[G.R. No. 141205. May 9, 2002] On June 14, 1993, HLURB Arbiter Alfredo M.

Tan II
found for the respondent. He ruled that the cancellation
ACTIVE REALTY & DEVELOPMENT of the contract to sell was void as petitioner failed to pay
CORPORATION, petitioner, vs. NECITA G. the cash surrender value to respondent as mandated by
DAROYA, represented by Attorney-In-Fact Shirley law. However, as the subject lot was already sold to a
Daroya-Quinones, respondents. third party and the respondent had agreed to a full refund
DECISION of her installment payments, petitioner was ordered to
PUNO, J.: refund to respondent all her payments in the amount of
P314,816.70, with 12% interest per annum from August
This is a petition for review on certiorari under Rule 45 26, 1991 (the date of the filing of the complaint) until
of the Revised Rules of Court which seeks to reverse and fully paid and to pay P10,000.00 as attorneys fees.[4]
set aside the Resolution of the Court of Appeals, dated
August 3, 1999, denying due course to petitioners appeal On appeal, the HLURB Board of Commissioners set
for insufficiency of form and substance. aside the Arbiters Decision. The Board refused to apply
the remedies provided under the Maceda Law and
Petitioner ACTIVE REALTY & DEVELOPMENT instead deemed it fit to formulate an equitable solution
CORPORATION is the owner and developer of Town & to the case. It ruled that, as both parties were at fault, i.e.,
Country Hills Executive Village in Antipolo, Rizal. On respondent incurred in delay in her installment payments
January 2, 1985, it entered into a Contract to Sell[1] with and respondent failed to send a notarized notice of
respondent NECITA DAROYA, a contract worker in the cancellation, petitioner was ordered to refund to the
Middle East, whereby the latter agreed to buy a 515 sq. respondent one half of the total amount she has paid or
m. lot for P224,025.00 in petitioners subdivision. P157,408.35, which was allegedly akin to the remedy
provided under the Maceda Law.[5]
The contract to sell stipulated that the respondent shall
pay the initial amount of P53,766.00 upon execution of Respondent appealed to the Office of the President. On
the contract and the balance of P170,259.00 in sixty (60) June 2, 1998, then Chief Presidential Counsel Renato C.
monthly installments of P4,893.35. Adding the down Corona, acting by authority of the President, modified
payment and installment payments, it would appear that the Decision of the HLURB as he found that it was not
the total amount is P346,367.00, a figure higher than that in accord with the provisions of the Maceda Law. He
stated as the contract price. held that as petitioner did not comply with the legal
requisites for a valid cancellation of the contract, the
On May 5, 1989, petitioner accepted respondents contract to sell between the parties subsisted and
amortization in the amount of P40,000.00. By August 8, concluded that respondent was entitled to the lot after
1989, respondent was in default of P15,282.85 payment of her outstanding balance. However, as the
representing three (3) monthly amortizations. Petitioner petitioner disclosed that the lot was already sold to
sent respondent a notice of cancellation[2] of their another person and that the actual value of the lot as of
contract to sell, to take effect thirty (30) days from the date of the contract was P1,700.00 per square meter,
receipt of the letter. It does not appear from the records, petitioner was ordered to refund to the respondent the
however, when respondent received the letter. amount of P875,000.00, the true and actual value of the
Nonetheless, when respondent offered to pay for the lot as of the date of the contract, with interest at 12% per
balance of the contract price, petitioner refused as it has annum computed from August 26, 1991 until fully paid,
allegedly sold the lot to another buyer. or to deliver a substitute lot at the choice of
respondent.[6]
On August 26, 1991, respondent filed a complaint for
specific performance and damages[3] against petitioner Upon denial of its motion for reconsideration, petitioner
before the Arbitration Branch of the Housing and Land assailed the Decision in the Court of Appeals. However,
Use Regulatory Board (HLURB). It sought to compel its petition for review[7] was denied due course for
the petitioner to execute a final Deed of Absolute Sale in insufficiency in form and substance,[8] because: 1) no
respondents favor after she pays any balance that may affidavit of service was attached to the petition; 2)
still be due from her. Respondent claimed that she is except for certified true copies of the decision and
entitled to the final deed of sale after she offered to pay resolution of the Office of the President, no other
the balance of P24,048.47, considering that she has material portions of the record, as would support the
already paid the total sum of P314,816.76, which allegations in the petition, were attached; and, 3) the
amount is P90,835.76 more than the total contract price certification of forum-shopping was signed by the head
of P224,025.00. counsel and vice-president of the petitioner corporation

