Maceda Law 2-Year Installment Discussion

THIRD DIVISION
G.R. No. 208185, September 06, 2017
PRISCILLA ZAFRA ORBE, Petitioner, v. FILINVEST LAND, INC., Respondent.
In a sale by installment, a buyer defers full payment of the purchase price and ratably
apportions payment across a period. It is typified by regular, fractional payments. It is
these regular, fractional payments that are referred to as "installments."54
Thus, when Section 3 speaks of paying "at least two years of installments," it refers to
the equivalent of the totality of payments diligently or consistently made throughout a
period of two (2) years. Accordingly, where installments are to be paid on a monthly
basis, paying "at least two years of installments" pertains to the aggregate value of 24
monthly installments. As explained in Gatchalian Realty v. Angeles:55
It should be noted that Section 3 of R.A. 6552 and paragraph six of Contract Nos. 2271
and 2272, speak of "two years of installments." The basis for computation of the term
refers to the installments that correspond to the number of months of payments, and
not to the number of months that the contract is in effect as well as any grace period
that has been given. Both the law and the contracts thus prevent any buyer who has
not been diligent in paying his monthly installments tom unduly claiming the rights
provided in Section 3 of R.A. 6552.56 (Emphasis supplied)
The phrase "at least two years of installments" refers to value and time. It does not
only refer to the period when the buyer has been making payments, with total
disregard for the value that the buyer has actually conveyed.57 It refers to the
proportionate value of the installments made, as well as payments having been made
for at least two (2) years.
Laws should never be so interpreted as to produce results that are absurd or

unreasonable.58 Sustaining petitioner's contention that spe falls within Section 3's
protection just because she has been paying for more than two (2) years goes beyond
a justified, liberal construction of the Maceda Law. It facilitates arbitrariness, as
intermittent payments of fluctuating amounts would become permissible, so long as
they stretch for two (2) years. Worse, it condones an absurdity. It sets a precedent that
would endorse minimal, token payments that extend for two (2) years. A buyer could,
then, literally pay loose change for two (2) years and still come under Section 3's
protection.
Reckoning payment of "at least two years of installments" on the basis of the regular,
factional payments due from the buyer was demonstrated in Marina Properties Corp. v.
Court of Appeals.59 There, the monthly amortization of P67,024.22 was considered in
determining the validity of the cancellation of the contract by the seller:
We likewise uphold the finding that MARINA's cancellation of the

Contract To Buy and To Sell was clearly illegal. Prior to MARINA's
unilateral act of rescission, H.L. CARLOS had already paid
P1,810,330.70, or more than 50% of the contract price of
P3,614,000.00. Moreover, the sum H.L. CARLOS had disbursed
amounted to more than the total of 24 installments, i.e., two years'
worth of installments computed at a monthly installment rate of
P67,024.22, inclusive of the downpayment.60
In Jestra Development and Management Corporation v. Pacifico,61 where

down payment was itself payable in portions, this Court reckoned the
monthly installment payment for the down payment amounting to
P121,666.66, rather than the monthly amortization. This Court justified
this by referencing Section 3's injunction that "[d]own payments,
deposits or options on the contract shall be included in the computation
of the total number of installment payments made":
The total purchase price of the property is P2,500,000. As provided in

the Reservation Application, the 30% down payment on the purchase
price or P750,000 was to be paid in six monthly installments of
P121,666.66. Under the Contract to Sell, the 70% balance of
P1,750,000.00 on the purchase price was to be paid in 10 years through
monthly installments of P34,983, which was later increased to P39,468
in accordance with the agreement to restructure the same.
While, under the above-quoted Section 3 of R.A. No. 6552, the down
payment is included in computing the total number of installment
payments made, the proper divisor is neither P34,983 nor P39,468, but
P121,666.66, the monthly installment on the down payment.
The P750,000 down payment was to be paid in six monthly installments.

If the down payment of P750,000 is to be deducted from the total
payment of P846,600, the remainder is only P96,600. Since respondent
was able to pay the down payment in full eleven (11) months after the
last monthly installment was due, and the sum of P76,600 representing
penalty for delay of payment is deducted from the remaining P96,600,
only a balance of P20,000 remains.
As respondent failed to pay at least two years of installments, he is not,

under above-quoted Section 3 of R.A. No. 6552, entitled to a refund of
the cash surrender value of his payments.62
Jestra was wrong to use the installment payments on the down payment as divisor. It is
an error to reckon the payment of two (2) years' worth of installments on the
apportionment of the down payment because, even in cases where the down payment
is broken down into smaller, more affordable portions, payments for it still do not
embody the ratable apportionment of the contract price throughout the entire duration
of the contract term. Rather than the partial payments for the down payment, it is the
partition of the contract price into monthly amortizations that manifests the ratable
apportionment across a complete contract term that is the essence of sales on
installment. The correct standard is that which was used in Marina, not in Jestra.
Marina also correctly demonstrated how Section 3's injunction that "[d]own payments,
deposits or options on the contract shall be included in the computation of the total
number of installment payments made" should operate. In Marina, the total amount of
P1,810,330.70 paid by the buyer was inclusive of payments for down payment worth
P1,034,200.00 and cash deposit worth P50,000.00. In concluding that the buyer
in Marina had paid more than two (2) years' or 24 months' worth of installments, what
this Court considered was the total amount of P1,810,330.70 and not merely the
payments on amortizations.
Following Marina, this Court reckons petitioner's satisfaction of the requisite two (2)
years' or 24 months' worth of installments using as divisor the monthly amortizations
due from petitioner. However, this Court notes that the monthly amortizations due from
petitioner were stipulated to escalate on a yearly basis. In keeping with the need to
construe the Maceda Law in a manner favorable to the buyer, this Court uses as basis
the monthly amortizations set for the first year, i.e., P27,936.84. With this as the
divisor, it shall appear that petitioner has only paid 21.786 months' worth of
installments. This falls short of the requisite two (2) years' or 24 months' worth of
installments.

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THIRD DIVISION

G.R. No. 208185, September 06, 2017

PRISCILLA ZAFRA ORBE, Petitioner, v. FILINVEST LAND, INC., Respondent.

Laws should never be so interpreted as to produce results that are absurd or

We likewise uphold the finding that MARINA's cancellation of the

In Jestra Development and Management Corporation v. Pacifico,61 where

The total purchase price of the property is P2,500,000. As provided in

The P750,000 down payment was to be paid in six monthly installments.

As respondent failed to pay at least two years of installments, he is not,

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