G.R. No. 203990 , August 24, 2020
PRYCE PROPERTIES CORP. (NOW PRYCE CORPORATION), PETITIONER, VS. NARCISO R. NOLASCO, JR., RESPONDENT.

FACTS

Respondent Narciso Nolasco, Jr. purchased three subdivision lots from petitioner Pryce Corporation in 1995, making total deposit payments of P393,435.00. Nolasco claimed he never signed the formal Contract to Sell, objected to its terms, and demanded a refund of his deposits after failing to secure bank financing for the balance. Pryce Corporation refused, contending their transaction was a contract to sell and that Nolasco had effectively accepted its terms through his conduct. Pryce invoked Republic Act No. 6552 (the Maceda Law), arguing Nolasco’s payments were forfeited due to his failure to complete payment within the grace period, leading to a valid rescission.
The parties submitted the case for decision based on a Pre-Trial Order stipulating key facts, including Nolasco’s non-signature of the contract, his payments, his written withdrawal from the transaction in 1997, and Pryce’s eventual notice of intent to rescind in December 1998 for non-payment of installments. The Regional Trial Court ruled in favor of Nolasco, ordering a refund with interest, a decision affirmed with modifications by the Court of Appeals.

ISSUE

Whether Pryce Corporation is obligated to refund Nolasco’s deposit payments under the circumstances of the case.

RULING

Yes, Pryce Corporation is obligated to refund the deposits. The Supreme Court affirmed the rulings of the lower courts but modified the applicable interest rate. The Court held that the transaction between the parties was a contract to sell, not a contract of sale, as ownership was reserved by the seller until full payment of the price. Crucially, the Court found that Pryce failed to comply with the mandatory procedure for cancellation under the Maceda Law.
For a valid cancellation of a contract to sell under the Maceda Law where the buyer has paid less than two years of installments, the seller must serve a notarized notice of cancellation or demand for rescission. The buyer then has a 30-day grace period from receipt to pay the overdue installments. The seller may only effect the cancellation through a notarial act after the expiration of this period. The records showed Pryce’s December 1998 letter was a mere notice of intent to rescind, not a formal notarized notice of cancellation. Consequently, no valid rescission occurred. Without a valid rescission, Pryce had no right to forfeit the installment payments made. Nolasco is therefore entitled to a refund of his deposits amounting to P393,435.00, with legal interest at 12% per annum from judicial demand on January 22, 1999 until June 30, 2013, and 6% per annum thereafter until fully paid.