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In his answer to the complaint, RILLO averred, among others, that while he had
[G.R. No. 125347. June 19, 1997] already paid a total of P149,000.00, CORB REALTY could not deliver to him his
EMILIANO RILLO, petitioner, vs. COURT OF APPEALS and CORB REALTY individual title to the subject property; that CORB REALTY could not claim any right
INVESTMENT, CORP., respondents. under their previous agreement as the same was already novated by their new
DECISION agreement for him to pay P50,000.00 representing interest charges and other penalties
PUNO, J.: spread through twenty-five (25) months beginning April 1989; and that CORB
This is an appeal under Rule 45 of the Rules of Court to set aside the decision [1] of REALTY's claim of P155,129.99 over and above the amount he already paid has no
the Court of Appeals in CA G.R. CV No. 39108 cancelling the "Contract to Sell" legal basis.[11]
between petitioner Emiliano Rillo and private respondent Corb Realty Investment At the pre-trial, the parties stipulated that RILLO's principal outstanding obligation
Corporation. It also ordered Rillo to vacate the premises subject of the contract and as of March 12, 1989 was P50,000.00 and he has paid only P4,000.00 thereof and that
Corb Realty to return 50% of P158,184.00 or P79,092.00 to Rillo. the monthly amortization of P2,000.00 was to bear 18% interest per annum based on
The facts of the case are the following: the unpaid balance. The issues were defined as: (1) whether or not CORB REALTY
On June 18, 1985, petitioner Rillo signed a "Contract To Sell of Condominium was entitled to a rescission of the contract; and (2) if not, whether or not RILLO's
Unit" with private respondent Corb Realty Investment Corporation. Under the current obligation to CORB REALTY amounts to P62,000.00 only inclusive of accrued
contract, CORB REALTY agreed to sell to RILLO a 61.5 square meter condominium interests.[12]
unit located in Mandaluyong, Metro Manila. The contract price was P150,000.00, one The Regional Trial Court held that CORB REALTY cannot rescind the "Contract to
half of which was paid upon its execution, while the balance of P75,000.00 was to be Sell" because petitioner did not commit a substantial breach of its terms. It found that
paid in twelve (12) equal monthly installments of P7,092.00 beginning July 18, 1985. It RILLO substantially complied with the "Contract to Sell" by paying a total
was also stipulated that all outstanding balance would bear an interest of 24% per of P154,184.00. It ruled that the remedy of CORB REALTY is to file a case for specific
annum; the installment in arrears would be subject to liquidated penalty of 1.5% for performance to collect the outstanding balance of the purchase price.
every month of default from due date. It was further agreed that should petitioner CORB REALTY appealed the aforesaid decision to public respondent Court of
default in the payment of three (3) or four (4) monthly installments, forfeiture Appeals assigning the following errors, to wit:
proceedings would be governed by existing laws, particularly the Condominium Act. [2] "THE TRIAL COURT ERRED IN DISREGARDING OTHER FACTS OF THE CASE,
On July 18, 1985, RILLO failed to pay the initial monthly amortization. On August INCLUDING THE FACT THAT THE CONTRACT TO SELL, AS NOVATED, CREATED
18, 1985, he again defaulted in his payment. On September 20, 1985, he paid the first RECIPROCAL OBLIGATIONS ON BOTH PARTIES;
monthly installment of P7,092.00. On October 2, 1985, he paid the second monthly "THE TRIAL COURT ERRED IN DISREGARDING ARTICLE 1191 OF THE CIVIL
installment of P7,092.00. His third payment was on February 2, 1986 but he paid CODE;
only P5,000.00 instead of the stipulated P7,092.00.[3] "THE TRIAL COURT ERRED IN RENDERING JUDGMENT BY SIMPLY
On July 20, 1987 or seventeen (17) months after RILLO's last payment, CORB DISREGARDING THE CASE OF ROQUE V. LAPUZ, 96 SCRA 744, AND WITHOUT
REALTY informed him by letter that it is cancelling their contract due to his failure to INDICATING THE APPLICABLE LAW ON THE CASE.
settle his accounts on time. CORB REALTY also expressed its willingness to refund "THE TRIAL COURT ERRED IN RENDERING A DECISION WHICH DID NOT
RILLO's money.[4] COMPLETELY DISPOSE OF THE CASE."
