Maceda & Maceda Law Office

Philippines Stock Exchange Center, Pasig City, Metro Manila, 1605

September 25, 2018

Ms. Angelica Anonuevo

President
Navotas Polytechnic College

Re: Possible remedies and protection in favor of buyers of realty through

installment.

Dear Ms. Anonuevo:

You requested legal opinion from our law firm regarding possible legal and
factual defenses and remedies you may afford may afford as a buyer from a
Contract to Sell.

The most prominent legal defense that may protect you in buying of realty is
Republic Act No. 6552, also known as the “Realty Installment Buyer Act” or
“Maceda Law.” This law declares a public policy to protect buyers of real estate on
installment payments against onerous and oppressive conditions.

The contract you and Atty. ABCD agreed upon provides that, “In the event
that the (i) Buyer fails to pay any amount on the due date hereof or within the
period herein agreed upon, or (ii) to comply with any of the terms, restrictions or
obligation stated in the Contract to Sell, this Supplement (with annexes) or the
Master Deed (or any amendments thereto), the Seller may, at its sole option and
discretion, unilaterally cancel/rescind the Contract to Sell without need of court
declaration and consent of the Seller. The Seller shall give the buyer a written
notice of the cancellation/rescission.”

The provision in the contract above is contrary to the Sec. 3 and 3 (a) of
Maceda Law which declares:

“Sec. 3. In 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 Numbered Thirty-eight hundred forty-four, 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 entitled to the following rights in case he
defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the
total grace period earned by him which is hereby fixed at the rate of one
month grace period for every one year of installment 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, if any.”
 Hence, since the sum of your paid installments amount to more than two
years, you are entitled for a grace period which gives you an opportunity to pay
before a notice of cancellation may be raised by Atty ABCD. This is because the
issuance of notice of cancellation constitutes the refusal of the seller to enable you
afford the grace period.

In addition, your contract with Atty. ABCD states that “In the event that the
Seller obtains a loan from a bank or financial institution to finance the purchase price
of the Unit, then upon cancellation/rescission of the Contract to Sell, the Seller is
hereby authorized to refund to the lending bank or financial institution any payment
heretofore received from or for the account of the Buyer under the relevant loan
document executed between the Buyer and such bank or financial institution.”
This provision contradicts the Sec. 3 (b) of Maceda Law which states:

“Sec. 3 (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 per cent of
the total payments made, and, after five years of installments, an additional five
per cent every year but not to exceed ninety per cent of the total payments made:
Provided, that the actual cancellation of the contract shall take place after thirty
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.

Down payments, deposits or options on the contract shall be included in the

computation of the total number of installment payments made.”

The amount of money received by the seller has to be surrendered to you as

the buyer. Hence, the provision in the contract which states that the payment be
refunded to the lending bank or financial institution violates the law which affords
your right to receive the payment you made in case that you failed.

If the question you have is how long is the grace period you are supposed to
be entitled, Sec. 4 of Maceda Law provides that in case where less than two years
of installments were paid, the seller shall give the buyer a grace period of not less
than sixty days from the date the installment became due.

Sec. 4 also provides that if the buyer fails to pay the installments due at the
expiration of the grace period, the seller may cancel the contract after thirty days
from receipt by the buyer of the notice of cancellation or the demand for rescission
of the contract by a notarial act. Such notice of cancellation does not constitute a
proper receipt from you, given that you were unaware that there was a notice from
the beginning. “Receipt from the buyer” as stated in the law means that you have
acknowledged the notice itself and that you are aware of it existing.

Since the contract itself provides provisions that are contrary to Sec. 3 and 4
of Maceda Law, it shall be rendered null and void. Sec. 7. of Maceda Law
provides, “Any stipulation in any contract hereafter entered into contrary to the
provisions of Sections 3, 4, 5 and 6, shall be null and void.”
 Regarding your fixtures, and furniture as you may have failed to claim your
items inside the property, Art. 6 of provides for the protection of your interest over
them: Rights may be waived, unless the waiver is contrary to law, public order,
public policy, morals, or good customs, or prejudicial to a third person with a right
recognized by law.

The law above overrules this provision in the contract which states, “If the
Buyer fails to make a claim or to take possession of the furniture, fixtures and
equipment within the period allowed, the Seller is hereby constituted, named and
appointed as its attorney in fact to dispose of or sell these furniture, fixtures, and
equipment by public or private auction and to sign the necessary documents
relative thereto, the costs of which auction and documents shall be charged to the
Buyer, and to apply the proceeds thereof to the settlement of the Buyer’s liabilities
without prejudice to the right of the Seller to collect from the Buyer the balance
thereof. The exercise by the Seller of its rights herein shall not constitute the Seller
a depository of the properties of the Buyer.”

It is clear that in the waiver of rights, it shall be clear, unequivocal, and

expressed. Your failure to make a claim does not constitute a waiver of your rights
over your property.

The items that you have in the condominium shall be returned to you as Art.
22 of the New Civil Code states that, “Every person who through an act of
performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the
same to him.”

Since it is obvious that Atty. ABCD, who has knowledge of the law, and
such ethical responsibilities of a lawyer has been expected from him, wrote a
contract that is willfully against you, as a buyer, you are entitled to receive
damages from him as Article 21 of the New Civil Code states, “Any person who
willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage.”

We recommend that you talk to Atty. ABCD and raise these defenses to him.
Should he insist his malicious contract against you, you may tell him that the
largest remedy you may receive from this case should you win against him is that
he be suspended from practicing law, or worse, disbarred.

Sincerely yours,

EZEKIEL JACOB D. CARINAN

Legal Counsel