Installment Sales and

Condominium Act
Atty. Coco Chanel G. Garcia
  Straight
Terms of  Installment

Payment - Personal property

- Real property
 Art. 1484. In a contract of sale of personal property the price
of which is payable in installments, the vendor may exercise
any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail
to pay;
Installment- (2) Cancel the sale, should the vendee's failure to pay cover
two or more installments;
Personal
(3) Foreclose the chattel mortgage on the thing sold, if one
Property has been constituted, should the vendee's failure to pay cover
two or more installments. In this case, he shall have no
further action against the purchaser to recover any unpaid
balance of the price. Any agreement to the contrary shall be
void.
 Juan sold his 2020 Mitsubishi Xpander GLS to Maria for P1M payable
Installment- in installment. A chattel mortgage was constituted on the car. Due
to business reverses during the pandemic, Maria defaulted in two
Personal installment payments. Juan demanded payment of the unpaid
Property obligation amounting to P400K. A writ of attachment was
subsequently issued and the car was sold for P300K.
When  In case of sale on straight-term
 If security foreclosed is other than the chattel mortgage
deficiency may constituted on the thing sold.
be recovered  In the case of sale on execution of judgment in favor of the seller
S sold his only ring to B for P50,000.00 under the following terms:
down payment of P30,000.00; balance payable at month end. As
security, B executed a chattel mortgage on the ring. B defaulted in
the payment of the balance. By reason thereof, S foreclosed the
chattel mortgage on the ring. However, only P15,00.00 was realized
in the foreclosure sale. Can S still proceed against B to collect the
deficiency of P5,000.00?
S sold his only car to B for P100,000.00 payable in 10 equal monthly
installments of P10,000.00 each. As security, B executed a chattel
mortgage on the car and another chattel mortgage on his piano.
After paying the first 2 installments, B defaulted in the payment of
the third, fourth and fifth installments. As a consequence, S
foreclosed the chattel mortgage on the piano which was sold for
P75,000.00.

May S recover the deficiency of P5,000.00?

May S foreclose the chattel mortgage on the car in order to recover

the deficiency?
S sold his only car to B for P100,000.00 payable in 10 equal monthly
installments of P10,000.00 each. As security, B executed a chattel
mortgage on the car. After paying the first 2 installments, B
defaulted in the payment of the third, fourth and fifth installments.
As a consequence, S brought a court action against B to recover the
balance. The court rendered judgment in favor of S and against B
who was ordered to pay. Since B had no other property except the
car, S moved for the attachment of the car and its sale to satisfy the
judgment. At the execution sale, the car was sold only for a net
amount of P75,000.00. May S recover the deficiency of P5,000.00?
 Art. 1485. The preceding article shall be applied to contracts
purporting to be leases of personal property with option to
buy, when the lessor has deprived the lessee of the possession
Installment- or enjoyment of the thing.
Personal
Property Art. 1486. In the case referred to in two preceding articles, a
stipulation that the installments or rents paid shall not be
returned to the vendee or lessee shall be valid insofar as the
same may not be unconscionable under the circumstances.
O, the owner of a forklift, leased the same to T. The lease contract
provided, among other terms and conditions, the following: (1)
Lease period – two years; (2) monthly rental P2,000.00; (3) T is given
the option to buy the forklift at the end of the term of the lease with
the monthly rentals being considered as installment payments.
After 8 months, T defaulted in his payment of rental on the ninth,
tenth and eleventh months. Accordingly, O terminated the lease
contract and repossessed the forklift. May O recover the rental
arrears from T?
 Realty Installment Buyer Protection Act (Maceda Law- R.A. No. 6552)
Purpose: To protect the buyers of real estate on installment payments
against onerous and oppressive conditions (Sec. 2, R.A. No. 6552)

Covered transactions- sale or financing of real estate on installment

payments:
- Residential condominium units
- Residential houses, lots, or house and lots
Installment-
Real Property Not applicable in the following sale or financing of:
- Industrial lots
- Commercial buildings
- Sale to tenants under the Land Reform Act

