RESEARCH

TO: CBL
FROM: Glenn Rey D. Anino
RE: Extent of Payment To Be Made by the Buyer under Maceda Law
DATE: March 1, 2017

Sir:

This is in connection with the research concerning the rights and obligations among the sellers
and buyers under Maceda law, more particularly on the buyers who paid less than two years in
installments.

The pertinent provisions of the Maceda law provides:

SECTION 4. In case where less than two years of installments were paid the
seller shall give the buyers 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.

SECTION 5. Under Section 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
updating the account during the grace period and before actual cancellation of
the contract. The deed of sale or assignment shall be done by notarial act.
(Emphasis supplied).

[G.R. No. 202358, November 27, 2013]

Gatchalian Realty, Inc. vs. Angeles

The buyer’s failure to pay the installments due at the expiration of the grace period
allows the seller to cancel the contract after 30 days from the buyer’s receipt of the
notice of cancellation or demand for rescission of the contract by a notarial act.

[G.R. No. 189145, December 04, 2013]

Optimum Development Bank vs. Spouses Jovellanos

(2) Where he has paid less than two years in installments,

Sec. 4. x x x the seller shall give the buyer a grace period of not less than sixty
days from the date the installment became 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. (Emphasis and
underscoring supplied)

Pertinently, since Sps. Jovellanos failed to pay their stipulated monthly installments
 as found by the MeTC, the Court examines Optimum’s compliance with Section 4 of
RA 6552, as above–quoted and highlighted, which is the provision applicable to
buyers who have paid less than two (2) years–worth of installments. Essentially, the
said provision provides for three (3) requisites before the seller may actually
cancel the subject contract: first, the seller shall give the buyer a 60–day grace
period to be reckoned from the date the installment became due; second, the
seller must give the buyer a notice of cancellation/demand for rescission by
notarial act if the buyer fails to pay the installments due at the expiration of the
said grace period; and third, the seller may actually cancel the contract only
after thirty (30) days from the buyer’s receipt of the said notice of
cancellation/demand for rescission by notarial act. (Emphasis supplied and
citations ommited)

In the present case, the 60–day grace period automatically operated in favor of the
buyers, Sps. Jovellanos, and took effect from the time that the maturity dates of the
installment payments lapsed. With the said grace period having expired bereft of any
installment payment on the part of Sps. Jovellanos, Optimum then issued a notarized
Notice of Delinquency and Cancellation of Contract on April 10, 2006. Finally, in
proceeding with the actual cancellation of the contract to sell, Optimum gave Sps.
Jovellanos an additional thirty (30) days within which to settle their arrears and
reinstate the contract, or sell or assign their rights to another. It was only after the
expiration of the thirty day (30) period did Optimum treat the contract to sell as
effectively cancelled – making as it did a final demand upon Sps. Jovellanos to
vacate the subject property only on May 25, 2006.

Thus, based on the foregoing, the Court finds that there was a valid and effective
cancellation of the Contract to Sell in accordance with Section 4 of RA 6552 and
since Sps. Jovellanos had already lost their right to retain possession of the subject
property as a consequence of such cancellation, their refusal to vacate and turn over
possession to Optimum makes out a valid case for unlawful detainer as properly
adjudged by the MeTC.

[G.R. No. 195072, August 01, 2016]

Danan vs. Spouses Gregorio Serrano and Adelaida Reyes

Thus, the rights of the buyer in the event he defaults in the payment of the
succeeding installments depend upon whether he has paid at least two (2) years of
installments or less. In the case at hand, it is undisputed that Bonifacio was only
able to pay the first P2,000.00 installment upon the signing of their agreement,
thereafter, failing to pay the balance of the purchase price when they fell due
on June 30, 1977 and June 30, 1978. It is, therefore, Section 4 of RA No. 6552
that applies herein. Essentially, the said provision provides for three (3) requisites
before the seller may actually cancel the subject contract: first, the seller shall give
the buyer a sixty (60)-day grace period to be reckoned from the date the installment
became due; second, the seller must give the buyer a notice of cancellation/demand
for rescission by notarial act if the buyer fails to pay the installments due at the
expiration of the said grace period; and, third, the seller may actually cancel the
contract only after thirty (30) days from the buyer's receipt of the said notice of
 cancellation/demand for rescission by notarial act.

xxx xxx xxx

Thus, when there is failure on the part of the seller to comply with the requirements
prescribed by RA No. 6552 insofar as the cancellation of a contract to sell is
concerned, the Court shall not hesitate in upholding the sale, albeit being subject to
the full payment by the buyer of the purchase price.34 In fact, in Fabrigas v. San
Francisco del Monte, Inc.,35 the Court even went as far as nullifying a clause in a
contract providing for automatic rescission immediately upon default of the buyer
notwithstanding the statutory grace periods permitted by the Act.

[G.R. No. 157374, August 27, 2009]

Heirs of Cayetano Pangan & Consuelo Pangan vs. Spouses Perreras

As in the rescission of a contract of sale for nonpayment of the price, the

defaulting vendee in a contract to sell may defeat the vendor’s right to cancel by
invoking the rights granted to him under Republic Act No. 6552 or the Realty
Installment Buyer Protection Act (also known as the Maceda Law); this law
provides for a 60-day grace period within which the defaulting vendee (who has
paid less than two years of installments) may still pay the installments due. Only
after the lapse of the grace period with continued nonpayment of the amounts
due can the actual cancellation of the contract take place. The pertinent
provisions of the Maceda Law provide:
xxxx

Section 2. It is hereby declared a public policy to protect buyers of real estate on

installment payments against onerous and oppressive conditions.

Sec. 3. In all transactions or contracts involving the sale or financing of real

estate on installment payments, including residential condominium apartments
but excluding industrial lots, commercial buildings and sales to tenants under
Republic Act Numbered Thirty-eight hundred forty-four as amended by Republic
Act Numbered Sixty-three hundred eighty-nine, where the buyer has 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:

xxxx

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 60 days from the
date the installment became 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 the receipt by the buyer of the notice of cancellation or the demand for
rescission of the contract by notarial act. [Emphasis supplied.]

xxxx
 Based on the above discussion, we conclude that the respondents’ payment on
June 15, 1989 of the installment due on June 14, 1989 effectively defeated the
petitioners-heirs’ right to have the contract rescinded or cancelled. Whether the
parties’ agreement is characterized as one of sale or to sell is not relevant in light
of the respondents’ payment within the grace period provided under Article 1592
of the Civil Code and Section 4 of the Maceda Law. The petitioners-heirs’
obligation to accept the payment of the price and to convey Consuelo’s conjugal
and hereditary shares in the subject properties subsists.

Given the foregoing law and jurisprudence, it is respectfully submitted that a BUYER who has
paid less than two years in installments and failed to pay in full or to update the due installments during
the grace period grants the SELLER the right to cancel the the contract provided the other requirements
provided by law are complied with. In order to defeat the vendor’s right to cancel the contract, the
buyer must pay in full the installments due.

I hope that the foregoing Research has been helpful.

Respectfully,

Glenn Rey D. Anino