Maceda Law (RA 6652) •
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This law should be read in relation to rights and obligations of the buyer. This law was enacted precisely to protect the buyer. This is a special law. The best way to remember the law, is to remember the official name of the law: “ Realty Installment Buyer Act .” .” Real Re alty ty – – This law can only only be invoked ifif the object of the sale is residential residential realty. (Note: not all immovables are considered as realty; the law does not apply to sale of industrial or commercial property.)
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Installment – – This law can only be invoked ifif the sale is on installment payments. payments. (Note: (Note: similarities similarities with the Recto Law: (1) both laws apply to sales on installm installments ents and (!) both laws were passed to protect buyers) (Note: Not all sales on credit are covered only sales on credit on installment basis; "or "or e#ample: $ sale wherein wherein it was stipulated stipulated that payment payment of the % of the price shall be made upon perfection perfection with the balance payable in 1 year & this is a sale on credit on a strai'ht basis.)
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uye u yerr – This law was intended to protect buyers. (Note: efore the effectivity of this law when a buyer in this ind of sales failed to pay the balance the seller was 'iven the ri'ht to rescind the sale. Normally Normally mutual restitution restitution would result i.e. return of house and lot and the price. *owever seller would insert a forfeiture forfeiture clause statin' that the amounts paid would constitute rentals and dama'es. +hus the installments installments made by the buyer would not be returned.) (Note: it is a misconception to state state that this law would only apply when the buyer has paid at least ! years of installments.) installments.)
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ights of the buyer ! o
"aid less than # than # years of installments – $% day grace period. The buyer would have the right to pay for the arrears without penalty or interest. &e can even assign his rights or advance the balance.
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"aid at least # # years of installments –
'race period ! ( month for every ( year of installment payments. payments. The buyer can pay the installments due without additional interest. The right to pay within the grace period can only be e)ercised by the buyer once every * years.
+f the contract is cancelled, payment of the cash surrender value – euivalent to *%- of the total payments made, and, after * years of installments, an additional *- every year but not to e)ceed %- of the total payments made. /own payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.
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0ancellati 0ancellation on ! 1 stipulati stipulation on granting granting automatic automatic cancellatio cancellation n is void. 1ctual cancellation cancellation of the contract shall only take place: (. #.
1fter 1fter 2% days from from receipt receipt by the buyer buyer of the notice notice of cancella cancellatio tion n or the demand demand for rescission of the contract by a notarial act3 and +f the at least least # years years of install installmen ments ts have have been paid, paid, upon full paym payment ent of the cash cash surrender value to the buyer.
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4alidity of forfeiture clause – +f the buyer has paid at least # years of installment, a forfeiture clause is void because the law reuires the return of the cash surrender value. 5therwise, +f the buyer has paid less than # years of installment, a forfeiture clause is valid.
Q: A sold to B a residential condominium unit for P10M under te followin! terms: 50" down# $alance to $e %aid in 60 montl& installments' B %aid until te 6 t installment' e ten failed to %a& te *t and + t installments' ,an B still %a& te arrears on te - t mont. 1:
6es. 7ore than # years of installments have been paid. 89$(# ; more than 2 years<. =nder the 7aceda >aw, the buyer is entitled to a grace period of ( month for every year paid. +n the case, ? had a grace period of 2 months. The 9 th month was within the graced period.
Q: /n a contract of sale of a residential realt&# %a&ment was to $e made in eual montl& installments for 20 &ears' e first monts were %aid ten te $u&er defaulted' owe3er# te $u&er was a$le to %a& wit in te 60 da& !race' But a!ain e was una$le to %a& for te rd installment of te 5t &ear' 4at is te !race %eriod. 1:
@ala na. 5nly have a grace period for every * years.
Remedies Take note that remedies are provided only to aggrieved parties. (*#$ enumerates the remedies of the unpaid seller. (. ight to withhold the goods #. Atoppage in transitu 2. esale 9. escind. ?ut there are other remedies. @ho is an unpaid sellerB +f C%- is paid, unpaid – yes. ?ut does it mean he must be a party to the contractB Do, the agent may be considered as a seller if the bill of lading has been indorsed to him. 1lso heirs, assignees. Even if ownership has already passed, the remedies are available. Dote that even if possession is retained, ownership may have passed. These remedies are alternative – right to retain and stoppage in transitu ?ut the other remedies are not alternative – retention kailangan. ight to retain – possessory lien – lien of the seller possessory in character to distinguish it from the lien of the seller over the thing sold if the buyer becomes insolvent. &e must have physical possession. +nsolvency is not reuired but it is not the only ground. >ook for the codal grounds. Aale on credit, lapsed, etc. +f the seller instead of invoking the other remedies, filed an action for specific performance and the court rendered judgment in his favor – possessory lien is not e)tinguished. There is only an order for payment, it is not certain, 1s far as stoppage in transitu is concerned – insolvency is reuired. +nsolvency can e)ist after the perfection of the contract while the goods are in transit. The goods must be in transit and the buyer must have parted with possession.
