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.

The Lawphil Project - Arellano Law Foundation

Eight Things You Need to Know about the Maceda Law

Things You Need to Know about the Maceda Law

Read on if you plan to buy a property on an installment basis

Are you planning to buy your own house or condominium? If paying the full purchase price is just too
much for you, then you are better off paying in installments. If this is the case, then you should know
that there is a law that protects homebuyers who decide to purchase their homes on an installment
basis.

Republic Act No. 6552, or more commonly known as the Maceda Law or the Realty Installment Buyer
Protection Act, deals primarily with one’s rights as a real estate investor or a real estate buyer paying in
installments. It also describes the rights of a buyer defaulting in payments for such purchases. This law
was authored by former senator Ernesto Maceda, hence its name, and took effect on August 26, 1972.

Let’s say you plan to buy that dream condominium unit in Makati, and being the posh, new building it is,
the developers have offered it at a price with a lot of commas and zeroes in it. Unfortunately, your salary
does not have as many commas or zeroes to match the property’s price, so you have availed yourself of
the initial installment plan they offered, thinking that you could get a loan for it after two or three years
of building equity.

But then after waiting, you ultimately did not get approved for a housing loan, and ended up defaulting.
Now, you are in a pinch, and you do not know what to do or what your rights are. Well, keep reading and
find out what the Maceda Law can offer you in your current situation.

1. How do I know that the state would protect my rights?

Section 2 of RA 6552 states that the protection of buyers of real estate on installment plans against
oppressive conditions shall be declared a public policy.

2. Who is covered by the Maceda Law?

There are two categories of qualified buyers who are afforded protection. Under Section 3 of RA 6552, a
qualified buyer is one who has paid at least two years of installments in all transactions or contracts
involving the sale or financing of real estate on installment payments. Properties covered include
residential condominiums, apartments, houses, townhouses, and house and lots, among others, but
exclude industrial lots, commercial buildings, and sales of properties to existing tenants.

Under Section 4, on the other hand, a qualified buyer is also one who has purchased any of the
properties enumerated above, but who has paid less than two years of installments.

3. What rights do I have under Section 3 of the Maceda Law?

Under Section 3 of RA 6552, buyers who default on their payments of installments are entitled to pay,
without additional interest, the unpaid installments due within the total grace period they have earned.
This total grace period has been fixed at the rate of one-month grace period for every one year of
installment payments made. However, this right can only be exercised by the buyer once in every five
years of the life of the contract and its extensions.

If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments
on the property, which is equivalent to 50 percent of the total payments made. After five years of
installments, an additional five percent for every year of payments will be added, but not to exceed 90
percent of the total payments made.

For the above paragraph to apply, the actual cancellation of the contract must take place 30 days after
receipt by the buyer of the notice of cancellation. This notice of cancellation, or a demand for rescission
at that must be by a notarial act and upon the full payment of the aforementioned cash surrender value
to the buyer.

In a nutshell, buyers are entitled to a refund, as well as grace periods, so long as they have paid for at
least two years.

4. What rights do I have under Section 4 of the Maceda Law?

In contrast with Section 3 , Section 4 of RA 6552 deals with cases where less than two years of
installments have been paid by the buyer. In this case, the buyer is entitled to a grace period of not less
than 60 days. This is counted from the date the installment became due.

The seller, on the other hand, is entitled to the cancellation of the contract, if the buyer fails to pay the
installments due at the end of the grace period. The seller, however, must first notify the buyer of the
cancellation, or of the demand for rescission of the contract. This notice or demand must be by a
notarial act, and shall only render the cancellation or rescission effective 30 days after such notice or
demand has been made.

5. Can I sell or assign my rights to the property to another person?

Section 5 of RA 6552 stipulates that those buyers covered by Sections 3 and 4 have the right to sell or
assign their rights over the property to another person. They may also reinstate the contract if they so
choose by updating the account during the given grace period, as provided for in Section 4. This
transaction, however, must be made prior to the actual cancellation of the contract. The corresponding
deed of sale or assignment must be done by notarial act.

6. What if I won the lottery or got a big break, and decide that I want to pay off my balance ahead of the
due date? Will I be allowed to do so without incurring the corresponding interests?
Section 6 of RA 6552 grants you the right to do so. It stipulates that buyers shall have the right to pay in
advance any of the installments or the full unpaid balance of the property’s purchase price. This can be
done any time without incurring interest. This full payment may also be annotated in the certificate of
title over the property.

7. What if the contract I entered into clashes with the law? Which would prevail

Ordinarily, the Constitution would tell us that no law impairing the obligations of contracts shall be
passed, but in this case, the Maceda Law, under Section 7, provides that any stipulation in any contract
that are contrary to Sections 3, 4, 5, and 6 are to be deemed null and void. This particular provision
serves to protect those who may have overlooked the fine prints of contracts during signing that have
been stipulated by real estate contractors or developers.

8. Does the Maceda Law apply when I pay through a bank?

Image via Shutterstock

Transactions today are often done through financing schemes. Developers nowadays merely require that
the buyer pay a down–payment, which constitutes a percentage of the purchase price. The remaining
balance would then often be shouldered by a financing scheme (usually a housing loan) that may be
provided by commercial banks, the Pag-IBIG Fund, by the developer’s themselves through their in-house
financing schemes, or by other financing institutions.

Opting for the first option—that is, taking a housing loan from a bank—means that the balance that you
have to pay the real estate developer has already been paid for in full by the bank through the loan. In
other words, you, in essence, have already paid the purchase price in full by availing of the loan. The
subsequent monthly payments you now make to the bank are not to pay for the balance of the purchase
price, but for the loan itself, the interests accruing on the principal loan, and the charges that may be or
may have been incurred.

Hence, having been fully paid insofar as the purchase price is concerned, the only balance you are liable
for is that of the loan, and since you are not exactly paying in installments anymore, considering that the
property is technically fully paid for, RA 6552 or the Maceda Law would no longer apply.
Main image via Shutterstock

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