Maceda Law RA No 6552

Consequence of failure to comply with the requisites of a valid cancellation under the Maceda Law | Maceda Law (R.A. No. 6552) | Contract of Sale | SPECIAL CONTRACTS

Consequences of Failure to Comply with the Requisites of a Valid Cancellation under the Maceda Law (R.A. No. 6552)

The Maceda Law (R.A. No. 6552) is a special law enacted to protect buyers of real property under installment plans from inequitable forfeitures and premature cancellations of their rights by developers or sellers. It sets forth strict procedural and substantive requirements that must be met for a valid cancellation of a contract to sell. Failure to comply with these requisites has specific legal consequences, as detailed below.

1. Overview of Cancellation Under the Maceda Law

Under Section 3 of the Maceda Law, a seller may cancel a contract to sell real property if the buyer fails to pay the required installments. However, cancellation must be effected strictly in accordance with the following procedural requirements:

  1. Formal Notice of Cancellation:

    • A written notice of cancellation must be served on the buyer.
    • The notice must be delivered personally or sent via registered mail to the buyer’s last known address.

  2. Refund of Payments (if Applicable):

    • If the buyer has paid at least two years of installments, the seller must refund 50% of the total payments made by the buyer, plus an additional 5% per year for every year beyond the first two years of installments.

  3. Grace Periods:

    • The law grants buyers a grace period of not less than 60 days from the due date of the unpaid installment within which to pay the arrears without additional interest.
    • Cancellation can only proceed after the lapse of this grace period.

  4. Compliance with Statutory Requirements:

    • Cancellation without following the above steps is deemed invalid and ineffective.

2. Legal Consequences of Non-Compliance

Failure to comply with the requisites for a valid cancellation under the Maceda Law renders the cancellation void and exposes the seller to various legal liabilities and consequences:

a. Nullity of the Cancellation

  • If the cancellation is not effected in compliance with the law, it is deemed void ab initio (from the start).
  • The buyer remains legally entitled to the property and cannot be deemed to have forfeited their rights.
  • Any attempt to repossess or resell the property without valid cancellation may constitute a breach of contract or illegal dispossession.

b. Continued Buyer’s Rights

  • The buyer retains all rights under the contract, including the right to possess the property and resume installment payments.
  • The buyer may invoke the grace period under Section 3, even if not previously granted.

c. Restitution and Refund Obligations

  • If the seller fails to refund the required percentage of total payments in cases where cancellation is initiated but invalid, the buyer can demand restitution of all amounts improperly withheld.
  • Non-compliance with refund provisions may expose the seller to civil liability, including damages.

d. Damages and Penalties

  • The buyer may file a legal action for damages, invoking bad faith or breach of the Maceda Law.
  • Courts may award:
    • Actual damages for any financial loss suffered by the buyer.
    • Moral damages if the buyer suffers mental anguish, serious anxiety, or humiliation due to the seller's actions.
    • Exemplary damages to serve as a deterrent against abusive practices by sellers.

e. Potential Criminal Liability

  • Willful and deliberate disregard of the Maceda Law’s provisions could give rise to criminal sanctions under applicable laws, especially if fraud or coercion is involved.

f. Invalidation of Resale or Repossession

  • If the seller resells the property to a third party without validly cancelling the original buyer’s contract, the resale may be invalidated.
  • Buyers can demand reinstatement or file an action for reconveyance of the property, as their contractual rights were never properly extinguished.

g. Remedies for the Buyer

  • The buyer may avail themselves of the following remedies:
    1. Reinstatement of the contract, invoking their right to pay arrears within the grace period.
    2. Specific Performance, compelling the seller to honor the contract.
    3. Injunction to prevent the seller from reselling or repossessing the property.
    4. Action for Damages to recover financial and moral losses resulting from invalid cancellation.

3. Jurisprudence on Non-Compliance with Cancellation Requirements

Courts have consistently emphasized strict adherence to the Maceda Law’s procedural and substantive requirements. Some key principles from jurisprudence include:

  • Cabuyao Realty Corp. v. Estacio:

    • A seller’s unilateral cancellation without refunding the buyer’s payments and without observing the grace period was declared invalid.
    • The court ordered the reinstatement of the buyer’s rights under the contract.

  • Rillo v. Court of Appeals:

    • Failure to serve the required written notice of cancellation deprived the seller of any legal basis to terminate the buyer’s contract.

  • Valenzuela v. Court of Appeals:

    • A premature repossession of the property before compliance with cancellation requirements was deemed an illegal act of dispossession. The court awarded damages to the buyer.

