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Recto and Maceda Law: Homework
Recto and Maceda Law: Homework
MACEDA LAW
Homework
John Christopher G. Cadiao
5th Year - ACT
July 14, 2012
Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of
Sections 3, 4, 5 and 6, shall be null and void.
Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall
be affected thereby.lawphi1
Section 9. This Act shall take effect upon its approval.
paid at
least two years of installments, the buyer is entitled to the following rights in case he defaults in
the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace period
earned by him, which is hereby fixed at the rate of one month grace period for every one year of
installment payments made; provided, That this right shall be exercised by the buyer only once
in every five years of the life of the contract and its extensions, if any.
(b) if the contract is cancelled, the seller shall refund to the buyer the cash surrender value of
the payments on the property equivalent to fifty per cent of the total payments made and, after
five years of installments, an additional five per cent every year but not to exceed ninety per
cent of the total payments made; provided, That the actual cancellation of the contract shall take
place after thirty days from receipt by the buyer of the notice of cancellation or demand for
rescission of the contract by a notarial act and upon full payment of the cash surrender value to
the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the
total number of installment payments made.
Buyer with less than 2 years of installments Section 4 RA 6552
If he has paid less than two (2) years of installments, he still has the right to pay within a grace
period of not less than sixty (60) days from the date the installment became due.
If the buyer fails to pay the installment due at the expiration of the grace period, i.e. 60 days, the
seller may cancel the contract after 30 days from receipt by the buyer of the notice of
cancellation or demand for rescission of the contract by a notarial act.
Here the buyer is not entitled to any refund.
Section 4 of RA 6552 provides, thus:
SECTION 4. In case where less than two years of installments were paid the seller shall give the
buyer a grace period of not less than sixty days from the date the installment become due. If the
buyer fails to pay the installments due at the expiration of the grace period, the seller may
cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act.
Right to Assign/Reinstate Contract
The buyer has a right to sell or assign his rights over the lot or unit to another person or reinstate
the contract by updating the account provided this is done during the grace period and before
actual cancellation of the contract.
Section 5 of RA 6552 states:
SECTION 5. Under Sections 3 and 4, the buyer shall have the right to sell his rights or assign the
same to another person or to reinstate the contract by upgrading the account during the grace
period and before actual cancellation of the contract. The deed of sale or assignment shall be
(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should
the vendee's failure to pay cover two or more installments. In this case, he shall have no
further action against the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void. (1454-A-a)
Article 1485. The preceding article shall be applied to contracts purporting to be leases of
personal property with option to buy, when the lessor has deprived the lessee of the possession
or enjoyment of the thing. (1454-A-a)
Article 1486. In the case referred to in the two preceding articles, a stipulation that the
installments or rents paid shall not be returned to the vendee or lessee shall be valid insofar as
the same may not be unconscionable under the circumstances. (n)
If the buyer refuses to surrender the items to the seller, he becomes a perverse buyer-mortgagor.
When that happens, the seller can recover expenses and attorney's fees.
The Recto Law also covers leases with the option to purchase.
The Maceda Law
The Maceda Law, RA 6552, is the real estate equivalent of the Recto Law. Like the Recto Law, it
also covers financing of sales of real property (which is why mortgages also come in.) It doesn't
apply,however, to the following sales:
1.) Industrial lots
2.) Commercial buildings and lots
3.) Lands under the CARP Law
Depending on when the buyer defaults, there are two (2) possible scenarios: if the buyer paid at
least two (2) years' installments and if the buyer paid less than 2 years' installments.
If the buyer paid less than 2 years' installments and defaults, he is given a grace period of sixty
(60) days starting from the date of his last installment to resume paying. This period can be
increased by the seller. If after the grace period the buyer still can't pay, the seller must make a
notarial demand to cancel the sale. The cancellation becomes effective thirty (30) days after the
buyer was notified. So it's possible that the buyer could be notified two months after the 60-day
period and then the 30-day period will begin.
If the buyer paid at least two years' installments, the buyer can pay the unpaid balance without
interest. The grace period is computed at one (1) month per year of installment payments. It also
begins from the time the buyer paid his last installment. The grace period can be used only once
every five (5) years of the sales contract's life -including itsextensions. So it's possible to have a
grace period of a year if the buyer had been paying his installments faithfully for 12 years. Once
the buyer chooses to use the grace period, he can't get it again until another five years are over.
If the seller wants to cancel the sale, he has to refund the buyer of 50% of the actual payments.
If the buyer paid more than five years' installments another 5% for every year is to be added to
the refund, but only up to 90% of the total payments made. The payments mentioned here
include the downpayment, options and deposits. The refund is made in this way: if the buyer paid
more 2 to 5 years' installments, he can get back 50% of the cash surrender value. If he paid for
more than 5 years, he can get the 50% plus 5% per year up to 90%.
The buyer is also allowed to make advanced payments, or even the full price, without interest.
He can also assign his rights to another person, making that person the new buyer, but he can
only do that with a notarial deed of sale assignment.
The Maceda Law cannot be used by a real estate developer. It also cannot be used by the highest
bidder in foreclosure proceedings.