Q: Can you please discuss Maceda Law computations for the benefit of Buyers who were affected by the pandemic as most developers charge penalties incurred and unpaid before refunding the 50%, to enlighten everyone.
Prof. Eden Dayrit, REC REA REB: This is a loaded question that is best divided into 2 parts to be better understood: RA 6552 and Bayanihan Act.RA 6552, known as the Maceda Law, named after the main author former senator Ernesto Maceda, or the Realty Installment Buyer Protection Act, was passed into law last August 26, 1972 to protect real property owners from inequitable conditions imposed on sale transactions involving real estate purchase financed through installment basis (Senate S.B. No. 2071 Explanatory Note introduced by Senator Maria Lourdes Nancy S. Binay.)
It’s salient features are as follows:
1. If Buyer has paid at least 2 years, he is entitled to a 30-day grace period of unpaid installments due without additional interest that can be availed once every 5 years. In case of cancellation of contract after notarial notice, Buyer can also exercise his Right to Refund amounting to 50% of payments made including amounts of downpayments, deposits or options on the contract, excluding penalties from 2nd to 5th year, plus 5% per year in excess of 5 years, up to a maximum of 90%. Refund is also called Cash Surrender Value.
2. If Buyer has paid less than 2 years, he is entitled to a grace period of not less than 60 days from the date installment is due. If Buyer fails to pay installments due at the end of the grace period, Seller is entitled to cancel the contract upon proper notarial notice. No refund can be made in this case.
3. Assignment. Buyer has the right to sell or to assign the property to others through a deed of sale or deed of assignment done by notarial act.
4. Reinstatement. Buyer also has the right to reinstate the contract by updating the account during the grace period before the cancellation of the contract.
Example of computation of refund:
Php2,000,000 Total amortizations including penalties
7 years paid
Rate of Refund = 50% for 2nd to 5th year + 5% on 6th + 5% on 7th = 60%
Amount of Refund = (Php250,000 + Php2,000,000 – Php60,000) x 60% = Php1,314,000
At the beginning of the pandemic, Bayanihan to Heal as One Act was enacted that gave a 30-day grace period from the lifting of quarantine on residential rents falling due within the period of the ECQ without interest or penalties. Total rent may be paid on staggered basis up to December 31, 2020. The passage of Bayanihan 2 a few months later addresses the gap on the loan payments for business owners.
For businesses with outstanding loans placed under community quarantine, the mandatory 30-day payment extension was extended equivalent to the number of days of the community quarantine (or as recommended by the BSP at least 60 days), meaning the maturity date of the loan is automatically pushed back. Specifically, for loans due on or before December 31, 2020, there will be no interest on interest and penalties until that date or a date amenable to both parties.
Therefore, should you have an existing bank (or any other financing institution) loan or in-house financing arrangement with the developer that falls within the criteria of Maceda Law, coupled with the extensions provided by the Bayanihan Act; and the lender is acting otherwise, it is best to set a meeting with them to discuss your rights as Buyer/Borrower to clarify if these laws were properly applied to your case. And collectively come up with acceptable actionable steps to either refinance, cancel and refund, or assign to someone else.
I hope this helps. Have anything to add? Comment below!