The Maceda Law, officially Republic Act No. 6552 entitled “An Act to Provide Protection to Buyers of Real Estate on Installment Payments,” was enacted on 26 August 1972. It remains the principal statute shielding installment buyers of real estate—including condominium units—from oppressive and one-sided contract terms. Although the law is primarily structured around the consequences of buyer default in payment, its policy of buyer protection, its nullification of contrary stipulations, and its refund mechanics are directly invoked when developers fail to turn over condominium units on the agreed date. In Philippine practice and jurisprudence, delayed turnover is treated as a fundamental breach that triggers the buyer’s right to rescind and recover all payments without the deductions that would apply had the buyer been the one in default.

Scope of Application to Condominium Purchases

The Maceda Law covers every contract for the sale of real estate on installment payments entered into after its effectivity. “Real estate” expressly includes condominium units sold under pre-selling schemes, whether the unit is still under construction or completed but not yet delivered. The law applies irrespective of the length of the payment period, the size of the project, or whether the Contract to Sell is registered with the Registry of Deeds, provided the buyer is making payments in installments rather than a single cash transaction. It binds both individual natural-person buyers and, in appropriate cases, juridical entities when the transaction is residential in character. The only practical exclusions are purely commercial or industrial properties bought by corporations for business use, which are rare in the condominium context.

The law’s protective mantle extends to the entire transaction—from reservation agreement to final deed of absolute sale—because any installment sale of a condo unit is deemed a “sale of real estate on installment basis” under Section 3.

Core Refund and Grace-Period Rules under the Maceda Law

Section 3 of RA 6552 lays down the mandatory rules that govern cancellation and refund whenever the seller seeks to cancel for buyer default. These rules become the baseline for determining what the buyer is entitled to receive when the buyer, not the seller, initiates rescission due to delayed turnover.

(a) Payments of less than two (2) years of installments
The seller must first grant a grace period of not less than sixty (60) days counted from the due date of the missed installment. Only after the grace period expires may the seller issue a notarial notice of cancellation, effective thirty (30) days after the buyer receives it. Upon such cancellation the buyer is entitled to the refund of all payments made, but the seller may retain ten percent (10%) of the total payments as liquidated damages.

(b) Payments of two (2) years or more of installments
The buyer receives a longer grace period—one (1) month for every year of installment payments already made. If the buyer still fails to pay within that extended grace period, the seller may cancel, but the buyer is entitled to a cash surrender value equal to fifty percent (50%) of the total payments made. If the installments paid exceed five (5) years, an additional five percent (5%) is added for every year beyond five, provided the total refund does not exceed ninety percent (90%) of all payments made.

These percentages are mandatory minimums. Any contractual clause that allows the seller to retain more than the prescribed percentages is void under Section 5.

Delayed Turnover as Seller’s Breach and the Buyer’s Right to Rescind

Delayed turnover occurs when the developer fails to deliver the completed, habitable condominium unit on or before the date expressly stipulated in the Contract to Sell, Reservation Agreement, or any amendment thereto. Delivery includes physical turnover together with the Certificate of Occupancy and the execution of the Deed of Absolute Sale (or its equivalent) upon full payment or completion of financing requirements.

Because the obligation to deliver and the obligation to pay are reciprocal (Civil Code, Art. 1191), the developer’s failure to deliver on time is a substantial breach that justifies rescission at the buyer’s option. When the buyer elects to rescind on this ground, the Maceda Law operates in two decisive ways:

The buyer is not the party in default; therefore none of the retention percentages (10% or 50%+) that apply to buyer-default cancellations may be imposed. The buyer recovers one hundred percent (100%) of all payments made.
Any stipulation in the Contract to Sell that purports to limit the refund, impose administrative or cancellation fees, or subject the buyer to the same retention rules that govern buyer default is “contrary to the provisions of this Act” and is therefore null and void (Section 5). The buyer’s right to full refund cannot be waived in advance (Section 4).

