Active Realty & Devt Corp v Daroya

G.R. No. 141205

May 9, 2002
Ponente Puno, J.
TOPIC IN SYLLABUS: Maceda Law: sales of Residential Realty on Installment
DOCTRINE:
RA 6552, Section 3.
Rights of the buyer in case of default in the payment of succeeding installments, where hes
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.

FACTS:
1.

Active Realty (owner & developer of Town & Country Hills Executive Village in Antipolo)
entered into a Contract to Sell with Daroya on Jan 1985, a contract worker in the Middle East.
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over 515 sqm lot at petitioners subdivision.

For P224, 025.
Stipulated that manner of payment would include P53,766 upon execution and
P170,529 balance in 60 monthly installments
(Note that the total amount is P346,367 which is higher than stated contract
price).

2.
3.

Aug 8 1989: Daroya in default of P15,282.85 representing 3 monthly amortizations.

Petitioner sent respondent a notice of cancellation of their contract to sell, to take effect 30 days
from receipt of letter (no records when she received it).
4. Daroya offered to pay but Active Realty refused and sold it to another buyer.
5. Daroya files for specific performance & damages the Arbitration Branch of the Housing and Land
Use Regulatory Board (HLURB) to execute a final Deed of Absolute Sale in her favor after she pays
balance still due, considering she offered to pay the balance and already paid P314, 816.76, (90k
higher than the contract price).
6. HLURB Arbiter: Cancellation of Contract to Sell voidActive Realty failed to pay cash surrender
value (CSV). But since already sold to 3rd party, petitioner ordered to refund all payments of
P314,816 + 12% interest.
7. On appeal: HLURB Board of Commissioners: REVERSED; refused to apply remedies under
Maceda law, formulated equitable solution.
a. Since both parties at fault (delay & failure to sent notarized deed of cancellation),
petitioner to refund of total amount paid (which was already akin to the remedy
provided under the Maced Law)
8. On appeal: Office of the President: According to Chief Pres Counsel Renato Corona(acting by
the authority of the Pres.), HLURB decision not in accord with Maceda Law.
a. Since petitioner didnt comply with legal requisites for a valid cancellation of the
contract, contract to sell between parties subsisted. Daroya entitled to lot after paying
outstanding balance, but since its already sold to another, petitioner was ordered to
refund P875k (actual value of lot as of contract date) + 12% interest beginning from
the date of complaint filing until fully paid, or to deliver a substitute lot at Daroyas
choice.
9. CA denies appeal because of procedural issues.
10. SC: affirmed Office of the Pres decision.

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,

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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)
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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 Daroyas 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 didnt stop them from sending her written notices
to pay her installment arrears in her last known address.
In disregard of basic equitable principles, Active Realtys 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.

Ordered Active Realty to refund P875k (actual value of lot as of contract date) + 12% interest
beginning from the date of complaint filing until fully paid, or to deliver a substitute lot at
Daroyas choice.

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