CORB REALTY, however, did not cancel the contract for on September 28, 1987, The respondent Court of Appeals reversed the decision. It ruled: (1) that
it received P60,000.00 from petitioner.[5] rescission does not apply as the contract between the parties is not an absolute
RILLO defaulted again in his monthly installment payment. Consequently, CORB conveyance of real property but is a contract to sell; (2) that the Condominium Act
REALTY informed RILLO through letter that it was proceeding to rescind their (Republic Act No. 4726, as amended by R.A. 7899) does not provide anything on
contract.[6] In a letter dated August 29, 1988, it requested RILLO to come to its office forfeiture proceedings in cases involving installment sales of condominium units, hence,
and withdraw P102,459.35 less the rentals of the unit from July 1, 1985 to February 28, it is Presidential Decree No. 957 (Subdivision and Condominium Buyers Protective
1989.[7] Again the threatened rescission did not materialize. A "compromise" was Decree) which should be applied to the case at bar. Under Presidential Decree No.
entered into by the parties on March 12, 1989, which stipulated the following: 957, the rights of a buyer in the event of failure to pay installment due, other than the
"1. Restructure Outstanding Balance Down to P50,000.00 failure of the owner or developer to develop the project, shall be governed by Republic
"2. Payment @ P2,000.00/Month @ 18% (Eighteen Percent)-Monthly- Act No. 6552 or the REALTY INSTALLMENT BUYER PROTECTION ACT also known
To Compute No. of Installments as the Maceda Law (enacted on September 14, 1972). The dispositive portion of its
"3. To Pay Titling Plus Any Real Estate Tax Due Decision states:
"4. Installments to start April 15, 1989."[8] "WHEREFORE, the decision appealed from is hereby SET ASIDE. The Contract to Sell
Rillo once more failed to honor their agreement. RILLO was able to pay P2,000.00 is hereby declared cancelled and rendered ineffective. Plaintiff-Appellant is hereby
on April 25, 1989 and P2,000.00 on May 15, 1989.[9] ordered to return 50% of P158,184.00 or P79,092.00 to appellee who is hereby ordered
On April 3, 1990, CORB REALTY sent RILLO a statement of accounts which fixed to vacate the subject premises.
his total arrears, including interests and penalties, to P155,129.00. When RILLO failed "SO ORDERED."[13]
to pay this amount, CORB REALTY filed a complaint[10] for cancellation of the contract Hence, this appeal with the following assignment of errors:
to sell with the Regional Trial Court of Pasig.
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"THE HONORABLE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN Petitioner further contends that the contract to sell has been novated by the
HOLDING AND DECIDING THAT RESCISSION IS THE PROPER REMEDY ON A parties agreement of March 12, 1989. The contention cannot be sustained. Article 1292
PERFECTED AND CONSUMMATED CONTRACT; of the Civil Code provides that "In order that an obligation may be extinguished by
"THE HONORABLE COURT OF APPEALS SERIOUSLY AND GRAVELY ERRED IN another which substitutes the same, it is imperative that it be so declared in unequivocal
NOT HOLDING AND DECIDING THAT THE OLD CONSUMMATED CONTRACT HAS terms, or that the old and the new obligations be on every point incompatible with each
BEEN SUPERSEDED BY A NEW, SEPARATE, INDEPENDENT AND SUBSEQUENT other." Novation is never presumed.[17]Parties to a contract must expressly agree that
CONTRACT BY NOVATION." they are abrogating their old contract in favor of a new one. [18] In the absence of an
The petition is without merit. express agreement, novation takes place only when the old and the new obligations are
The respondent court did not err when it did not apply Articles 1191 and 1592 of incompatible on every point.[19] In the case at bar, the parties executed their May 12,
the Civil Code on rescission to the case at bar. The contract between the parties is not 1989 "compromise agreement" precisely to give life to their "Contract to Sell". It merely
an absolute conveyance of real property but a contract to sell. In a contract to sell real clarified the total sum owed by petitioner RILLO to private respondent CORB REALTY
property on installments, the full payment of the purchase price is a positive suspensive with the view that the former would find it easier to comply with his obligations under the
condition, the failure of which is not considered a breach, casual or serious, but simply Contract to Sell. In fine, the "compromise agreement" can stand together with the
an event which prevented the obligation of the vendor to convey title from acquiring any Contract to Sell.
obligatory force."[14] The transfer of ownership and title would occur after full payment of Nevertheless, we do not agree with the respondent Court so far as it ordered
the purchase price. We held in Luzon Brokerage Co., Inc. v. Maritime Building Co., private respondent CORB REALTY to refund 50% of P158,184.00 or P79,092.00 to
Inc.[15] that there can be no rescission of an obligation that is still non-existent, the petitioner RILLO. Under Republic Act No. 6552, the right of the buyer to a refund
suspensive condition not having happened. accrues only when he has paid at least two (2) years of installments. In the case at bar,
Given the nature of the contract of the parties, the respondent court correctly RILLO has paid less than two (2) years in installments, hence, he is not entitled to a
applied Republic Act No. 6552. Known as the Maceda Law, R.A. No. 6552 recognizes refund.
