GR 167452; (January, 2007) (Digest)
G.R. No. 167452 ; January 30, 2007
JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION, Petitioner, vs. DANIEL PONCE PACIFICO, represented by his attorney-in-fact Jordan M. Pizarras, Respondent.
FACTS
Respondent Daniel Ponce Pacifico entered into a Reservation Application and later a Contract to Sell with petitioner Jestra Development and Management Corporation for a house and lot. The contract stipulated a 30% down payment and a 70% balance payable in 120 monthly installments. Pacifico experienced financial difficulties, leading to delayed payments. The parties subsequently restructured the obligation, increasing the monthly amortization and requiring Pacifico to issue postdated checks. The checks for January and February 1998 were dishonored. Pacifico then requested a suspension of payments and sought to sell the property to recover his investment. Jestra denied the request and, after providing a grace period, sent a notarial Notice of Cancellation dated May 1, 1998, which Pacifico received on May 13, 1998.
Pacifico filed a complaint with the HLURB, alleging Jestra’s failure to deliver the property and seeking refunds and damages. The HLURB ruled in favor of Jestra, upholding the valid cancellation of the contract. The Office of the President reversed this, ordering Jestra to refund Pacifico’s payments. The Court of Appeals affirmed the Office of the President’s decision, prompting Jestra to elevate the case to the Supreme Court.
ISSUE
Whether the Court of Appeals erred in ruling that the Contract to Sell was not validly cancelled by Jestra.
RULING
The Supreme Court granted the petition and reversed the Court of Appeals. The Court held that the cancellation of the Contract to Sell complied with the mandatory procedure under Section 4 of Republic Act No. 6552 (The Maceda Law). The law requires a two-step process: first, the seller must grant the buyer a grace period of at least sixty (60) days from the due date of the installment; second, after the grace period, the seller must furnish a notice of cancellation or demand for rescission through a notarial act, effective thirty (30) days from the buyer’s receipt.
Applying this to the case, the first installment under the restructured scheme was due on January 5, 1998. Pacifico’s checks were dishonored, and he took no corrective action. The 60-day grace period from the due date thus lapsed without payment. Jestra subsequently sent a notarial Notice of Cancellation, which Pacifico received on May 13, 1998. Consequently, the contract was deemed effectively cancelled thirty days thereafter, or on June 12, 1998. The Court found that Jestra meticulously followed the statutory procedure. Therefore, the cancellation was valid, and Pacifico’s complaint was correctly dismissed by the HLURB.