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Maceda Law

As a real estate property investor in the Philippines, it is very important to know our right under Philippine Laws. Most buyers are paying their property investment by installments. The law at hand that applies to protect the rights of buyers of real estate properties in the Philippines, be it condominium or simply “condo” units or house and lots, is Republic Act No. 6552, which is more popularly known as the Maceda Law.

Maceda Law is About Protection to Buyers

Maceda Law Republic Act No. 6552

The policy of the Maceda Law, as embodied in its title, is “to provide protection to buyers of real estate on installment payments,” and as provided in Section 3 thereof, the declared policy is “to protect buyers of real estate on installment payments against onerous and oppressive conditions.” Therefore, one who buys the property from the developer and who steps into the shoes of the seller under the Contract to Sell cannot claim any right or protection under the law. And thus, if the Maceda Law has any relevance at all, it is to protect the buyer, not the developer-seller or his successor-in-interest. Furthermore, Section 3(b) of the Law does not grant the developer any legal ground to cancel the contracts to sell; rather, it prescribes the responsibility of the seller in case the “contract[s are] cancelled. (Lagandaon vs. CA, 290 SCRA 330)

Here is the full text of RA 6552:

REPUBLIC ACT NO. 6552 REALTY INSTALLMENT BUYER PROTECTION ACT AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS

Section 1. This Act shall be known as the “Realty Installment Buyer Act.”

Sec. 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Sec. 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments 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: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

(b) 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 per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

Sec. 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due.

If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

Sec. 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

Sec. 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.

Sec. 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.

Sec. 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected thereby.

Sec. 9. This Act shall take effect upon its approval.

Approved: August 26, 1972

Rights of a Defaulting Buyer under RA 6552

(Source:http://old.hlurb.gov.ph/services/buyers/right-to-a-clean-title/rights-of-a-defaulting-buyer-under-ra-6552/)

Right to update payments without additional interest or in the alternative a refund of cash surrender value.

There are two categories of buyers accorded protection under this law:

1. a buyer with at least 2 years of installments under Section 3 RA 6552, and
2. a buyer with less than 2 years of installments under Section 4 RA 6552

Buyer with at least two (2) years of installment – Section 3 RA 6552
If the buyer in this category defaults in the payment of his succeeding installments, he is entitled to the following rights:
1. to pay without additional interest the unpaid installments due within the total grace period earned by him. Said grace period is equal to one (1) month for every year of installment payments he has made. Here the buyer has at least two (2) months grace period for he should have paid at least two (2) years of
installments to avail of the rights under this section.

This right can be exercised by the buyer only once in every five years of the life of the contract.
2. to be refunded of 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 increase of 5% every year and so on but the cash surrender value shall not exceed 90% of his total payments.

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

1. after 30 days from receipt by the buyer of the notice of cancellation or demand for rescission, AND
2. upon full payment to the buyer of the cash surrender value.

In the computation of the total number of installment payments the following are included:
1. down payment and
2. deposit or option money

Section 3 of RA 6552 provides, thus:

“SECTION 3. In all transactions or contracts, involving the sale or financing of real estate on installment payments, including residential condominium apartments … where the buyer has paid at
least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

“(a) To pay, without additional interest, the unpaid installments 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; provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

“(b) 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 per cent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made; provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

“Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.”

Buyer with less than 2 years of installments Section 4 RA 6552
If he has paid less than two (2) years of installments, he still has the right to pay within a grace period of not less than sixty (60) days from the date the installment became due.

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 receipt by the buyer of the notice of cancellation or demand for rescission of the contract by a notarial act.

Here the buyer is not entitled to any refund.

Section 4 of RA 6552 provides, thus:

“SECTION 4. In case where less than two years of installments were paid the seller shall give the buyer a grace period of not less than sixty days from the date the installment become due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.”

Right to Assign/Reinstate Contract

The buyer has a right to sell or assign his rights over the lot or unit to another person or reinstate the contract by updating the account provided this is done during the grace period and before actual cancellation of the contract.

Section 5 of RA 6552 states:

“SECTION 5. Under Sections 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by upgrading the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.”

Right to Advance Payment without Interest and Annotation of Full Payment in the Title Subject of the Sale

The buyer has the right to pay in advance any installments or the full unpaid balance without interest any time and have such full payment annotated in the title.

Section 6 of RA 6552 states:

“SECTION 6. The buyer shall have the right to pay in advance any installments or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.”

Tags: Maceda Law, REPUBLIC ACT No. 6552, Real Estate Law Philippines, Maceda Law Philippines

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