G.R. No. 164136 ; January 25, 2006
CARLOS R. TAMAYO, Petitioner, vs. MILAGROS HUANG, JOSEFINO HUANG, HUANG SUI SIN, MIGUEL HUANG and IAP TONG HA, Respondents

FACTS

Petitioner Carlos Tamayo entered into a Contract to Sell with respondents, through their agent EAP Development Corporation, for a subdivision lot in Doña Luisa Village, Davao City, on April 30, 1981. He paid a down payment and several monthly installments until June 1982, after which he stopped payments, having paid a total of P59,706.60. Petitioner claimed he ceased payment due to the non-development of the subdivision, a fact later corroborated by a 1990 RTC decision rescinding the development contract between respondents and EAP for EAP’s failure to develop. In January 1991, after noticing development had resumed, petitioner issued a check for P270,527.00 as full payment, but respondents returned it, claiming a mistake in its acceptance. Petitioner later filed a complaint for specific performance before the HLURB in 1997 and consigned two checks for the balance in September 1997.

ISSUE

Whether petitioner validly exercised his rights under Presidential Decree No. 957, thereby obligating respondents to accept payment and execute the sale, despite his prior stoppage of payments and the subsequent consignation.

RULING

The Supreme Court ruled in favor of the petitioner, reversing the Court of Appeals. The legal logic centers on the application of PD 957, which governs subdivision sales and protects buyers. The Court held that the developer’s failure to develop the subdivision, as legally established, constituted a violation of its statutory and contractual obligations, thereby justifying the buyer’s suspension of installment payments. This failure is a breach that warrants the buyer’s recourse under the protective decree. The subsequent tender of full payment in 1991, though refused, and the consignation in 1997 were deemed valid actions to preserve his rights under the contract, which was not deemed automatically rescinded. The Court emphasized that PD 957 imposes reciprocal obligations; the developer’s prior breach affected the buyer’s duty to pay. The case was remanded to the HLURB to determine the parties’ rights, particularly regarding an alleged subsequent sale of the lot, and to effectuate the proper remedies, which could include ordering the respondents to deliver the title or provide equitable relief such as a refund or substitute lot, given the developer’s default and the application of the law’s protective intent.