Down Payment Refund After the Developer Sells the Unit to Someone Else (Philippines)

This article explains your rights and remedies when a developer sells “your” unit to another buyer after you’ve already paid a reservation fee or down payment. Philippine law cited here includes the Civil Code, Presidential Decree (PD) 957, the “Maceda Law” (RA 6552), RA 11201 (creating DHSUD and the Human Settlements Adjudication Commission or HSAC), and relevant jurisprudential principles. This is general information, not legal advice.

The Core Legal Idea

When a developer sells the same unit to another buyer, that is typically a breach of contract (or a “double sale”). Your baseline remedy is to undo the deal and get your money back with interest and damages, or to compel delivery of the unit (if legally feasible), plus damages. Which path you take depends on your goal and the factual posture (e.g., is the second buyer in good faith? has the title been transferred/registered?).

Sources of Rights

Civil Code (Obligations & Contracts)
- Article 1191 (Resolution): If one party breaches, the other may rescind (terminate) the contract or demand specific performance, in either case with damages.
- Article 1544 (Double Sale): For immovables (condos/house-and-lots), ownership goes to the buyer who first registers in good faith. If neither registers, then to the buyer first in possession; if none, the buyer with the oldest title. Implication: If the developer has conveyed and the second buyer registered in good faith ahead of you, your practical remedy shifts to refund + damages rather than forcing delivery of that exact unit.
- Articles 19, 20, 21: Abuse of rights/unlawful acts—basis for damages when the developer acts in bad faith.
- Articles 2200–2209, 2217–2220, 2232: Monetary remedies: actual/compensatory, moral, exemplary, and attorney’s fees (Art 2208) in proper cases.
PD 957 (Subdivision and Condominium Buyers’ Protective Decree)
- Requires a Certificate of Registration and License to Sell (LTS) before selling. Misrepresentation, selling without LTS, or bad-faith practices are punishable and support administrative sanctions and civil remedies.
- Administrative complaints historically went to HLURB; today, adjudication is with the HSAC (created under RA 11201, with the Department of Human Settlements and Urban Development, DHSUD, as the regulator).
RA 6552 (Maceda Law) — Installment Buyers
- Protects installment buyers of real estate (excluding industrial/commercial land and non-real-estate like parking slots unless integral).
- Its cash surrender value and grace periods primarily address buyer default, not the developer’s breach.
- Still useful for non-forfeiture logic: if the developer is at fault, forfeiture clauses and “non-refundable” labels generally cannot defeat your right to restitution.
Interest on Refunds
- Courts commonly apply 6% per annum legal interest on money due, from date of demand or filing until full payment (following Nacar v. Gallery Frames and BSP circulars).

What Payments Are Refundable?

Reservation fees and down payments are part of the purchase price. If the developer breaches (e.g., sells the same unit to another), you can demand a full refund of everything you paid (reservation, down payment, amortizations, miscellaneous/association fees related to the sale) plus legal interest.
“Non-refundable” labels or broad forfeiture clauses typically won’t protect the developer when they are in breach or acted in bad faith.
Incidental losses (e.g., bank charges, appraisal fees, loan fixing fees, rent you incurred due to delay) may be claimed as damages if you can prove them.

Your Strategic Choices

1) Rescission (Cancel the Deal) + Refund + Damages

Choose this if you no longer want the unit or cannot get it because it was transferred to a good-faith second buyer who registered first.

What to claim

Full refund of all amounts paid (reservation, down payment, amortizations, documented incidentals), plus 6% p.a. interest from written demand (or filing) until paid.
Damages: actual (receipted costs), moral (if bad faith, anxiety, humiliation), exemplary (to deter), and attorney’s fees when justified.

2) Specific Performance (Get the Unit) + Damages

Choose this if the unit can still legally be conveyed to you (e.g., you registered first or the second buyer is not in good faith or has not registered, and the factual matrix supports your superior right under Art. 1544).

What to claim

Conveyance of the unit, plus damages for delay (e.g., rentals you paid while waiting), and interest.

Practical note: Specific performance in double-sale scenarios turns on registration and good faith. If a second buyer already holds a Transfer Certificate of Title in good faith, courts normally protect the registered buyer, and your action is better framed as refund + damages against the developer.

