Sale in Installments -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
Maceda Law without suffering interest. The vendee may also have the full payment of
the purchase price annotated in the certificate of title covering the
Purpose of the Law
property. (Sec. 6)
To protect buyers of real properties on installment basis against onerous
Recto Law
and oppressive conditions.
Purpose of the Law
Transactions Covered
To prevent potential abuses by the seller in the event that the buyer is
All transactions or contracts involving the sale or financing of real estate
unable to make further installments for a personal property purchased.
on installment payments, including residential condominium apartments.
(Sec. 2) Transactions Covered

Exclusions: Industrial lots, commercial buildings and sales to tenants -primarily for contracts of sale of personal property by installments
under the Agricultural Land Reform Code
-also used in a case purporting to be lease of personal property with
Rules and Rights of the Buyer option to buy, when the lessor has deprived the lessee of the possession
or enjoyment of the thing
A. Where the buyer has paid at least two years of installments (Sec. 3)
Rights of the Seller/Vendor
According to Section 3, in case the buyer default on payments of
installments are entitled to these rights: -to recover unpaid balance of purchase price

-To pay the unpaid installments, without additional interest, due within Remedies and Rules
the grace period of one month for every one year of installment
payments made. However, the right shall be exercised by the buyer only According to Article 1484, the vendor may exercise the following
once in every five years of the life of the contract and its extensions, if alternative remedies:
any.
1. Demand payment -Exact fulfillment of the obligation, if the buyer
-In case that the contract is canceled, the buyer would be entitled to 50% failed to pay -the unpaid seller cannot anymore choose other rmedies if
of the total payments made by him and an additional 5% every year but availed
not exceeding 90% of the total payments made [total payments include: 2. Cancel the sale -if the buyer failed to pay two or more installments
down payments, deposits or options on the contract] after five (5) years -the remedy is deemed chosen when: a) notice of rescission is sent, b)
of installments. seller takes possession of subject matterof sale, c) files action for
recission
-The actual cancellation of the contract shall take place after thirty (30) 3. Foreclose the chattel mortgage on the thing sold, if one has been
days from receipt by the buyer of the notice of cancellation or the constituted, should the buyer’s failure to pay cover two or more
demand for rescission of the contract by a notarial act and upon full installments.
payment of the cash surrender value to the buyer. -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
B. Where the buyer has paid at less than two years of installments (Sec. 4)
void.
-The buyer shall be given a grace period of not less than 60 days from the
PD 957
date the installment became due
Purpose of the Law
-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
-According to Par. 5 of PD 957, ”real estate subdivision and condominium
notice of cancellation or the demand for rescission of the contract by a
businesses be closely supervised and regulated, and that penalties be
notarial act. The cancellation would take effect after 30 days from receipt
imposed on fraudulent practices and manipulations committed in
of buyer.
connection therewith”
-The decree covers a wide range regarding the sale of condominiums and
C. Applies to both A&B
subdivisions. It is designed to prevent buyers from all real estate
-The buyer have the right to sell his rights or assign the same to another misinterpretations and fraudulent acts.
person . They may also reinstate the contract by updating the account Transactions Covered
during the given grace period and before actual cancellation of the -sale of subdivision lots and condominiums
contract. The deed of sale or assignment shall be done by notarial act. Rules
(Sec. 5)
-According to Section 5, the owner or dealer is not authorized to sell any
subdivision lot or condominium unit in the registered project unless he
shall have first obtained a license to sell the project within two weeks apartments but excluding industrial lots, commercial buildings and sales
from the registration of such project even if he has been issued a to tenants under Republic Act Numbered Thirty-eight hundred forty-four,
registration certificate. as amended by Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the buyer is
-The owner or dealer should file a performance bond approved by entitled to the following rights in case he defaults in the payment of
National Housing Authority to guarantee the construction and succeeding installments:
maintenance of the roads, gutters, drainage, sewerage, water system,
lighting systems, and full development of the subdivision project or the (a) To pay, without additional interest, the unpaid installments due
condominium project and the compliance by the owner or dealer with within the total grace period earned by him which is hereby fixed at the
the applicable laws and rules and regulations in order to be issued a rate of one month grace period for every one year of installment
license to sell subdivision lots or condominium units. (Sec. 6) payments made: Provided, That this right shall be exercised by the buyer
only once in every five years of the life of the contract and its extensions,
-Real estate dealer, broker or salesman shall be registered with the said if any.
Authority before they can engage in the business of selling subdivision
lots or condominium units. (Sec. 11) (b) If the contract is canceled, the seller shall refund to the buyer the
cash surrender value of the payments on the property equivalent to fifty
-“All contracts to sell, deeds of sale and other similar instruments relative per cent of the total payments made, and, after five years of installments,
to the sale or conveyance of the subdivision lots and condominium units, an additional five per cent every year but not to exceed ninety per cent
whether or not the purchase price is paid in full, shall be registered by of the total payments made: Provided, That the actual cancellation of the
the seller in the Office of the Register of Deeds of the province or city contract shall take place after thirty days from receipt by the buyer of the
where the property is situated.” (Sec. 17) 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
-No installment of the buyer may be forfeited by the developer when the
buyer.
buyer who is not delinquent, and after due notice, desist from further
payment due to failure of the developer to complete the development Down payments, deposits or options on the contract shall be included in
within the required period. The buyer may also be reimbursed, at his the computation of the total number of installment payments
option, with the total amount paid including amortization interest, with made.lawphi1™
interest thereon at the legal rate. (Sec. 23)
Section 4. In case where less than two years of installments were paid,
-In cases where the buyer fail to pay installments due to other reasons the seller shall give the buyer a grace period of not less than sixty days
other than the failure of the owner to develop the project shall be from the date the installment became due.
governed by the Maceda Law. (Sec. 24)
If the buyer fails to pay the installments due at the expiration of the
-“The owner or developer shall deliver the title of the lot or unit to the grace period, the seller may cancel the contract after thirty days from
buyer upon full payment of the lot or unit.” There shall be no fee receipt by the buyer of the notice of cancellation or the demand for
collected, except those required for the registration of the deed of sale in rescission of the contract by a notarial act.
the Registry of Deeds.
Section 5. Under Section 3 and 4, the buyer shall have the right to sell his
In the event a mortgage over the lot or unit is outstanding at the time of rights or assign the same to another person or to reinstate the contract
the issuance of the title to the buyer, the owner or developer shall by updating the account during the grace period and before actual
redeem the mortgage or the corresponding portion thereof within six cancellation of the contract. The deed of sale or assignment shall be done
months from such issuance in order that the title over any fully paid lot by notarial act.
or unit may be secured and delivered to the buyer in accordance
herewith. (Sec. 25) 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
-The owner or developer shall not levy upon any lot or buyer a fee for an without interest and to have such full payment of the purchase price
alleged community benefit. (Sec. 27) annotated in the certificate of title covering the property.

REPUBLIC ACT No. 6552 Section 7. Any stipulation in any contract hereafter entered into contrary
to the provisions of Sections 3, 4, 5 and 6, shall be null and void.
AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON
INSTALLMENT PAYMENTS. (Rep. Act No. 6552) Section 8. If any provision of this Act is held invalid or unconstitutional,
no other provision shall be affected thereby.lawphi1™
Section 1. This Act shall be known as the "Realty Installment Buyer Act."
Section 9. This Act shall take effect upon its approval.
Section 2. It is hereby declared a public policy to protect buyers of real
estate on installment payments against onerous and oppressive
conditions.

Section 3. In all transactions or contracts involving the sale or financing of