4. Practical Implications for Sellers and Buyers

For Sellers:

  • Sellers must strictly follow the procedural requirements of the Maceda Law before initiating cancellation or repossession to avoid legal disputes and liabilities.
  • Non-compliance exposes sellers to restitution, damages, and invalidation of any subsequent sale of the property.

For Buyers:

  • Buyers must be vigilant in asserting their rights under the Maceda Law, particularly the right to notice, refund, and grace periods.
  • Any premature or improper cancellation by the seller should be immediately challenged in court or through legal representation.

5. Conclusion

The Maceda Law ensures a balanced framework of protection for buyers of real property sold on installments. Sellers must strictly adhere to the procedural and substantive requirements of cancellation; otherwise, the cancellation will be invalid, and they may face significant legal consequences. Buyers are strongly advised to safeguard their rights by closely monitoring compliance with the law and seeking legal recourse in cases of violations.

Requisites for a valid cancellation under the Maceda Law | Maceda Law (R.A. No. 6552) | Contract of Sale | SPECIAL CONTRACTS

Requisites for a Valid Cancellation under the Maceda Law (R.A. No. 6552)

The Maceda Law, officially known as Republic Act No. 6552, provides protections to buyers of residential real property under installment payment schemes. For a valid cancellation of a contract to sell or deed of conditional sale under the Maceda Law, the following requisites must be strictly complied with:

1. Applicability of the Maceda Law

Before proceeding to cancellation, ensure that the Maceda Law applies:

  • The property must be residential real property, which includes houses, lots, and condominiums.
  • The transaction must involve a sale on installment basis.
  • It does not cover industrial lots, commercial buildings, or sales made through a full cash payment or bank financing.

2. Grounds for Cancellation

The buyer must have failed to meet installment payments as agreed in the contract. Non-payment or failure to pay within the grace periods specified in the law triggers the seller's right to cancel.

3. Compliance with the Buyer's Rights Under the Maceda Law

The seller must uphold the following rights of the buyer before initiating a valid cancellation:

a. 2-Year Rule for Refunds
  • If the buyer has paid at least two years of installments, they are entitled to a grace period of one month for every year of installments paid.
  • Additionally, they are entitled to a refund of 50% of the total payments made, less penalties. For payments exceeding five years, an additional 5% per year beyond five years shall be refunded, but the refund cannot exceed 90% of total payments.
b. Grace Period
  • The grace period is one month per year of installment payments made.
  • The seller cannot cancel the contract immediately upon default; the buyer must first be given this grace period to pay the overdue amount without additional interest.
c. Written Notice
  • After the lapse of the grace period, the seller must serve a notarized written notice of cancellation or rescission to the buyer. The notice must be sent via a method ensuring receipt, such as registered mail or personal delivery.

4. Refund of Payments (If Applicable)

For buyers who have paid two or more years of installments:

  • The seller must refund the buyer 50% of total payments made. An additional 5% refund applies for each year of installments beyond five years, subject to the 90% maximum cap.
  • Refunds are computed on total payments made, excluding interest, penalties, and delinquency charges.

5. Formal Cancellation

The cancellation becomes effective only upon compliance with the following:

  • Expiry of the grace period without the buyer rectifying their default.
  • Proper service of the notarized written notice of cancellation.
  • Fulfillment of any applicable refund obligation.

6. Resale of the Property

The seller cannot resell the property until the cancellation is effective. Any attempt to resell prior to valid cancellation could render the action invalid and expose the seller to legal liabilities.

Important Notes:

  • If the buyer has paid less than two years of installments, the seller only needs to grant a grace period of not less than 60 days from the due date. After the grace period, the seller can cancel the contract upon serving the proper written notice.
  • Failure to comply with these statutory requirements makes the cancellation invalid, and the seller may face legal action, including specific performance or damages.

Summary

For a valid cancellation under the Maceda Law:

  1. Ensure the transaction qualifies under R.A. No. 6552.
  2. Observe the 2-year rule and calculate the appropriate grace period and refund, if applicable.
  3. Serve a notarized written notice of cancellation.
  4. Comply with refund obligations (if applicable).
  5. Wait for the cancellation to become effective before reselling the property.

Any deviation from these steps could render the cancellation invalid and expose the seller to legal disputes.

