REPUBLIC ACT NO. 6552

AN 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."

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.

 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.

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

 Approved: August 26, 1972.

What is the Maceda Law?
The Maceda Law, also known as Republic Act 6552 or The Realty Installment Buyer Act, is a law that provides for certain rights and protection to buyers of real estate properties who default in paying the installments due. It was enacted by Ernesto C. Maceda and it took effect on August 26, 1972. 

What is the purpose of the law?
The purpose of the law is to protect buyers on installment payments against onerous and oppressive conditions which sellers may impose upon them.

 "The law seeks to address the acute housing shortage problem in our country that has prompted thousands of middle and lower class buyers of houses, lots and condominium units to enter into all sorts of contracts with private housing developers involving installment schemes.  Lot buyers, mostly low income earners eager to acquire a lot upon which to build their homes, readily affix their signatures on these contracts, without an opportunity to question the onerous provisions therein as the contract is offered to them on a “take it or leave it” basis. Most of these contracts of adhesion, drawn exclusively by the developers, entrap innocent buyers by requiring cash deposits for reservation agreements which oftentimes include, in fine print, onerous default clauses where all the installment payments made will be forfeited upon failure to pay any installment due even if the buyers had made payments for several years. Real estate developers thus enjoy an unnecessary advantage over lot buyers who they often exploit with iniquitous results. They get to forfeit all the installment payments of defaulting buyers and resell the same lot to another buyer with the same exigent conditions.  To help especially the low income lot buyers, the legislature enacted R.A. No. 6552 delineating the rights and remedies of lot buyers and protect them from one-sided and pernicious contract stipulations." (Active Realty & Development Corporation vs. Doroya, G.R. No. 141205, May 9, 2002)

What are the transactions covered by the Maceda Law?
The Maceda Law covers all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments.

What are the transactions not covered by the Maceda Law?
The following transactions, although involving sales on installments, are expressly excluded from the coverage of the law: 
  1. Sales covering industrial lots;
  2. Sales covering commercial buildings (and commercial lots by implication); and
  3. Sales to tenants under agrarian reforms laws. 
The enumeration is not exclusive since other transactions over immovables like sale on installment of commercial or office condominiums units are to be excluded because they are not within the express coverage. (Cesar L. Villanueva, Law on Sales)


What are the two categories of buyers accorded protection under the Maceda Law?
The following buyers are accorded protection under the Maceda Law:
  1.  Buyers with less than 2 years of installments
  2.  Buyers with  at least 2 years of installments

What are the rights of a defaulting buyer under the Maceda Law?
A. Buyer who has paid less than two years of installments:
  1. Right to pay, without additional interest, any installment due within a grace period of not less than sixty (60) days from the date the installment became due;
  2. Right to receive a 30-day notarial notice of cancellation or demand for rescission before his contract can be cancelled for non-payment of amortization. Here the buyer is not entitled to any refund; 
  3. Right to sell or assign his rights over the lot or unit to another person;
  4. Right to reinstate the contract by updating the account provided this is done during the grace period and before actual cancellation of the contract;
  5. Right to pay in advance any installments or the full unpaid balance without interest any time; and
  6. Right to have such full payment annotated in the title.

B. Buyer who has paid at least two years of installments:
  1. Right to pay without additional interest the unpaid installments due within the total grace period earned by him. Said grace period is equal to one (1) month for every year of installment payments he has made. Here the buyer has at least two (2) months grace period for he should have paid at least two (2) years of installments to avail of the rights. This right can be exercised by the buyer only once in every five years of the life of the contract;
  2. Right to receive a 30-day notarial notice of cancellation or demand for rescission before his contract can be cancelled for non-payment of amortization;
  3. Right to be refunded of the cash surrender value of his payments equal to 50% of his total payments if the contract is cancelled. But if he has paid five years or more, he is entitled to an increase of 5% every year and so on but the cash surrender value shall not exceed 90% of his total payments. Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made;
  4. Right to sell or assign his rights over the lot or unit to another person;
  5. Right to reinstate the contract by updating the account provided this is done during the grace period and before actual cancellation of the contract; and,
  6. Right to pay in advance any installments or the full unpaid balance without interest any time; and,
  7. Right to have such full payment annotated in the title.

What are the mandatory twin requirements for a valid and effective cancellation of the contract under the Maceda Law?
Under the Maceda Law, the actual cancellation of a contract to sell takes place after 30 days from receipt by the buyer of the notarized notice of cancellation, and upon full payment of the cash surrender value to the buyer. In other words, before a contract to sell can be validly and effectively cancelled, the seller has 
  1.  To send a notarized notice of cancellation to the buyer and 
  2.  To refund the cash surrender value. (Communities Cagayan, Inc. vs Sps. Nanol, G.R. No. 176791, November 14, 2012)

 What is the effect of failure to comply with these mandatory twin requirements?
Until and unless the seller complies with these twin mandatory requirements, the contract to sell between the parties remains valid and subsisting. Thus, the buyer has the right to continue occupying the property subject of the contract to sell, and may “still reinstate the contract by updating the account during the grace period and before the actual cancellation” of the contract. (Communities Cagayan, Inc. vs Sps. Nanol, ibid.)
What is the effect of contrary stipulation?
Any stipulation in any contract entered into contrary to the provisions of the law shall be null and void. (Sec. 7, RA 9552)