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This article was originally published on February 11, 2021 and has been updated to reflect recent legal developments.
This article is provided for general informational purposes only and does not create, nor shall it be construed as creating, a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. For advice on specific legal concerns, you are encouraged to engage the services of a qualified lawyer. You may also directly consult Alburo Alburo and Associates Law Offices for proper guidance tailored to your situation.
The views and information presented herein are based on the laws, rules, and jurisprudence prevailing at the time of writing. They do not take into account subsequent legal developments and should not be relied upon as a substitute for professional legal advice.
AT A GLANCE:
In Pryce Properties Corp, v. Narciso R. Nolasco Jr., G.R. No. 203990, August 24, 2020, the Supreme Court stated that the Realty Installment Buyer Protection Act, otherwise known as Republic Act 6552 or the Maceda Law, protects buyers of real estate on installment payments against onerous and oppressive conditions.
In our previous discussion on Republic Act No. 6552, it was emphasized that buyers in transactions involving the sale or financing of real estate on installment payments are protected against oppressive and onerous conditions. It was likewise mentioned that, in proper cases, the buyer is entitled to a refund of the cash surrender value of the payments made.
In Pryce Properties Corp, v. Narciso R. Nolasco Jr., G.R. No. 203990, August 24, 2020, the Supreme Court stated that the Realty Installment Buyer Protection Act, otherwise known as Republic Act 6552 or the Maceda Law, protects “buyers of real estate on installment payments against onerous and oppressive conditions.”
One of the legal features of RA 6552 is Section 4 thereof, which provides for the remedies of a defaulting buyer that has paid less than two years of installment amortizations for a purchase of real property.
When May the Seller Cancel the Contract?
Section 4 of the Maceda Law states that 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.
Take note that under the Maceda Law, cancellation of the contract is not automatic and the seller may only cancel the contract after thirty (30) days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.
Moreover, Section 3(b) of the Maceda Law states that 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.
Take note that under the same section, the law provides that Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.
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