The buyer must have paid at least 2 years of installments

 Rights of the buyer (in case of default)
 If at least 2 years of installments paid
- To pay, without additional interest, the unpaid
Installment- installments due within the total grace period earned by him
Real Property 1 month grace period for every year of installment
payments made
This right shall be exercised by the buyer only once in every
5 years of the life of the contract and its extensions, if any.
 Rights of the buyer (in case of default)
 If at least 2 years of installments paid
If the contract is cancelled
Buyer is entitled to refund of the cash surrender value of
the payments on the property
Installment- - 50% of the total payments made
Real Property - After 5 years of installment payments
> Additional 5% for every year
> But not to exceed 90% of the total payments
made
 Rights of the buyer (in case of default)
 If at least 2 years of installments paid
If the contract is cancelled
- Actual cancellation shall take place after 30 days from
receipt by the buyer of the notice of cancellation or demand for
Installment- rescission of the contract by notarial act and upon full payment of
the cash surrender value to the buyer
Real Property
- Down payments, deposits or options on the contracts
shall be included in the computation of the total number of
installments
 Rights of the buyer (in case of default)
 If less than 2 years of installments were paid

Installment- - Grace period of not less than 60 days from the date the
installment became due
Real Property If the buyer fails to pay the installment due upon the
expiration of the grace period, the seller may cancel the sale within
30 days from the receipt by the buyer of the notice of cancellation or
the demand for rescission of the contract by notarial act
 Rights of the Buyer
 During the grace period before the cancellation of the contract
- To sell his rights to another by notarial act

Installment- - To assign his rights to another by notarial act

Real Property - To reinstate the contract by updating the account

 To pay in advance any installment or the full unpaid balance any
time without interest
 To ask for the annotation of the full payment of the purchase price
in the certificate of title covering the property
Spouses H and W, employees of X Bank, obtained a housing loan
from the latter. The loan, which was payable in 108 equal monthly
amortizations through salary deductions, was secured by a real
estate mortgage over a certain property. Subsequently, the spouses
were separated from employment and were unable to pay their loan
amortizations. Due to the default, X bank brought suit to foreclose
the real estate mortgage. The spouses raised, among other
defenses, that the bank’s foreclosure was premature, because under
R.A. No. 6552, otherwise known as the “Maceda Law,” they were
entitled to a grace period within which to pay the installments
defaulted, which period had not yet expired. Are the spouses
correct?
  A condominium is an interest in real property consisting of
separate interest in a unit in a residential, industrial or commercial
building and an undivided interest in common, directly or
indirectly, in the land on which it is located and in other common
areas of the building.
 A condominium may include, in addition, a separate interest in
Condominium other portions of such real property.
Act  Title to the common areas, including the land, or the appurtenant
interest in such areas, may be held by a corporation specially
formed for the purpose (hereinafter known as the “condominium
corporation”) in which holders of separate interest shall
automatically be members or shareholders, to the exclusion of
others, in proportion to the appurtenant interest of their
respective units in the common areas.
 Unit
 A part of the condominium project intended for any type of
Condominium independent use or ownership, including one or more rooms or
Act spaces located in one or more floors (or part or parts of floors) in a
building or buildings and such accessories as may be appended
thereto.
 Ownership
 Any transfer or conveyance of a unit or an apartment, office or
store or other space therein, shall include the transfer or
conveyance of the undivided interests in the common areas or, in
Condominium a proper case, the membership or shareholdings in the
condominium corporation.
Act  Where the common areas in the condominium project are owned
by the owners of separate units as co-owners thereof, no
condominium unit therein shall be conveyed or transferred to
persons other than Filipino citizens, or corporations at least sixty
percent of the capital stock of which belong to Filipino citizens.
 Ownership

Condominium - Where the common areas in a condominium project are held by a

corporation, no transfer or conveyance of a unit shall be valid if the
Act concomitant transfer of the appurtenant membership or
stockholding in the corporation will cause the alien interest in such
corporation to exceed the limits imposed by existing laws.