Case 14

Baldo bought a residential house and lot from Tierra Madre Realty for P250,000 giving a
down payment of P10,000 and promising to pay the balance of P240,000 in 20 years in
monthly installments of P1,000. After paying 72 installments, Baldo defaulted in the
payment of the 73rd installment and subsequent ones. Despite the grace period he had
earned he was not able to make any further payments. Accordingly, Tierra Madre
Realty cancelled the sale. How much cash surrender value is Baldo entitled to receive?
ANSWER:
Baldo shall be entitled to receive cash surrender value of 45,100. Under Section 3 of
Republic Act No. 6652, it was mentioned that if the contract involving the sale of real
estate on installment payments is canceled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to 50% of the total
payments made, and after five years of installments, an additional 5% every year but
not to exceed 90% of the total payments made. Here, Baldo, despite the grace period
he had earned, was not able to make any further payments. Thus, he shall be receiving
45,100 as cash surrender value.