6.Can I sell or assign my rights to the property to another person?

A. True
B. False
C. It depends

Rationale: True, since this is clearly explained in Section 5 – that those

buyers covered by Sections 3 and 4 have the right to sell or assign their
rights over the property to another person. They may also reinstate the
contract if they so choose by updating the account during the given grace
period.

This transaction, however, must be made prior to the actual cancellation

of the contract. The corresponding deed of sale or assignment must be
done by notarial act.

7. Can I opt to pay off my balance ahead of the due date? Will I be
allowed to do so without incurring the corresponding interests?
A. Yes
B. No
C. It depends

Rationale: True. Stipulated in Section 6 of the Maceda Law, the rights of

the buyer include paying in advance any of the installments or the full
unpaid balance of the property’s purchase price. This can be done at any
time without incurring interest. This full payment may also be annotated
in the certificate of title over the property.

8. Does the Maceda Law apply when I pay through a housing loan
from a bank?

A. True
B. False
C. It depends

Rationale:
This is where the common misconception usually lies in terms of the
coverage of the Maceda Law.
If you are taking a housing loan from a bank, this means that the balance
that you have to pay the real estate developer has already been paid for in
full by the bank through the loan. In other words, you, in essence, have
already paid the purchase price in full by availing of the loan. The
subsequent monthly payments you now make to the bank are not to pay
for the balance of the purchase price, but for the loan itself, the interests
accruing on the principal loan, and the charges that may be or may have
been incurred.

Hence, having been fully paid insofar as the purchase price is concerned,
the only balance you are liable for is that of the loan, and since you are
not exactly paying in installments anymore, considering that the property
is technically fully paid for, RA 6552 or the Maceda Law would no
longer apply.

9. Can a contract to sell be rescinded?

A. True
B. False
C. It depends

Rationale: Rescission refers to the legal cancellation of the contract for a

purchase transaction. Under the Maceda Law, the seller is given the right
to demand rescission of the contract to sell when the buyer fails to
comply with the payment terms. However, before a contract to sell can be
rescinded, the buyer must first be given a grace period. For those who
have been paying installments for more than two years, the grace period
is equivalent to one month for every one year installment payments made.
For buyers paying less than two years, the grace period is not more than
60 days. This right can only be used by the buyers once every five years.

A contract to sell has a unique characteristic that distinguishes it from the

other forms of contract. In a contract to sell, a deed of sale is only
executed upon full payment of the property’s purchase price. Thus, the
seller retains full ownership of the property until the payment is
completed. When the buyer fails to complete the payment or pay for the
interests after the grace period, the buyer will be given a 30-day notice of
delinquency and cancellation. When the 30 days starting from the buyer’s
receipt of the notice lapse and the buyer fails to settle the payment,
including interests incurred, only then will the seller be able to demand
rescission for the contract to sell.

10. Is down payment refundable in the Philippines?

A. True
B. False
C. It depends

Rationale: The refund of the down payment is only applicable to those

who have paid at least two years of installment on the transactions
covered by the Maceda Law.

11. Is the contract of sale a real contract?

A. True
B. False

Rationale: According to Article 1458 of the New Civil Code, a contract

of sale is a form of agreement where the seller obliges himself to transfer
the property’s ownership upon payment equivalent to its value. It is a
legitimate contract that explicitly implies property title transfer after the
buyer fulfills its obligation to pay.

The crucial elements of a valid contract of sale are consent, where both
parties agree to fulfill their obligations; subject matter, which pertains to
the property and its value discussed; and cause of obligation that indicates
the nature of the contract.

A contract of sale may be absolute or conditional. Absolute means there

is no other condition aside from the payment of the purchase price and
the transfer of title, and conditional where certain conditions need to be
fulfilled before the property’s delivery.

It is important to note that a contract of sale is different from a contract to

sell. In a contract of sale, the property ownership is transferred upon the
property’s turnover after full or constructive payment. In contrast, in a
contract to sell, the seller retains property ownership until the buyer
fulfills all obligations and pays the total purchase price.

12. Does a contract to sell need to be notarized?

A. Yes
B. No
C. It depends

Rationale: Although a contract to sell remains valid even without

notarization, it is necessary to notarize the contract to sell to register it in
public records. Under Sec 112 of the Property Registration Decree, any
form of document that affects registered and unregistered land shall be
made available to public records and registered to the Register of Deeds
for accurate documentation.

Laws pertaining to real estate transactions can get a little overwhelming

to understand, but it’s important to know them and protect your rights as
a buyer.