Instalment Sale Agreement (Philippines)
INSTALMENT SALE AGREEMENT
This Instalment Sale Agreement ("Agreement") is entered into on [Agreement Date], by and between:
SELLER: [Seller Name], with address at [Seller Address], BIR TIN [Seller T I N] (hereinafter "Seller");
BUYER: [Buyer Name], with address at [Buyer Address], BIR TIN [Buyer T I N] (hereinafter "Buyer").
1. PROPERTY DESCRIPTION
The Seller agrees to sell, and the Buyer agrees to purchase, on an instalment basis, the following real property ("Property"): [Property Type] covered by [Tct Number], described as [Lot Number], with a total area of [Property Area], located at [Property Location], registered under the Land Registration Authority (LRA) Torrens system pursuant to Presidential Decree No. 1529 (Property Registration Decree).
2. PURCHASE PRICE AND PAYMENT TERMS
2.1 Total Purchase Price. The total agreed purchase price of the Property is PHP ₱[Total Purchase Price].
2.2 Downpayment. The Buyer shall pay a downpayment of PHP ₱[Downpayment] on or before [Downpayment Date]. The outstanding balance payable in instalments is PHP ₱[Outstanding Balance].
2.3 Monthly Instalments. The outstanding balance shall be paid in [Number Of Instalments] equal monthly instalments of PHP ₱[Monthly Instalment] each, commencing on [First Instalment Date] and due on the [Instalment Due Day]th day of each succeeding month thereafter. Annual interest rate: [Interest Rate].
2.4 Late Payment Penalty. Any instalment not paid on its due date shall be subject to a penalty charge of [Penalty Rate]. Repeated late payment of 3 or more consecutive months shall constitute default.
2.5 Payment Method. All instalment payments shall be remitted via [Payment Method] to [Payment Details].
3. TITLE TRANSFER AND OWNERSHIP
3.1 Transfer of Title. Title to the Property shall transfer as follows: [Title Transfer Condition]. The Seller shall execute and deliver a Deed of Absolute Sale and surrender the owner's duplicate TCT/CCT to the Buyer upon fulfillment of the title transfer condition. The Seller warrants that the Property is free from all liens, encumbrances, and adverse claims except as disclosed.
3.2 BIR Taxes. Capital Gains Tax (CGT) at 6% of the gross selling price or BIR zonal value (whichever is higher) under Section 24(D) of the National Internal Revenue Code (RA 8424 as amended by TRAIN Act RA 10963) shall be paid by the Seller within 30 days of notarization of the Deed of Absolute Sale. Documentary Stamp Tax (DST) under NIRC Section 196 at PHP 15.00 per PHP 1,000 shall be paid by the Seller within 5 days after the close of the month of execution. Transfer Tax to the Local Government Unit under Section 135 of the Local Government Code (RA 7160) and Registry of Deeds registration fees shall be borne by the Buyer.
4. MACEDA LAW RIGHTS (RA 6552)
Maceda Law Applicability: [Maceda Law Applies]. If the Maceda Law (Realty Installment Buyer Protection Act, Republic Act No. 6552, 1972) applies to this Agreement, the Buyer's rights are as follows:
4.1 Buyer with 2 or More Years of Instalments Paid (Section 3, RA 6552): The Buyer has the right to a grace period of one (1) month for every year of instalments paid before the Seller may cancel this Agreement. Upon valid cancellation, the Seller must refund to the Buyer a cash surrender value equal to at least fifty percent (50%) of total payments made, increasing by five percent (5%) per year after the fifth year of instalments, up to a maximum of ninety percent (90%). These rights cannot be waived.
4.2 Buyer with Less Than 2 Years of Instalments Paid (Section 4, RA 6552): The Seller must give the Buyer a minimum of sixty (60) days' written notice before cancellation. The Buyer may reinstate the Agreement by paying all unpaid instalments within the 60-day period.
4.3 Non-Waiver. The rights of the Buyer under RA 6552 are non-waivable. Any contract provision purporting to waive these rights is void and unenforceable.
5. GENERAL PROVISIONS
This Agreement is governed by the Civil Code of the Philippines (RA 386), Articles 1458–1637 (Sale) and 1642–1688 (Lease), and the Realty Installment Buyer Protection Act (RA 6552). Any dispute arising from or relating to this Agreement shall be submitted to barangay conciliation under the Katarungang Pambarangay (RA 7160) if both parties reside in the same city or municipality, and thereafter to the proper courts of competent jurisdiction.
IN WITNESS WHEREOF, the parties have affixed their signatures on [Agreement Date] at ______________________, Philippines.
Seller / Authorized Representative
________________
Signature
Buyer
________________
Signature
Witness
________________
Signature
What Is a Instalment Sale Agreement (Philippines)?
An Instalment Sale Agreement in the Philippines defines what each party must do under the deal and the consequences of failing to perform.
The Maceda Law (RA 6552) applies to all transactions involving the sale of residential real estate — residential houses and lots, condominium units, and residential lots — on instalment basis, except industrial lots, commercial buildings, and sales to corporations. Under RA 6552, Section 3, a buyer who has paid at least 2 years of instalments has the right to a grace period of 1 month for every year of instalments paid before cancellation, plus a cash surrender value (CSV) refund of at least 50% of total payments made, increasing by 5% per year after 5 years of instalments, up to a maximum of 90%.
