The Maceda Law, also known as The Realty Installment

Buyer Act or Republic Act 6552 is the law that lays out a
defaulting buyer’s rights in the Philippines with regards to his
purchase of a real estate property, whether it’s 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 OFW’s are buying condominiumsor 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 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 can’t 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 can’t 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 there’s 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 I’ve 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:

o Banks

o HDMF (formerly PAG-IBIG)

o “In-house Financing”, by the developer

themselves

o or other financing institutions

If you opt to pay your remaining balance using bank financing,

that means you’ll be taking a housing loan from the bank.

When you start paying to the bank, that means you’ve 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 what’s 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. That’s because the
property is technically, already paid in full.

 Does it apply when I’ve 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 who’s at fault and

I want to back out. Will Maceda Law apply?

The Maceda Law only assures 50% refund on all the payments
you’ve 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 you’ve 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.