Maceda law does not apply to loan transaction

Dear PAO,

My employer granted me a housing loan, and the proceeds were used to procure a house and lot. I mortgaged the house and lot to them, and the amortization payments were deducted from my salary. Unfortunately, I was terminated from work, so I failed to make several monthly payments. My former employer is now collecting the remaining balance of my loan. I heard that there is a law giving a buyer a certain grace period to pay the arrears. Would that law apply to my situation?

Wilmaine

Dear Wilmaine,

The law which protects buyers of real estates on an installment basis is Republic Act 6552, otherwise known as the «Realty Installment Buyer Act.» Section 3 of the same law provides that:

«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 per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent 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. xxx

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