I.

RA 6552 “Maceda Law

REPUBLIC ACT NO. 6552

AN ACT TO PROVIDE PROTECTION TO BUYER OF REAL ESTATE ON
INSTALLMENT PAYMENTS

Be it enacted by the Senate and House of Representatives of the Philippines in

Congress assembled:

SECTION 1. This Act shall be known as the “Realty Installment Buyer Protection 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 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 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 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 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.

SECTION 4. In case where less than two years of installments were paid the seller shall
give the buyers a grace period of not less than sixty days from the date the installment become
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 Sections 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 installments 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 provisions of this Act is held invalid or unconstitutional no other

provision shall be affected thereby.

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

Approved August 26, 1972.

 II. Definition
Republic Act No. 6552, otherwise known as the "Realty Installment Buyer Protection
Act", or more popularly the "Maceda Law", protects buyers of real property against inequitable
conditions imposed on sale transactions involving real estate purchase financed through
installment basis (Sec. 2, R.A. No, 6552).
It was introduced by former Sen. Ernesto “Ernie” Maceda in an effort to assist people
who fail to pay installments.

NOTES:
- In signing into inconsistent contracts with the existing laws, the Maceda Law provides
protection to those buyers who may have overlooked the fine print of contracts during the
signing required by the real estate contractors or developers by implementing that any
terms and conditions conflicting the Sections 3, 4, 5, and 6 of the Maceda Law will be
considered null and void.
- Should the developers be found to be at fault in any manner – for example, in terms of
delays and damages – the provisions of Presidential Decree No. 957 or the Revised Rules
and Regulations Implementing the Subdivision and Condominium Buyers Protective
Decree may be investigated and implemented instead.

It is the real estate equivalent of the Recto Law. It covers the following sales:
1. Sale or financing of real estate on installment payments
2. Residential condominium units
3. Residential houses, lots, or house and lots

It doesn’t apply however to the following sales:

1. Industrial lots
2. Commercial buildings
3. Sale to tenants under the Land Reform Act

NOTES:
- Land Reform Act - officially designated as Republic Act No. 3844, was an advancement
of land reform in the Philippines that was enacted in 1963 under President Diosdado
Macapagal. It abolished tenancy and established a leasehold system in which farmers
paid fixed rentals to landlords, rather than a percentage of harvest. In agricultural
leasehold, the farmer cultivates the land belonging to, or possessed by, another with the
latter's consent for a price certain in money or in produce or both. It also established the
Land Bank of the Philippines to help with land reform, particularly the purchase of
agricultural estates for division and resale to small landholders, and the purchase of land
by the agricultural lessee.
 Maceda Law is also on the side of the homebuyers in the event that there will be any
offenses on the part of the developer or the seller as this law declared the protection of real estate
buyers on installment payments as a public policy.
As a whole, it serves as a security defense for low-income and middle-class buyers who
would like to purchase their property.

The buyer must have paid at least two (2) years of installments.
Depending on when the buyer defaults, there are two (2) possible scenarios: if the buyer
paid at least two (2) years’ installments and if the buyer paid less than 2 years’ installments.

Rights of the buyer (in case of default)

- If at least two (2) years of installments paid
● The buyer can pay the unpaid balance without interest. The grace period is
computed at one (1) month per year of installment payments. It also begins from
the time the buyer paid his last installment.

NOTES:
- The grace period can be used only once every five (5) years of the sales contract’s life
-including its extensions. So it’s possible to have a grace period of a year if the buyer had
been paying his installments faithfully for 12 years. Once the buyer chooses to use the
grace period, he can’t get it again until another five years are over.

● If the contract is cancelled,

- Buyer is entitled to a refund of the cash surrender value of the payments
on the property. (50% of the actual payments)
- If the buyer paid more than five years of installments, another 5% for
every year is to be added to the refund, but only up to 90% of the total
payments made.
- Actual cancellation shall take place after 30 days from receipt by the buyer
of the notice of cancellation or demand for rescission of the contract by
notarial act and upon full payment of the cash surrender value to the buyer.

NOTES:
- Cash surrender value is money an insurance company pays to a policyholder or an
annuity contract owner if their policy is voluntarily terminated before its maturity or an
insured event occurs.
- The payments mentioned in if the contract is cancelled include the down payment,
options and deposits. The refund is made in this way: if the buyer paid more 2 to 5 years’
installments, he can get back 50% of the cash surrender value. If he paid for more than 5
years, he can get the 50% plus 5% per year up to 90%.
 - If less two (2) years of installments paid
● If the contact is cancelled
- The buyer is given a grace period of not less than sixty (60) days starting
from the date of his last installment to resume paying. This period can be
increased by the seller.

● If the buyer fails to pay the installment due upon the expiration of the grace
period.
- The seller may cancel the sale within 30 days from the receipt by the
buyer of the notice of cancellation or the demand for rescission of the
contract by notarial act.

Rights of the Buyer

- During the grace period before the cancellation of the contract
● To sell his/her rights to another by notarial act
● To assign his/her rights to another by notarial act
● To reinstate the contract by updating the account
- To pay in advance any installments or the full unpaid balance any time without interest
- To ask for the annotation of the full payment of the purchase price in the certificate of
title covering the property.

REFERENCES:
15 Things You Need to Know about the Maceda Law | Lamudi

Maceda and Recto Law Free Essay Example

WHAT YOU NEED TO KNOW ABOUT THE MACEDA LAW

Maceda Law

Maceda Law Significance to Homebuyers | Property Investment

Understanding Maceda Law in the New Normal | The Freeman

The Maceda Law (RA 6552) - Read the full text and know your rights... •
ForeclosurePhilippines.com

The Comprehensive Agrarian Reform Program after 30 Years: Accomplishments and Forward
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Sales: Installment Payments (Recto Law, Maceda Law and Condominium Act) - YouTube