The Bureau of Internal Revenue (BIR) treats an instalment sale of real property as a sale for CGT and DST purposes at the time of execution of the notarized Deed of Absolute Sale or Contract to Sell. CGT under Section 24(D) of the NIRC (RA 8424) is computed on 6% of the gross selling price or BIR zonal value (whichever is higher), payable within 30 days of notarization. DST under NIRC Section 196 at PHP 15.00 per PHP 1,000 is payable within 5 days after the close of the month of execution.
An Instalment Sale Agreement differs from a Contract to Sell in that an Instalment Sale Agreement may immediately transfer ownership subject to a vendor's lien or mortgage, while a Contract to Sell suspends the transfer of title until full payment under the condition precedent structure recognized by the Supreme Court in Romero v. Court of Appeals (G.R. No. 107207, November 23, 1995). Philippine housing developers predominantly use the Contract to Sell structure to retain title as security until full payment.
For Pag-IBIG Fund (RA 9679) financing of instalment purchases, the HDMF Circulars set maximum loanable amounts (up to PHP 6,000,000 as of 2024) and require the property to have a clean title free of adverse claims.
The legal framework governing the Instalment Sale Agreement (Philippines) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a Instalment Sale Agreement (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Property Registration Decree (PD 1529) sets the foundational requirements.
When Do You Need a Instalment Sale Agreement (Philippines)?
An Instalment Sale Agreement in the Philippines is needed in the following circumstances.
An Instalment Sale Agreement is required whenever a Philippine property seller agrees to receive payment for real estate over multiple payments rather than in a single closing payment. This structure is prevalent in subdivision housing projects, condominium pre-selling, and commercial lot sales where buyers cannot pay the full purchase price upfront and the seller provides in-house financing.
An Instalment Sale Agreement is needed when a Philippine real estate developer (licensed under RA 6552 and Housing and Land Use Regulatory Board/HLURB rules) sells pre-selling condominium units or subdivision lots, as all such transactions are mandatorily governed by RA 6552 buyer protection provisions that cannot be waived.
An Instalment Sale Agreement is required when a property buyer is taking out a housing loan from a bank, Pag-IBIG Fund, or in-house developer financing and the loan proceeds are disbursed in tranches corresponding to construction milestones, requiring the instalment agreement to align with the loan disbursement schedule.
An Instalment Sale Agreement is needed when parties negotiate a private sale of a house and lot between individuals — for example, a seller allowing a buyer to pay in 24 monthly instalments — and want the Maceda Law protections to apply explicitly to define the rights of both parties in the event of buyer default.
An Instalment Sale Agreement is required by the Department of Human Settlements and Urban Development (DHSUD, which absorbed HLURB functions under RA 11201) for all developers selling residential real estate on instalment, as a prerequisite for obtaining a License to Sell and Certificate of Registration for a subdivision or condominium project.
Parties in Philippines should prepare a Instalment Sale Agreement (Philippines) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Instalment Sale Agreement (Philippines)
A valid Philippines Instalment Sale Agreement must contain the following essential elements.
Parties and Property Description: Full legal names, TINs, and addresses of seller and buyer. Complete property description: TCT/CCT number, lot/unit number, area in square meters, location (barangay, municipality, province). Attach a copy of the title and the vicinity map or floor plan.
Total Purchase Price and Downpayment: Total purchase price in PHP ₱ (stated in figures and words). Downpayment amount and due date. Whether the downpayment is non-refundable if buyer defaults during the first 2 years of instalments (consistent with Maceda Law RA 6552, Section 4 for buyers with less than 2 years of payments).
Instalment Schedule: Number of instalments, amount per instalment in PHP ₱, due dates, and total instalment amount. Specify the bank account or payment center for remittance. Include penalty rate for late payment (typically 2–3% per month on the unpaid instalment).
Interest Rate: Whether the sale is interest-bearing or interest-free. If interest-bearing, state the annual interest rate, computation method, and amortization schedule. Philippine developer in-house financing typically charges 12–18% per annum on the outstanding balance.
Maceda Law Rights — RA 6552: Explicitly state the buyer's rights under RA 6552: (a) if buyer has paid at least 2 years of instalments, seller must give a grace period of at least 1 month per year of instalments paid before cancellation, and pay a cash surrender value of at least 50% of total payments; (b) if buyer has paid less than 2 years, seller must give 60 days' notice before cancellation. These rights cannot be waived under RA 6552, Section 2.
Title Transfer and Encumbrances: Seller's obligation to deliver a clean TCT/CCT free of mortgages, liens, and adverse claims upon full payment. If the property is mortgaged to a bank, specify the seller's obligation to discharge the mortgage using buyer's payments before title transfer.
BIR Taxes: CGT at 6% under NIRC Section 24(D) and DST under NIRC Section 196, specifying which party bears each tax. Transfer tax to the LGU under LGC Section 135 and Registry of Deeds fees borne by the buyer.
