Claiming refund for recalled subdivision project

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Dear PAO,
I have been paying for three years for a house and lot in a subdivision located in the Bicol Region. I am supposed to complete payment two years from now. Unfortunately, the developer contacted us to inform that the subdivision project was recalled and it shall refund the money we have paid. We called the developer’s main office to fix the refund but they are giving us a hard time. Finally, the accounting department confirmed to us that we can only refund half of what we paid citing the Maceda Law. I believe that this is unfair since there is no fault on our part.
Mr. Cinco

Dear Mr. Cinco,
The Maceda Law or Republic Act (R.A.) No. 6552 otherwise known as “Realty Installment Buyer Protection Act” affords buyers on installment on the sale of real estate properties including residential condominium apartments certain rights where they have defaulted in the payment of succeeding installments. The buyer’s rights under the law include, among others: 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 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.

Accordingly, a buyer shall be entitled to refund in case his contract with the seller of the real estate property is cancelled. However, the said provision of R.A. No. 6552 shall be applicable only in case the buyer has made defaults in his succeeding payments. In your situation, the said law cannot be applicable in the cancellation of the developer of the contract involving the sale of a house and lot in a subdivision located in the Bicol region since the same was cancelled not because you defaulted in the payment of your installments. Indeed, the reason for the said cancellation, according to you, was the recall of the subdivision project. Thus, the failure on the part of the developer entitles you, among others, to rescind the contract with payment of damages (Article 1191, Civil Code). You may first send a demand letter to the developer to inform them of your demand. Thereafter, you may file a case in court when the developer refused to give in with your demand. You may also inquire with the Housing and Land Use Regulatory Board (HLURB) for administrative liability of the said developer in its failure to comply with its obligation.

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.


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