CONTARCT FOR A PIECE OF WORK

Article 1715. The contractor shall execute the work in such a manner that it
has the qualities agreed upon and has no defects which destroy or lessen its
value or fitness for its ordinary or stipulated use. Should the work be not of
such quality, the employer may require that the contractor remove the defect
or execute another work. If the contractor fails or refuses to comply with this
obligation, the employer may have the defect removed or another work
executed, at the contractor’s cost.

Article 1716. an agreement waiving or limiting the contractor’s liability for any
defect in the work is void if the contractor acted fraudulently.

1717. if the contractor bound himself to furnish the material, he shall suffer
the loss if the work should be destroyed before its delivery, save when there
has been delay in receiving it.

1718. the contractor who as undertaken to put only his work or skill, cannot
claim any compensation if the work should be destroyed before its delivery,
unless there has been delay in receiving it, or if the destruction was cause
by the poor quality of the material, provided this fact was communicated in
due time to the owner. If the material is lost through a fortuitous event, the
contract is extinguished.

1719. acceptance of the work by the employer relieves the contractor of

liability for any defect in the work, unless:

(1) The defect is hidden and the employer is not, by his special knowledge,
expected to recognize the same;

(2) The employer expressly reserves his rights against the contractor by
reason of the defect.

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1723. the engineer or architect who drew up the plans and specifications for
a building is liable for damages if within fifteen years from the completion
of the structure, the same should collapse by reason of a defect in those
plans and specifications, or due to the defects in the ground. The contractor
is likewise responsible for the damages if the edifice falls, within the
same period, on account of defects in the construction or the use f
materials of inferior quality furnished by him, or due to any violation of
the terms of the contract. If the engineer or architect supervises the
construction, he shall be solidarily liable with the contractor.

Acceptance of the building, after completion, does not imply waiver of

any of the causes of action by reason of any defect mentioned in the
preceding paragraph.

The action must be brought within ten years following the collapse of
the building.

MACEDA LAW (R.A. 6552)

Rationale: Public policy to protect buyers of real estate on installment

payments against onerous & oppressive conditions.

Covered Transactions: Applies to all sale of residential real estate on

installments including Contracts to Sell and those financed through banking
institutions. (R.A. 6552, Section 3)

Excluded:

1. Industrial Estate
2. Commercial Real Estate
3. Sale to tenants under Agrarian Laws
R.A. 6552, Section 3

Requisites of Section 3 of Maceda Law:

1. Failure to pay installments was due to reasons, other than failure of the
developer to develop the subdivision or condominium according to the
approved plan and to comply with such within the time limit.
 2. Only covers residential lots including condominium units, excluding
sales to tenants.
3. The buyer has paid at least two (2) years of installments.

Rights of the Buyer under Maceda Law with at least two (2) years of
installment:

1. To pay without additional interest, the unpaid installments due within

the total grace period earned by him. Said grace period is fixed at the
rate of one-month grace period for every one year of installments
payments made. Thus, here the buyer has at least two months grace
period for he should have paid at least two years of installments to avail
of the rights under this section.
Note: This right can be exercised only once in every five (5) years of
the life of the contract and its extensions, if any.
2. To be refunded the cash surrender value of his payments equal to 50%
of his total payments if the contract is cancelled. But if he has paid five
years or more, he is entitled to an in crease of 5% every year and so
on but the cash surrender value shall not exceed 90% of his total
payments (McLaughlin c. CA, G.R. No. L-57552, 1986).

The actual cancellation of the contract referred to above shall take place
only:

1. After 30 days from receipt by the buyer of the notarial notice of

cancellation or demand for rescission; AND
2. Upon full payment to the buyer of the cash surrender value (RA 6552,
Section 3).
Note: Buyer may update payment during the 30 days waiting period
which will render the cancellation ineffective.
In the computation of the total number of installment payments the
following are included:
1. Still has the right to pay within a grace period of not less that sixty
(60) days from the date the installment became due.
2. If the buyer fails to pay the installment due at the expiration of the
grace period, i.e. 60 days, the seller may cancel the contract after
30 days from the receipt by the buyer of the notice of cancellation
or demand for rescission of the contract by a notarial act.
 Note: Here, the buyer is not entitled to any refund.

Other rights granted under the Maceda Law: (R.A. 6552, Section 5 and 6)

1. Sell rights to another;

2. Assign the same to another person;
3. Reinstate contract by updating during grace period and before actual
cancellation;
4. Deed of Sale to be done by notarial act;
5. To pay in advance any installment or the full balance of price anytime
without interest and have such full payment annotated in certificate of
title.

Purpose of the law protect: Protect buyers in installments against oppressive

conditions. Applies to contracts even before the law was enacted.

Note: stipulations to the provisions of Sections 3, 4, 5 and 6 are null and void
(R.A. 6552, Section 7). Waiver of the required notice is oppressive.