Not reviewed by a lawyer. This summary was written from the statute below and checked by the PhilippineLaws team to the best of our knowledge. The official text is the authority.
In plain English
What this law means
Republic Act No. 6552, known as the Maceda Law, protects residential real estate and condominium buyers purchasing on installment plans. If a buyer falls behind on monthly amortizations, the developer cannot immediately cancel the contract or confiscate all previous payments. The law guarantees statutory grace periods, a mandatory 50% to 90% cash surrender value refund, and requires a strict 30-day notarized cancellation notice.
Who it affects
Buyers of residential lots, subdivision houses, and residential condominium units bought under Contract to Sell or in-house developer financing. It excludes industrial lots, commercial buildings, and agricultural tenants.
In practice
A buyer pays monthly installments for a condo unit for 4 years, then suffers financial hardship. Under Section 3, the developer cannot simply forfeit all paid amortizations. The developer must grant a 4-month interest-free grace period, and if the contract is ultimately cancelled, must refund 50% of all payments made (including down payments and reservation fees) via notarial notice.
Section by section
SEC. 3Buyers with at Least Two Years of Installments
What this law means
When a buyer has paid at least 2 years of installments (including down payments and reservation fees), default triggers two mandatory rights: (1) A grace period of 1 month for every year of installment payments made, exercisable once every 5 years; and (2) If cancelled, a Cash Surrender Value (CSV) refund of 50% of total payments made, increasing by +5% for every year after 5 years, up to a maximum of 90%. Cancellation takes effect only 30 days after notarial notice and full payment of the CSV refund.
Who it affects
Long-term installment buyers facing temporary cash flow shortages or unexpected defaults.
In practice
If you paid for 7 years and default, your cash surrender value is 60% of all payments made (50% for first 5 years + 5% for Year 6 + 5% for Year 7). A cancellation without receiving the actual refund check is legally ineffective under Supreme Court doctrine.
SEC. 4Buyers with Less than Two Years of Installments
What this law means
If a buyer defaults with less than 2 years of installment payments, the seller must grant a statutory grace period of not less than 60 days from the due date. If the buyer fails to pay within 60 days, the developer may cancel the contract, but actual cancellation takes effect only 30 days after the buyer receives a notarized notice of cancellation or demand for rescission.
Who it affects
New property buyers in the first 23 months of their installment payment plan.
In practice
A buyer misses payment on Month 14. The developer sends an immediate demand giving only 7 days to pay. That demand is void: the buyer has a statutory 60-day grace period, followed by another mandatory 30-day notarial notice window.
SEC. 5Right to Sell, Assign, or Reinstate Contract
What this law means
During the grace period and prior to actual valid cancellation, the buyer has the absolute statutory right to sell or assign their rights over the property to another person, or reinstate the contract by updating the overdue amortizations. Developers cannot block the transfer or charge unreasonable 'transfer penalties'.
Who it affects
Buyers seeking to 'assume balance' or sell 'pasalo' rights to recover their investments.
In practice
A buyer who can no longer afford monthly amortizations can legally assign and transfer their contract to another willing buyer via a notarized deed of assignment before the developer's 30-day notarial cancellation matures.
SEC. 6Right to Prepay Without Interest Penalty
What this law means
Buyers have the right to pay in advance any installment or settle the entire unpaid balance of the purchase price at any time without additional interest, and have full payment annotated on the certificate of title.
Who it affects
Borrowers receiving windfalls, bonuses, or securing cheaper bank home loans to pay off developer in-house financing.
In practice
A buyer who receives an OFW remittance or sells another asset can settle the remaining 5-year balance immediately, and the developer cannot charge 'pre-termination penalty fees'.
SEC. 7Nullity of Contrary Contractual Stipulations
What this law means
Any waiver, clause, or stipulation in a contract to sell or reservation agreement that contradicts, reduces, or waives the protections of the Maceda Law is automatically null and void as against public policy.
Who it affects
Real estate developers and installment buyers.
In practice
Standard developer fine-print stating 'all prior payments shall be automatically forfeited as liquidated damages upon default' is legally void and unenforceable in court.
Pangkalahatang impormasyon lamang ito para sa edukasyon — hindi ito legal advice, at hindi ito sinuri ng abogado. Sinikap naming tama ito ayon sa batas na binanggit, pero para sa sarili mong kaso, kumonsulta sa abogado o sa Public Attorney's Office (PAO).
An Act to Provide Protection to Buyers of Real Estate on Installment Payments
[ REPUBLIC ACT NO. 6552, September 14, 1972 ]
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 Protection Act".
SEC. 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.
SEC. 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:
- 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.
- 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 per cent of the 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.