Right of refund under Maceda Law

Dear PAO,

I have been paying a subdivision lot on installment basis for three years. Unfortunately, the recent pandemic has affected our savings and cash flow. Due to this, we intend to seek a refund from the developer of the amount that we could recover pursuant to the so-called Maceda Law. Regretfully, the developer and our real estate agent were uncooperative and did not assist us on our request. May we know if we can really demand for the refund and may we know where we can ask for assistance/ complaint for such?

Kent

Dear Kent,

The answer to your question is best addressed by the provisions of Republic Act (RA) 6552, otherwise known as the “Realty Installment

Buyer Act” or the “Maceda Law.” Succinctly, Section 3 (b) of the said law reads:

“Section 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:

(a) x x x

(b) 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 (50) percent of the total payments made and, after five years of installments, an additional five (5) percent every year but not to exceed ninety (90) percent of the total payments made: Provided, that the actual cancellation of the contract shall take place 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 and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.” (Emphasis and underscoring supplied)

Applying the foregoing, it is clear that a buyer of a real estate on installment basis who had paid at least two years of installment payments is entitled to a refund equivalent to fifty (50) percent of the cash surrender value of the total payments made. Moreover, for purposes of this computation, it must be noted that the down payments made, deposits or options on the contract must also be included in the total number of installment payments made for purposes of the refund.

In the event that the buyer on installment basis fails to receive the necessary assistance from the developer, dealer, broker, agent or salesman in the enforcement of his/her right to refund under the Realty Installment Buyer Act, the latter may file a verified complaint or a duly accomplished complaint before the Regional Arbitration Branch (“RAB”) of the Human Settlements Adjudication Commission (“HSAC”), which has jurisdiction over the region where the project involved is located as provided in the Human Settlement Adjudication Commission En Banc Resolution Number 8 series of 2021, or commonly referred to as the Rules of Procedure of the HSAC. For your guidance, Rule 1, Section 2 of the said rule dictates:

“Section 2. Coverage. — These rules shall govern the proceedings before the HSAC and shall apply to the following disputes

or controversies:

(a) Cases involving subdivisions, condominiums, memorial parks and similar real estate developments:

(1) x x x;

(2) Claims for refund and other claims filed by a subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman x x x.”

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.