Defaulting buyer's rights under the Maceda Law

Dear PAO,

I agreed to buy an apartment unit, payable monthly for 10 years. I already paid one-and-a-half years' worth of installments. However, recently, I was unable to pay due to financial constraints. The developer threatened to cancel our contract immediately. Are they correct? I would like to know what my rights are under the law.

Shiela

Dear Shiela,

While your developer may cancel your contract in case you fail to pay your installments, they may only do so under the strict provisions of Republic Act (RA) 6552, otherwise known as the «Realty Installment Buyer Act» or the «Maceda Law.» This law was created to protect buyers of real estate on an installment basis against onerous and oppressive conditions. More specifically, Section 4 of the said law provides that:

«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."

Corollary thereto, in Priscilla Zafra Orbe vs. Filinvest Land, Inc., GR 208185, Sept. 6, 2017, through Associate Justice Marvic M.V.F. Leonen, the Supreme Court discussed the following:

«For cancellations under Section 4 to be valid, three (3) requisites must concur. First, the buyer must have been given a 60-day grace period but failed to utilize it. Second, the seller must have sent a notice of cancellation or demand for rescission by notarial act. And third, the cancellation shall take effect only after 30 days of the buyer's receipt of the notice of cancellation:

»Essentially, the said provision provides for three (3) requisites before the seller may actually cancel the subject contract: first, the seller shall give the buyer a 60-day grace period to be reckoned from the date the installment became due; second, the seller must give the buyer a notice of cancellation/demand for rescission by notarial act if the buyer fails to pay the