Wong, Carmela Jia Ming A.

BS Accountancy
Section 20

1. Baldo bought a residential house and lot from Tierra Madre Realty for P250,000.00 giving
a down payment of P10,000.00 and promising to pay the balance of P240,000.00 in 20
years in monthly installments of P1,000.00. 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 Baldomero entitled to
receive?
According to the Maceda Law that upon the cancellation of the contract, the
seller must give the buyer a cash surrender value equivalent to 50% of the total
payments. The 50% will increase by 5 percent every 5 years of installment payment but
in no case shall the cash surrender value exceed 90%.
Total payments Baldo made = P10,000 + (P1,000 x 72) = P82,000
72 monthly installments are equal to 6 years. Since, 50% increase by 5 percent every 5
year, the seller must give a surrender value of 55% of total payments.
Cash surrender value entitled to receive = P82,000 x 55% = P45,100

2. Mr. Ayco offered to sell his land to Mr. Cruz for P300,000. Mr. Cruz accepted the offer
and paid Mr. Ayco the purchase price. Mr. Ayco delivered the owner’s duplicate of the
Transfer Certificate of title of the land. Mr. Cruz wants to register the land in his name
but the Register of Deeds asks Mr. Cruz for the Deed of Sale. What is the status of the
sale? What can Mr. Cruz do?
The sale is valid. Based on Article 1458 under the contract of sale that one of the
parties which is the seller or vendor obligates himself to deliver something to the other
called the buyer or vendee who, on his part, binds himself to pay therefor a sum of
money or its equivalent (known as the price). Mr. Cruz already paid the purchase price
amounting to P300,000. As stated in Article 1477 by the transfer of ownership, the
ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof. He already has the right to the title due to the fact that he
already paid for the said amount.