Maceda Law – “Realty Installment Buyer Act”
(R.A. 6552, Sept. 1972)
• Reason/Justification of the law:
To help especially the low income lot buyers,
The law provides for the rights and remedies of lot
buyers and protect them from one-sided and
pernicious contract stipulations;
To protect buyers of real estate on installment
payments against onerous and oppressive conditions;
Coverage of R.A. 6552
• All transactions or contracts involving the sale or
financing of real estate on installment payments,
including residential condominium apartments but
excluding industrial lots, commercial buildings and sales
to tenants under Republic Act 3844, as amended by
Republic Act 6389, where the buyer has paid at least
two (2) years of installments.
Requisites to Avail of Rights Under R.A. 6552
1. Transactions or contracts involving the sale or
financing of real estate on installments payments,
including residential condominium apartments;
2. The buyer has paid at least two (2) years of
installments; and
3. The buyer defaults in payment of succeeding
installments.
Article 1592. In the sale of immovable property,
even though it may have been stipulated that
upon failure to pay the price at the time agreed
upon the rescission of the contract shall of right
take place, the vendee may pay, even after the
expiration of the period, as long as no demand for
rescission of the contract has been made upon
him either judicially or by a notarial act. After the
demand, the court may not grant him a new term.
(1504a)
Rights of a Buyer Under R.A. 6552
1. PAYMENT
2. CASH SURRENDER VALUE
3. ASSIGNMENT/REINSTATEMENT
4. PAY IN ADVANCE
CAPACITY TO BUY OR SELL
Art. 1489. All persons who are authorized in this
Code to obligate themselves, may enter into a
contract of sale, saving the modifications contained
in the following articles.
Where necessaries are sold and delivered to a
minor or other person without capacity to act, he
must pay a reasonable price therefor. Necessaries
are those referred to in Article 290.
Kinds of Incapacity
General rule: All persons, whether natural or juridical, who
can bind themselves by contract have also legal capacity
to buy and sell.
Exceptions: Cases when the law determines that party
suffers from either absolute or relative incapacity.
Kinds of Incapacity:
- 1. Absolute – in the case of persons who cannot bind
themselves (ex. minors, insane); and
- 2. Relative – where its exists only with reference to certain
persons or a certain class of property;
- Persons who are merely relatively incapacitated are stated
in Articles 1490-1491 (ex. husband and wife).
Liability for necessaries of minor or other
person without capacity to act
Necessaries are things which are needed for sustenance,
dwelling, clothing, medical attendance, education and
transportation.
Generally, contracts entered into by minor and other
incapacitated person (insane or demented persons, deaf-
mutes who do not know how to write) are voidable;
But where necessaries are sold and delivered to him (without
the intervention of the parent or guardian), he must pay a
reasonable price therefor;
Sale by minors
The sale of real estate effected by minors who have
already passed the ages of puberty and adolescence
and are now in the adult age, when they pretended to
have already reached their majority, while in fact they
have not, is valid;
They cannot be permitted later on to excuse themselves
from compliance with the obligations assumed by them
or to seek their annulment.
Art. 1490. The husband and the wife
cannot sell property to each other, except:
(1) When a separation of property was
agreed upon in the marriage settlements; or
(2) When there has been a judicial
separation of property under Article 191.
Relative incapacity of husband and wife
General rule: The husband and wife are prohibited by from
selling property to each other;
A sale between husband and wife in violation of Article 1490
is inexistent and void from the beginning;
Reason of prohibition – to protect third persons;
They are also prohibited from making donations to each other
during the marriage except moderate gifts on the occasion
of any family rejoicing;
Exceptions:
1. If there has been a separation of property agreed upon in
the marriage settlements; or
2. when there has been a judicial separation of property
decreed between them by the court.
Art. 1491. The following persons cannot acquire by
purchase even at a public or judicial auction, either in
person or through the mediation of another.
(1) The guardian, the property of the person or
persons who may be under his guardianship;
(2) Agents, the property whose administration or
sale may have been entrusted to them, unless the
consent of the principal has been given;
(3) Executors and administrators, the property of
the estate under administration;
(4) Public officers and employees, the property of the State or of
any subdivision thereof, or of any government-owned or controlled
corporation, or institution, the administration of which has been
intrusted to them; this provisions shall apply to judges, and government
experts who, in any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior courts, and other officers and employees connected with the
administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory
they exercise their respective functions; this prohibition include the act
of acquiring by assignment and shall apply to lawyers, with respect to
the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession;
(6) Any others especially disqualified by law.
Incapacity by reason of position and
relation to property
1. guardians;
2. agents;
3. executors and administrators;
4. public officers and employees;
5. judicial officers and employees and lawyers; and
6. others especially disqualified by law.