1
who was not authorized by a Board Resolution to Resolution by petitioner corporation authorizing Atty.
represent petitioner. Rene Katigbak, its Chief Legal Counsel and Vice-
President for Legal Affairs, to represent it in the filing of
Petitioner moved for reconsideration. The Court of the appeal, petitioner admits that this was due to its
Appeals denied it on an entirely new ground, i.e., for honest belief that such authority is not required as it was
untimely filing of the petition for review.[9] not mentioned in Section 6(c) of Rule 43.[12] To make
up for such omission, petitioner submitted a Secretarys
Petitioner now impugns the decision of the Court of Certificate[13] confirming and ratifying the authority of
Appeals and raises the following procedural issues: Atty. Katigbak to represent petitioner. Finally, we find
that the Court of Appeals erred in denying petitioners
I motion for reconsideration due to untimely filing as the
records clearly show that it was filed on June 25, 1999, a
THE HONORABLE COURT OF APPEALS day before the expiration of the period to appeal granted
GROSSLY ERRED IN RELYING TOO MUCH ON by the Court of Appeals.[14]
FORM RATHER THAN ON THE MERITS OF THE
PETITION THEREBY DENYING PETITIONER OF In denying due course to the petition, the appellate court
ITS RIGHT TO DUE PROCESS. gave premium to form and failed to consider the
important rights of the parties in the case at bar.[15] At
II the very least, petitioner substantially complied with the
procedural requirements for appeal, hence, it is best to
THE HONORABLE COURT OF APPEALS give due course to the petition at bar to clarify the rights
ANCHORED THE DENIAL OF PETITIONERS and duties of a buyer in contracts to sell real estate on
MOTION FOR RECONSIDERATION ON installment basis.
INCONSISTENT AND CONFLICTING RULINGS
NOT BORNE BY THE FACTS AND THE RECORDS The issue to be resolved is whether or not the petitioner
OF THE CASE. can be compelled to refund to the respondent the value
of the lot or to deliver a substitute lot at respondents
On the procedural points raised, we find for the option.
petitioner.
We find for the respondent and rule in the affirmative.
Our perusal of the record reveals that petitioner
substantially complied with the formal requirements of The contract to sell in the case at bar is governed by
Rule 43 of the Rules of Court.[10] First, as to the non- Republic Act No. 6552 -- The Realty Installment Buyer
attachment of the affidavit of service, the records bear Protection Act, or more popularly known as the Maceda
that the petition was accompanied by the original Law -- which came into effect in September 1972. Its
registry receipts issued by the post office, showing that declared public policy is to protect buyers of real estate
the petition and its annexes were served upon the parties. on installment basis against onerous and oppressive
Moreover, respondents counsel of record, Atty. Sergio conditions.[16] The law seeks to address the acute
Guadiz, actually received a copy of the petition.[11] housing shortage problem in our country that has
Second, petitioner likewise complied with Section 6 (c) prompted thousands of middle and lower class buyers of
of Rule 43 requiring the submission of copies of the houses, lots and condominium units to enter into all sorts
award, judgment, final order and resolution appealed of contracts with private housing developers involving
from. Its petition was accompanied by the duplicate installment schemes. Lot buyers, mostly low income
original of the appealed Decision of the Chief earners eager to acquire a lot upon which to build their
Presidential Legal Counsel and his Resolution denying homes, readily affix their signatures on these contracts,
petitioners motion for reconsideration, the Decision of without an opportunity to question the onerous
the HLURB Board of Commissioners and that of the provisions therein as the contract is offered to them on a
HLURB arbiter. A perusal of these documents will take it or leave it basis.[17] Most of these contracts of
reveal that they contained all the relevant facts of the adhesion, drawn exclusively by the developers, entrap
case from which the appellate body can form its own innocent buyers by requiring cash deposits for
decision. Its failure to submit the other documents, like reservation agreements which oftentimes include, in fine
the Complaint, Answer, Position Papers and Appeal print, onerous default clauses where all the installment
Memoranda of the parties before the HLURB, was due payments made will be forfeited upon failure to pay any
to the refusal of the Office of the President to give them installment due even if the buyers had made payments
a certified true copy of these documents which were for several years.[18] Real estate developers thus enjoy
submitted with said Office. Third, as to the lack of Board an unnecessary advantage over lot buyers who they often