Rights given to the buyer on installment | Maceda Law (R.A. No. 6552) | Contract of Sale | SPECIAL CONTRACTS

CIVIL LAW > VII. SPECIAL CONTRACTS > A. Contract of Sale > 7. Maceda Law (R.A. No. 6552) > c. Rights Given to the Buyer on Installment

The Maceda Law, or Republic Act No. 6552, is the primary legislation governing the rights of buyers of real estate property in the Philippines who pay through installment. It is officially titled the “Realty Installment Buyer Protection Act.” It aims to protect buyers of residential real estate against onerous and arbitrary forfeiture of payments in cases of default. Below is a comprehensive outline of the rights granted to buyers under this law.

Scope and Coverage

The Maceda Law applies to:

  1. Sale of residential real property (house, lot, or condominium unit) by installment payment.
  2. Excludes industrial lots, commercial buildings, and sales to tenants under agrarian reform laws.

Rights of the Buyer Under the Maceda Law

1. Right to a Grace Period (Section 3)

  • Buyers who have paid at least two (2) years of installments:

    • They are entitled to a grace period of one month for every year of installment payments made, to pay the unpaid installments without additional interest.
    • The grace period can only be availed once every five years of the contract's life and must not result in the contract's cancellation.

  • Buyers who have paid less than two (2) years of installments:

    • Grace period of 60 days is granted from the date the installment became due.

2. Right to Refund (Section 3)

  • Buyers who have paid at least two (2) years of installments and whose contracts are canceled are entitled to:
    • A refund of 50% of the total payments made, excluding delinquency interest.
    • If payments exceed five (5) years, the buyer is entitled to an additional 5% refund per year beyond the fifth year, but not exceeding 90% of the total payments.

3. Right to Avoid Automatic Cancellation (Section 3)

  • Cancellation of the contract is not immediate. Sellers must:
    • Notify the buyer of cancellation.
    • Allow the buyer to exercise the grace period rights.
    • Refund the appropriate amount if applicable.

4. Right to Assign the Contract (Section 5)

  • Buyers are allowed to assign their rights to another person before cancellation or actual forfeiture of payments, subject to the seller's approval. This enables the buyer to transfer the financial obligation and property interest to a third party.

5. Right to Reinstatement of the Contract (Section 3)

  • Buyers can reinstate the contract by updating all unpaid installments and other charges due during the grace period.

6. Prohibition Against Unconscionable Forfeitures (Section 4)

  • For buyers who have paid less than two years’ worth of installments:
    • A 60-day grace period is provided for payment of overdue installments.
    • Cancellation or forfeiture is only valid after a notarial demand or judicial rescission and after compliance with due process requirements.

Additional Protections

  • Notice of Cancellation: Before cancellation or rescission of the contract, the seller must issue a written notice of cancellation to the buyer. This notice must be notarized and should clearly inform the buyer of their rights, including any grace period or refund applicable.

  • Applicability to Subdivisions and Condominiums: The Maceda Law applies specifically to residential lots in subdivisions and residential condominiums sold on installment.

  • Exclusivity: The law ensures that any stipulation contrary to its provisions, such as a waiver of the buyer's rights under the law, is considered null and void.

Limitations of the Maceda Law

  1. It does not cover purchases through bank financing or mortgage arrangements unless specifically stipulated.
  2. It applies only to residential real estate and excludes industrial or commercial properties.
  3. It grants a refund only to buyers who have completed at least two years of installments.

Key Jurisprudence on the Maceda Law

  1. Rillo v. Court of Appeals (1997): This case emphasized that the Maceda Law grants buyers the opportunity to recover a portion of their payments to prevent unjust enrichment of the seller.
  2. Garcia v. Court of Appeals (1995): The Supreme Court clarified the calculation of refunds, stating that penalties and delinquency interest must be excluded from the total amount of payments made.

Practical Implications

  • Sellers must exercise caution in drafting contracts to ensure compliance with the Maceda Law’s requirements for cancellation and refunds.
  • Buyers must be aware of their rights to avoid unjust forfeiture of payments and potential abuse by unscrupulous sellers.

By mandating due process, fair refunds, and a reasonable grace period, the Maceda Law balances the interests of buyers and sellers in installment sales of residential real estate.

Computation of the number of installments made | Maceda Law (R.A. No. 6552) | Contract of Sale | SPECIAL CONTRACTS

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.

Transactions covered by the Maceda Law | Maceda Law (R.A. No. 6552) | Contract of Sale | SPECIAL CONTRACTS

MACEDA LAW (R.A. No. 6552): TRANSACTIONS COVERED

The Maceda Law or Republic Act No. 6552, formally known as the “Realty Installment Buyer Protection Act,” provides protection to buyers of residential real property under installment payment schemes. Below is a detailed explanation of the transactions covered by the law:

1. NATURE OF TRANSACTIONS COVERED

The Maceda Law governs sale or financing agreements involving residential real property on an installment basis.