Transit not eual to parting with possession. "ossessory lien may be the proper remedy if no parting. &ow is this right e)ercised: (. taking actual possession #. +nstructing the common carrier to transport to a specified place. &owever, if the goods are covered any a negotiable bill of lading, the bill of lading must be delivered to the covered carrier. This is a form of protection for the common carrier. +f the buyer sold the goods but his buyer sold the goods to a third person, but the seller still has a possessory lien or made use of his right of stoppage in transitu, the seller would not as a rule lose his possessory lien. E)ceptions: (. assent to alienation #. even without consent, the 2rd person is a buyer in good faith and for value 8negotiable document< ight of resale – "ossessory lien is a reuirement. +s insolvency reuiredB Do. ?ut it may be a scenario. ?ecause one of the grounds is failure to pay for an unreasonable time. E)pressly reserved.. other grounds. Two notices are provided by law: (< notice as to intention to resell #< Dotice of the time and place of the resale These are not necessary. The firstly is important only if the buyer has defaulted for an unreasonable time. The #nd notice would be relevant in order to hold the buyer liable for deficiency in case the goods are sold for a price less than the liability. E). "(%%,%%%.%%. The goods were only sold for F%, the 2% balance could only be recovered if the sale was made in good faith. Therefore the second notice becomes relevant. Dote that the buyer is prohibited from directly or indirectly purchasing the goods in the resale. The more problematic is: "(%%,%%%.%% goods. Aold for "(*%,%%%.%%. @ho has the right to the e)cessB =nder the law, the seller is not responsible for the e)cess. @hat if partial payment has already paid, would the buyer be entitled to the return of what was paidB Do. The buyer was at fault. +f ownership has already passed to the buyer, may the seller resell the goods without rescissionB escission is not reuired. @hen goods are sold in the resale, the would terminate the ownership of the first buyer by operation of law. The 2 rd person acuires ownership ight to rescind – similar to resale ang grounds but not included is perishable ang goods. ecto >aw – both protection of buyer and remedy of the seller. emedies provided in this law: (9C9 (. e)act fulfillment – specific performance #. 0ancellation of the sale – rescission 2. Goreclosure of the mortgage. E): "*,%%%,%%%.%% Aale of a car payable in (% eual annual payments. The buyer failed to pay the 2 rd installment, can the buyer chose from the 2 remediesB +f the action is filed within one month, what can be collected. The only amount due per installment is *%%,%%%. 5nly the due amount can be demanded e)cept when there is an acceleration clause. @hat if default on 2 rd year but was able to pay until he defaulted again on the F th year. @ould the seller have the right to chose from the 2 remediesB Do. F th installment is only one installment.
/efault on 2rd and 9th installments – note that the default in installments must be consecutive – chose cancellation of the contact. 7utual restitution. 5rdinary, the seller would have the obligation to pay the installments. ?ut the law gives the seller to retain a reasonable amount to be considered as rentals. 7ay the seller retain everythingB 6es. +f the there is a forfeiture clause. This is one of the differences from the 7aceda >aw. The recto law would only apply if the object is movable property. &owever, if the there is a forfeiture clause, if it will be unconscionable, no retention of everything. +t will depend on the circumstances. @hat if the obligation to pay was secured by a mortgage e)ecuted by the buyer over a diamond. 1nd the buyer failed to pay the 2 rd and 9th installment, and the seller opted to foreclose the mortgage but there was a deficiency. @ould the seller have the right the deficiencyB 6es. The recto law does not apply. The object sold must be the one mortgaged for the recto law to apply ?ar E)amination Huestion. 1 sold a car to ? on installments. The sale was secured by a chattel mortgage over the car and a real estate mortgage over the land of 0, ?Is brother. ? failed to pay two installments. 1 foreclose the chattel mortgage but a the was a deficiency. 0an 1 foreclose the real estate mortgageB Do. =nder 1rt. (9C9, once the seller forecloses the chattel mortgage on the thing sold, he shall have no further action against the purchaser to recover any unpaid balance. Goreclosure of the real estate mortgage is a form of recovery of the deficiency. Thus, foreclosure cannot be made.
