Dear PAO,
A certain company was selling a 120 sqm residential land in Rodriguez, Rizal, for P2 million. After a couple of negotiations, my wife and I entered into a contract to sell with the company, wherein we agreed to pay for the price of the land for ten years through 120 equal monthly amortizations, with an interest rate of 15 percent per annum. Unfortunately, my wife got seriously ill, and we could no longer continue paying our monthly obligations. After a month of failing to pay the monthly installments, the company sent a notarized letter to us demanding full payment of the balance within 30 days from receipt thereof. Otherwise, the contract to sell shall be deemed canceled. We only paid 14 consecutive installments. I would like to ask what possible remedies do we have regarding the matter.
Julianito
Dear Julianito,
Republic Act (RA) 6552 or the Realty Installment Buyer Protection Act or more popularly known as the “Maceda Law,” named after its author, the late senator Ernesto M. Maceda, was passed to protect buyers like you, i.e., buyers of real estate on installment payments against onerous and oppressive conditions. It provides for the “rights and remedies of... buyers and protects them from one-sided and pernicious contract stipulations.”
In the case of State Investment Trust, Inc., v. Carlos Baculo et al. (GR 237934, June 10, 2024, penned by Associate Justice Antonio Kho Jr.), the Supreme Court had the occasion to expound on the rights of buyers of real estate who was given the option to pay on installment basis but were able to pay the installments for less than two years. It banked on Section 4 of RA 6552, to wit:
“Section 4. In case where less than two (2) years of installments were paid, the seller shall give the buyer a grace period of not less than sixty (60) days from the date the installment became due.”
In the same case, it was explained that if the buyer fails to pay the installments due at the expiration of the grace period, i.e., 60 days, the seller may cancel the contract after 30 days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.
From the foregoing, the following requisites should be complied with before the vendor may actually cancel the contract:
1. The seller shall give the buyer a 60-day grace period to be reckoned from the date the installment became due;
2. The seller must give the buyer a notice of cancellation/demand for rescission by notarial act if the buyer fails to pay the installments due to the expiration of the said grace period; and
3. The seller may actually cancel the contract only after 30 days from the buyer’s receipt of the said notice of cancellation/demand for rescission by notarial act.
In your case, therefore, the seller company of the residential land cannot just cancel your contract to sell without adhering to the correct procedure as provided by Section 4 of RA 6552. It should have given you at least 60 days grace period to pay your monthly amortization and this period is to be reckoned from the date the installment became due. Should you still fail to pay after the grace period, the company further needs to send you a notice of cancellation/demand for rescission by notarial act and count 30 days from the time you received the notice before it can unilaterally cancel your contract.
We hope that we were able to answer your queries. This advice was solely based on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued 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 dearpao@manilatimes.net