MACEDA LAW
Purpose of the Law
- To protect buyers of real properties on installment basis
against onerous and oppressive conditions.
Transactions Covered
- All transactions or contracts involving the sale or
financing of real estate on installment payments, including
residential condominium apartments. (Sec. 2)
Exclusions: Industrial lots, commercial buildings and sales
to tenants under the Agricultural Land Reform Code.
Rules and Rights of the Buyer
A. Where the buyer has paid at least two years of
installments (Sec. 3)
According to Section 3, in case the buyer default on
payments of installments are entitled to these rights:
- To pay the unpaid installments, without additional
interest, due within the grace period of one month for every
one year of installment payments made. However, the right
shall be exercised by the buyer only once in every five years
of the life of the contract and its extensions, if any.
- In case that the contract is canceled, the buyer would be
entitled to 50% of the total payments made by him and an
additional 5% every year but not exceeding 90% of the total
payments made [total payments include: down payments,
deposits or options on the contract] after five (5) years of
installments.
- The actual cancellation of the contract shall take place
after thirty (30) 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.
B. Where the buyer has paid at less than two years of
installments (Sec. 4)
- The buyer shall be given a grace period of not less than
60 days from the date the installment became due
- The seller may cancel the contract if the buyer fails to
pay the installments within the 60-day grace period.
However, there must be a notice of cancellation or the
demand for rescission of the contract by a notarial act. The
cancellation would take effect after 30 days from receipt of
buyer.
C. Applies to both A & B
- The buyer have the right to sell his rights or assign the
same to another person. They may also reinstate the
contract by updating the account during the given grace
period and before actual cancellation of the contract. The
deed of sale or assignment shall be done by notarial act.
(Sec. 5)
- The buyer shall have the right to pay in advance any
installment or the full unpaid balance of the purchase price.
It may be done at any time without suffering interest. The
vendee may also have the full payment of the purchase
price annotated in the certificate of title covering the
property. (Sec. 6)
RECTO LAW
Purpose of the Law
- To prevent potential abuses by the seller in the event
that the buyer is unable to make further installments for a
personal property purchased.
Transactions Covered
- Primarily for contracts of sale of personal property by
installments
- Also used in a case purporting to be lease of personal
property with option to buy, when the lessor has deprived
the lessee of the possession or enjoyment of the thing.
Rights of the Seller/Vendor
- To recover unpaid balance of purchase price.
Remedies and Rules
According to Article 1484, the vendor may exercise the
following alternative remedies:
1. Demand payment
- Exact fulfillment of the obligation, if the buyer failed
to pay
- the unpaid seller cannot anymore choose other
remedies if availed
2. Cancel the sale
- if the buyer failed to pay two or more installments
- the remedy is deemed chosen when: a) notice of
rescission is sent, b) seller takes possession of subject
matterof sale, c) files action for recission
3. Foreclose the chattel mortgage on the thing sold, if
one has been constituted, should the buyer’s failure to
pay cover two or more installments.
- the seller shall have no further action againt the
purchaser to recover any unpaid balance of the price. Any
agreemetn to the contrary shall be void.
 PRESIDENTIAL DECREE 957

Purpose of the Law
- According to Par. 5 of PD 957, ”real estate subdivision
and condominium businesses be closely supervised and
regulated, and that penalties be imposed on fraudulent
practices and manipulations committed in connection
therewith”
- The decree covers a wide range regarding the sale of
condominiums and subdivisions. It is designed to prevent
buyers from all real estate misinterpretations and
fraudulent acts.
Transactions Covered
- Sale of subdivision lots and condominiums
Rules
- In cases where the buyer fail to pay installments due to
other reasons other than the failure of the owner to develop
the project shall be governed by the Maceda Law. (Sec. 24)
- “The owner or developer shall deliver the title of the lot
or unit to the buyer upon full payment of the lot or unit.”
There shall be no fee collected, except those required for
the registration of the deed of sale in the Registry of Deeds.
In the event a mortgage over the lot or unit is outstanding
at the time of the issuance of the title to the buyer, the
owner or developer shall redeem the mortgage or the
corresponding portion thereof within six months from such
issuance in order that the title over any fully paid lot or unit
may be secured and delivered to the buyer in accordance
herewith. (Sec. 25)

- According to Section 5, the owner or dealer is not - The owner or developer shall not levy upon any lot or
authorized to sell any subdivision lot or condominium unit in buyer a fee for an alleged community benefit. (Sec. 27)
the registered project unless he shall have first obtained a
license to sell the project within two weeks from the
registration of such project even if he has been issued a
registration certificate.

- The owner or dealer should file a performance bond

approved by National Housing Authority to guarantee the
construction and maintenance of the roads, gutters,
drainage, sewerage, water system, lighting systems, and full
development of the subdivision project or the condominium
project and the compliance by the owner or dealer with the
applicable laws and rules and regulations in order to be
issued a license to sell subdivision lots or condominium units.
(Sec. 6)

- Real estate dealer, broker or salesman shall be

registered with the said Authority before they can engage
in the business of selling subdivision lots or condominium
units. (Sec. 11)

- “All contracts to sell, deeds of sale and other similar

instruments relative to the sale or conveyance of the
subdivision lots and condominium units, whether or not the
purchase price is paid in full, shall be registered by the seller
in the Office of the Register of Deeds of the province or city
where the property is situated.” (Sec. 17)

- No installment of the buyer may be forfeited by the

developer when the buyer who is not delinquent, and after
due notice, desist from further payment due to failure of the
developer to complete the development within the required
period. The buyer may also be reimbursed, at his option,
with the total amount paid including amortization interest,
with interest thereon at the legal rate. (Sec. 23)