JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION v.

DANIEL PONCE
PACIFICO
513 SCRA 403 (2007), SECOND DIVISION (Carpio Morales, J.)
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.
FACTS: Daniel Ponce Pacifico (Pacifico) signed a Reservation Application with FilEstate 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: R.A. 6552 was enacted to protect buyers of real estate on installment against
onerous and oppressive conditions. In Fabrigas v. San Francisco del Monte,Inc., the
court described the cancellation of the contract under Section 4 of R.A. 6552 as a twostep 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 buyers receipt thereof.
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.
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