Failure to pay within the period stipulated

In a sales contract involving real property, the agreement that the vendee’s failure to make full payment on the agreed time will render the sale rescinded, the vendee may still pay as long as the vendor does not make a demand for rescission.

Article 1592 of the New Civil Code of the Philippines provides that “in the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.”

Clearly, Article 1592 of the said Code allows a vendee to pay as long as no demand for rescission has been made by the vendor or seller. This is supported by the decision of the Supreme Court in the case of Province of Cebu vs. Heirs of Rufina Morales, GR 170115, Feb. 19, 2008, penned by Honorable Associate Justice Consuelo Ynares-Santiago, which held:

“Thus, respondents could still tender payment of the full purchase price as no demand for rescission had been made upon them, either judicially or through notarial act. While it is true that it took a long time for respondents to bring suit for specific performance and consign the balance of the purchase price, it is equally true that petitioner or its predecessor did not take any action to have the contract of sale rescinded.

Article 1592 allows the vendee to pay as long as no demand for rescission has been made. The consignation of the balance of the purchase price before the trial court thus operated as full payment, which resulted in the extinguishment of respondents’ obligation under the contract of sale.”

Further, in the earlier case of The City of Cebu vs. Heirs of Rubi, GR 128579, April 29, 1999, penned by Honorable Associate Justice Minerva Gonzaga-Reyes, the high court ruled:

“It is not disputed that the City of Cebu did not give notice of rescission much less make a judicial or notarial demand for rescission. The only subsequent action taken by petitioner was to send to the respondents a ‘Formal Notice’ dated March 4, 1989 ordering the latter to vacate the premises within fifteen days from receipt of notice for the reason that the occupancy of lot 1141-D is presumed to be illegal as the lot is still registered in the name of the City of Cebu. This letter did not amount to a demand for rescission, as indeed there was no reference to the sale much less a declaration that the sale was being rescinded or abrogated from the beginning. It was only when the City of Cebu filed its Answer on June 15, 1989 to the instant complaint for specific performance that the city invoked ‘automatic rescission’ and prayed for relief allowing it to rescind the contract.”

In case, you failed to make the full payment on the stipulated date, you may still tender payment despite the expiration of the period as long as no demand for rescission has been made by the vendor, either through a judicial action or notarial act.

Source: Manila Times

Defaulting buyer's rights in the first two years - Maceda Law

While the developer may cancel your contract in case you fail to pay your installments, they may only do so under the strict provisions of Republic Act (RA) 6552, otherwise known as the "Realty Installment Buyer Act" or the "Maceda Law." This law was created to protect buyers of real estate on an installment basis against onerous and oppressive conditions. More specifically, Section 4 of the said law provides that:

"Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due.

"If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act."

Corollary thereto, in Priscilla Zafra Orbe vs. Filinvest Land, Inc., GR 208185, Sept. 6, 2017, through Associate Justice Marvic M.V.F. Leonen, the Supreme Court discussed the following:

"For cancellations under Section 4 to be valid, three (3) requisites must concur. First, the buyer must have been given a 60-day grace period but failed to utilize it. Second, the seller must have sent a notice of cancellation or demand for rescission by notarial act. And third, the cancellation shall take effect only after 30 days of the buyer's receipt of the notice of cancellation:

"Essentially, the said provision provides for three (3) requisites before the seller may actually cancel the subject contract: first, the seller shall give the buyer a 60-day grace period to be reckoned from the date the installment became due; second, the seller must give the buyer a notice of cancellation/demand for rescission by notarial act if the buyer fails to pay the installments due at the expiration of the said grace period; and third, the seller may actually cancel the contract only after thirty (30) days from the buyer's receipt of the said notice of cancellation/demand for rescission by notarial act."

In the instance, since you have paid installments for less than two years, for the seller to cancel your contract validly, you must first be given a 60-day grace period from the date the installment became due. If you fail to utilize this period to update your payment, the seller should send a notice of cancellation or demand for rescission by notarial act. Likewise, the seller may only cancel your contract only after 30 days from your receipt of the said notice/demand. In other words, the developer-seller cannot immediately cancel your contract unless it complies with the foregoing requisites. These are your rights under the law.

Source: Manila Times