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REPUBLIC ACT NO. 6552

REALTY INSTALLMENT BUYER PROTECTION ACT

AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON

INSTALLMENT PAYMENTS

Section 1. This Act shall be known as the “Realty Installment Buyer Act.”

Sec. 2. It is hereby declared a public policy to protect buyers of real estate on installment

 payments against onerous and oppressive conditions.

Sec. 3. In all transactions or contracts involving the sale or financing of real estate oninstallment 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 cancelled, 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 paymentsmade, and, after five years of installments, an additional five per cent every year but notto 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 actand 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.

Sec. 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 becamedue.

If the buyer fails to pay the installments due at the expiration of the grace period, theseller 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.

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Sec. 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the

same to another person or to reinstate the contract by updating the account during the

grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

Sec. 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of 

the purchase price annotated in the certificate of title covering the property.

Sec. 7. Any stipulation in any contract hereafter entered into contrary to the provisions of 

Sections 3, 4, 5 and 6, shall be null and void.

Sec. 8. If any provision of this Act is held invalid or unconstitutional, no other provisionshall be affected thereby.

Sec. 9. This Act shall take effect upon its approval.

Rights of a Defaulting Buyer under RA 6552, Realty Installment BuyersProtection Act (MACEDA LAW)

A.) Right to update payments without additional interest or in the alternative a

refund of cash surrender value.

There are two categories of buyers accorded protection under this law:1. a buyer with at least 2 years of installments under Section 3 RA 6552, and

2. a buyer with less than 2 years of installments under Section 4 RA 6552.

I.) Buyer with at least two (2) years of installment – Section 3 RA 6552If the buyer in this category defaults in the payment of his succeeding

installments, he is entitled to the following rights:

a. to pay without additional interest the unpaid installments due within the totalgrace period earned by him. Said grace period is equal to one (1) month for 

every year of installment payments he has made. Here the buyer has at least

two (2) months grace period for he should have paid at least two (2) years of installments to avail of the rights under this section.

This right can be exercised by the buyer only once in every five years of the

life of the contract.

 b. to be refunded of the cash surrender value of his payments equal to 50% of his total payments if the contract is cancelled. But if he has paid five years

or more, he is entitled to an increase of 5% every year and so on but the cash

surrender value shall not exceed 90% of his total payments.The actual cancellation of the contract referred to above shall take place only:

1. after 30 days from receipt by the buyer of the notice of cancellation or 

demand for rescission, AND2. upon full payment to the buyer of the cash surrender value.

In the computation of the total number of installment payments the following

are included:

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1. down payment and

2. deposit or option money

Section 3 of RA 6552 provides, thus:“SECTION 3. In all transactions or contracts, involving the sale or 

financing of real estate on installment payments, including

residential condominium apartments … 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 duewithin 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 itsextensions, if any.

“(b) if the contract is cancelled, the seller shall refund to the buyer the

cash surrender value of the payments on the property equivalent tofifty per cent of the total payments made and, after five years of 

installments, an additional five per cent every year but not to exceedninety 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 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.”

II.) Buyer with less than 2 years of installments Section 4 RA 6552

If he has paid less than two (2) years of installments, he still has the right to pay within a grace period of not less than sixty (60) days from the date the

installment became due.

If the buyer fails to pay the installment due at the expiration of the grace period, i.e. 60 days, the seller may cancel the contract after 30 days from

receipt by the buyer of the notice of cancellation or demand for rescission of 

the contract by a notarial act.

Here the buyer is not entitled to any refund.

Section 4 of RA 6552 provides, thus:

“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 become 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.” B.) Right to Assign/Reinstate Contract – The buyer has

a right to sell or assign his

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rights over the lot or unit to another person or reinstate the contract by updating the

account provided this is done during the grace period and before actual cancellation

of the contract.Section 5 of RA 6552 states:

“SECTION 5. Under Sections 3 and 4, the buyer shall have the right to

sell his rights or assign the same to another person or to reinstate thecontract by upgrading the account during the grace period and before

actual cancellation of the contract. The deed of sale or assignment

shall be done by notarial act.”C.) Right to Advance Payment without Interest and Annotation of Full Payment in

the Title Subject of the Sale – The buyer has the right to pay in advance any

installments or the full unpaid balance without interest any time and have such full

 payment annotated in the title.Section 6 of RA 6552 states:

“SECTION 6. The buyer shall have the right to pay in advance any

installments or the full unpaid balance of the purchase price any time

without interest and to have such full payment of the purchase priceannotated in the certificate of title covering the property