HDMF/Pag-IBIG and Bank Financing: Include provisions for the buyer to assume a Pag-IBIG housing loan or bank mortgage as the primary payment mechanism for the outstanding balance, with seller cooperation obligations in the loan process.
Additional compliance elements for a Instalment Sale Agreement (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.
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Forms Legal. (2026). Instalment Sale Agreement (Philippines) (Philippines) [Legal document template]. Forms Legal. https://forms-legal.com/philippines/real-estate/purchase-sale/instalment-sale-agreement-philippines
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note = {Free legal document template. Based on Property Registration Decree (PD 1529)}
}Frequently Asked Questions
The Maceda Law (RA 6552, 1972) gives Philippine buyers of residential real estate on instalment two tiers of protection based on the number of years of instalments paid. For buyers who have paid at least 2 years of instalments (Section 3): the right to a grace period of 1 month for every year of instalments paid before the seller can cancel the contract; the right to cash surrender value (CSV) of at least 50% of total payments made, increasing by 5% per year after the 5th year, up to a maximum of 90%; the right to sell or assign the buyer's rights to another party; and the right to reinstate the contract by paying the unpaid instalments during the grace period. For buyers who have paid less than 2 years of instalments (Section 4): the right to at least 60 days' notice before cancellation, with the right to reinstate within the 60-day period. Downpayments and other payments made before the 2-year threshold may be treated as consideration forfeited upon cancellation. The Maceda Law protections cannot be contractually waived.
A seller may cancel an Instalment Sale Agreement for non-payment in the Philippines, but only after complying with the mandatory requirements of the Maceda Law (RA 6552). For buyers with at least 2 years of instalments paid (Section 3), the seller must: (1) provide written notice of cancellation with a grace period of at least 1 month per year of instalments paid; (2) pay the cash surrender value of at least 50% of total payments within 30 days of cancellation. Failure to provide the grace period or pay the CSV makes the cancellation void. For buyers with less than 2 years of instalments paid (Section 4), the seller must give 60 days' written notice. If the contract is for industrial lots or commercial buildings, or if the buyer is a corporation, the Maceda Law does not apply — the cancellation provisions of the Civil Code (RA 386, Article 1191 on rescission) and the Deed of Absolute Sale or Contract to Sell govern instead. The Supreme Court affirmed these protections in Luzon Brokerage v. Maritime Building (G.R. No. L-25885, January 31, 1972).
In Philippine real estate law, a Contract to Sell and an Instalment Sale Agreement both involve the sale of property for a price payable in instalments, but they differ in the timing of title transfer. In a Contract to Sell — the structure used by most Philippine property developers — ownership and title remain with the seller until the buyer completes all instalment payments; the seller's obligation to execute a Deed of Sale is suspended as a condition precedent under the Civil Code (RA 386, Article 1478) and as affirmed in Romero v. Court of Appeals (G.R. No. 107207, 1995). In a Deed of Absolute Sale with Instalment Payment (Instalment Sale), title passes to the buyer upon execution of the deed, subject to a vendor's lien or real estate mortgage securing the unpaid balance. The practical difference is that under a Contract to Sell, the seller retains a stronger security position; under an Instalment Sale, the buyer is the registered owner subject to a lien. Both structures are protected by the Maceda Law (RA 6552) for residential real estate.
Capital gains tax (CGT) on an instalment sale of real property in the Philippines is computed at 6% of the gross selling price or BIR zonal value (whichever is higher) under Section 24(D) of the NIRC (RA 8424). The CGT is payable in full within 30 days of the date the Deed of Absolute Sale is notarized — even though the buyer pays in instalments. The seller cannot defer CGT to match instalment receipts; the full CGT liability arises at the time of notarized deed execution. If only a Contract to Sell (without a Deed of Sale) is executed initially, the BIR position under Revenue Memorandum Order (RMO) No. 6-2020 is that CGT arises when the Contract to Sell is signed, if it constitutes the full agreement for sale. For BIR purposes, the minimum tax base is the BIR zonal value per BIR Revenue Regulations No. 9-2012, even if the actual selling price is lower. The CGT is filed using BIR Form 1706 at the Revenue District Office (RDO) having jurisdiction over the property location.
If the property subject to an Instalment Sale Agreement is mortgaged by the seller to a bank or other financial institution, the buyer faces the risk that the seller may default on the mortgage and the mortgagee may foreclose on the property. Under the New Civil Code (RA 386, Article 1676) and the General Banking Law (RA 8791), a mortgagee bank that forecloses on a mortgaged property takes title free of the buyer's instalment sale rights if the mortgage was registered before the instalment contract. Philippine property buyers must conduct a Registry of Deeds title search before signing an Instalment Sale Agreement to confirm the property is free of mortgages and encumbrances. If the property is mortgaged, the seller should arrange for the bank to issue a Clearance or Consent to Sell, or the instalment payments should be remitted directly to the mortgagee bank to discharge the mortgage before or simultaneously with transfer of title to the buyer. The DHSUD's License to Sell for developers requires disclosure of all property encumbrances.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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