in conditional sales of all kinds of real estate (industrial, commercial, residential) the IN VIEW WHEREOF, the decision appealed from is AFFIRMED with the
right of the seller to cancel the contract upon non-payment of an installment by the MODIFICATION that the refund of 50% P158,184.00 or P79,092.00 made in favor of
buyer, which is simply an event that prevents the obligation of the vendor to convey title petitioner Emiliano Rillo is deleted. No costs.
from acquiring binding force.[16] It also provides the right of the buyer on installments in SO ORDERED.
case he defaults in the payment of succeeding installments, viz: Regalado, (Chairman), Romero, Mendoza, and Torres, Jr., JJ., concur.
(1) Where he has paid at least two years of installments,
"(a) To pay, without additional interest, the unpaid installments due within the total 14. p. 70 valarao v ca
grace period earned by him, which is hereby fixed at the rate of one month grace period 15. p. 71 active realty
for every one year of installment payments made: Provided, That this right shall be 16. fabrigas
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 G.R. No. 152346 November 25, 2005
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 ISAIAS F. FABRIGAS and MARCELINA R. FABRIGAS, petitioners
to exceed ninety per cent of the total payments made: Provided, That the actual vs.
cancellation of the contract shall take place after cancellation or the demand for SAN FRANCISCO DEL MONTE, INC., respondent
rescission of the contract by a notarial act and upon full payment of the cash surrender
value to the buyer. FACTS:
Down payments, deposits or options on the contract shall be included in the
computation of the total number of installments made." Spouses Fabrigas entered into an agreement denominanted as Contract to
(2) Where he has paid less than two years in installments, Sell No. 2482-V with San Francisco Del Monte, Inc. a parcel of residential lot situated in
"Sec. 4. x x x the seller shall give the buyer a grace period of not less than sixty days Barrio Almanza, Las Pias, Manila for a consideration of P109,200,00. The agreement
from the date the installment became due. If the buyer fails to pay the installments due includes that the spouses shall pay a downpayment of P30,000 with balance within 10
at the expiration of the grace period, the seller may cancel the contract after thirty days years in successive instalments of P1,285.69 and a contract containing an automatic
from receipt by the buyer of the notice of cancellation or the demand for rescission of cancellation clause, in the event the purchaser fail to pay any installments and in the
the contract by a notarial act." event of forfeiture, all sums of money paid will be treated as rentals and waives all right
Petitioner RILLO paid less than two years in installment payments, hence, he is to ask or demand the return of the amount and agrees to peaceably vacate the
only entitled to a grace period of not less than sixty (60) days from the due date within premises.
which to make his installment payment. CORB REALTY, on the otherhand, has the Fabrigas paid the downpayment and took possession of the property but failed
right to cancel the contract after thirty (30) days from receipt by RILLO of the notice of to pay any installments. Del Monte sent demand letters on 4 occasions to Fabrigas as
cancellation. Hence, the respondent court did not err when it upheld CORB REALTY's final letter sent on December 7, 1983 having grace period of 15 days and otherwise will
right to cancel the subject contract upon repeated defaults in payment by RILLO. forfeit all payments maid and the rescission however letter was received by Fabrigas on
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December 23, 1983 but the contract was considered cancelled by Del Monte but did not alone consented to a contract involving conjugal property. Art. 168, the wife may, by
notice Fabrigas on the cacellation. express authority of the husband embodied in a public instrument, administer the
Marcelina Fabrigas continued remitting money to Del Monte until on January conjugal partnership property. Art. 169, the wife may also, my express authority of the
21, 1985, parties enter into another contract to sell of No. 2491-V but under different husband appearing in a public instrument, administer the latter’s estate. Any transaction
terms. Between March 1985 and January 1986, spouses Fabrigas made irregular entered by the wife without the court or the husbands authority is unenforceable in
payments for the second contract then on February 3, 1986 Del Monte sent a demand accordance with Art. 1317.
letter to Fabrigas for overdue account. Being unenforceable, Contract to Sell No. 2491- is susceptible to ratification. In
A petition for review was made in assailment for the decision made by the here, Isaias Fabrigas, the husband continued remitting payments for the satisfaction of
Court of Appeals in CA-G.R. CV No. 45203 and its resolution denying petitioners the obligation under Contract to Sell No. 2491-V, constitute ratification of the contract.
motion for reconsideration. In the decision, the spouses Fabrigas, as defendants,
considered paid by the amount of P78,152.00 were ordered (a) to make complete Therefore, Contract to Sell No. 2482-V was novated by Contract to Sell No.
