Pryce Properties Corp. v. Nolasco
REITERATIONFacts
The Antecedents: This case originated from a complaint for recovery of a sum of money filed by Narciso R. Nolasco, Jr. (Nolasco) against Pryce Corporation, formerly Pryce Properties Corporation (Pryce). Nolasco alleged that in 1995, he purchased three lots from Pryce and deposited a total of P393,435.00. He claimed that Pryce failed to deliver the certificates of title and sales agreement, and when he finally received the agreement, it contained unacceptable conditions. Nolasco asserted that there was no meeting of the minds as he had not signed the agreement and demanded a refund of his deposit, along with moral damages, exemplary damages, and attorney's fees. Pryce countered that the transaction was a contract to sell, not a contract of sale, and that Nolasco was furnished a copy of the Contract to Sell which he allegedly signed and requested amendments for. Pryce further argued that Nolasco was not entitled to a refund under Republic Act No. 6552 (RA 6552), the Maceda Law, due to his failure to complete payments within the grace period, leading to forfeiture and rescission of the contract. Procedural History: The Regional Trial Court (RTC), Branch 24 of Cagayan de Oro City, ruled in favor of Nolasco, finding a perfected contract of sale and ordering Pryce to refund the P393,435.00 with 12% interest from the filing of the case. The RTC denied Nolasco's claims for damages and attorney's fees. Pryce appealed to the Court of Appeals (CA), arguing that the contract was a contract to sell, that it had properly rescinded the contract under RA 6552, and that Nolasco was not entitled to a refund. The CA affirmed the RTC in part, agreeing that it was a contract to sell but upholding Nolasco's entitlement to a refund, modifying the interest rate as per established jurisprudence. The CA denied Pryce's subsequent motion for reconsideration. The Petition: Pryce Properties Corporation filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the CA's decision. Pryce argued that Nolasco impliedly agreed to the unsigned Contract to Sell and that RA 6552 was applicable, asserting that Nolasco was not entitled to a refund due to a valid rescission of the Contract to Sell via a December 5, 1998 letter and its Answer with Counterclaims. Pryce contended that Nolasco's deposit payments were forfeited. Nolasco, in response, argued that Pryce raised factual issues improper for a Rule 45 petition and that the CA correctly found him entitled to a refund, admitting to a contract to sell but denying signing a written one. The Supreme Court considered whether the contract was validly rescinded under RA 6552 and if Pryce should refund Nolasco.
Issue(s)
Whether the contract between Pryce and Nolasco was rescinded in accordance with RA 6552. Whether petitioner Pryce should refund respondent Nolasco, and the applicable interest rates.
Ruling
The Supreme Court denied the petition and affirmed the Court of Appeals' decision with modification regarding the interest rates. The Court held that Pryce failed to validly rescind the contract to sell with Nolasco in accordance with RA 6552, thus Nolasco is entitled to a refund of his deposit payments.
Ratio Decidendi
On whether the contract was rescinded in accordance with RA 6552: The Court reiterated that RA 6552 protects buyers of real estate on installment payments. Section 4 of RA 6552 outlines four conditions for a seller to cancel a contract when the buyer has paid less than two years of installments: (1) the buyer has paid less than two years of installments; (2) the seller must provide a sixty-day grace period from the due date of the installment; (3) the seller must give the buyer a notice of cancellation or demand for rescission by a notarial act; and (4) cancellation can only occur after thirty days from the buyer's receipt of such notice. Pryce's written Contract to Sell contained stipulations that conflicted with RA 6552, specifically regarding the reckoning point of the thirty-day period and the requirement of receipt versus mere service of notice. Furthermore, the contract was not signed by Nolasco. Even if the contract were considered, Pryce failed to comply with the last two conditions for cancellation, as there was no notice of notarial rescission served upon Nolasco, and thus, thirty days could not have lapsed from such service. The Court emphasized that a mere allegation of rescission in an Answer with Counterclaims, even if notarized via a jurat, does not constitute the notarial rescission required by RA 6552. The jurat, unlike an acknowledgment, does not validate representative capacity, and the use of a Community Tax Certificate as proof of identity is impermissible. On whether Pryce should refund Nolasco, and the applicable interest rates: In the absence of a lawful rescission of a contract governed by RA 6552, the contract remains valid and subsisting. Since Pryce failed to validly rescind the contract to sell with Nolasco, Nolasco is entitled to a refund of the deposit payments made. The Court affirmed the lower courts' directive for Pryce to refund Nolasco the sum of P393,435.00. The Court also clarified the interest rates applicable to the monetary award, citing Nacar v. Gallery Frames, mandating 12% per annum from judicial demand until June 30, 2013, and 6% per annum thereafter until full payment. The Court noted that while RA 6552 does not explicitly mention the buyer's option to claim a refund, equity considerations have filled this legal vacuum, as established in jurisprudence.
Main Doctrine
A seller's unilateral cancellation of a contract to sell under Republic Act No. 6552 (Maceda Law) requires a notice of cancellation or demand for rescission by a notarial act, which must be an acknowledgment, not merely a jurat. The use of a jurat and an incompetent proof of identity like a Community Tax Certificate renders the rescission fatally infirm.