January 8, 2014 at 5:32 pm
hi, what if i voluntarily withdraw the property bought because of financial reason. I paid almost 82% of the total price. The Seller’s contract stated that if the buyer failed to pay the remaining installment/monthly mortgage of whatsoever reason the seller will forfeit all payments as liquidated damages.
Could i still have the chance to get any refund of my money?
I would really appreciate your help.
Vernon Ceballos says:
November 14, 2013 at 3:10 am
what happens if buyer cancelled the contract due to the seller’s inability to complete its promise to complete defective house and that the buyer has already paid 19 of the 24 monthly equities. The duration of payment here is 24 months but buyer has completed the 19 months payment, so how will the Maceda Law (rep act 6552) come into play here?
There are two types of situations where the buyer does not pay to the developer the monthly amortization for the property: (1) the buyer fails to pay because of his own financial reasons; and (2) the buyer fails to pay because the seller failed to fulfill its promise to deliver the agreed-upon house and lot.
In the first case (when you stop paying because of financial reasons), the Maceda Law (Republic Act No. 6552, the Realty Installment Buyer Act) applies. In the second case (when the seller fails to fulfill its obligations), Presidential Decree No. 1344, as amended, applies.
FIRST CASE (when buyer stops paying because of financial reasons)
The law provides for a remedy, in particular, Republic Act No. 6552 or the Realty Installment Buyer Act. You can read the full law here – http://www.lawphil.net/statutes/repacts/ra1972/ra_6552_1972.html
You can also go to HLURB to ask for assistance in your problems such as computation of refunds and failure of the developer to deliver what he has promised.
So we have different scenarios:
The first scenario – you have paid less than two years of installments: In this case, the seller should give the buyer a grace period of at least 60 days to pay the amount due – via written notice. If the buyer still fails to pay after the expiration of the grace period, the seller can cancel the contract through a notarial demand for cancellation. Actual cancellation of the contract takes place after 30 days from buyer’s receipt of notice. The buyer can: (a) assign the contract to a third person via notarial act before it is cancelled; or (b) update the account by paying the due installments during the grace period. There is no refund.
The second scenario – you have paid at least two years of installments: In this case, the buyer is entitled to a grace period of one month for every year of installment made. He has the right to pay, without additional interest, the unpaid installments due within the total grace period. This right can only be exercised once every five years of the contract.
If the buyer still fails to pay the unpaid installments due during the grace period, the seller may cancel the contract in the same way as the first scenario, via notarial demand for cancellation. Actual cancellation takes place after 30 days from: (a) receipt of notice or demand; and (b) full payment of refund.
If the buyer paid two to five years of installments, he is entitled to a refund of the cash surrender value of the payments on the property (including down payments, deposits or options) equivalent to fifty per cent (50%) of the total payments made.
For every year of installments made in excess of five years, the buyer is entitled to an additional five percent (5%), but not to exceed ninety percent (90%) of the total payments made.
So if the buyer paid 6 years of installments, he is entitled to 55% refund of the total payments made. If he made 7 years of installments, he is entitled to 60% refund, and so on. However, his refund cannot exceed 90% of the total amount paid.
For an accurate computation of your refund, please ask the HLURB’s help. Don’t forget that you can research all this information from the internet.
By the way, the Maceda law does not cover industrial lots, commercial buildings , and sales to tenants under RAs 3844 & 6389 (Code of Agrarian Reforms of the Philippines).
SECOND CASE (when the seller fails to fulfill its obligations):
What if you were a victim of fraudulent acts of the developer, i.e., consistently paying the monthly amortization only to find out that the unit was already previously sold to another, or the unit being delivered is substantially not what was agreed upon.
If you have experienced this, do not worry. The law provides for a remedy.
Presidential Decree No. 957 (1976) provides for penalties for violations on the regulations of the sale of subdivision lots and condominiums.
Presidential Decree No. 1344 (1978) provides for the exclusive jurisdiction of the National Housing Authority (NHA) to hear the following cases:
(a) Unsound real estate business practices;
(b) Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and
(c) Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.
Executive Order (EO) No. 648 dated 7 February 1981 transferred the regulatory and quasi-judicial functions of the NHA to the Human Settlements Regulatory Commission (HSRC). The HSRC was renamed as the Housing and Land Use Regulatory Board (HLURB), pursuant to EO 90 dated 17 December 1986.
So now, cases falling under the jurisdiction of NHA under PD 1344 (as above-enumerated) are now with HLURB. More often than not, in these cases, you can get a full refund of your payments. If you have experienced any of the above-mentioned practices from these real-estate developers, please visit the HLURB at HLURB Bldg., Kalayaan Ave. corner Mayaman St., Diliman, Quezon City. There will be government officials there who will be willing to help you! You may also call them at +632 924 3378 or +632 934 3384.