payment under the conditions of Contract to Sell No. 2491-V dated January 21, 1985 2491-V due to ratification, then the spouses Fabrigas shall follow the decision of the
within 20 days from the receipt of the decision and in the event of failure or refusal, all Court of Appeals.
persons claiming right and possession or occupation are ordered to vacate and leave
the premises of the house and lot, (b) if defendants chose to surrender possession of
the property will be ordered to pay San Francisco, the plaintiff, P206,223.80 as unpaid 17. jestra v pacific
installments on the land inclusive of interests (c) ordering defendants to jointly and
severally pay plaintiff the amount of P10,000.00 for attorneys fees and (d) to pay the JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION v. DANIEL
costs of suit. PONCE PACIFICO
513 SCRA 403 (2007)
ISSUES: Cancellation of the contract, under the law, requires that the seller should extend the
buyer a grace period of at least 60 days from the due date of the installment, and at the
1. Whether or not Contract to Sell No. 2482-V, the first contract entered end of the grace period, the seller shall furnish the buyer with a notice of cancellation or
into by the parties, has really been cancelled and no longer valid. demand for rescission.
2. Whether or not consent by the husband needed for novation was Daniel Ponce Pacifico (Pacifico) signed a Reservation Application with Fil-Estate
achieved. Marketing Association for the purchase of a house and lot located at Paranaque, Metro
Manila and paid the reservation fee of 20,000.00. Under the Reservation Application,
RULINGS: upon fulfillment of the 30% down payment by Pacifico, he will sign a contract to sell with
the owner and developer of the property which is the JESTRA Development and
1. Yes, Contract to Sell No. 2482-V has really been cancelled and replaced by Management Corporation (Jestra).
Contract to Sell No. 2491-V. It is already novated by the second contract because of the Pacifico run out of funds to pay for the property, and he requested to Jestra to suspend
ratification made by the Fabrigas. payment. Jestra denied his request. Pacifico filed a complaint before the Housing and
According to the Maceda Law Sec 4, the cancellation of the contract is a two- Land Use Regulatory Board (HLURB) against Jestra claiming that despite his full
step process. First, the seller should extend the buyer a grace period of at least sixty payment of the down payment, Jestra failed to deliver to him the property within 90
days from the due date of the instalment . Second, at the end of the grace period, the days as provided in the contract to sell dated March 6, 1997 and Jestra instead sold the
seller shall furnish the buyer with a notice of cancellation or demand for rescission property to another buyer in October 1998.
through a notarial act, effective thirty days fro the buyers receipt thereof. The mere ISSUE:
notice or letter will not suffice. Whether or not the act of Jestra in canceling the contract to sell agreement with Pacifico
Del Monte did not comply with this but applied automatic rescission clause of is valid
the contract, but rescission is not the only mode of extinguishing obligations. In this HELD:
case Novation was applied. Novation takes place when an old obligation is terminated R.A. 6552 was enacted to protect buyers of real estate on installment against onerous
by the creation of a new obligation or when the old obligation subsists to the extent it and oppressive conditions. In Fabrigas v. San Francisco del Monte,Inc., the court
remains compatible with the amendatory agreement. Requisites for novation are a described the cancellation of the contract under Section 4 of R.A. 6552 as a two-step
previous valid obligation, an agreement of all parties concerned to a new contract, the process. First, the seller should extend the buyer a grace period of at least 60 days
extinguishment of the old obligation and the birth of a valid new obligation. These from the due date of the installment. Second, at the end of the grace period, the seller
requisites were complied with by the both parties even though a question of consent shall furnish the buyer with a notice of cancellation or demand for rescission through a
takes place. notarial act, effective 30 days from the buyer‘s receipt thereof.
Pacifico admits that the first installment on the 70% balance of the purchase price was
2. Yes, consent for novation was achieved. due on January 5, 1998. He issued checks for it but was dishonored due to insufficiency
On article 172 of the civil code expressly classifies a contract executed by the of funds. Pacifico was notified of the dishonor of the checks but he took no action,
husband without the consent of the wife as merely annullable at the instance of the hence, 60 days grace period lapsed. Pacifico made no further payments thereafter.
wife. However, there is no comparable provision covering an instance where the wife Instead, he requested for suspension of payment.
