REPUBLIC ACT No.

6552
AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS. (Rep.
Act No. 6552)
Section 1. This Act shall be known as the "Realty Installment Buyer Act."
Section 2. It is hereby declared a public policy to protect buyers of real estate on installment payments
against onerous and oppressive conditions.
Section 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 canceled, 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.lawphi1
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 thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of
the contract by a notarial act.
Section 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.
Section 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.
Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5
and 6, shall be null and void.
Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected
thereby.lawphi1
Section 9. This Act shall take effect upon its approval.
Approved: August 26, 1972

Defaulting Payments Know Your Rights under Republic Act 6552 (Maceda Law)

Posted by: Joanne Almaden in Real Estate Laws On:June 18, 2016 Last updated: July 30, 2016
Knowing your rights as purchaser of a real estate property under the Maceda Law, will mean a huge difference.
It can mean losing everything you have put in for your investment, or getting at least 50% of it back, when for
some reason on your part, you cannot continue with your installment purchase. So in this post, we will discuss
the most important points in the Maceda Law that are relevant to a distressed real estate buyer.
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 condominiumsor house-andlots 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 even longer. Then they just take out a loan from their
bank for the remaining balance since banks usually have lower interest rates compared to in-house financing.

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

RIGHTS OF A BUYER

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 of the notice of cancellation or 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..

FREQUENTLY ASKED QUESTIONS

The following questions have been commonly asked by our readers:

Does it apply when Ive been paying to the bank already?

A common practice today is for the developers to require only the equity to be paid in
installments. This equity or also called down payment, varies from 10% to 50% (usually 20%),
depending on the developer or the particular development project. The remaining balance after
the equity, will be shouldered by some financing scheme.

This financing scheme may be provided by:

Banks

HDMF (formerly PAG-IBIG)

In-house Financing, by the developer themselves

or other financing institutions

If you opt to pay your remaining balance using bank financing, that means youll be taking a
housing loan from the bank.

When you start paying to the bank, that means youve already taken out your housing loan from
them. When you took a loan from your bank, you basically borrowed money and then you used
that money to pay the developer in full. But this all happened in the background and the money
did not go through your hands anymore. The bank gave it straight to the developer. And this is
what commonly confuses people.

So now, your property has been fully paid as far as the developer/seller is concerned. In fact, as
far as the law is concerned, your property has been fully paid already. But your loan from the bank
is whats outstanding. Your debt is now to the bank the money you borrowed, to pay the
developer.

So the answer to the question on whether this Maceda Law will still apply, is no, it will not apply
anymore. Thats because the property is technically, already paid in full.

Does it apply when Ive been paying to PAG-IBIG already?

Please refer to the answer to the preceding question above.

My developer/seller is very slow or is already late in delivering the property, will

Maceda Law apply if I back out from the purchase?

You check first when the developer is supposed to deliver the property to you their supposed
deadline. You may check your contract. Or you may also call your nearest HLURB office and
check with them when is the deadline given to the developer, as indicated in their License to
Sell for the specific project where your property is in.

After determining that your developer is at fault, you may file a complaint for recision of your
contract and for total refunds plus damages, as appropriate, at HLURB.

But as far as Maceda Law is concerned, it is not the appropriate law to rely on, now. Read carefully
the provisions of P.D. 957. This is what applies in cases like this.

My developer is for some reason, the one whos at fault and I want to back out. Will
Maceda Law apply?

The Maceda Law only assures 50% refund on all the payments youve made (or a little more as
appropriate). If your developer is at fault, you should not ask for only 50% refund but for the
entire amount youve already paid. You can even demand for damages as you deem fit.

If your developer is at fault, the provisions of P.D. 957 may apply; and/or the appropriate
provisions of Book IV of the New Civil Code on Obligations and Contracts.

