Leano v. Court of Appeals
Respondent Fernando and petitioner entered into a contract to sell with respect to a lot of Respondent in 1985.
The contract provided that in case the petitioner failed to pay the monthly installments beyond the grace period, the respondent can rescind the contract and the prior payments made by the petitioner shall be considered as rent.
In 1989, the petitioner failed to pay her installments. This prompted the respondent to file an ejectment suit in the MTC. The lower court ruled that there was already a rescission of the contract as stipulated.
Whether or not there was a valid rescission of contract of sale pursuant to the Maceda Law
No. The Maceda Law requires that there must be (1) notice of rescission through a notarial act and (2) return of the cash surrender value.
The respondent complied with the first requisite as the decision in the ejectment case can be considered as a valid notice of cancellation under the Maceda Law. However, the respondent failed to comply with the second requirement of giving the cash surrender value.
Thus, the contract to sell is not properly canceled. However, since the petitioner incurred delay, she shall pay additional penalties. Thus, the contract to sell exists where the petitioner shall pay damages.