The Republic Act No. 6552, popularly known as the Maceda Law or the Realty Service Buyer Protection Act, serves as the primary legal shield for installment buyers of real estate in the Philippines. Enacted to protect low and middle-income buyers from "unreasonable" forfeitures, it outlines specific rights regarding grace periods and, most importantly, the right to a refund.

Scope and Applicability

Before diving into refund rights, it is essential to determine if the law applies to your specific transaction.

What it Covers: Residential real estate, including condominiums, apartments, houses and lots, and developed lots.
What it Excludes: * Commercial buildings and industrial lots.
Sales to tenants under the Land Reform Code.
Payments made via a bank loan (since the law governs the relationship between the buyer and the developer/seller, not the buyer and the bank).

The Two Categories of Rights

The Maceda Law distinguishes between buyers based on the length of time they have been paying installments.

1. Buyers with at least Two (2) Years of Paid Installments

If you have paid at least 24 monthly installments, you are entitled to the following:

The Right to a Refund (Cash Surrender Value): If the contract is cancelled, the buyer has the right to receive the Cash Surrender Value (CSV) of the payments made.
Computation: The refund is equivalent to 50% of the total payments made.
Incremental Increase: After five (5) years of installments, an additional 5% per year is added to the refund, though the total refund cannot exceed 90% of the total payments made.
Included Payments: The "total payments" include the down payment, options, and reservation fees.
The Grace Period: The buyer is entitled to a grace period of one month for every year of installments paid. This right can only be exercised once every five years.

2. Buyers with less than Two (2) Years of Paid Installments

If you have paid less than two years of installments, your rights are more limited:

Grace Period: The buyer is entitled to a grace period of not less than 60 days from the date the installment became due.
Cancellation: If the buyer fails to pay at the end of the grace period, the seller may cancel the contract.
Refund Eligibility: Unlike those who have paid for two years, buyers in this category are not entitled to a cash surrender value refund under the Maceda Law.

The Proper Process for Cancellation

For a seller to legally cancel a contract and forfeit payments (or trigger the refund process), they must strictly follow these steps:

Notice of Cancellation: The seller must send a notarial notice of cancellation or demand for rescission. A simple letter or phone call is insufficient.
The Waiting Period: The actual cancellation of the contract takes effect only 30 days after the buyer receives the notarial notice and (in cases where applicable) the full payment of the cash surrender value.

Note: If the seller fails to provide the notarial notice or fails to pay the refund (if the buyer has paid 2+ years), the contract remains valid and subsisting.

Key Considerations for Buyers

Calculating the "Two Years": The law counts the total number of installments paid, not necessarily the number of calendar years passed.
Transfer of Rights: Under Section 5, the buyer has the right to sell or assign their rights to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation.
Void Stipulations: Any clause in a contract that waives or goes against the provisions of the Maceda Law is considered null and void. The law is a matter of public policy and cannot be overridden by private agreements.

Summary Table: Refund and Grace Periods

Years of Installments Paid	Grace Period	Refund (Cash Surrender Value)
Less than 2 Years	60 days	None
2 to 5 Years	1 month per year paid	50% of total payments
6 Years	1 month per year paid	55% of total payments
10 Years	1 month per year paid	75% of total payments
13 Years or more	1 month per year paid	90% (Maximum limit)