In the Philippine real estate landscape, purchasing a condominium is often the single largest investment an individual will make. To prevent the forfeiture of hard-earned capital due to unforeseen financial reversals, Republic Act No. 6552, popularly known as the Maceda Law (or the Realty Installment Buyer Protection Act), serves as a crucial consumer protection mechanism.

Enacted in 1972, this law governs the rights of buyers of real estate on installment payments—including residential condominiums—protecting them against one-sided contract provisions and oppressive forfeiture practices by developers.

Scope and Applicability

The Maceda Law applies specifically to installment sales of residential real estate. It does not cover:

Commercial buildings or industrial lots.
Sales to tenants under the Land Reform Code.
Straight-cash sales (where the full price is paid upfront).

For a condominium buyer to invoke these rights, the transaction must involve a payment plan where the purchase price is spread over a period, rather than a single lump sum or a bank-financed "cash" payment to the developer.

Two Categories of Buyer Protection

The extent of a buyer’s rights depends entirely on how many years of installments have been paid.

1. Buyers with at least two (2) years of installments

If a buyer has paid at least two years’ worth of installments and subsequently defaults, they are entitled to the following:

The Grace Period: The buyer has the right to pay, without additional interest, the unpaid installments due within a total grace period of one month for every one year of installments paid. This right can only be exercised once every five years of the contract's life.
The Cash Surrender Value (Refund): If the contract is cancelled, the seller must refund the "Cash Surrender Value." This is calculated as:
50% of the total payments made (including down payments and options).
An additional 5% for every year of installments beyond five years.
Note: The total refund cannot exceed 90% of the total amount paid.

2. Buyers with less than two (2) years of installments

Buyers who have paid for less than 24 months have fewer, but still significant, protections:

The Grace Period: A mandatory grace period of not less than 60 days from the date the installment became due.
Cancellation: If the buyer fails to pay within the 60-day grace period, the seller may cancel the contract. However, unlike the "two-year" category, the buyer is not entitled to a refund of payments made.

The Cancellation Process: Strict Requirements

A developer cannot simply "auto-cancel" a contract the moment a payment is missed. For a cancellation to be legally valid under the Maceda Law, the seller must comply with two cumulative requirements:

Notice of Cancellation: The seller must provide a formal notice of cancellation or a demand for rescission.
Notarial Act: The notice must be via a notarial act (a document signed before a Notary Public).
The 30-Day Window: The actual cancellation of the contract only takes effect 30 days after the buyer receives the notarized notice of cancellation and (if applicable) the full payment of the cash surrender value.

Important: If the developer fails to send a notarized notice or fails to pay the required refund, the contract remains valid and subsisting.

Additional Statutory Rights

Beyond refunds and grace periods, the Maceda Law grants buyers two proactive rights during the life of the contract:

Right to Reinstate: During the grace period and before the actual cancellation of the contract, the buyer can update their account by paying the arrears.
Right to Sell or Assign: The buyer has the right to sell their rights or assign them to another person.
Right to Fast-Track Payments: The buyer may pay any installment or the full unpaid balance at any time without interest and have such full payment of the price annotated in the Certificate of Title.

Common Pitfalls and Clarifications

Down Payments: When calculating "years of installments," the down payment, deposits, and option money are included in the total amount paid.
Bank Financing: A common point of confusion is "In-House" vs. "Bank" financing. If a buyer takes a loan from a bank to pay the developer in full, the developer is paid, and the Maceda Law no longer applies to the bank loan. The relationship becomes a mortgage under the bank's terms, not an installment sale under the Maceda Law.
Void Stipulations: Any clause in a Contract to Sell that waives or contradicts the protections of the Maceda Law is considered null and void as it is contrary to public policy.