Contract of Sale

Franklin Lopez
Accounting Education Department
RMMC-MI
R.A. No. 6552 (Maceda Law)
The law is known as the “Realty Installment
Buyer Act”. Its objective is “to protect buyers of
real estate on installment payments against
onerous and oppressive conditions”.
 Covers sale/financing of Real Property on
installments including residential
condominium apartments
 However, Maceda Law does not include:
1. Industrial lots
2. Commercial buildings
3. Sale to tenants under R.A. No. 3844 as
amended by R.A. 6389 or Land Reform Law.
• Unlike Recto Law provides remedies to the
part of the vendors, Maceda Law provides
remedies on the part of the buyer/vendee.
Remedies of the Vendee under Maceda Law:

1. Grace Period
2. Cash Surrender Value (CSV) (cancellation of contract)
3. Additional Rights of the buyer:
a. The buyer shall have the right during the grace
period before the cancellation of the contract:
1. to sell his rights to another by notarial act
2. to assign his rights to another by notarial act
3. to reinstate the contract by updating the
account
b. To pay in advance any installment or the full
unpaid balance any time without interest
c. To ask for the annotation pf the full payment
of the purchase price in the certificate of title
covering the property
1. Grace Period
- if the installment paid is less than 2 years
- the buyer will be given a 60-days
- if the installment paid is more than 2 years
- the buyer will be given a 1-month for every
year of installments paid.
• Example:
Installment paid = 5 years
Grace period = 5 months
Another example:
Installment paid = 10 years
Grace period = 10 months

The rights shall be exercised by the buyer only once

in every 5 years of the life of the contract and its
extensions, if any.
Cash Surrender Value
Installments paid
- 2-5years
- 50% of the total installments paid

Installments paid
- below 2 years, the buyer cannot avail Cash Surrender Value

More than 5 years

- 50% + 5% every year after 5 years
But not to exceed ninety percent (90%) of the total payments
made.
• Example:
- installments paid = 7 years
Compute for the cash surrender value
 50% = 5 years
+5% = 6th year
+5% = 7th year
60% = total
Example:
B bought from S Realty Inc. a residential house and lot
for P600,000.00. the terms of the contract provided
the following: down payment of P60,000.00; balance
payable in 15 years in installments of P3,000.00 per
month. After paying the down payment and 84
monthly installments, B defaulted in the payment of
the 85th and succeeding installments. As a
consequence, S Realty, inc. cancelled the sale. How
much cash surrender value is B entitled to receive?
Answer/Solution:
84 months / 12 months = 7 years
5 years = 50%
6th year = 5%
7th year = 5%
Total = 60%
60%[P60,000.00 (P3,000.00 x 84 months)]
= P187,200.00
P.D. No. 957 otherwise known ass The
Subdivision and Condominium Buyer’s
Protective Decree.
1. Transaction covered:
a. Every disposition, or attempt to dispose for a valuable
consideration of a subdivision lot, including the building
and other improvements thereon, if any, in a subdivision
project or a condominium project.
b. Contract to sell, contract of purchase and sale, exchange,
attempt to sell, option of sale or purchase, a solicitation of
a sale, or an offer to sell, directly or by an agent, or by
ocular, letter, advertisement or otherwise.
Subdivision lot and condominium unit,
concept,
Section 2 (e) Subdivision lot shall mean anu of the lots,
whether residential, commercial, industrial, or recreational in a
subdivision project.

Section 2 (h) Condominium unit shall mean a part of the

condominium project intended for any type of independent
use or ownership, including one or more rooms or spaces
located in one or more floors (or part/s of floors) in a
building/s and such accessories as may be appended thereto.

Rights of the buyer in case of default.

Thank you!!!!!