Maceda Law and In-House Financing Cancellation in the Philippines: A 2025 Primer
1. What the Maceda Law Is—and Is Not
- Republic Act No. 6552 (Realty Installment Buyer Act), better known as the Maceda Law, was enacted on 26 August 1972 to “protect buyers of real estate on installment payments against onerous and oppressive conditions.” (Lawphil)
- It covers residential real estate sold on installment, including subdivision lots, house-and-lot packages, and condominium units, regardless of whether the seller is a licensed developer, a small landowner, or an individual.
- It does not apply to purely commercial/industrial land, agricultural land under agrarian laws, straight cash sales, or loan transactions (bank, Pag-IBIG, or mortgage financing). In BPI Family v. Spouses Spade, the Court stressed that RA 6552 “aimed to protect buyers, not mortgage borrowers.” (Lawphil)
2. Why In-House Financing Falls Squarely Under RA 6552
“In-house” (seller) financing means the buyer pays the developer directly in monthly amortizations instead of borrowing from a bank. Because title stays with the developer until the price is fully paid, each remittance is an installment payment—the exact scenario RA 6552 was written for. (Lamudi)
Key takeaway: If you bought through the developer’s in-house scheme and fall behind on dues, your rights are governed by the Maceda Law (and, if the project is licensed to sell, by PD 957 as well). (RESPICIO & CO.)
3. Statutory Rights of an Installment Buyer
| Situation | Statutory Grace/Refund | Source |
|---|---|---|
| < 2 years of paid installments | One grace period ≥ 60 days to pay all arrears. If you fail, the seller may cancel and keep prior payments. | RA 6552 § 4 (Human Settlements Development) |
| ≥ 2 years of paid installments | 1 month of grace per year of payment (minimum 2 months). If cancelled after the grace lapses, you are entitled to a cash-surrender refund of 50 % of everything paid, plus 5 % per extra year after the 5th, up to 90 %. | RA 6552 § 3 (Lawphil) |
| Developer breach (e.g., no license-to-sell or delayed turnover) | May opt for Maceda refund or invoke PD 957 § 23 for 100 % refund + 6 % interest. | PD 957; DHSUD FAQ (RESPICIO & CO.) |
Waivers of these rights are void for being contrary to public policy. (RESPICIO & CO.)
4. How a Developer Must Cancel Under RA 6552
- Serve a notarized notice of default giving the correct statutory grace period.
- If the buyer still fails to pay, serve a second notarized notice of cancellation and refund.
- Refund (cash or manager’s cheque) must be tendered simultaneously with the cancellation notice.
The Supreme Court’s February 2025 media release reiterated that unilateral cancellation is allowed only if these steps are strictly followed; otherwise, the seller’s act is void and the buyer may recover possession and damages. (Negros Now Daily, Manila Bulletin)
5. Recent Supreme Court and HSAC Jurisprudence (2020-2025)
| Case | Year | Holding |
|---|---|---|
| Spouses Villareal v. DMCI (G.R. 249442) | 2023 | Cancellation void for lack of Maceda notice; developer ordered to pay 50 % refund + 12 % p.a. interest. (Supreme Court of the Philippines) |
| Orbe v. Filinvest (G.R. 225234) | 2024 | Even buyers who paid < 2 years are protected if seller skips statutory notices; forfeiture clause struck down. (RESPICIO & CO.) |
| SC Media Release (Notice must be notarized) | 2025 | Re-emphasised notarized demand + refund as conditions precedent; mere demand letters are insufficient. (Negros Now Daily) |
| HSAC Rules of Procedure (EBR 8-2021) | 2021 | Fast-track refund suits; decision in 60 days, execution after 15 days. (HSAC) |
6. Practical Roadmap for Buyers Facing Cancellation
- Verify the notices. Check dates, notarization, mode of service, and refund amount.
- Compute your cash-surrender value. (Total payments × 50 %) + (5 % × years beyond 5, cap 90 %).
- Negotiate or mediate. DHSUD regional offices provide mandatory mediation before litigation. (RESPICIO & CO.)
- File a complaint with HSAC within ten (10) years from the unlawful cancellation. Reliefs include refund, damages, and reinstatement. (Respicio & Co.)
- Protect evidence: official receipts, bank proofs, emails, pictures of construction progress.
7. Common Misconceptions
| Myth | Reality |
|---|---|
| “Reservation fees are always non-refundable.” | Courts order refund if the developer is at fault or the clause is unconscionable. (RESPICIO & CO.) |
| “Maceda Law applies to bank mortgages.” | It does not; banks may foreclose, but you can negotiate restructuring or rely on Pag-IBIG refund policies. (Lawphil) |
| “Developer can resell the unit right after sending a demand letter.” | Title cannot be transferred until a valid Maceda cancellation and refund are completed. (RESPICIO & CO.) |
8. Interaction with Related Laws
- PD 957 (Subdivision & Condominium Buyers’ Protective Decree). Grants full refund with interest when the developer is in breach—a stronger remedy than Maceda when the buyer is fault-free. (RESPICIO & CO.)
- RA 11201 (2019) created DHSUD and HSAC, transferring dispute resolution from HLURB to HSAC. (HSAC)
- Civil Code on rescission and unjust enrichment operates subsidiarily, filling gaps when Maceda or PD 957 do not squarely apply.
9. Policy Debates & Reform Bills (as of May 2025)
The real-estate sector has asked Congress to clarify refund computations for buyers who restructure their contracts and to shorten the prescriptive period for claims. CREBA’s 2021 position paper also pushes to align Maceda grace periods with modern payment cycles. (CREBA) No bill has yet passed committee as of the 19th Congress.
10. Quick Compliance Checklist (Developers)
✅ Use HLURB/DHSUD-approved Contract-to-Sell templates. ✅ Send notarized default & cancellation notices; observe the correct grace period. ✅ Escrow the computed refund so interest stops on tender date. ✅ Annotate cancellations on the title only after buyer receives the refund or after HSAC decision.
Failure at any step exposes the seller to void cancellation, refund liability, moral damages, and even criminal prosecution for unsound real-estate business practices. (RESPICIO & CO.)
11. FAQs
Does making a partial payment during the grace period reset the clock? Yes, payment of the full arrears within the grace window cures default; the contract remains in force. (Human Settlements Development)
Can buyer and seller agree on a smaller refund? Only after default occurs; advance waivers are void. Any post-default compromise must be in writing and supported by separate consideration. (RESPICIO & CO.)
What if the developer refuses to accept payment during the grace period? Tender by manager’s cheque and document refusal; file an HSAC complaint for specific performance and damages. (RESPICIO & CO.)
12. Conclusion
For in-house financing deals, the Maceda Law is your statutory seatbelt. Know the timelines (60-day cure, one-month-per-year grace, five-to-ninety-percent refund), insist on notarized notices, and act quickly before HSAC. Developers who comply preserve their right to resell; those who skip a step risk paying twice.
This article is for general information only and is not a substitute for individualized legal advice. Consult Philippine counsel for specific situations.