Dear PAO,

Jean and I agreed that she will buy my lot classified as commercial. She paid the down payment of the price agreed upon and the remaining balance will be paid in equal monthly installments for three years. She religiously paid for a year until she missed payment for five months. I already sent her a demand letter but same proved futile. I brought the matter before the barangay and told her that I will be cancelling the contract to sell by notarial act pursuant to the provision of the Maceda Law if she will not pay at the end of the month. She claimed, however, that I have no legal basis to cancel the contract and the law I mentioned does not apply to sale of a commercial lot. Is she correct?

Zeus

Dear Zeus,

The prevailing law governing the given set of facts is Republic Act (RA) 6552, otherwise known as the Realty Installment Buyer Act. The provisions of said law apply to all transactions involving sale of realty and the remedies in case of default of payment was provided under Section 3 thereof, which reads:

“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: xxx”

Clearly, the provisions of RA 6552 apply to all transactions involving sale or financing of real estate on installment basis. To enlighten you further, please take note of the pronouncement of the High Court in State Investment Trust Inc. vs. Baculo and Heirs of Baculo, GR 237934, June 10, 2024, penned by Associate Justice Antonio T. Kho, Jr., stating that:

“Republic Act No. 6552 or the Realty Installment Buyer Protection Act or more popularly referred to as the ‘Maceda Law’, named after its author, the late Senator Ernesto Maceda, was adopted with the purpose of ‘protecting buyers of real estate on installment payments’ against onerous and oppressive conditions. It delineates the rights and remedies of buyers and protects them from one-sided and pernicious contract stipulations. The law also ‘recognizes in conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to cancel the contract upon non-payment of an installment by the buyer, which is simply an event that prevents the obligation of the vendor to convey title from acquiring binding force.”’

Applying the above-quoted decision to your situation, the provisions of RA 6552 (Maceda Law) clearly cover the sale of real estate on installment basis, including industrial, commercial, and residential lots. Hence, Jean has no legal basis in her claim that the provisions of Maceda Law do not cover the commercial lot which she bought from you on installment basis.

Considering that Jean paid for less than two years, your appropriate legal remedy is found under Section 4 of RA 6552, which reads:

“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.

“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.”

We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

We appreciate your trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]