The Recto Law, which forms part of the Civil Code, covers installment sales of personal property while the
Maceda Law governs installment sales of real property.
The Recto Law
The Recto Law comprises Articles 1484 to 1486 of the Civil Code. It was added to the Civil Code to prevent
abuses in the foreclosure of chattel mortgages, such as when mortgagee-creditors foreclosed mortgaged
property, bought them at a low price (on purpose,) then prosecuted the mortgagor-debtors to recover the
deficiencies.
In the event a buyer of personal property defaults by failing to pay two or more of the agreed installments, the
seller can do any of the following:
1.
2.
3.

Demand that the buyer pay (a.k.a. specific performance)

Cancel or rescind the sale
Foreclose the mortgage on the property bought (if there ever was a chattel mortgage)

Regarding no. 3, this happens when a person takes a loan to buy something and he mortgages the thing he
bought to ensure the creditor that he will pay the loan. Remember: If you choose one remedy, you cant
choose the others. These remedies, believe it or not, are also available to the buyer. You also cant use all or
any of them at the same time. The Recto Law also wont apply to a straight sale (i.e. a sale where there is a
downpayment and the balance is payable in the future in a single payment only.) The seller can also assign his
credit to another person, making that person the new creditor.
If the buyer refuses to surrender the items to the seller, he becomes a perverse buyer-mortgagor. When that
happens, the seller can recover expenses and attorneys fees.
The Recto Law also covers leases with the option to purchase.
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 doesnt 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.

Act No. 4122 also known as the RECTO LAW on Tue Sep 23, 2008 2:41 pm
Article 1484 of the Civil Code provides for the remedies of a seller in contracts of sale of personal property by
installments, and incorporates the provisions of Act No. 4122, known as the Installment Sales Law or the Recto
Law, which then amended Article 1454 of the Civil Code of 1889.
RATIONALE the object of Recto Law was to remedy the abuses committed in connection with the
foreclosure of chattel mortgages and was meant to prevent mortgagees from seizing the mortgaged
property, buying it at foreclosure sale for a low price and then bringing suit against the mortgagor for a
deficiency judgment.
Under Article 1484 of the New Civil Code, in a contract of sale of personal property the price of
which is payable in installments, the vendor may exercise any of the following REMEDIES:
1. Exact fulfillment of the obligation, should the buyer fail to pay any installment;
2. Cancel the sale, should the buyers failure to pay cover two or more installments;
3. Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the buyers failure to
pay cover two or more installments.
The remedies have been recognized as alternative, not cumulative, in that the exercise of one would also
bar the exercise of the others. They cannot also be pursued simultaneously.
If the seller should foreclose on the mortgage constituted on the thing sold, he shall have no
further action against the purchaser to recover any unpaid balance of the price. Any agreement
to the contrary shall be void.
The provisions of Recto Law are applicable to financing transactions derived or arising from
sales of movables on installments, even if the underlying contract at issue is a loan because the
promissory note has been assigned or negotiated by the original seller.
Acts No. 4122 Recto Law
AN ACT TO AMEND THE CIVIL CODE BY INSERTING BETWEEN SECTIONS FOURTEEN HUNDRED AND FIFTY-FOUR
AND FOURTEEN HUNDRED AND FIFTY-FIVE, THEREOF A NEW SECTION, TO BE KNOWN AS SECTION FOURTEEN
HUNDRED AND FIFTY-FOUR-A.
Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled and by
the authority of the same:
SECTION 1. The Civil Code is hereby amended by inserting between sections fourteen hundred and fifty-four
and fourteen hundred and fifty-five thereof a new section, to be known as section fourteen hundred and fiftyfour-A, which shall read as follows:
"SEC. 1454-A. In a contract for the sale of personal property payable in installments, failure to pay two or more
installments shall confer upon the vendor the right to cancel the sale or foreclose the mortgage if one has
been given on the property, without reimbursement to the purchaser of the installments already paid, if there
be an agreement to this effect.
"However, if the vendor has chosen to foreclose the mortgage he shall have no further action against the
purchaser for the recovery of any unpaid balance owing by the same, and any agreement to the contrary shall
be null and void.
"The same rule shall apply to leases of personal property with option to purchase, when the lessor has chosen
to deprive the lessee of the enjoyment of such personal property."

SEC. 2. This Act shall take effect on its approval.

Approved, December 9, 1933.