Where and How to Enforce

Demand Letter (always start here)
- State the facts, elect your remedy (rescission or specific performance), demand refund or conveyance, claim interest and damages, and give a firm deadline (e.g., 10 banking days).
- Demand letters help start interest running and show bad faith if ignored.
Administrative / Quasi-Judicial Route
- File a complaint with the HSAC against the developer/project owner (and broker/agent if appropriate) for violations of PD 957 and related rules.
- Reliefs may include rescission, refund with interest, damages, and sanctions.
- DHSUD (regulatory) may also act on licensing/misrepresentation issues.
Civil Action in Court
- For Art. 1191 rescission or specific performance and damages, especially where double sale (Art. 1544) is central or annotations on title (e.g., lis pendens, adverse claim) are needed.
- You may annotate a lis pendens on the title to protect your claim in a pending case, when appropriate.
Criminal Angles (situational)
- PD 957 carries penal provisions for misrepresentation and selling without LTS/registration.
- In extreme deceit scenarios, elements of estafa under the Revised Penal Code may be evaluated with counsel.

Evidence Checklist

All payment proofs: reservation receipt, official receipts, bank proofs, amortization ledgers.
Contract to Sell / Reservation Agreement / Offer to Purchase, and project approvals (e.g., LTS number if provided).
Communications (emails, texts, chat) showing the unit designation and developer representations.
Second sale indicators: copies of a later buyer’s deed, a new CTS, or title search results; photos of turnover to someone else; marketing listings showing reallocation of your unit.
Losses: receipts for rent, moving costs, loan fees, appraisal fees, etc.

Timelines & Prescription

Written contracts: generally 10 years to sue (Civil Code Art. 1144).
Quasi-delict: 4 years.
Rescission for breach under Art. 1191 is typically treated as an action on a written contract (10 years).
Act promptly—earlier action strengthens your interest claims and practical leverage.

Frequently Disputed Clauses (and Typical Outcomes)

“Non-refundable reservation fee”: Refundable when developer is in breach or acted in bad faith.
“Developer may reassign unit”: If exercised to your prejudice after you paid and complied, this can be invalid or trigger rescission + damages.
“Liquidated damages” against buyer only: Cannot negate buyer’s statutory/civil remedies when developer is at fault.
“Force majeure” defenses**:** Don’t justify selling your unit to another buyer.

Interest, Taxes, and Costs

Legal interest: Typically 6% per annum, computed from demand (or filing) until full payment.
Taxes: A refund of your own payments is not income; damages may have different implications—consult a tax professional if significant.
Attorney’s fees / costs: May be awarded when the developer’s bad faith or the need to litigate is shown.

Practical Playbook

Gather evidence and timeline your payments and communications.
Run a quick title check (Registry of Deeds) to see if the unit was conveyed/registered to someone else.
Send a demand letter electing rescission + full refund + 6% interest + damages, or specific performance (with Art. 1544 analysis), within a clear deadline.
If ignored or refused, file with HSAC (PD 957 violation + civil reliefs) and/or file a civil case (rescission/specific performance + damages). Consider lis pendens where appropriate.
Document all additional losses while waiting—these support your damages claim.
Be open to settlement only if it fully makes you whole (full refund with interest and reasonable incidentals, or a clean conveyance of your unit with assured title)—and put settlement in writing.

Sample Demand Letter Skeleton (Short)

Subject: Demand for Rescission and Refund with Interest – Unit [Project/Building/Unit No.]

Dear [Developer], I purchased Unit [details] under [Reservation Agreement/CTS] dated [date] and paid a total of ₱[amount] (reservation + down payment + amortizations). I recently discovered that you have sold/allocated the same unit to another buyer on [date/facts]. This constitutes breach of our contract under Article 1191 of the Civil Code and violations of PD 957.

I hereby rescind our contract and demand a full refund of all amounts I paid, with legal interest at 6% per annum from receipt of this letter, plus damages (actual expenses, moral and exemplary, and attorney’s fees). Kindly remit payment within 10 banking days from receipt. Otherwise, I will file a complaint before the HSAC and pursue civil action for damages, with costs charged to you.

Sincerely, [Name, address, contact] [Attachments: proof of payments, contract, ID]

(If you want specific performance instead, replace “rescind” with “demand specific performance and conveyance,” add an Art. 1544 paragraph on priority, and still claim damages.)

Quick Answers to Common Questions

Can the developer keep my reservation/down payment? No—not when they breached. You can demand full refund with interest and damages.
What if the second buyer already holds the title? If they acquired and registered in good faith, your practical path is refund + damages versus the developer.
Do I need a lawyer? It’s highly advisable—especially for double sale cases, lis pendens, or HSAC proceedings.
How long will this take? Proceedings vary. Your demand letter helps both settlement and interest accrual.

Bottom Line

If the developer re-sold your unit, the law is squarely on your side. You can rescind and get your money back with interest and damages, or force delivery if legal priority favors you. Move quickly, document everything, and use the HSAC/courts as needed to enforce your rights.