The Maceda Law, RA 6552: what a buyer on installments keeps
Republic Act 6552 of 1972, the Realty Installment Buyer Act, is known as the Maceda Law. It protects someone buying real estate on installments who falls behind: how long they have to catch up, what they get back if the seller cancels, and how the seller must cancel. It is nine short sections. Each row below carries the section it comes from.
The Maceda Law, section by section
Each row gives the point, the rule in short, and the section it comes from.
Who it protects
| Point | In short | Source and condition |
|---|---|---|
| A sale or financing of real estate on installments | covered | Section 3: including residential condominium apartments |
| Industrial lots, commercial buildings, and sales to tenants under the land reform code | not covered | Section 3: excluded, with sales to tenants under RA 3844 as amended by RA 6389 |
| Down payments, deposits and options | count as installments | Section 3: included in computing the total number of installment payments made |
Paid at least two years of installments
| Point | In short | Source and condition |
|---|---|---|
| Grace period to catch up | one month per year paid | Section 3(a): pay the unpaid installments without additional interest within the grace period earned; usable once in every five years of the contract and its extensions |
| Refund if the contract is cancelled | half of the total payments | Section 3(b): the cash surrender value, rising by 5 percent a year after five years of installments, to 90 percent at most |
| When cancellation actually takes effect | 30 days after notice, and after the refund is paid | Section 3(b): 30 days from the buyer's receipt of a notice of cancellation or demand for rescission by notarial act, and upon full payment of the cash surrender value |
Paid less than two years
| Point | In short | Source and condition |
|---|---|---|
| Grace period | at least 60 days | Section 4: from the date the installment fell due |
| Cancellation | 30 days after notice | Section 4: if the buyer has not paid by the end of the grace period, the seller may cancel 30 days after the buyer receives a notice by notarial act. The Act provides no refund in this case |
Rights in every case
| Point | In short | Source and condition |
|---|---|---|
| Selling or assigning your rights | allowed | Section 5: to another person, by notarial act, during the grace period and before actual cancellation |
| Reinstating the contract | by updating the account | Section 5: during the grace period and before actual cancellation |
| Paying early or in full | without interest | Section 6: any installment or the whole unpaid balance, at any time, with full payment annotated on the certificate of title |
| A contract clause that takes these rights away | void | Section 7: any stipulation contrary to Sections 3, 4, 5 and 6 is null and void |
Maceda Law refund and grace period, by years paid
The table is our arithmetic on Section 3, reading "after five years of installments, an additional five per cent every year" as one more step for each full year paid after the fifth. The refund is a share of the total payments made; Section 3 also counts down payments, deposits and options in the number of installments paid.
| Installments paid | Grace period | Refund if cancelled, share of total payments |
|---|---|---|
| 1 year | at least 60 days | none under the Act |
| 2 years | 2 months | 50 percent |
| 5 years | 5 months | 50 percent |
| 6 years | 6 months | 55 percent |
| 8 years | 8 months | 65 percent |
| 10 years | 10 months | 75 percent |
| 13 years | 13 months | 90 percent |
| 15 years | 15 months | 90 percent |
The grace period after two years can be used only once in every five years of the life of the contract and its extensions, so the grace period in any row is available only if it has not already been used in that five-year span. The table uses whole years; the Act says nothing about part years. The refund reaches its cap of 90 percent after thirteen years of installments.
What it means when you buy a house or lot on installments
- Keep every receipt. The grace period and the refund are both counted from what you have paid, and Section 3 counts the down payment and deposits toward the years paid.
- A cancellation has a form. It needs a notice by notarial act (Sections 3(b) and 4) and, after two years of installments, the refund paid in full before it takes effect (Section 3(b)). An unnotarised letter or a text message is not that. If you have received a notice of cancellation, have a lawyer read it and the contract.
- Buying from a developer. PD 957 sends a buyer who defaults to this Act and adds its own rights, such as stopping payment, after notice, when the developer fails to develop the project as approved; the PD 957 guide covers them, and the RA 11201 guide covers where a refund claim against a developer is heard.
- Before you sign. Our consultation for future home buyers looks at the lot or house itself, its size, orientation and what the zoning allows, before the first installment is paid.
What this page does not cover
- Court rulings on the Act. How courts have applied it to particular contracts is outside this page, which reads the Act alone.
- Bank and Pag-IBIG loans. Section 3 names financing as well as sale. How it applies to a bank or Pag-IBIG housing loan is outside this page, which reads the Act alone; see a lawyer before you stop paying a lender.
- Amounts. The refund is a share of what you paid; this page does not compute a figure for any contract.
Source: Republic Act No. 6552, the Realty Installment Buyer Act, as published by the Lawphil Project.