Help! I need the law regarding this matter.

A lot was bought 30 yrs ago by B from A. It was "hulugan". There were payments but then the payment stopped around the third year because hindi naasikaso. (family problem). After buying the lot, B constructed house and apartments in the said lot. The last payment made for the lot was in 1985. There was no "paniningil" made by A. Now 2011, A decided to demand payment at the current market price of the land. B is willing to pay the old value of the land plus interest.

In this case, who have the right? Can B really demand the current price even though there was a previous contract? Also, if B is in the right, can A demand payment for the house and apartment?

I think because there is no reformation of the contract, it should be observed in its original tenor- old value + interest.

since this is a contract base, you have no more obligation to pay because of prescription, the obligation to pay has been extinguished because contract expired within 10 years provided there was no demand made before the expiration of the 10 years. in your problem, it seems that the demand was made only in Nov 2011 and the last payment made was in 1985.

the contract to sell is not clear..was there something stipulated that in case of default the principal automatically becomes due without need of demand?

Can seller demand a different selling price on the ground that the buyer has defaulted payment?

Everyone will agree with JaneDoe that the buyer cannot demand payment for a purchase price, different from what is contained in the contract to sell.

However, I have doubts as to the accuracy of the statements of nhelzar that

"since this is a contract base, you have no more obligation to pay because of prescription, the obligation to pay has been extinguished because contract expired within 10 years provided there was no demand made before the expiration of the 10 years."


Prescription may extinguish an obligation; but it is inaccurate to simply state that a ten year failure to demand payment pursuant to a contract to sell extinguishes the obligations of the buyer to pay or the seller has no more right to demand payment.

PERSONAL VIEW:

It is my personal view that what is extinguished is the right to seek judicial recourse for the unpaid installments. As long as a valid contract to sell exists, the obligation thereunder exist likewise; but, technically, considered not enforceable due to the principle of prescription. enforceability is not the same as extinguishment.

Even after ten years, but before rescission of the contract to sell, If buyer pays and the seller refuses to accept, the buyer can still enforce the contract to sell by tender and consignation. This is so because in reciprocal obligations, like a contract to sell, there is no delay unless one has complied with his or her obligation (Article 1169, NCC)

On the other hand, if seller demands payment and buyer refuses, strictly, it is true that an action in Court to seek payment for unpaid installments is not anymore feasible because the filing of that action has prescribed. But,unless the seller has observed the requirements under RA 6552, Realty Installment Buyer Act, the contract to sell still exist and is binding between the parties. Being a party to an existing and valid contract to sell, the observance of what has been agreed upon is mandatory.

Though deprived by prescription to seek judicial recourse, the enactment of RA 6552 grants the seller an extra-judicial right to enforce payment - without need of filing a suit in Court. Thus, even if he or she is barred by prescription to seek judicial action, the seller now has another remedy. He or she may now enforce the contract to sell or demand payment of the purchase price, in a way, by requiring the buyer to update his or her account, which is recognized under said law.

And, the failure of the buyer to update, within the grace period, triggers the right of seller to rescind the contract to sell. To rescind, the seller must send the required notarial notices. After 30 days from receipt and payment of the cash surrender value, only then the contract to sell ceases to exist. This is the specific point in time wherein the buyer cannot anymore insist payment, since after receipt of the cash surrender value, no valid contract to sell exist anymore. If buyer refuse, the seller must consign the cash surrender value.

In a way, although a judicial action has prescribed, RA 6552 has provided the parties an alternative course of action, that is extra-judicial rescission of contract to sell involving real property by installments.

MY JUSTIFICATION:

Mainly, because a valid existing contract to sell still exists, the buyer's obligation to pay has not ceases. And, even if deprived by prescription to enforce the contract in Court, RA 6552 itself has provided another remedy that has not been affected by prescription.

Thus, the supposed "stale" demand is not automatically reduced to a mere moral obligation nor should it be deemed extinguished. The enactment of RA 6552 gave way to an alternative method of enforcement giving the parties opportunity to complete what they have begun. A demand that should have been stale due to prescription is now extra-judicially enforceable.

Due to the enactment of RA 6552, the seller must rescind the contract to sell by following the requirements of said law; otherwise, the buyer may demand enforcement anytime. If seller fails to rescind, he or she cannot prevent the seller to enforce what is contained in the contract to sell. Also, the principle of laches may work against the seller.

NOTE: this is only my personal view

What happen to the house and apartment build by buyer?

If seller sells the land to buyer, no problem. buyer becomes the owner of the land and the building.

But, if the contract is rescinded, buyer should be granted the rights of a builder in goodfaith.