Layug v IAC: MojicaDOCTRINE:Even in residential properties, RA 6552 recognizes and reaffirmsthe vendor sright to cancel the contract to selluon !reach and non"ay#ent o$ thestiulatedinstal#ents%The one who fails to pay the rest of the instalments as agreed upon is left only toari ghttoa re$undo$the cash surrender val ueo$the ay#entson the roertye&uival entto'() o$thetotalay#ents al ready#ade%FAT!"# $a%uya %rought a suit against &ayug for annulment of the contractand for recovery of damages %ecause &ayug failed to pay the rest of the instalments forthe purchase of"2 lots in'ligan ity (agreed tocost )"2*,*** paya%le in three yearly instalments#+Layug only aid the$irst * install#ents +,-(.(((/ and $ailed to ay the last instal#ent o$ ,0(.(((%2# The T ruled in favour of $a%uya+ This was affirmed %ythe A+,# &ayug is relying on the stipulation in the contract a# granting him, as vendee, a ,*days graceperiod within which topay any yearly instalment not paid within the time fi-ed therefor, and %#declaring himlia%le, in the event of his failure to pay within the grace period, .for interest at thelegal rate+/ 1earguest hatt hest i ul at i oni ndi cat est hat resci ssi on 2asnot envisionedasa re#edy against a$ail ureto ayinstal #entsand thatsuch $ail ure2asnotaground$or a!rogati ng thecontract !ut#erel y generated l i a!il ity $orinterestat l egal rate34'!!0E1hether or not $a%uya had the right torescind the contract and should this happen, whether&ayug should %e entitled to get %ac2 the E3T'RE amount he already paid45E&6 7es $a%uya could rescind the contract+ 3o, &ayug should not %e entitled to the entire amount healready paid+The !8 The grace period clause should %e read con9ointly with the stipulation on rescission, andin such a manner as to give full effect+ The patent andlogical import of %oth provisions, ta2entogether, is that when the vendee fails to pay any instalmenton its due date, he %ecomesentitled to a grace period of ,* days to cure default %y paying the amount of the instalment plusinterest,!ut t hat i $ he shoul d st i l l $ ai l t o ay2i t hi n t hegrace eri od. t henrescission o$ the contract ta5es lace%Layug cannot!e er#i ttedto cl ai#thatal lhisay#ents shoul d!e creditedtohi #i nthei r enti rety 2ithout regard 2hateverto theda#ages hisde$aul t #ighthave caused to 6a!uya%R+A+ 6552 governs sales of real estate on installments+ 'trecognizes the vendor:s right to cancelsuch contracts upon failure of the vendee to comply with the terms of the sale, %ut imposes,chieflyfor the latter:s protection, certain conditions thereon+ 1e have had occasion to rule that;even in residential properties the Act; recognizesand reaffirms the vendor:s right to cancel thecontract to sell upon %reach and nonpayment ofthe stipulated installments+ +++;The law providesinter alia that ;in all transactions or contracts involving thesale or financing of real estate on installment payments, including residential condominium apartments , +++,7'where the buyer has paid at least two years of installments , the %uyer is entitled to the following rightsin case he defaults in the payment ofsucceeding installments8

)rovided, That theactual cancellation of the contract shall ta2e place after thirty days fromreceipt %y the %uyer of the notice ofcancellation or the demand for rescissionofthe contract %ya notarial act and upon full payment of thecash surrendervalueto the %uyer+'n the case at %ar,&ayug had paidtwo (2# annual installments of )?*,***+** each+ 5e is deemedtherefore, in the words of the law, to have ;paid at least two years of installments +; 5e thereforehad a grace period of;one month .. for every year of installment payments made ,; or two (2#months (correspondingto the two years of installments paid# within which to pay the finalinstallment+1ehast hus !eenl e$ t onl y 2i t ht heri ghtt oare$ undo$t he9c as hs ur r e nde rval ue o$ t heay#e nt sont her oe r t y e &ui val e nt t o $ i $ t ye r c e nto$ t he t ot alay#e nt s#ade. 9or ,0(. (((% (((i+e+, @ of the total paymentsof )A*,***+**#+ !uchrefund will%e the operative act to ma2e effective the cancellation of the contract %y$a%uya,conforma%ly with the terms of the law+