What transactions are covered by R.A. No. 6552?

The law covers all transactions involving sale on installment of residential real estate.

The law does not cover transactions involving other classes of real estate such as
commercial and industrial. Moreover, the law does not apply to sales to tenants  pursuant
to agrarian reform.

What are the rights of buyers?

A. Under Section 3 in relation to Section 5, when the following conditions are
present:

               ⇒ the buyer has paid at least two years of installments

               ⇒ the buyer defaults in the payment of succeeding installments

the buyer has the following rights:

1. To be given a grace period equivalent to one month for every one year of installment
payments made
2. To pay the unpaid installments due, without interest, within the grace period
3. In case the contract is cancelled:
a. To be notified of the cancellation or rescission
b. To be refunded of the cash surrender value of payments made
4. To sell or assign his rights to another person; in which case, the deed of sale or
assignment must be duly notarized
5. To reinstate the contract by updating his account before the actual cancellation of the
contract

B. Under Section 4 in relation to Section 5, where the buyer has paid less than 2
years of installments:

1. To be given a grace period of not less than 60 days

2. In case of cancellation or rescission, to be notified of the cancellation or rescission
3. To reinstate the contract by updating his account before the actual cancellation
4. To sell or assign his rights to another person. The deed of sale or assignment must be
duly notarized.

As may be observed, R.A. 6552 grants common rights to buyers falling under Section 3
and Section 4 as follows:

        1. In case of cancellation, to be notified of the cancellation or rescission

        2. To reinstate the contract by updating the account before actual cancellation
        3. To sell or assign their rights by notarial act.

In addition, Section 6 entitles the buyer (regardless of the number of installments paid) to
pay any installment in advance or the full unpaid balance anytime without interest.

When may the seller cancel the contract?

The seller may cancel the contract when the following conditions are met:

1. The grace period has expired;

2. The buyer fails to pay the installment due

What are the requisites for the validity of the cancellation or rescission of the contract?
When the buyer has paid at least 2 years of installments, for the cancellation or rescission
to be valid, the following requirements must be satisfied:

     1. The buyer must be given a duly notarized notice of cancellation or demand for
rescission

     2. The seller must refund to the buyer the cash surrender value of payments made

When the buyer has paid less than 2 years of installments, he must be given a duly
notarized notice of cancellation or demand for rescission, but he is not entitled to cash
surrender value.