Pryce Properties v. Narciso Nolasco, Jr., G.R. No. 203990, August 24, 2020

FACTS:

Nolasco alleged that in 1995, he purchased three lots located in Cagayan de Oro City from Pryce; also in 1995, he deposited a total amount of P393,435 through check payments in favor of Pryce; the latter did not deliver to Nolasco the copies of the lots' certificates of title and their sales agreement; he was surprised, frustrated, and dismayed when he finally received the sales agreement, as it contained unacceptable conditions to which he conveyed his objections to Pryce; since he had not yet signed the sales agreement, there was still no meeting of the minds between him and Pryce; and that despite demands for refund of his deposit payments, Pryce failed to comply.

Pryce filed an Answer with Counterclaims. It countered that Nolasco could not yet be issued certificates of title since their transaction was not a contract of sale but a contract to sell. Nolasco was allegedly furnished a copy of the Contract to Sell as early as November 8, 1995, which he signed and even requested for an amended Contract to Sell to reflect a new amortization schedule. Nolasco, under R.A. No. 6552 or the Maceda Law, was not entitled to a refund of his deposits since he failed to complete the payments within the grace period provided by Pryce, resulting in their forfeiture and the rescission of the contract to sell.

The RTC ruled in favor of Nolasco. It found that there had been a perfected contract of sale between Nolasco and Pryce pursuant to Article 1482 of the Civil Code. It also ruled that under RA 6552 or the Maceda Law, Pryce can rescind the contract of sale for failure of Nolasco to pay at least two (2) years of installments to Pryce. The latter, however, did not rescind the contract. As regards the issue of refund of the payments he made to Pryce, the RTC declared Nolasco as entitled thereto, citing jurisprudence and Article 1191.

The CA affirmed the RTC in part. The CA found that the contract entered into by Pryce and Nolasco was a contract to sell. The CA nonetheless upheld Nolasco's entitlement to a refund, as Pryce did not exercise the remedy of cancellation under RA 6552 and under equity considerations.

 

ISSUES:

1) Whether the contract between Pryce and Nolasco was rescinded in accordance with R.A. No. 6552

2) Whether petitioner Pryce should refund respondent Nolasco

 

RULING:

1) NO. The written Contract to Sell is ineffectual. Section 4 of RA 6552 requires four conditions before the seller may actually cancel the contract thereunder: first, the defaulting buyer has paid less than two years of installments; second, the seller must give such defaulting buyer a 60-day grace period, reckoned from the date the installment became due; third, if the buyer fails to pay the installments due at the expiration of the said grace period, the seller must give the buyer a notice of cancellation and/or a demand for rescission by notarial act; and fourth, the seller may actually cancel the contract only after the lapse of 30 days from the buyer's receipt of the said notice of cancellation and/or demand for rescission by notarial act.

There was compliance with the first and second requisites when Pryce sent Nolasco, a defaulting buyer whose payments did not amount to two years' worth of installments, its December 5, 1998 letter giving him 60 days to make good on his obligation. Pryce, however, did not meet the last two conditions. As properly determined by the CA, there was no notice of notarial rescission served upon Nolasco. Necessarily, 30 days could not have lapsed from a non-existent service of such notice.

2) YES. In summary and only for purposes of brevity, We point out that a defaulting buyer of real property on installments, whether or not she or he has paid two (2) years of installments, has three common legal remedies in the absence of a valid rescission, granted by Section 6 of R.A. No. 6552 and jurisprudence:

 

(a) Pay in advance any installment at any time, necessarily without interest;

(b) Pay the full unpaid balance of the purchase price at any time without interest, and to have such full payment of the purchase price annotated in the certificate of title covering the real property subject of the transaction under R.A. No. 9552; or

(c) Claim an equitable refund of prior payments and/or deposits made by the defaulting buyer to the seller pertinent to their transaction under R.A. No. 9552, if any.