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TEXT OF MACEDA LAW:

REPUBLIC ACT NO. 6552
REALTY INSTALLMENT BUYER PROTECTION ACTAN ACT TO PROVIDE PROTECTION TO
BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS

Section 1. This Act shall be known as the Realty Installment Buyer Act.

Sec. 2. It is hereby declared a public policy to protect buyers of real estate on installment
payments against onerous and oppressive conditions.

Sec. 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered
Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three
hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer
is entitled to the following rights in case he defaults in the payment of succeeding
installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him which is hereby fixed at the rate of one month grace period for every
one year of installment payments made: Provided, That this right shall be exercised by the
buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value
of the payments on the property equivalent to fifty per cent of the total payments made,
and, after five years of installments, an additional five per cent every year but not to exceed
ninety per cent of the total payments made: Provided, That the actual cancellation of the
contract shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of
the total number of installment payments made.

Sec. 4. In case where less than two years of installments were paid, the seller shall give the
buyer a grace period of not less than sixty days from the date the installment became due.

If the buyer fails to pay the installments due at the expiration of the grace period, the seller
may cancel the contract after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act.

Sec. 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the
same to another person or to reinstate the contract by updating the account during the
grace period and before actual cancellation of the contract. The deed of sale or assignment
shall be done by notarial act.

Sec. 6. The buyer shall have the right to pay in advance any installment or the full unpaid
balance of the purchase price any time without interest and to have such full payment of the
purchase price annotated in the certificate of title covering the property.


Sec. 7. Any stipulation in any contract hereafter entered into contrary to the provisions of
Sections 3, 4, 5and 6, shall be null and void.

Sec. 8. If any provision of this Act is held invalid or unconstitutional, no other provision
shall be affected thereby.

Sec. 9. This Act shall take effect upon its approval.

What is the Maceda Law?
The Maceda Law, also known as The Realty Installment Buyer Act or Republic Act
6552 is the law that lays out a defaulting buyers rights in the Philippines with regards to
his purchase of a real estate property, whether its a condominium unit or a house-and-lot
unit in a subdivision development. This was initiated by lawmaker Ernesto Maceda and has
taken into effect on August 26, 1972.
Who it applies to
Today, more and more people in the working class, especially OFWs are buying
condominiums or house-and-lots in subdivision projects. But paying them in full in just one
payment is just too much. So practically, they opt to pay the equity by installment since
developers or contractors installment equity payment schemes have become increasingly
affordable. This is through stretching their equity payment or down payment stage to 20,
30, 40 months or sometimes longer.
If you have taken advantage of this convenience in acquiring your property, everything is
okay as long as you can keep up with your payments. But times are not always good. There
are times when we face difficult situations and times when we just cant make the payments
anymore. If you come into this situation, the Maceda Law was passed to help protect you. It
established the rights of a qualified buyer who cant continue with his payments anymore.
Under the Maceda Law, there are two qualification categories of buyers accorded
protection. These buyers are:
1. Under Section 3 of Maceda Law, a buyer with at least 2 years of installments
2. Under Section 4 of Maceda Law, a buyer with less than 2 years of installments
Section 3
where the buyer has paid at least two years of installments, the buyer is entitled to the
following rights in case he defaults in the payment of succeeding installments:

a.) To pay, without additional interest, the unpaid installment due within the total grace
period earned by him, which is hereby fixed at the rate of one month grace period for every
one year of installment payments made; provided that this right shall be exercised by the
buyer only once in every five years of the life of the contract and its extensions, if any.
b.) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value
of the payments on the property equivalent to fifty percent of the total payments made
Down payments, deposits or options on the contract shall be included in the computation of
the total number of installment payments made
Section 4
In case where less than two years of installments were paid, the seller shall give the buyer
a grace period of not less than sixty days from the date the installment became due.
If the buyer fails to pay the installments due at the expiration of the grace period, the seller
may cancel the contract after 30 days from the receipt by the buyer the notice of
cancellation of the demand for rescission of the contract by a notarial act.
In other words, Section 3 of Maceda Law indicates that the buyer has a right to a refund and
grace periods as long as the buyer has paid at least two years. However, if theres still less
than 2 years of installment payments made, the buyer is only entitled to 60 days grace
period as indicated in Section 4.
More importantly, there is a section in the Maceda Law that protects the buyers from the
fine prints of contracts imposed by the contractors or developers. These fines prints are
oftentimes neglected by the buyers to review during the contract signing.
Section 7 of the Maceda Law states that Any stipulation in any contract hereafter entered
into contrary to the provisions of Sections 3,4,5, and 6 shall be null and void.
This section emphasizes the overriding power of the Maceda Law against the contract made
by the developer and the buyer..