2
exploit with iniquitous results. They get to forfeit all the installment arrears through her last known address.
installment payments of defaulting buyers and resell the Clearly, had respondent not filed a case demanding a
same lot to another buyer with the same exigent final deed of sale in her favor, petitioner would not have
conditions. To help especially the low income lot buyers, lifted a finger to give respondent what was due her
the legislature enacted R.A. No. 6552 delineating the actual payment of the cash surrender value, among
rights and remedies of lot buyers and protect them from others. In disregard of basic equitable principles,
one-sided and pernicious contract stipulations. petitioners stance would enable it to resell the property,
keep respondents installment payments, not to mention
More specifically, Section 3 of R.A. No. 6552 provided the cash surrender value which it was obligated to return.
for the rights of the buyer in case of default in the The Layug[20] case cited by petitioner is inapropos. In
payment of succeeding installments, where he has Layug, the lot buyer did not pay for the outstanding
already paid at least two (2) years of installments, thus: balance of his account and the Court found that notarial
rescission or cancellation was no longer necessary as the
(a) To pay, without additional interest, the unpaid seller has already filed in court a case for rescission of
installments due within the total grace period earned by the contract to sell. In the case at bar, respondent offered
him, which is hereby fixed at the rate of one month grace to pay for her outstanding balance of the contract price
period for every one year of installment payments made; but respondent refused to accept it. Neither did petitioner
xxx adduce proof that the respondents offer to pay was made
after the effectivity date stated in its notice of
(b) If the contract is cancelled, the seller shall refund to cancellation. Moreover, there was no formal notice of
the buyer the cash surrender value of the payments on cancellation or court action to rescind the contract.
the property equivalent to fifty per cent of the total Given the circumstances, we find it illegal and iniquitous
payments made; provided, that the actual cancellation of that petitioner, without complying with the mandatory
the contract shall take place after thirty days from receipt legal requirements for canceling the contract, forfeited
by the buyer of the notice of cancellation or the demand both respondents land and hard-earned money after she
for rescission of the contract by a notarial act and upon has paid for, not just the contract price, but more than
full payment of the cash surrender value to the buyer. the consideration stated in the contract to sell.

In this case, respondent has already paid in four (4) years Thus, for failure to cancel the contract in accordance
a total of P314,860.76 or P90,835.76 more than the with the procedure provided by law, we hold that the
contract price of P224,035.00. In April 1989, petitioner contract to sell between the parties remains valid and
decided to cancel the contract when the respondent subsisting. Following Section 3(a) of R.A. No. 6552,
incurred in delay in the payment of P15,282.85, respondent has the right to offer to pay for the balance of
representing three (3) monthly amortizations. Petitioner the purchase price, without interest, which she did in this
refused to accept respondents subsequent tender of case. Ordinarily, petitioner would have had no other
payment of the outstanding balance alleging that it has recourse but to accept payment. However, respondent
already cancelled the contract and sold the subject lot to can no longer exercise this right as the subject lot was
another buyer. However, the records clearly show that already sold by the petitioner to another buyer which lot,
the petitioner failed to comply with the mandatory twin as admitted by the petitioner, was valued at P1,700.00
requirements for a valid and effective cancellation under per square meter. As respondent lost her chance to pay
the law,[19] i.e., he failed to send a notarized notice of for the balance of the P875,000.00 lot, it is only just and
cancellation and refund the cash surrender value. At no equitable that the petitioner be ordered to refund to
time, from the date it gave a notice of cancellation up to respondent the actual value of the lot resold, i.e.,
the time immediately before the respondent filed the P875,000.00, with 12% interest per annum computed
case against petitioner, did the latter exert effort to pay from August 26, 1991 until fully paid or to deliver a
the cash surrender value. In fact, the records disclose that substitute lot at the option of the respondent.
it was only during the preliminary hearing of the case
before the HLURB arbiter when petitioner offered to pay On a final note, it would not be amiss to stress that the
the cash surrender value. Petitioner justifies its inaction HLURB Board Decision ordering petitioner to refund to
on the ground that the respondent was always out of the respondent one half of her total payments is not an
country. Even then, the records are bereft of evidence to equitable solution as it punished the respondent for her
show that petitioner attempted to pay the cash surrender delinquent payments but totally disregarded petitioners
value to respondent through her last known address. The failure to comply with the mandatory requisites for a
omission is surprising considering that even during the valid cancellation of the contract to sell. The Board
times respondent was out of the country, petitioner has failed to consider that the Maceda law was enacted to
been sending her written notices to remind her to pay her remedy the plight of low and middle-income lot buyers,

3
save them from the exacting default clauses in real estate
sales and assure them of a home they can call their own.
Neither would the Decision of the HLURB Arbiter
ordering a full refund of the installment payments of
respondent in the amount of P314,816.70 be justified as,
under the law, respondent is entitled to the lot she
purchased after payment of her outstanding balance
which she was ready and willing to do. Thus, to penalize
the petitioner for failing in its obligation to deliver the
subject lot and to give the respondent what is rightly
hers, the petitioner was correctly ordered to refund to the
respondent the actual value of the land (P875,000.00)
she lost to another buyer, plus interest at the rate of 12%
per annum from August 26, 1991 until fully paid or to
deliver a substitute lot at the choice of the respondent.

IN VIEW WHEREOF, the Decision of then Chief

SO ORDERED.