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Also, Pacifico admits that Jestra was justified in canceling the contract to sell via the of the seller to cancel the contract upon non-payment of an installment by the buyer,
notarial Notice of Cancellation which he received on May 13, 1998 which took effect on which is simply an event that prevents the obligation of the vendor to convey title from
June 12, 1998. Thus, the cancellation of the contract to sell of Jestra is valid. acquiring binding force. It is noteworthy that upon review of the records of this case, the
18. manuel v valbueco Court finds that respondent had been served a notice of the notarial rescission of the
conditional deeds of sale when it was furnished with the petitioner's Answer, dated
MANUEL UY & SONS, INC. February 16, 1995, to its first Complaint filed on November 28, 1994with the RTCbut
vs. the complaint was later dismissed without prejudice xxx.Five years after the dismissal
VALBUECO, INCORPORATED, of the first Complaint, respondent again filed this case for specific performance in which
it received the petitioner’s answer containing the notarial rescission of the conditional
G.R. No. 179594, September 11, 2013 sale. Since respondent already received notices of the notarial rescission of the
Facts: Petitioner is the owner of the subject lots. In 1973, two Conditional Deeds of conditional deeds of sale, together with petitioner’s Answer to the first Complaint five
Sale were executed by petitioner in favor of the respondent. The Deeds of Conditional years before it filed this case, it can no longer deny having received notices of the
Sale provided, among others, that the purchase price shall be paid in 3 installments notarial rescission in this case, as respondent admitted the same when it attached the
with interest, that the vendee be granted a grace period of 30 days from date of notices of notarial rescission to its Reply in this case.
installment and that ownership of the properties shall not pass to the vendee until after
full payment of the purchase price. Respondent was able to pay petitioner the amount Contracts; contract to sell distinguished from contract of sale; in a contract to sell,
of P275,055.558 as partial payment for the two properties corresponding to the initial ownership remains with the vendor and does not pass to the vendee until full payment
payments and the first installments of the said properties.However, respondent of the purchase price; a deed of sale is absolute when there is no stipulation in the
suspended further payment as it was not satisfied with the manner petitioner complied contract that title to the property remains with the seller until the full payment of the
with its obligations under the conditional deeds of sale.Consequently, in 1978, petitioner purchase price. In a conditional sale, as in a contract to sell, ownership remains with
sent respondent a letter informing respondent of its intention to rescind the conditional the vendor and does not pass to the vendee until full payment of the purchase price.
deeds of sale and attaching therewith the original copy of the respective notarial The full payment of the purchase price partakes of a suspensive condition, and non-
rescission. In 1994, respondent filed a Complaint for specific performance and fulfillment of the condition prevents the obligation to sell from arising. To differentiate, a
damages against petitioner with the RTC. Such was dismissed without prejudice for deed of sale is absolute when there is no stipulation in the contract that title to the
lack of interest, as respondent's counsel failed to attend the pre-trial conference. In property remains with the seller until full payment of the purchase price. Ramos v.
2001, respondent again filed with the RTC a complaint for specific performance and Heruela held that Articles 1191 and 1592 of the Civil Code are applicable to contracts of
damages, seeking to compel petitioner to accept the balance of the purchase price for sale, while R.A. No. 6552 applies to contracts to sell.
the two conditional deeds of sale and to execute the corresponding deeds of absolute
sale. Respondent contended that its non-payment of the instalments was due to the 19. Gatchalian realty v angeles
following reasons:(1) Petitioner refused to receive the balance of the purchase price as
the properties were mortgaged and had to be redeemed first before a deed of absolute
sale could be executed; (2) Petitioner assured that the existing mortgages on the
properties would be discharged on or before May 20,1974, or that petitioner did not
inform it (respondent) that the mortgages on the properties were already released; and
(3) Petitioner failed to fully eject the unlawful occupants in the area. On the other hand,
Petitioner claimed that it gave respondent a notice of notarial rescission of both
conditional deeds of sale that would take effect 30 days from receipt thereof. The notice
of notarial rescission was allegedly received by respondent in 1978. Petitioner asserted
that since respondent failed to pay the full purchase price of the subject lots, both
conditional deeds of sale were rescinded as of April 16, 1978; hence, respondent had
no cause of action against it. The trial court dismissed the complaint. On appeal the
court of appeals reversed and set aside the RTC decision. It reinstated the complaint of
respondent, and directed petitioner to execute deeds of absolute sale in favor of
respondent after payment of the balance of the purchase price of the subject lots.
Issue: Whether or not the contracts to sell were validly rescinded. Ruling: Yes. The
contracts to sell were validly rescinded. In Ramos v. Heruela the Court held that
Articles 1191 and 1592 of the Civil Code are applicable to contracts of sale, while R.A.
No. 6552or the Realty

Installment Buyer Act applies to contracts to sell.R.A. No. 6552 recognizes in


conditional sales of all kinds of real estate (industrial, commercial, residential) the right