Case Digest (G.R. No. 141205) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
The case involved Active Realty & Development Corporation as petitioner and Necita G. Daroya, represented by her attorney-in-fact Shirley Daroya-Quinones, as respondent. On January 2, 1985, the petitioner, owner and developer of Town & Country Hills Executive Village in Antipolo, Rizal, entered into a Contract to Sell with respondent Necita Daroya, then a contract worker abroad. The contract entailed the sale of a 515-square meter lot for ₱224,025.00, payable by an initial down payment of ₱53,766.00 plus sixty monthly installments of ₱4,893.35. Despite the stated contract price, total payments due would amount to ₱346,367.00. By May 5, 1989, respondent had paid ₱40,000.00 as amortization but incurred a default of ₱15,282.85 covering three monthly installment payments by August 8, 1989. Petitioner sent a notice of cancellation of the contract to take effect thirty days from receipt but did not establish actual receipt by respondent. Subsequently, respondent offered to pa
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Case Digest (G.R. No. 141205) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Contract and Payment Terms
- Petitioner Active Realty & Development Corporation owned and developed Town & Country Hills Executive Village in Antipolo, Rizal.
- On January 2, 1985, petitioner and respondent Necita G. Daroya entered into a Contract to Sell a 515 sq. m. lot for P224,025.00, with an initial down payment of P53,766.00, and the balance of P170,259.00 payable in 60 monthly installments of P4,893.35.
- The total amount respondent would pay, combining down payment and installments, amounted to P346,367.00, significantly higher than the stated contract price.
- Respondent’s Default and Petitioner’s Cancellation Notice
- Respondent made payments totaling P40,000.00 by May 5, 1989.
- By August 8, 1989, she was in default by three installments totaling P15,282.85.
- Petitioner sent a notice of cancellation of the contract, to take effect thirty days from receipt. The exact date respondent received the notice is not in the records.
- When respondent tendered payment of the balance, petitioner refused, claiming the lot had been sold to another buyer.
- Administrative Proceedings Before HLURB
- Respondent filed a complaint for specific performance and damages before the HLURB Arbitration Branch on August 26, 1991, seeking enforcement of the contract and issuance of a Deed of Absolute Sale upon payment of balance.
- Respondent claimed to have paid a total of P314,816.76, which exceeded the contract price by P90,835.76.
- HLURB Arbiter’s Decision
- On June 14, 1993, Arbiter Alfredo M. Tan II ruled the cancellation void due to petitioner’s failure to pay the cash surrender value mandated by law.
- Since the lot was already sold to a third party, and respondent agreed to a refund, petitioner was ordered to refund all payments of P314,816.70 with 12% interest from filing date (August 26, 1991) and P10,000.00 attorney’s fees.
- HLURB Board of Commissioners’ Decision
- On August 10, 1994, the HLURB Board set aside the Arbiter’s Decision and refused to apply the Maceda Law remedies strictly.
- Finding both parties at fault — respondent for delayed payments and petitioner for failure to send notarized cancellation — it ordered petitioner to refund only half of the total payments or P157,408.35.
- Office of the President Review
- Respondent appealed to the Office of the President.
- On June 2, 1998, Chief Presidential Counsel Renato C. Corona modified HLURB’s decision and ruled:
- Petitioner failed to comply with the legal requisites for valid cancellation.
- The contract remained valid and respondent was entitled to the lot upon payment of the outstanding balance.
- As the lot had been sold, petitioner must refund the actual value of the lot as of the contract date—P875,000.00 with 12% interest from August 26, 1991—or deliver a substitute lot at respondent’s option.
- Court of Appeals Proceedings
- Petitioner filed a petition for review contesting the Office of the President’s Decision.
- The Court of Appeals denied the petition for insufficiency in form and substance:
- No affidavit of service attached.
- Lack of the required portions of the record to support petition allegations.
- The certification of no forum shopping was signed by an unauthorized corporate officer.
- Petitioner’s motion for reconsideration was denied on timeliness grounds.
- Supreme Court Review
- Petitioner questioned the denial of due course by the Court of Appeals focusing on issues of form over merit and inconsistent rulings on the motion for reconsideration.
- The Supreme Court found:
- Substantial compliance with procedural requirements.
- Evidence of actual service to respondent’s counsel.
- Proper submission of relevant records including decisions and resolutions appealed from.
- Non-submission of some documents was due to refusal by respondent agency to provide certified true copies.
- Authorization for counsel to file was ratified by Secretary’s Certificate.
- Motion for reconsideration was timely filed.
- The Court of Appeals erred by denying the petition and motion due to formal defects, neglecting substantive rights.
- Application of the Maceda Law
- The contract is governed by Republic Act No. 6552 or the Maceda Law, designed to protect installment buyers of real estate, particularly low and middle-income purchasers.
- The law mandates that cancellation of contracts to sell real estate on installment basis requires:
- A notarized written notice of cancellation or rescission served on buyer.
- Payment of the cash surrender value, i.e., 50% of total payments made, after at least two years installments paid.
- Petitioner failed to comply with these requirements: no notarized cancellation nor cash surrender value paid.
- Respondent had paid P314,860.76, exceeding contract price, and was ready to pay the balance.
- Petitioner prematurely cancelled the contract and resold the lot without returning respondent’s payments or complying with Maceda Law procedures.
- Equity and Justness of the Ruling
- Petitioner’s failure to comply with cancellation requirements rendered the contract valid and subsisting.
- Respondent has the right to complete payment without penalty or interest for the balance, but the lot is no longer available.
- Respondent is entitled to recover the actual value of the lot (P875,000.00) plus interest or receive a substitute lot.
- HLURB Board’s refund of only half the payments was inequitable as it disregarded petitioner’s failure to comply with the law.
- HLURB Arbiter’s full refund decision was also not fully justified since respondent was entitled to the lot upon balance payment.
Issues:
- Whether the Court of Appeals erred in denying the petition for review on procedural grounds without considering the merits.
- Whether the petitioner had validly cancelled the contract to sell in compliance with the Maceda Law requirements.
- Whether the respondent is entitled to the lot or a refund of the actual value thereof, given that the lot was sold to a third party.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)