Specific Transactions Covered:

  1. Sales of Residential Real Property:

    • Includes houses, lots, and condominiums intended for residential use.
    • Covers transactions involving raw lots intended for residential purposes, even if not yet developed.

  2. Installment Payment Agreements:

    • Applicable when buyers pay the price of the real property in monthly, quarterly, or other periodic installments.

  3. Direct Sale or Financing Agreements:

    • Includes sales where the seller directly finances the installment payments.
    • Also includes transactions with third-party financing but involving installment payments to acquire residential real property.

Scope of the Law:

  • Residential real properties only.
  • Does not cover industrial lots, commercial buildings, or agricultural lands.
  • Protects buyers with payment records, emphasizing equitable treatment and fairness.

2. EXCLUSIONS FROM COVERAGE

The following transactions are not covered:

  1. Rent-to-own agreements without a definitive sale commitment.
  2. Sales involving non-residential property (e.g., commercial or industrial real estate).
  3. Transactions where the buyer has already fully paid the property but is dealing with separate legal disputes (e.g., title issues).

3. PROTECTION OFFERED UNDER THE MACEDA LAW

Key Buyer Rights Based on Payment Period:

A. If Buyer Has Paid Less than Two Years of Installments:

  • Grace Period: Buyer is entitled to a grace period of 60 days from the due date of the installment to pay any unpaid installment without penalties.
  • Notice of Cancellation: Seller must issue a written notice of cancellation after the lapse of the grace period.
  • Right to Reinstate: Buyer can reinstate the contract during the grace period by paying the due amount.

B. If Buyer Has Paid Two Years or More of Installments:

  • Buyer is entitled to refund of the cash surrender value of the payments made, equivalent to 50% of the total payments, in case of cancellation.
  • Additional Refund: An additional 5% refund for every year beyond the second year of installment payments, up to a maximum of 90% refund.
  • Grace Period: Buyer is entitled to one month of grace period for every year of installment payments made.

Conditions for Refund:

  • The refund is due only if the sale is canceled due to the buyer’s default.

C. Prohibition of Unjust Cancellation:

  • Sellers cannot unilaterally cancel the contract without complying with the Maceda Law’s procedural safeguards, including the notice requirement and observance of grace periods.

4. OBLIGATIONS OF THE SELLER

  1. Written Notice of Cancellation:

    • A seller intending to cancel a contract must issue a notarized notice of cancellation to the buyer.
    • Cancellation becomes effective only after compliance with the grace period and notice requirements.

  2. Grace Periods:

    • The seller must honor the grace periods stipulated under the law.
    • During the grace period, the buyer has the right to reinstate the contract without additional charges beyond the due amount.

  3. Issuance of Refund:

    • Upon cancellation of the contract, the seller is obligated to refund the appropriate cash surrender value to buyers who have paid at least two years of installments.

5. LEGAL REMEDIES FOR BUYERS

  1. Judicial Enforcement of Buyer Rights:

    • Buyers may file a complaint in court if the seller violates the Maceda Law, such as failing to provide refunds or honor grace periods.

  2. Right to Specific Performance:

    • Buyers may compel the seller to comply with the contract if the seller’s actions are deemed prejudicial or unlawful.

  3. Damages and Attorney’s Fees:

    • Buyers may recover damages and attorney’s fees if the seller’s violation causes undue harm or inconvenience.

6. IMPLICATIONS FOR DEVELOPERS AND SELLERS

  • Developers and sellers must adhere to the law to avoid penalties, legal challenges, and reputational damage.
  • Failure to comply with notice and refund requirements can result in lawsuits, financial losses, and administrative sanctions.

SUMMARY

The Maceda Law (R.A. No. 6552) provides a strong framework to protect residential property buyers under installment plans. It ensures fairness by granting:

  • Grace periods for delayed payments,
  • Refunds for cancellations after two years of installment payments, and
  • Procedural safeguards against unjust cancellation.

However, its coverage is limited to residential real property and does not extend to non-residential real estate. Compliance with the law ensures equitable treatment of buyers while fostering trust and accountability in real estate transactions.

