Canceling a Pre-Selling Condo Contract and Refund Rights (Philippines)

A practical, law-based guide to your options when life throws an emergency and you need out of a pre-selling condominium purchase in the Philippines.

The short answer

A personal emergency (job loss, illness, family crisis, etc.) does not automatically give a legal right to cancel and get a refund. Your relief typically comes from:

The Maceda Law (RA 6552) — protects buyers who purchased residential real property on installment (including condo units) and sets grace periods and cash-surrender value (CSV) refunds if you’ve paid long enough.
PD 957 (Subdivision and Condominium Buyers’ Protective Decree) — strong remedies (including full refunds with legal interest) if the developer is at fault (e.g., failure to develop, missed turnover, false/misleading ads).
Your contract — many developers have internal policies (assignment/assumption of balance, transfer to another unit/project, goodwill refunds).
Civil Code remedies — cancellation for seller’s substantial breach (not for buyer emergencies), or mutual cancellation by agreement.

Below is the comprehensive version with steps, computations, and templates.

Key laws & who handles disputes

RA 6552 (Maceda Law) – rights of buyers of residential real estate on installment (condos included).
PD 957 – regulates the sale of subdivision lots and condo units; protects buyers when developers fail their obligations.
Condominium Act (RA 4726) – framework for condo ownership and governance.
Civil Code – rules on breach, rescission (Art. 1191), fortuitous events (Art. 1174), and related doctrines.
Regulators/adjudicators:
- DHSUD (Dept. of Human Settlements and Urban Development) – regulation & licensing of projects/developers.
- HSAC (Human Settlements Adjudication Commission; formerly HLURB for adjudication) – primary venue for most buyer–developer disputes under PD 957/RA 6552.

What “pre-selling” usually looks like (paper trail)

Reservation Agreement (+ reservation fee)
Contract to Sell (CTS) (installments/down payment while under construction)
Deed of Absolute Sale (DOAS) and turnover (after full payment or bank take-out)

Your rights and math depend on (a) what you’ve signed and (b) how much and how long you’ve paid.

Emergencies & the law: plain language reality

Personal emergencies aren’t, by themselves, a legal ground to force the developer to cancel with a refund.
Fortuitous events/force majeure typically do not excuse an obligation to pay money (“genus non perit” – money doesn’t perish).
You can:
- Use Maceda Law protections (grace period/refund) if you qualify, or
- Request mutual cancellation/goodwill accommodation, or
- Assign/sell your buyer’s rights (often called Assumption of Balance/AOB) to a new buyer, with developer consent and fees.

When you can cancel and get money back

A) Maceda Law (RA 6552) – when you choose to stop

Coverage: Residential real property sold on installment (condo units qualify). Two tracks depending on how long you’ve paid:

Paid less than 2 years of installments
- Right: A grace period of at least 60 days to pay unpaid installments.
- If still unpaid after the grace period, the seller may cancel the sale, but only after 30 days from your receipt of a notarized cancellation/demand.
- Refund: No statutory cash refund required for this track (unless your contract/developer policy says otherwise).
Paid at least 2 years of installments
- Grace period: 1 month per year of installments paid (to cure default).
- Cash-Surrender Value (CSV) if you cancel:
  - 50% of total payments made, plus
  - +5% per year of installments after the 5th year, capped at 90% of total payments.
- “Total payments” generally include the reservation fee, down payment, and monthly amortizations you actually remitted. Penalties are not counted. (Whether interest/taxes are counted can vary by contract/agency computation; many exclude penalties and delinquency interest.)

Important mechanics under Maceda:

Cancellation by the seller is not effective until you actually receive a notarized cancellation/demand and 30 days pass.
You can reinstate by paying overdue amounts within the applicable grace period (before cancellation becomes effective).
Many CTSs allow assignment of your buyer’s rights to another person (often with fees and developer consent).

Examples (Maceda math):

You paid 3 years of ₱15,000/month + ₱50,000 reservation = ₱590,000 total paid.
- CSV = 50% × 590,000 = ₱295,000.
You paid 7 years (≥5 years) with ₱1,200,000 total paid.
- CSV rate = 50% + (2 years × 5%) = 60% ⇒ ₱720,000.
- (Never exceeds 90%.)

Tip: Count “years paid” by months of actual installments ÷ 12, rounding down to whole years.

B) PD 957 – when the developer is at fault

Use this when issues like these exist:

Failure to develop/delay well beyond promised timeline or missed turnover without valid cause.
Material deviations from approved plans or misrepresentations in ads (amenities, size, finishes) that were part of the inducement to buy.
Project/Unit issues that fundamentally impair your use/enjoyment or violate regulatory approvals.

Relief (buyer’s choice, case-by-case):

Cancel the sale and get reimbursement of all amounts paid, typically with legal interest; or
Demand completion/turnover/specific performance + damages.

PD 957 is powerful but hinges on developer breach. You’ll need proof (ads, brochures, CTS/annexes, DHSUD permits, promised turnover date, correspondence, site photos, expert reports).

C) Civil Code rescission (Art. 1191)

If the seller substantially breaches the contract (e.g., excessive delay, failure to deliver what was promised), you can sue to cancel and seek damages.

Usually invoked alongside PD 957, or when something falls outside PD 957/RA 6552.
Not a route for buyer emergencies alone.

What if you’re only at the reservation stage?

If you haven’t signed a CTS yet, the reservation fee is often labeled “non-refundable.”
However, once a Maceda-covered CTS is executed and you later qualify for CSV, that reservation typically counts toward “total payments” for refund computation.
Before CTS: refunds are contract/policy-driven; ask and negotiate—some developers allow partial refunds or conversion to another unit/project.

