Dear PAO,
In January 2021, I bought a house and lot from a developer. Since then, I have been paying my monthly amortization amounting to Twenty-one Thousand Pesos (P21,000.00). Over the past three years, I have been making payments for the property, but the same has not been continuous since I failed to pay the amortization for a couple of months when I got laid off from work. The total amount that I have paid is Three Hundred Seventy-eight Thousand Pesos (P378,000.00). Now, I lost my job again, and I can’t afford to pay anymore. Am I entitled to a refund of my payments?
Marc
Dear Marc,
Please be informed that Sections 3 and 4 of Republic Act (R.A.) 6552, otherwise known as the “Realty Installment Buyer Act or Maceda Law,” provide that:
“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) 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.
“(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 percent of the total payments made, and, after five years of installments, an additional five percent every year but not to exceed ninety percent 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.
“Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.
“Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due.
“If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract 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.” (Emphasis supplied)
Relatedly, in the case of Orbe vs. Filinvest Land, GR 208185, Sept. 6, 2017, the Supreme Court, through Associate Justice Marvic M.V.F Leonen, ruled that:
“The phrase ‘at least two years of installments’ refers to value and time. It does not only refer to the period when the buyer has been making payments, with total disregard for the value that the buyer has actually conveyed.” (Emphasis supplied)
Based on the foregoing, a buyer who has paid a total amount equivalent to at least two (2) years’ worth of installments can pay within the grace period designated by law. In case the contract is canceled, the buyer is entitled to a refund of the cash surrender value at a rate that is graduated, and commensurate with the amount of payments made. Moreover, the Honorable Supreme Court held that the words “at least two years of installments” refer not only to the length of the payment period, but also to the amount paid.
In your situation, the equivalent of two years of monthly installments is P504,000.00. Although you have been able to pay for more than two years, the total amount you paid is only P378,000.00. Thus, based on the afore-quoted provisions of the law and jurisprudence, you are only entitled to avail the benefit of paying your past due amortization within the grace period provided therein, but not to the right to get a refund.
We hope that we were able to answer your queries. Please be reminded that 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 on.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]