Legal interest at the prevailing rate (presently six percent [6%] per annum under BSP rules) accrues on the refundable amount from the date of extrajudicial demand until actual payment. The buyer may also claim actual damages (e.g., rental expenses incurred because of the delay), moral damages when bad faith or gross negligence is proven, exemplary damages, and attorney’s fees.

Suspension of Further Installments

Upon the developer’s failure to meet the turnover date, the buyer may lawfully suspend payment of subsequent amortizations without being considered in default. The reciprocal character of the obligations excuses the buyer from performing until the developer is ready to perform. Any attempt by the developer to charge penalty interest, impose late fees, or initiate cancellation proceedings while the unit remains undelivered will be struck down as violative of the Maceda Law and the principle against unjust enrichment.

Procedural Steps to Enforce Rights

Formal written demand – The buyer must send a demand letter (preferably by registered mail or courier with proof of receipt, or by notarial service) requiring the developer to (a) turn over the unit within a reasonable period or (b) refund all payments plus interest and damages within thirty (30) to sixty (60) days.
Notarial rescission – If the developer fails to comply, the buyer may execute a notarial deed of rescission and cause its annotation on the title or file it with the developer and the relevant government agency.
Administrative complaint – The primary forum is the Department of Human Settlements and Urban Development (DHSUD), which exercises original and exclusive jurisdiction over subdivision and condominium disputes under PD 957. DHSUD adjudicators routinely apply Maceda Law refund rules in delayed-turnover cases and can issue cease-and-desist orders, impose administrative fines on the developer, and order full refund with interest.
Judicial action – If the amount involved exceeds the jurisdictional threshold of small-claims or if complex damages are claimed, a civil action for rescission and damages may be filed in the Regional Trial Court. The Maceda Law provisions are pleaded as the governing standard for refund computation.

Interaction with PD 957 and Other Statutes

Although the Maceda Law stands on its own, delayed-turnover cases almost invariably involve PD 957 (Subdivision and Condominium Buyers’ Protective Decree). PD 957 requires developers to register projects and obtain a license to sell; failure to deliver within the registered timeline constitutes a violation that DHSUD can penalize with fines, suspension, or revocation of the license. Buyers frequently file a single complaint invoking both PD 957 and the Maceda Law, with the latter supplying the precise refund formula and the former supplying the regulatory sanctions.

The Consumer Act (RA 7394) further reinforces the buyer’s position by treating misleading statements about turnover dates as deceptive acts. The Maceda Law’s non-waiver clause prevents developers from contracting out of these protections.

Jurisprudence Reinforcing Buyer Rights

The Supreme Court has consistently upheld the protective intent of the Maceda Law. In cases involving delayed condominium projects, the Court has ruled that a buyer who rescinds for the developer’s failure to deliver is entitled to the return of all installments paid without any deduction, plus legal interest and damages. Contractual clauses that attempt to convert the buyer’s rescission into a “buyer-default” scenario subject to the 10% or 50% retention are consistently declared void. The Court has also affirmed that the buyer’s right to suspend payments during the period of delay is a legitimate exercise of the exceptio non adimpleti contractus and does not trigger the seller’s right to cancel under the Maceda schedule.

Practical Considerations for Condo Buyers

Keep complete records of every payment, official receipts, the Contract to Sell, amendments, and all correspondence.
Note the exact turnover date stipulated; any extension must be in writing and supported by justifiable cause (force majeure must be strictly proven and does not include ordinary construction delays).
Act promptly; laches may weaken the claim for moral or exemplary damages, although the right to principal refund remains imprescriptible within the ten-year period for written contracts.
If the project is under receivership or bankruptcy, the buyer’s claim for refund is treated as a preferred claim under the Maceda Law’s public-policy character.

The Maceda Law, though enacted more than five decades ago, continues to serve as the bedrock of protection for condominium buyers confronting delayed turnover. By mandating minimum refund standards in buyer-default scenarios and nullifying any attempt to impose harsher terms, the statute ensures that when the developer breaches its primary obligation to deliver, the buyer recovers every peso paid, with interest and without penalty. This comprehensive statutory shield, reinforced by PD 957 and Civil Code remedies, places the full arsenal of legal rights in the hands of the installment buyer of a condominium unit.