Maceda Law (R.A. No. 6552): Computation of the Number of Installments Made

The Maceda Law, officially known as the Realty Installment Buyer Protection Act, protects buyers in installment sales of real estate property. One crucial aspect of its implementation is the computation of the number of installments made, as this determines the extent of the buyer's rights under the law.

Here is a comprehensive breakdown of the rules and principles governing this computation:

1. Basic Principles on Installments

The term "installment" refers to the periodic payments made by the buyer under a contract of sale for real estate.
Computation of installments includes:
- Regular periodic payments (e.g., monthly, quarterly, or annual payments specified in the contract).
- Payments made beyond the scheduled amounts, provided they are applied to the purchase price.

2. Relevance of the Number of Installments Paid

The buyer's rights under the Maceda Law hinge on the total number of installments paid:

Buyers who have paid at least two years of installments:
- Entitled to a grace period of one month for every year of installment payments made, to pay arrears without interest.
- If the contract is canceled, entitled to a refund of 50% of the total payments made (and an additional 5% per year after five years of payments, up to a maximum of 90%).
Buyers who have paid less than two years of installments:
- Entitled to a grace period of 60 days from the due date to settle arrears before the contract can be canceled.
- No refund is provided if the contract is canceled.

3. Computation Rules for Installments

To determine the number of installments paid:

Installments must be consistent with the agreed terms of the contract:
- Verify the payment schedule in the contract (e.g., monthly, quarterly).
- Include only payments explicitly applied to the installment price (exclude penalties, interest, or other charges).
Payments made in advance:
- Advance payments are credited as installments if applied to the purchase price.
- Lump-sum payments are considered as several installments if the contract allows such application.
Partial payments:
- Partial payments made toward an installment count as an installment only when the full installment amount is completed.
- For example:
  - If the agreed monthly installment is ₱10,000 and the buyer pays ₱5,000, it does not count until the balance of ₱5,000 is completed.
Non-cash payments:
- If the buyer pays in kind (e.g., a car or other property as partial payment), the monetary value agreed upon between the buyer and seller determines how it is credited as an installment.

4. Exclusions in Installment Computation

The following are not counted in computing the number of installments paid:

Payments for interest:
- Interest payments are separate from the principal purchase price.
Penalties or charges:
- Penalties for late payments or other fees do not count as installments.
Payments applied to other obligations:
- If payments are applied to taxes, insurance, or other obligations, they are not considered installments.

5. Documentary Evidence of Installments

The buyer must provide documentation to establish the number of installments paid. This may include:

Official receipts from the seller.
Copies of checks or bank transfer records.
Acknowledgment receipts, if payments are made directly to the seller.

Sellers are obligated to issue receipts under the law, and buyers should keep detailed records of their payments to substantiate their claims.

6. Effect of Delays in Payment

Delayed payments do not necessarily disqualify the computation of the installment, provided the buyer cures the default within the grace period allowed under the Maceda Law.
Payments made after the grace period but accepted by the seller may still be counted as installments unless explicitly excluded by agreement.

7. Special Cases

Restructured Agreements:
- If the contract is restructured, the new payment terms determine how installments are computed.
- Payments made under the original terms are included in the total installment count unless waived or credited differently in the new agreement.
Pre-termination by Seller:
- Payments made up to the point of contract termination are included in the computation of the total installments.
- The buyer may dispute the seller’s computation if there is a discrepancy in the acknowledgment of payments.

8. Legal Recourse in Case of Dispute

If there is a disagreement between the buyer and the seller regarding the computation of installments:

The buyer may file a complaint with the Housing and Land Use Regulatory Board (HLURB) or its successor agency, the Department of Human Settlements and Urban Development (DHSUD).
Courts may also adjudicate disputes if substantial issues of contract interpretation or application of the Maceda Law arise.

Conclusion

The computation of the number of installments made is critical under the Maceda Law as it determines the buyer’s rights to a grace period, refund, and other protections. Buyers must ensure accurate documentation and timely payments to maximize their rights under the law. Likewise, sellers must properly account for payments and adhere to legal requirements to avoid liability.