In the Philippine real estate landscape, the Republic Act No. 6552, popularly known as the Maceda Law (or the Realty Installment Buyer Protection Act), serves as the primary shield for installment buyers. Enacted to prevent exploitative practices in the real estate industry, it outlines specific protections for buyers who default on their payments after a certain period.
1. Scope and Applicability
The Maceda Law applies to residential real estate transactions involving installments. This includes houses, condominiums, and lots.
It does not apply to:
- Industrial lots.
- Commercial buildings.
- Sales to tenants under the Land Reform Code.
- Straight-cash sales.
2. Categories of Buyers and Their Rights
The law distinguishes between two types of buyers based on the length of time they have been paying installments.
Category A: Buyers who have paid at least two (2) years of installments
If a buyer has paid at least 24 months' worth of installments, they are entitled to the following:
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 of the contract's life.
The Cash Surrender Value (Refund): If the contract is cancelled, the buyer is entitled to a refund of the cash surrender value.
The refund is equivalent to 50% of the total payments made.
After five years of installments, an additional 5% per year is added, up to a maximum of 90% of the total payments.
Note: "Total payments" include the down payment, options, and reservation fees.
Notice of Cancellation: The actual cancellation of the contract can only take place 30 days after the buyer receives a notarized notice of cancellation or demand for rescission.
Category B: Buyers who have paid less than two (2) years of installments
Buyers who have not yet reached the two-year mark have more limited protections:
- The Grace Period: They are entitled to a grace period of not less than 60 days from the date the installment became due.
- Cancellation Process: If the buyer fails to pay within the 60-day grace period, the seller may cancel the contract after 30 days from the buyer's receipt of a notarized notice of cancellation.
- No Refund: Unlike Category A, buyers with less than two years of payments are generally not entitled to a refund of their payments.
3. The Right to Assign or Reinstate
Regardless of the number of installments paid, the Maceda Law grants buyers additional flexibility:
- Sell or Assign: The buyer has the right to sell their rights or assign them to another person.
- Reinstatement: The buyer can reinstate the contract by updating the account during the grace period and before the actual cancellation of the contract.
- Advanced Payment: The buyer has the right to pay any installment or the full unpaid balance at any time without interest, and to have such full payment of the purchase price annotated in the Certificate of Title.
4. Void Stipulations
The Maceda Law is a matter of public policy. Therefore, any clause in a contract that contradicts the protections offered by R.A. 6552 is considered null and void. For instance, if a contract states that "no refunds shall be given under any circumstances," that provision cannot be enforced against a buyer who qualifies for a refund under the law.
5. Summary Table of Refund Rates
| Years of Installments Paid | Refund Percentage (Cash Surrender Value) |
|---|---|
| Less than 2 years | 0% |
| 2 to 5 years | 50% |
| 6 years | 55% |
| 7 years | 60% |
| ... | (Increases by 5% every year) |
| 13 years and above | 90% (Maximum limit) |
6. Important Procedural Requirements
For a developer or seller to legally cancel a contract, they must strictly follow the "Twin Requirements":
- The buyer must be given the appropriate Grace Period.
- The buyer must receive a Notarized Notice of Cancellation.
Failure to provide a notarized notice means the contract remains technically valid, and the buyer may still have the right to update payments or seek legal recourse.