, the Court of Appeals erred in not remanding the case to the RTC for trial.[5]
Petitioner submits that the Maceda Law supports and recognizes the right of vendors of real estate to cancel the sale outside of court, without need for a judicial declaration of rescission, citing Luzon Brokerage Co., Inc., v. Maritime Building Co., Inc.[6]
Petitioner
contends that respondent also had more than the grace periods provided under
the Maceda Law within which to pay. Under Sec. 3[7] of the said law, a buyer who has paid at
least two years of installments has a grace period of one month for every year
of installment paid. Based on the amount
of P12,950 which respondent had already paid, she is entitled to a grace
period of six months within which to pay her unpaid installments after
December, 1979. Respondent was given more than six months from January 1980
within which to settle her unpaid installments, but she failed to do so. Petitioner’s
demand to vacate was sent to respondent in February 1997.
There is nothing in the Maceda Law,
petitioner asserts, which gives the buyer a right to pay arrearages after the
grace periods have lapsed, in the event of an invalid demand for
rescission. The Maceda Law only provides
that actual cancellation shall take place after 30 days from receipt of the
notice of cancellation or demand for rescission and upon full payment of the
cash surrender value to the buyer.
Petitioner contends that his demand
letter dated
In addition, petitioner asserts that
whatever cash surrender value respondent is entitled to have been applied and
must be applied to rentals for her use of the house and lot after December,
1979 or after she stopped payment of her installments.
Petitioner argues that assuming
Patricio accepted respondent’s delayed installments in 1981, such act cannot
prevent the cancellation of the Contract to Sell. Installments after 1981 were still unpaid and
the applicable grace periods under the Maceda Law on the unpaid installments
have long lapsed. Respondent cannot be allowed to hide behind the Maceda Law.
She acted with bad faith and must bear the consequences of her deliberate
withholding of and refusal to make the monthly payments.
Petitioner also contends that the
applicability of the Maceda Law was never raised in the proceedings below; hence,
it should not have been applied by the CA in resolving the case.
The Court is not persuaded.
The CA correctly ruled that R.A No.
6552, which governs sales of real estate on installment, is applicable in the
resolution of this case.
This case originated as an action for
unlawful detainer. Respondent is alleged
to be illegally withholding possession of the subject property after the
termination of the Contract to Sell between Patricio and respondent. It is,
therefore, incumbent upon petitioner to prove that the Contract to Sell had
been cancelled in accordance with R.A. No. 6552.
The pertinent provision of R.A. No.
6552 reads:
Sec.
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 percent of the total payments made and, after
five years of installments, an additional five percent every year but not to
exceed ninety percent 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.[9]
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.[10] 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
Second, petitioner also failed to
cancel the Contract to Sell in accordance with law.
Petitioner contends that he has
complied with the requirements of cancellation under Sec. 3 (b) of R.A. No.
6552. He asserts that his demand letter
dated February 24, 1997 should be considered as the notice of cancellation or
demand for rescission by notarial act and that the cash surrender value of the
payments on the property has been applied to rentals for the use of the house
and lot after respondent stopped payment after January 1980.
The Court, however, finds that the
letter[11]
dated February 24, 1997, which was written by petitioner’s counsel, merely made
formal demand upon respondent to vacate the premises in question within five
days from receipt thereof since she had “long ceased to have any right to
possess the premises x x x due to [her] failure to pay without justifiable
cause the installment payments x x x.”
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[12]
to support his contention that the demand letter was sufficient
compliance. Layug held that “the
additional formality of a demand on [the seller’s] part for rescission by
notarial act would appear, in the premises, to be merely circuitous and
consequently superfluous” since the seller therein filed an action for annulment
of contract, which is a kindred concept of rescission by notarial act.[13] 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.
The Court notes that this case has
been pending for more than ten years.
Both parties prayed for other reliefs that are just and equitable under
the premises. Hence, the rights of the parties over the subject property shall
be resolved to finally dispose of that issue in this case.
Considering that the Contract to Sell was not cancelled by the vendor, Patricio, during his lifetime or by
petitioner in accordance with R.A. No. 6552
when petitioner filed this case of unlawful detainer after 22 years of
continuous possession of the property by respondent who has paid the
substantial amount of P12,300 out of the purchase price of P17,800,
the Court agrees with the CA that it is only right and just to allow respondent
to pay her arrears and settle the balance of the purchase price.
For respondent’s delay in the payment
of the installments, the Court, in its discretion, and applying Article 2209[14]
of the Civil Code, may award interest at the rate of 6% per annum[15]
on the unpaid balance considering that there is no stipulation in the Contract
to Sell for such interest. For purposes of computing the legal interest, the
reckoning period should be the filing of the complaint for unlawful detainer on
Based on respondent’s evidence[16]
of payments made, the MTC found that respondent paid a total of P12,300
out of the purchase price of P17,800. Hence, respondent still has a
balance of P5,500, plus legal interest at the rate of 6% per annum on
the unpaid balance starting
The third issue is disregarded since
petitioner assails an inexistent ruling of the RTC on the lack of jurisdiction
of the MTC over a rescission case when the instant case he filed is for
unlawful detainer.
WHEREFORE, the Decision of the Court of Appeals
dated October 30, 2000 sustaining the dismissal of the unlawful detainer case
by the RTC is AFFIRMED with the following MODIFICATIONS:
1.
Respondent
Rufina Dela Cruz Vda. de Manzano shall pay petitioner Manuel C. Pagtalunan the
balance of the purchase price in the amount of Five Thousand Five Hundred Pesos
(P5,500) plus interest at 6% per annum from April 8, 1997 up to the
finality of this judgment, and thereafter, at the rate of 12% per annum;
2.
Upon
payment, petitioner Manuel C. Pagtalunan shall execute a Deed of Absolute Sale
of the subject property and deliver the certificate of title in favor of
respondent Rufina Dela Cruz Vda. de Manzano; and
3. In case of failure to pay within 60 days
from finality of this Decision, respondent Rufina Dela Cruz Vda. de Manzano shall
immediately vacate the premises without need of further demand, and the
downpayment and installment payments of P12,300 paid by her shall
constitute rental for the subject property.
No costs.
SO ORDERED.
ADOLFO S. AZCUNA
Associate Justice
WE
CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
ANGELINA
SANDOVAL-GUTIERREZ RENATO C.
CORONA
Associate Justice Associate Justice
CANCIO C.
GARCIA
Associate
Justice
CERTIFICATION
Pursuant to
Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] The MTC Decision stated that plaintiff (petitioner) never submitted a copy of the Kasunduan in evidence.
[2] Rollo, p. 122.
[3]
[4]
[5]
[6] No. L-25885,
[7] R.A.
No. 6552, Sec. 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 [R.A No. 3844], as amended by [R.A No. 6389], 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.
[8] No. L-75364,
[9] Emphasis supplied.
[10] Leaño
v. Court of Appeals, G.R. No. 129018,
[11] Rollo, p. 48.
[12] Supra, note 8.
[13]
[14] Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest which is six percent per annum.
[15] Ramos
v. Heruela, G.R. No. 145330,
[16] Exhibits 9 to 71, Records, pp. 141-202.