Dear PAO,
Jean and I came to an agreement where she would purchase my commercially zoned property. The initial installment was made according to our agreed-upon amount, with the rest due in evenly distributed monthly payments over three years. For one year, Jean consistently met these financial obligations until she fell behind on payments for five consecutive months. After sending her a formal demand notice without success, we took this issue to the local barangay office. I informed her that unless full payment was received by the end of the month, I intended to terminate the sales contract via a notarized document under provisions set forth by the Maceda Law. However, Jean argued that I lacked legal grounds to rescind the contract since the specific statute doesn’t pertain to transactions involving commercial lots. Was she right about this?
Zeus
Dear Zeus,
The applicable legislation for the specified set of circumstances is Republic Act (RA) 6552, also referred to as the Realty Installment Buyer Act. This statute covers all deals related to property sales, and it outlines the measures taken when payments fall into arrears, as detailed in Section 3, which states:
In every transaction or contract concerning the sale or financing of real estate with installment payments, which includes residential condominiums yet excludes industrial lots and commercial properties, as well as deals not covered by Republic Act No. 3844, revised through Republic Act No. 6389, if the purchaser has settled at least twenty-four monthly installments, they shall be granted these specific rights should they fail to pay subsequent installments:
Certainly, the stipulations of RA 6552 pertain to every transaction concerning the sale or financing of real estate on an installment basis. For your better understanding, consider the ruling made by the Supreme Court in State Investment Trust Inc. v. Baculo and Heirs of Baculo, G.R. No. 237934, dated June 10, 2024, authored by Associate Justice Antonio T. Kho, Jr., which asserts that:
Republic Act No. 6552, known commonly as the 'Realty Installment Buyer Protection Act' or informally as the 'Maceda Law,' honors its creator, former Senator Ernesto Maceda. This legislation aims at safeguarding purchasers who buy property under installment plans from unfair terms. It sets out clear guidelines for both buyers’ privileges and options when dealing with such transactions. Additionally, this act acknowledges sellers' entitlements in various types of real estate deals—such as industrial, commercial, and residential—to terminate agreements due to unpaid installments without compelling vendors to transfer ownership prematurely.
When we apply the aforementioned ruling to your case, it’s evident that the stipulations of RA 6552 (the Maceda Law) encompass the sale of real estate through an installment plan for various types of properties such as industrial, commercial, and residential plots. Therefore, Jean does not have a valid legal argument claiming that the Maceda Law doesn’t extend to the commercial plot she purchased from you under an installment arrangement.
Given that Jean paid for fewer than two years, the suitable legal recourse available to you can be found under Section 4 of RA 6552, which states:
In instances where fewer than twenty-four months of installments have been paid, the seller must provide the buyer with a grace period of at least sixty days starting from the day the installment was supposed to be due.
In case the purchaser does not settle the dues once the grace period ends, the vendor can annul the agreement 30 days following thebuyer’s reception of the notification of cancellation or the formal demand for revocation through a notarized document.
We trust that we managed to address your concerns. The guidance provided hinges only on the details you shared and how we understood them. If additional information comes forth or circumstances alter, our perspective might differ.
We value your confidence and backing.
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