LUCKY DOMINGO

Maceda Law or RA 6552: Right of real estate buyers on instalment basis. Section 3 a. and b.
258. X entered into a contract to sell with Y for a house and lot, making a down payment of P20,000 with
a promise to pay a monthly amortization of P5,000 for fifteen years. After religiously paying for three
years, X got sick and failed to pay the instalments. Six months later, Y sent X a notarized letter stating
that pursuant to express provisions of the agreement, the contract was cancelled for failure to pay the
instalments, and the amortizations paid are deemed rentals for the property. Is the contract considered
cancelled?
No. In the case the buyer has paid at least two years of installments. Under Maceda law or RA
6552 the buyer is entitled to pay, without additional interest, the unpaid installment 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 xxx Applying such in the case, the contract is not automatically
canceled upon default of payments. X has 3 months to settle his unpaid installment. If in case he failed
to settle it within the grace period the payment made are not considered as rentals. Under the Maceda
law, if the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to fifty percent of the total payments made.

Civil Law: Property and Obligation and Contacts. Application of Article 448 (builder in good faith) and Article
1678 of the Civil code (Obligation and Right of lessor and lessee)

259. X rented a house and lot from Y. With the consent of Y, X spent P200,000 for an additional wing of
the house. At the end of the period of the lease, X sought to recover the money spent since Y gave his
consent. Would Article 448 apply?
No. It is well settled doctrine that a lessee is neither a builder in good faith nor in bad faith that
would call for the application of Articles 448 of the Civil Code. Under this provision, to be entitled
to reimbursement for useful improvements introduced on the property, one must be considered builders in
good faith. Articles 448, which allow full reimbursement of useful improvements and retention of the
premises until reimbursement is made, apply only to one who builds on land in the belief that he is the
owner thereof. This principle of possessor in good faith naturally cannot apply to a lessee because as such
lessee he knows that he is not the owner of the leased property. Knowing that his occupation of the
premises continues only during the life of the lease contract and, he introduces improvements on said
property at his own risk. What governs the case is Article 1678 of the Civil Code, the lessor has the primary
right to reimburse the lessee for 50% of the value of the improvements at the end of the lease. If the lessor
refuses, the subsidiary right of the lessee to remove the improvements, even though the principal thing
suffers damage, arises (Sulo Sa Nayon, Inc. V. Nayong Pilipino Foundation)
260. X borrowed the car of Y to go to Baguio. On his way, a small stone dislodged from the mountain by
the wind hit the windshield of the car, forcing X to swerve and hit a tree, causing some P50,000
damage to the car. Who shall pay for the damage?
The relationship of X and Y is commodatum. Under paragraph 2 of Article 1949 of the Civil Code,
the bailor shall refund the extraordinary expenses arise on the occasion of the actual use of the thing
by the bailee, even though he acted without fault, they shall be borne equally by both the bailor and the
bailee, unless there is a stipulation to the contrary. Applying such in the case, the expenses shall be
borne by X and Y on 50-50 basis or both shall pay 25,000.