The Maceda Law, Ra 6552

Do you want to know your rights as a real estate investor, or simply as a real estate buyer
who is making installment payments? The first logical step would be to know what law
applies and what that particular law contains, which in this case would be the full text
of Republic Act No. 6552. More popularly known as the Maceda Law, the RA 6552 follows.

The Maceda Law, RA 6552, is the real estate equivalent of the Recto Law. Like the Recto
Law, it also covers financing of sales of real property (which is why mortgages also come
in.) It doesn't apply,however, to the following sales:

1.) Industrial lots

2.) Commercial buildings and lots

3.) Lands under the CARP Law

MACEDA LAW (RA6552) Maceda Law in the Philippines applies to the purchaser of real
property by installment payments when the purchase becomes cancelled by a delinquency
in payment. It provides the buyer with a right to a refund as a requisite for cancellation of
contract due to delinquency when the buyer has paid at least two years. The refund is 50%
of total payments; additional 5% per year after 5th year.

To qualify for the Maceda Law, the buyer must have already paid at least 2 years of
installment payments.


1. The buyer has the right to continue the unpaid installments due without additional
interest provided that the buyer must pay within the grace period. The grace period
provided is one month for every one year of installments paid.
2. The buyer has the right to opt for a refund of the installment payments being made
(This includes the down payments, deposits or options on the contract). The buyer is
entitled to 50% refund from his total payments made. An additional of 5% refund
per year for every 5 years.

If the buyer has paid less than two years installment:
The buyer has the right to continue his payments within a grace period of 60 days.



Maceda Law (Republic Act No. 6552)

So what happens if youve been paying for real estate property in installments, and you
default because you dont have any money to pay anymore?
Once again, the law provides for a remedy, in particular, Republic Act No. 6552 or the Realty
Installment Buyer Act. You can read the full law here
http://www.lawphil.net/statutes/repacts/ra1972/ra_6552_1972.html
You can also go to HLURB to ask for assistance in your problems such as computation of
refunds and failure of the developer to deliver what he has promised . HLURBs address and
contact number is on the previous post on PD 1344 (just check that out!).

So we have different scenarios:

The first scenario you have paid less than two years of installments: In this case, the
seller should give the buyer a grace period of at least 60 days to pay the amount due via
written notice. If the buyer still fails to pay after the expiration of the grace period, the
seller can cancel the contract through a notarial demand for cancellation. Actual
cancellation of the contract takes place after 30 days from buyers receipt of notice. The
buyer can: (a) assign the contract to a third person via notarial act before it is cancelled; or
(b) update the account by paying the due installments during the grace period. There is no
refund.
The second scenario you have paid at least two years of installments: In this case,
the buyer is entitled to a grace period of one month for every year of installment made. He
has the right to pay, without additional interest, the unpaid installments due within the total
grace period. This right can only be exercised once every five years of the contract.
If the buyer still fails to pay the unpaid installments due during the grace period, the seller
may cancel the contract in the same way as the first scenario, via notarial demand for
cancellation. Actual cancellation takes place after 30 days from: (a) receipt of notice or
demand; and (b) full payment of refund.
REFUND
If the buyer paid two to five years of installments, he is entitled to a refund of the cash
surrender value of the payments on the property (including down payments, deposits or
options) equivalent to fifty per cent (50%) of the total payments made.
For every year of installments made in excess of five years, the buyer is entitled to an
additional five per cent (5%), but not to exceed ninety percent (90%) of the total payments
made.
So if the buyer paid 6 years of installments, he is entitled to 55% refund of the total
payments made. If he made 7 years of installments, he is entitled to 60% refund, and so
on. However, his refund cannot exceed 90% of the total amount paid.
For an accurate computation of your refund, please ask the HLURBs help. Dont forget that
you can research all this information from the internet.
EXCEPTION
By the way, the Maceda law does not cover industrial lots, commercial buildings , and sales
to tenants under RAs 3844 & 6389 (Code of Agrarian Reforms of the Philippines).