Reason of prohibition – to prevent frauds on the part of
persons enumerated therein and minimize temptations
to the exertion of undue and improper influence;
The law does not trust human nature to resist the
temptations likely to arise out of antagonism between
the interest of the seller and the buyer.
In a contract for agency, after termination of the
relationship, the agent is not prohibited to purchase a
property belonging to the former principal;
Article 1491 (5) of the Civil Code prohibits lawyers from
acquiring by purchase or assignment the property or
rights involved which are the object of the litigation;
But the prohibition applies only during the pendency of
the case;
Other persons especially disqualified
(1) Aliens who are disqualified to purchase private agricultural
lands;
(2) An unpaid seller; having a right of lien or having stopped
the goods in transit, who is prohibited from buying the
goods either directly or indirectly in the resale of the same
at a public or private sale which he may make; and
(3) The officer conducting an execution sale of property to
enforce a court judgment rendered against the owner
thereof cannot become a purchaser or be interested
directly, or indirectly in any purchase at such sale.
Effect of sale in violation of prohibition
(1) With respect to Nos. 1 to 3, the sale shall only be voidable
because in such cases only private interests are affected.
The defect can be cured by ratification of the seller;
(1) With respect to Nos. 4 to 6, the sale shall be null and void,
public interests being involved therein.
Art. 1492. The prohibitions in the two
preceding articles are applicable to sales
in legal redemption, compromises and
renunciations.
This Prohibition is founded on public policy.
Prohibition Extends to Sales in Legal
redemption, etc.
1. The relative incapacity in Arts. 1490 and 1491 applies also to sales
by virtue of legal redemption, compromises, and renunciatons;
a. Compromise is a contract whereby the parties, by reciprocal
concessions, avoid a litigation or put an end to one already
commenced. It is the amicable settlement of a controversy;
b. By renunciation, a creditor gratuitously abandons his right
against his creditor. The other terms used by law are condonation
and remission.
2. The persons disqualified to buy referred to in Arts. 1490 and 1491
are also disqualified to lessees of the things mentioned therein.
Effects of the Contract When the Thing Sold
has been Lost
Art. 1493. If at the time the contract of
sale is perfected, the thing which is the
object of the contract has been entirely lost,
the contract shall be without any effect.
But if the thing should have been lost in
part only, the vendee may choose between
withdrawing from the contract and
demanding the remaining part, paying its
price in proportion to the total sum agreed
upon.
When a thing is considered lost
A thing is lost when it perishes or goes out of commerce or
disappears in such a way that its existence is unknown or it
cannot be recovered. (Art. 1189[2])
“Perishes” – includes a case where there has been a
material deterioration or complete change in the nature
of the thing in such a manner that it losses its former utility
(a consideration of contract).
Effect of loss of thing at the time of sale
Here, the loss or injury – before or at the time the
contract of sale is perfected:
1. The thing is entirely lost – contract is inexistent and void;
Reason: There is no object;
2. The thing is only partially lost – vendee may elect
between withdrawing from the contract and demanding
the remaining part, paying its proportionate price;
S sold his car to B. Unknown to both of them, the car has
been totally destroyed before they agreed on the sale.
Here, no valid contract of sale for lack of object;
S (owner) bears the loss; B need not pay the price;
If car is only partially destroyed, there still remains of the
object;
Since the character or condition of the car has been
materially changed, the buyer may withdraw from the
contract or demand delivery of the car but paying only
the proportionate price;
Art. 1494. Where the parties purport a sale of
specific goods, and the goods without the
knowledge of the seller have perished in part or
have wholly or in a material part so deteriorated in
quality as to be substantially changed in character,
the buyer may at his option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods or in so
much thereof as have not deteriorated, and as
binding the buyer to pay the agreed price for the
goods in which the ownership will pass, sale was
divisible.
Effect of loss in case of specific goods
Article 1493 – sale of specific things;
Article 1494 – sale of goods (mass of “specific goods”
identified and agreed upon when contract of sale was
made);
If sale is divisible – the second option is available;
If sale is indivisible – buyer should pay only the
proportionate price of the remaining goods as provided
in par. 2 of Article 1493;
Say the subject matter sold was 100 cavans of rice in the
warehouse of S at P1,000 per cavan, or for a total price of
P100,000;
If 60 cavans of rice were lost, B may, at this option,
withdraw from the contract without the obligation of
paying the rice; or demand the delivery of the 40 cavans,
but binding him to pay the agreed price thereof (P40,000);
If the contract is indivisible (100 cavans of rice were sold for
P100,000 without consideration of the number of cavans), B
should be made to pay only the proportionate price of 40
cavans which is also P40,000.