The Supreme Court (SC) reiterated that a notice to cancel a contract to sell real estate must be notarized under Republic Act 6552, or the Maceda Law.
In a decision penned by Associate Justice Antonio Kho Jr., the SC’s Second Division upheld the validity of contracts to sell between State Investment Trust Inc. (SITI) and spouses Carlos and Victoria Baculo, after SITI failed to meet the Maceda Law’s cancellation requirements.
SITI owned two parcels of land, which it offered to sell to the spouses through two contracts to sell, allowing them to pay the total purchase price in installments over three years.
After the spouses failed to complete payments, SITI sent letters demanding payment within five days and later declaring the contracts to sell cancelled. The spouses refused to vacate the property, leading Siti to file an ejectment case.
While the Metropolitan Trial Court and Regional Trial Courts ruled in SITI’s favor, the Court of Appeals (CA) reversed the decisions, stating that contract cancellation requires a notarized notice under the Maceda Law.
The SC agreed, ruling that while a seller may cancel a contract to sell under the Maceda Law on its own without going to court, it must still comply with Section 4 of the law, which requires a 60-day grace period for the buyer to settle overdue installments, counted from the date the installment became due; a notarized notice of cancellation from the seller; and cancellation only after 30 days from the buyer’s receipt of the notarized notice.
The Maceda Law’s purpose is to protect real estate buyers on installment payments against one-sided conditions in contracts, the SC Office of the Spokesperson said in a press release Feb. 13.
The SC found that SITI’s letters were not notarized, and it failed to provide the required 60-day grace period, giving only five days to settle the balance.
Under the Revised Rules on Evidence, a proper notarial act occurs when a person appears before a notary public and confirms signing a document voluntarily. Notarization makes private documents public, and allows sellers to cancel the contract on their own, even without agreement from the other parties.
As a result, the SC ruled that the contracts remain valid. However, spouses Baculo must pay the outstanding balance with interest, after which SITI must execute a Deed of Absolute Sale in their favor.
If they fail to pay within 60 days, they must vacate the properties without further demand. ||
