Maceda Law not always applicable in granting refund
"I bought a house and lot through the help of Pag-Ibig fund loan. After several years of payment, however, I failed to pay my monthly amortization. Consequently, after several notices, I finally received a notice of foreclosure. A friend of mine informed me of the so-called Maceda Law, which entitles me to some kind of a refund of payment upon cancellation. Am I entitled to this refund under the said law?
The answer to your query is in the negative. An examination of the facts that you have narrated would indicate that although you are paying for a monthly amortization for several years, the same is not by reason of the fact of installment payment due with the House developer in which Republic Act 6552, otherwise known as the “Maceda Law,” would apply. Instead, it appears that the monthly payment is for the payment of the loan agreement with Pag-Ibig.The Maceda Law provides that its provisions granting certain relief to buyers of real property only apply to transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments. To be precise, Sections 3 and 4 of the Maceda Law provide, to wit:
“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 (3844), as amended by Republic Act Numbered Sixty-three hundred eighty-nine (6389), 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.“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.”
Responding to your question regarding the provision under the Maceda Law on refund, the law states that if a buyer on installment basis has paid at least two years, he is entitled to the cash surrender value of the payments on the property equivalent to 50 percent of the total payments made, and, after five years of installments, an additional 5 percent every year, but not to exceed 0 percent of the total payments made.Nonetheless, as previously mentioned, you are not entitled to the benefits of refund under the Maceda Law because the supposed balance that you have to pay for the real estate developer has already been paid for in full by Pag-Ibig through the loan. In other words, in essence, you have already paid the purchase price in full by availing of the loan. The subsequent monthly payments that you are paying monthly before Pag-Ibig are not payment for the balance of the purchase price, but for the loan with Pag-Ibig, the interests accruing on the principal loan, and the charges that may be or may have been incurred.Thus, in so far as you and Pag-Ibig are concerned, the governing law applicable are the provisions under Act 386, otherwise known as the “Civil Code of the Philippines,” on loan.On this note, as a security for the loan, the parties can secure its payment through the execution of a Real Estate Mortgage (REM). Consequently, the reason perhaps why you received a notice of foreclosure is because of the mortgagee Pag-Ibig’s exercise of its right to foreclose the REM upon your default as the mortgagor.We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our narration of the same. Our opinion may vary when other facts are changed or elaborated.Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to email@example.com."
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"Maceda Law not always applicable in granting refund"
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