Bank loan denial / financing issues

If your CTS conditions the sale on successful bank take-out, check the clause: outcomes vary.
Some developers allow transfer to in-house financing or another project; others treat denial as buyer default (possible forfeiture).
Maceda still applies if the structure is installment on a residential unit (you may qualify for CSV depending on how long you’ve paid).

Practical exit paths if you have a personal emergency

Compute your Maceda position (years paid; expected CSV).
Negotiate:
- Voluntary cancellation with CSV (if eligible).
- Assignment/Assumption of Balance (AOB) to a new buyer (often faster cash recovery; check transfer/admin fees).
- Transfer to a cheaper unit or longer payment term.
Escalate on developer lapses using PD 957 (if applicable).
File at HSAC if talks fail (see “How to file,” below).

How to do it (step-by-step)

1) Prepare your file

CTS and any addenda; reservation slip & official receipts
DHSUD/HLURB permits, project brochures/ads, promised turnover date
Payment ledger/statement; emails/texts with the developer/broker
Photos, inspection reports (if alleging defects/delays)

2) Write to the developer (and broker)

Goal: a signed Cancellation Agreement and Refund/AOB terms.
Send via registered mail with return card, personal service with receiving copy, and email. Notarize your letter for formality.

Template — Request to Cancel & Compute CSV (Maceda):

Subject: Request for Cancellation and Cash-Surrender Value (RA 6552) – [Project, Unit] I purchased [Project/Unit] under Contract to Sell dated [date] and have paid [X years, Y months] of installments totaling ₱[amount] (including reservation/down payment). Under RA 6552 (Maceda Law), I am electing to cancel and claim the cash-surrender value of [rate]% amounting to ₱[amount]. Kindly confirm the refund amount and release date within 15 days, and advise requirements for closing my account. I remain willing to coordinate promptly. Sincerely, [Name, Address, Contact] [Attachments: receipts/ledger]

Template — Developer Breach (PD 957/Civil Code):

Subject: Demand to Rescind and Refund – PD 957/Civil Code – [Project, Unit] Due to [describe material breach—e.g., turnover delay from [date], deviations from approved plan, misrepresented amenities], I demand rescission and full reimbursement of all payments with legal interest, plus damages as allowed by law. Please confirm within 10 days; otherwise, I will file with HSAC for appropriate relief. Sincerely, …

3) If ignored or refused: file at HSAC

Where: HSAC Regional Adjudication Branch with jurisdiction over the project.
What to file: Verified Complaint, Certificate of Non-Forum Shopping, evidence, and prayer (e.g., rescission/refund/CSV, interest, damages, attorney’s fees).
Flow: Answer → preliminary conference/mediation → position papers → decision.
Appeals: To the HSAC Commission, then to the Court of Appeals (Rule 43).
Execution: Writ of execution for refunds after decision becomes final.

Computation guide (Maceda CSV)

Determine “years paid” = full months of actual installment remittances ÷ 12 (ignore partial years).
Total payments = reservation + down payment + monthly amortizations you actually paid (exclude penalties/delinquency interest; practice varies on interest/taxes—clarify in computation).
CSV rate
- < 2 years: no CSV (only 60-day grace; potential forfeiture per contract).
- 2–5 years: 50% of total payments.
- > 5 years: 50% + 5% per year after 5th, cap at 90%.
Deductions: Expect developers to net out unpaid dues, utility charges, documented damages, and transfer/processing fees where applicable. Disputed deductions can be litigated.

FAQs

Is the reservation fee refundable?

Before CTS: usually contractual (often non-refundable).
After CTS & qualifying under Maceda: it generally counts toward “total payments” used to compute your CSV.

Can the developer keep everything if I default early?

If you’ve paid <2 data-preserve-html-node="true" years, the law requires a 60-day grace period and a notarized 30-day cancellation notice to make forfeiture effective. Some contracts go beyond this and allow partial goodwill refunds—ask.

What about interest, VAT, or taxes I paid?

Penalties/delinquency interest are typically not refundable.
Treatment of interest and VAT varies (contract and agency practice). Many buyers recover principal-type payments; VAT already remitted to the BIR is often not returned by developers. Challenge improper deductions if needed.

Broker’s commission?

Commission issues are between developer and broker. They do not reduce the statutory refund you’re entitled to.

Can I sell my rights instead?

Often yes (AOB/assignment), subject to developer consent and fees. This can be the quickest way to recover most of what you paid.

Turnover was delayed. Do I get anything extra?

Under PD 957/Civil Code, legal interest on your payments and damages may be awarded if the developer is at fault.

Practical checklist

Compute your Maceda position (years paid; expected CSV or grace).
Identify developer breaches (if any) for PD 957 leverage.
Decide strategy: CSV, AOB, transfer, or PD 957 rescission.
Send formal letter(s) (keep proof of service).
Negotiate timelines and deductions in writing.
If needed, file at HSAC with complete evidence.

Final notes & cautions

Laws create minimum protections; your contract or a developer’s policy may grant more.
Temporary emergency laws (e.g., moratoria/grace periods during nationwide crises) have existed in the past but are time-bound; check current measures before deciding.
This guide is general information, not legal advice. For high stakes or contested cases, consult a Philippine real-estate lawyer or seek help at HSAC/DHSUD.

If you want, tell me (a) how many months you’ve paid and (b) how much in total—you’ll get a quick, tailored CSV estimate and the best next step for your situation.