bought a condo from Megaworld, payable over 72 months. Now, after paying 30 months of installments, he doesn't want to pay anymore. Megaworld told him that he has to forfeit his payment as damages. Is Megaworld correct?
My answer is the developer is wrong. The developer did not take into account the Maceda Law (http://www.lawphil.net/statutes/repacts/ra1972/ra_6552_1972.html) RA 6552 or otherwise known as the Maceda law requires that:
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 ... 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.
In this case, because the "friend" had purchased a residential condo, and had already paid 30 months of installments, then he has a right to two months of grace period within which to decide if he wants to continue payment. If he decides not to continue with payment of the remaining installments, then he can ask for the refund 50% of what he had already paid so far, including downpayments and the 30 installments.
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