JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION vs DANIELPONCE PACIFICO, 513 SCRA 403 (2007)

JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION vs DANIEL
PONCE PACIFICO, 513 SCRA 403 (2007)

Facts:
Daniel Ponce Pacifico (Pacifico) signed a Reservation Application with Fil-Estate 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, 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 Management Corporation (Jestra).
Pacifico run out of funds to pay for the property, and he requested to Jestra to suspend payment. Jestra denied his request. Pacifico filed a complaint before the Housing and Land Use Regulatory Board (HLURB) against Jestra claiming that despite his full payment of the down payment, Jestra failed to deliver to him the property within 90 days as provided in the contract to sell dated March 6, 1997 and Jestra instead sold the property to another buyer in October 1998.

ISSUE:
Whether or not the act of Jestra in canceling the contract to sell agreement with Pacifico is valid

HELD:
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 end of the grace period, the seller shall furnish the buyer with a notice of cancellation or demand for rescission.
 
R.A. 6552 was enacted to protect buyers of real estate on installment against onerous and oppressive conditions. In Fabrigas vs San Francisco del Monte,Inc., the court described the cancellation of the contract under Section 4 of R.A. 6552 as a two-step process. First, the seller should extend the buyer a grace period of at least 60 days from the due date of the installment. Second, at the end of the grace period, the seller shall furnish the buyer with a notice of cancellation or demand for rescission through a notarial act, effective 30 days from the buyer‘s receipt thereof.
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Pacifico admits that the first installment on the 70% balance of the purchase price was due on January 5, 1998. He issued checks for it but was dishonored due to insufficiency of funds. Pacifico was notified of the dishonor of the checks but he took no action, hence, 60 days grace period lapsed. Pacifico made no further payments thereafter. Instead, he requested for suspension of payment.

Also, Pacifico admits that Jestra was justified in canceling the contract to sell via the notarial Notice of Cancellation which he received on May 13, 1998 which took effect on June 12, 1998. Thus, the cancellation of the contract to sell of Jestra is valid.