Part 1:

1. What transaction is covered by Maceda Law?

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.

2. What is the purpose of the Maceda Law?

According to the Republic act No. 6552, the Realty Installment Buyer Act, was enacted ‘to protect buyers
of real estate on installment payments against onerous and oppressive conditions ‘(Sec. 2). It protects lot
buyers, especially the low-income earners, who often fall prey to one-sided contract stipulations because
of their eagerness to own a house they can call their home.

Part 2:

1. Differentiate contract of pledge from contract of mortgage.

A contract of pledge specifies what is owed, the property that shall be used as a pledge, and conditions
for satisfying the debt or obligation. A mortgage contract through which a debtor gives security for the
fulfillment of a principal obligation to a creditor. This is done by designating an immovable property (like
a house and lot) or real rights over immovable property as answerable for the principal obligation.

2. What are the common requisites of contract of pledge and mortgage?

In order to say that there is a valid contract of pledge, the following requisites must be present first That
the pledge be constituted to secure the fulfillment of a principal obligation. Second That the pledgor be
the absolute owner of the thing pledged. And the third are the persons constituting the pledge have the
free disposal of their property, and in the absence thereof, that they be legally authorized for the
purpose. As a special type of contract, the validity of a mortgage agreement is determined by the
concurrence of the requisites provided by law, to wit. The first it must secure fulfilment of a principal
obligation, second are the mortgagor must be the absolute owner of the property and the third is he
must have free disposal of the property

3. Who are the parties to the contract of pledge and contract of mortgage?

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 The parties of contract in pledge are Pledgor, one who delivers movable property to another to secure
his debt or that of another person and Pledgee, the party who receives a movable property from
another to secure the latter’s debt. In the contract of mortgage are Mortgagor, the party who constitutes
a security upon the immovable property without delivering the property. Mortgagee, the party in whose
favor a security is constituted on the immovable property but without delivering the property.

4. What are the characteristics of the contract of pledge?

 Accessory – cannot exist with the principal obligation.
 Indivisible – creates a lien on the whole or all of the properties pledged, which lien continues
until the obligation it secures has been fully paid.
 Real – the thing pledged is required to be delivered to the creditor or third person for its
perfection.
 Nominate – it has a name
 Unilateral – it creates an obligation solely on the part of the creditor to return the thing pledged
upon satisfaction of the principal obligation.

5. What are the kinds of pledge?

Legal are created by operation of law (Arts. 546, 1731 and 1994).

Conventional – constituted by mutual consent of the pledgor and the pledgee. Its requisites are: It be
constituted to secure the fulfilment of principal obligation (Art. 2085); Pledgor be the absolute owner of
the thing pledged; Person constituting the pledge has free disposal of the property; The thing pledged be
placed in the possession of the creditor, or of a third person by common agreement.

6. What is a real estate mortgage?

It be constituted to secure the fulfillment of a principal obligation and the mortgagor be the absolute
owner of the thing mortgaged. The person constituting the mortgage must have free disposal of his
property, and in the absence, thereof, he be legally authorized for the purpose; The document in which
the mortgage appears be recorded in the Register of Deeds.

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 7. Who are the parties to the real estate mortgage?

Mortgagor, the party who constitutes a security upon the immovable property without delivering the
property. Mortgagee, the party in whose favor a security is constituted on the immovable property but
without delivering the property.

8. What are the characteristics of real estate mortgage?

Accessory – cannot exist without the principal contract;

Indivisible – creates a lien on the whole or all of the properties mortgaged;

Inseparable – subjects the property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted;

Real right – creates a lien on the property mortgaged whereby the mortgagee has a right to have the
mortgaged property sold to satisfy his claim;

Real Property – a real right over an immovable.

9. What is foreclosure of mortgage?

Remedy available to the mortgagee by which he subjects the mortgaged property to the satisfaction of
the obligation to secure which the mortgage was given. Denotes a procedure adopted by
the mortgagee to terminate the rights of the mortgagor on the property and includes the sale itself.

10. What are the kinds of foreclosure?

The first kind of foreclosure is judicial made through filing a petition in court and the second are extra
judicial it means made out of court.

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