Maceda Law (R.A. No. 6552) | Contract of Sale | SPECIAL CONTRACTS

Comprehensive Guide to the Maceda Law (R.A. No. 6552)

The Maceda Law (Republic Act No. 6552), officially titled “An Act to Provide Protection to Buyers of Real Estate on Installment Payments,” is a landmark legislation in the Philippines that provides significant protections to buyers of real property under installment payment arrangements. It is also known as the Realty Installment Buyer Protection Act. Below is a detailed explanation of the law, its provisions, scope, and application:

I. Purpose and Policy of the Law

The Maceda Law was enacted to:

  1. Protect buyers of real estate who purchase properties through installment payments.
  2. Prevent undue forfeiture of payments made by buyers in cases of default.
  3. Promote fairness and equity in contracts of sale involving installment payments.

II. Scope and Coverage

  1. Covered Transactions:

    • The Maceda Law applies to the sale or financing of residential real estate on installments, including subdivision lots and residential condominiums.
    • It does not cover:
      • Industrial lots
      • Commercial lots
      • Agricultural lands
      • Contracts where the buyer has already fully paid the price

  2. Buyer's Protection:

    • Buyers must have paid at least two years of installments to be entitled to the benefits under the law.

III. Rights of Buyers under the Maceda Law

1. If Buyer has Paid At Least Two Years of Installments

  • Right to a Grace Period:

    • The buyer is entitled to a grace period of one month for every year of installment payments made, without interest.
    • Example: A buyer who has paid for 3 years gets a 3-month grace period to settle overdue installments.
    • The buyer can exercise this right only once every five years of the contract.

  • Refund of Payments:

    • If the buyer decides to cancel the contract or if the seller cancels due to default, the buyer is entitled to a cash surrender value (CSV) of the total payments made:
      • 50% of total payments if the buyer has paid at least two years.
      • An additional 5% per year beyond the second year, but not exceeding 90%.
    • Example:
      • Total Payments Made: ₱1,000,000
      • Years Paid: 5 years
      • Refund = 50% (base) + 5% × (5 years - 2 years) = 65% of ₱1,000,000 = ₱650,000

  • Right to Assign or Sell the Contract:

    • The buyer may assign or sell their rights to the property to another person, with prior written consent from the seller.

  • Right to Reinstatement:

    • The buyer has the right to reinstate the contract before it is officially canceled by updating all unpaid installments.

2. If Buyer has Paid Less Than Two Years of Installments

  • Grace Period:
    • The buyer is entitled to a grace period of 60 days from the due date to settle unpaid installments.
  • Cancellation:
    • The seller may cancel the contract after the grace period, but must provide the buyer with 30 days' written notice of cancellation.

IV. Seller's Obligations

  1. Notice Requirement for Cancellation:

    • The seller must serve the buyer with a notarized notice of cancellation or demand for rescission before the cancellation takes effect.

  2. Refund Obligation:

    • If applicable, the seller must refund the buyer the cash surrender value within 30 days from the time of cancellation.

  3. Compliance with Grace Period:

    • Sellers must honor the grace period provided under the law.

V. Prohibitions Under the Law

  • Waiver of rights under the Maceda Law is prohibited.
    • Any stipulation that deprives the buyer of the benefits under the law is deemed void and unenforceable.

VI. Practical Applications

  1. Protection Against Forfeiture:

    • The law prevents sellers from arbitrarily forfeiting the payments made by the buyer in cases of default, ensuring that the buyer receives fair compensation for payments made.

  2. Equitable Grace Periods:

    • Buyers who encounter financial difficulties are granted reasonable time to settle overdue payments, balancing the interests of both buyer and seller.

  3. Enhanced Negotiability of Contracts:

    • The provision allowing the assignment of rights to another person improves the negotiability of installment contracts.

VII. Limitations of the Maceda Law

  1. It does not apply to buyers who have paid less than two years of installments, beyond the 60-day grace period protection.
  2. The law does not provide relief for installment buyers of properties other than residential real estate (e.g., commercial or agricultural lots).
  3. Refunds are limited to percentages of payments made and do not cover other expenses incurred by the buyer.

VIII. Case Law and Judicial Interpretation

The Maceda Law has been upheld by Philippine courts as a social legislation designed to protect the weaker party in real estate transactions. Key rulings include:

  1. Strict Compliance by Sellers:
    • Sellers must strictly comply with the requirements for cancellation and refund.
  2. Substantial Payments Favor the Buyer:
    • Courts tend to favor buyers who have substantially complied with their payment obligations, emphasizing the equitable nature of the law.

IX. Conclusion

The Maceda Law embodies the principle of social justice by protecting installment buyers of residential properties from unfair practices. It balances the interests of buyers and sellers, ensuring fairness in real estate transactions. Both buyers and sellers must be fully aware of their rights and obligations under this law to avoid disputes and ensure compliance.

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