Dear PAO,
I bought a lot from a real estate company on installment basis but unfortunately I was not able to complete the monthly amortization.

I have filed for a refund last March 9, 2012 but when I inquired about the status of my refund they told me that they were still processing it. An employee told me that the refund will be given to me if someone buys the lot. Do I really have to wait until the lot is bought? How much will I recover?
Emma Rose
 
Dear Emma Rose,
The transaction you entered into with the real estate company is covered by Republic Act (R.A.)No. 6552 or the Realty Installment Buyer Act. Under the said law, a buyer of a real estate, the payment of which is on installment basis, is entitled to at least half of the amount paid, if he/she fails to pay the succeeding installments and he/she has been paying for at least two (2) years. Section 3 thereof provides:

“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, 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 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.”

Thus, assuming that you have paid the installments for at least two (2) years, you are entitled to refund at least half of the amount that you have paid to the said company. However, it is clear that the law did not mention that the refund is conditioned upon the sale of the lot by another person before the company pays you. Therefore, you may demand the refund within a reasonable period.

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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