MACEDA LAW (R.A.

6552) When the buyer is delinquent in his payment

Objective: To protect installment buyers of real estate against onerous and oppressive conditions. Applicability - Applies to sale or financing of residential estate on installment payment covered by contract to sell and not sale with mortgage, but excluding industrial lots, commercial building, and sales to tenants under R.A. 3844. Rights of buyer who has paid two years or more of installments: a) To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment, provided that such right can only be availed of once every five years. b) To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency. c) To receive the cash surrender value of his total payments before his contract can be cancelled due to delinquency. The refund is equivalent to fifty percent of total payments and, after the fifth year, an additional five percent per year of installment payment, but not to exceed ninety percent of total payments. d) To transfer or assign his right to the contract e) To register or annotate his contract on the title f) To pay, without additional interest, the full principal balance of the price before the term of the contract. Rights of buyer who has paid less than two years of installment - The buyer has practically the same rights as a buyer who has paid two years or more of instalmments, except for the following differences: a) The grace period to pay without additional interest on any installment due is fixed at sixty days b) For cancellation of contract due to delinquency, the buyer is only entitled to receive a thirtyday notarial notice of cancellation but without right to receive the cash surrender value of his payments. P.D. 957 When the developer fails to complete the development within the required period The refund is 100% of total payments less penalty interest plus legal interest of money.

REPUBLIC ACT No. 6552 AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS. (Rep. Act No. 6552) Section 1. This Act shall be known as the "Realty Installment Buyer Act." Section 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

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. (b) If the contract is canceled. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3. That the actual cancellation of the contract shall take place 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 and upon full payment of the cash surrender value to the buyer. without additional interest. shall be null and void. In case where less than two years of installments were paid. deposits or options on the contract shall be included in the computation of the total number of installment payments made. 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.lawphi1™ . and. That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions. 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. if any. In all transactions or contracts involving the sale or financing of real estate on installment payments. The deed of sale or assignment shall be done by notarial act. after five years of installments. Section 5.Section 3. 4. If the buyer fails to pay the installments due at the expiration of the grace period. as amended by Republic Act Numbered Sixty-three hundred eighty-nine. Down payments. Section 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.lawphi1™ Section 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. Section 7. no other provision shall be affected thereby. commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four. the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments: (a) To pay. Section 8. If any provision of this Act is held invalid or unconstitutional. the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided. where the buyer has paid at least two years of installments. including residential condominium apartments but excluding industrial lots. Under Section 3 and 4. 5 and 6.

2. in that the exercise of one would also bar the exercise of the others. and incorporates the provisions of Act No. in a contract of sale of personal property the price of which is payable in installments. Both laws govern the sale of property by installments. 4122. he shall have no further action against the purchaser to recover any unpaid balance of the price. � Under Article 1484 of the New Civil Code. Any agreement to the contrary shall be void. . They cannot also be pursued simultaneously. � The remedies have been recognized as alternative. This Act shall take effect upon its approval. Cancel the sale. Exact fulfillment of the obligation. Foreclose the chattel mortgage on the thing sold. should the buyer fail to pay any installment. covers installment sales of personal property while the Maceda Law governs installment sales of real property. known as the Installment Sales Law or the Recto Law. RATIONALE � the object of Recto Law was to remedy the abuses committed in connection with the foreclosure of chattel mortgages and was meant to prevent mortgagees from seizing the mortgaged property. buying it at foreclosure sale for a low price and then bringing suit against the mortgagor for a deficiency judgment. 1972. should the buyer�s failure to pay cover two or more installments. the vendor may exercise any of the following REMEDIES: 1. � If the seller should foreclose on the mortgage constituted on the thing sold. which forms part of the Civil Code. which then amended Article 1454 of the Civil Code of 1889. not cumulative. if one has been constituted. Summary These two laws are relevant and are very often the issue of many court cases. should the buyer�s failure to pay cover two or more installments. The Recto Law. 3. even if the underlying contract at issue is a loan because the promissory note has been assigned or negotiated by the original seller. Article 1484 of the Civil Code provides for the remedies of a seller in contracts of sale of personal property by installments.Section 9. The provisions of Recto Law are applicable to financing transactions derived or arising from sales of movables on installments. Approved: August 26.

are also available to the buyer. to the following sales: 1. The Maceda Law The Maceda Law. The Recto Law also won't apply to a straight sale (i. The Recto Law also covers leases with the option to purchase. RA 6552. believe it or not.) It doesn't apply. making that person the new creditor. When that happens.e. If the buyer refuses to surrender the items to the seller. bought them at a low price (on purpose. is the real estate equivalent of the Recto Law. the seller can recover expenses and attorney's fees. the seller can do any of the following: 1. These remedies. this happens when a person takes a loan to buy something and he mortgages the thing he bought to ensure the creditor that he will pay the loan. such as when mortgageecreditors foreclosed mortgaged property.) The seller can also assign his credit to another person. he becomes a perverse buyer-mortgagor. Like the Recto Law.) Demand that the buyer pay (a.however.) Cancel or rescind the sale 3.) Lands under the CARP Law .k. Remember: If you choose one remedy.The Recto Law The Recto Law comprises Articles 1484 to 1486 of the Civil Code. You also can't use all or any of them at the same time.) then prosecuted the mortgagor-debtors to recover the deficiencies.) Foreclose the mortgage on the property bought (if there ever was a chattel mortgage) Regarding no.a. In the event a buyer of personal property defaults by failing to pay two or more of the agreed installments. you can't choose the others. It was added to the Civil Code to prevent abuses in the foreclosure of chattel mortgages.) Commercial buildings and lots 3. 3. a sale where there is a downpayment and the balance is payable in the future in a single payment only. specific performance) 2. it also covers financing of sales of real property (which is why mortgages also come in.) Industrial lots 2.

He can also assign his rights to another person. It also cannot be used by the highest bidder in foreclosure proceedings. Once the buyer chooses to use the grace period. If after the grace period the buyer still can't pay. he can't get it again until another five years are over. If the buyer paid less than 2 years' installments and defaults. without interest. This period can be increased by the seller. The buyer is also allowed to make advanced payments. If the seller wants to cancel the sale. The payments mentioned here include the downpayment. 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. the seller must make a notarial demand to cancel the sale. The cancellation becomes effective thirty (30) days after the buyer was notified. 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. 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. So it's possible to have a grace period of a year if the buyer had been paying his installments faithfully for 12 years. If the buyer paid at least two years' installments. If the buyer paid more than five years' installments another 5% for every year is to be added to the refund. options and deposits. making that person the new buyer. . the buyer can pay the unpaid balance without interest. he is given a grace period of sixty (60) days starting from the date of his last installment to resume paying. The Maceda Law cannot be used by a real estate developer. he has to refund the buyer of 50% of the actual payments.Depending on when the buyer defaults. but he can only do that with a notarial deed of sale assignment. or even the full price. but only up to 90% of the total payments made. The grace period can be used only once every five (5) years of the sales contract's life -including its extensions.

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