This article explains, in practical detail, how buyers of pre-selling subdivision lots or condominium units in the Philippines can respond when a developer serves a cancellation notice for missed “equity” payments. Plain-English guidance follows; it is not a substitute for advice from a Philippine lawyer who can review your documents.

Executive Summary

“Equity” (also called the down payment or DP) is usually paid in monthly installments before bank take-out or turnover. Missing these installments can trigger developer cancellation.
Cancellations must comply with Republic Act No. 6552 (the “Maceda Law”) and, for subdivision and condo projects, Presidential Decree No. 957 (the Subdivision and Condominium Buyers’ Protective Decree) and later regulations.
For buyers who have paid at least two (2) years of installments: you’re entitled to (a) a grace period of one month per year paid (no interest), and (b) a cash surrender value (CSV) refund of at least 50% of all payments made, plus 5% per year after the 5th year, up to 90% maximum. Cancellation requires a notarized notice and becomes effective only after 30 days and after the CSV is actually paid.
For buyers who have paid less than two (2) years: you’re entitled to a grace period of at least 60 days. Cancellation may proceed only after 30 days from your receipt of a notarized demand or cancellation notice if you still fail to pay. CSV generally does not apply in this bracket.
Any waiver of your statutory rights is void.
If the developer cancels without following these rules, you can dispute the cancellation and pursue remedies before the Human Settlements Adjudication Commission (HSAC).

The Legal Framework—Who and What Governs

Maceda Law (R.A. 6552). Governs sales of real estate on installment to buyers, including most residential house-and-lot and condo purchases paid in installments. It establishes grace periods, CSV refunds, and notice requirements.
P.D. 957 and its rules. Applies to subdivision and condominium projects (pre-selling or otherwise). It imposes licensing, disclosure, advertising, escrow, and consumer-protection duties on developers. It coexists with, and often strengthens, buyers’ Maceda rights.
DHSUD and HSAC. The Department of Human Settlements and Urban Development (DHSUD) regulates housing developers and projects; the HSAC adjudicates disputes between buyers and developers (formerly within the HLURB system).

Key Terms You’ll See in Your Papers

Reservation Agreement – short pre-contract form with a fee; it alone may not create a full installment sale yet.
Contract to Sell (CTS) / Deed of Conditional Sale – core contract governing equity installments and eventual transfer.
Notice of Cancellation / Notarial Demand – written, notarized notice starting the 30-day clock under the Maceda Law.
Take-out – when a bank pays the balance and you begin a mortgage; equity is usually fully paid before this.

First Aid: What To Do the Day You Receive the Notice

Calendar the dates: date on the letter, date you actually received it, and any deadlines cited.
Check if the notice is notarized. If it isn’t notarized, cancellation has not been validly triggered.
Pull your payment history: official receipts (ORs), statements of account, bank proofs. Count how many full months/years you have paid.
Identify your contract: reservation only, CTS signed, or already mortgaged?
Check project compliance: the project should have a valid License to Sell and registration—relevant if you need to raise P.D. 957 defenses.
Choose a path (below) and respond in writing within your applicable grace period.

Are You in the “Under 2 Years” or “2 Years or More” Bucket?

If you have paid less than 2 years of installments

You’re entitled to a minimum 60-day grace period to pay unpaid installments without interest during that period.
If you still fail to pay, the developer may cancel 30 days after your receipt of a notarized demand or cancellation notice.
CSV/refund generally does not apply here.

If you have paid 2 years or more

You’re entitled to a grace period of 1 month per year of paid installments (e.g., 3 years paid = 3 months’ grace), without interest.
The developer cannot treat the contract as cancelled until (a) 30 days have passed from your receipt of a notarized cancellation notice, and (b) the CSV has actually been paid to you.
Minimum CSV is 50% of all payments made. Add 5% per year after the 5th year, capped at 90%.

No waivers: Any contract clause reducing grace periods, denying CSV, or allowing immediate cancellation despite Maceda rights is void.

“Equity” vs. Other Installments—Does It Matter?

Developers often label the pre-take-out down payment as “equity” (e.g., 20% of the price payable over 24–36 months).
If those equity payments are part of the purchase price under an installment sale (CTS/conditional sale), Maceda applies.
If you’re still on a reservation agreement and no installment sale exists yet, you may have fewer statutory protections; however, once equity is being collected as part of the price, developers cannot sidestep Maceda obligations by labeling it “equity.”

Decision Tree: Four Main Response Strategies

A) Cure the default during your grace period

Pay the arrears within your applicable grace window (60 days if <2 data-preserve-html-node="true" years; or 1 month per year paid if ≥2 years).
Require the developer to waive interest/surcharge for payments made within the grace period (the law says no interest during grace).
Get a written reinstatement or “reactivation” confirmation.

B) Negotiate a reinstatement or revised schedule

If your grace period has lapsed or you need more time, ask for:
- Reinstatement on catch-up terms,
- Re-aging of the equity,
- Temporary interest/surcharge waiver,
- Application of excess or misapplied payments.
Keep everything in writing; pay only against official receipts.

C) Invoke your CSV refund rights (≥2 years paid)

Send a formal demand for CSV payment before any cancellation takes effect.
State your computation (see formulas below) and demand actual payment (not merely “credited”) since cancellation is ineffective until CSV is paid.
You may opt to rescind and walk away with the CSV if that’s better for you.

D) Dispute an illegal or premature cancellation

Grounds include: non-notarized notice, no 30-day wait, failure to pay CSV (≥2 years paid), unlawful waivers, overcharges, or project compliance issues under P.D. 957.
File a complaint with the HSAC for nullification of cancellation, reinstatement, damages, and/or refund.

How to Compute the Cash Surrender Value (CSV)

Let:

TP = total of all payments you actually made (reservation + equity + other amortizations applied to price).
Y = total full years you have paid installments.

Step 1 – Base CSV: 50% of TP. Step 2 – Add longevity increments: If Y > 5, add 5% of TP for each year beyond 5, capped so CSV ≤ 90% of TP.

Example:

You paid TP = ₱600,000 over 7 full years.
Base CSV = 50% × 600,000 = ₱300,000.
Extra years beyond 5 = 2 → add 10% × 600,000 = ₱60,000.
CSV = ₱360,000 (which is within the 90% cap = ₱540,000).

Tip: CSV is based on total payments made, not just the “equity.” Developers cannot deduct arbitrary “processing” or “marketing” fees from statutory CSV unless your contract and law clearly allow it—and even then, illegal or unconscionable deductions can be challenged.

Timeline Checklist (Put This On Your Fridge)

Day 0–1: Receive and date-stamp the notice; check if notarized.
Day 1–3: Audit payments; determine whether you are <2 data-preserve-html-node="true" years or ≥2 years paid.
Within grace:
- Cure arrears without interest or send a CSV demand (≥2 years) or propose a reinstatement plan.
Day 30 after receipt: If <2 data-preserve-html-node="true" years and you didn’t cure, cancellation may ripen (assuming the notice was notarized and proper).
≥2 years paid: Cancellation cannot ripen on Day 30 unless CSV is actually paid to you.
If the developer jumps the gun: File a written protest immediately and prepare an HSAC complaint.

Evidence You Should Gather

Reservation agreement, CTS/Deed of Conditional Sale, and all amendments.
Official receipts, bank proofs, statements of account, demand letters, and envelopes (to prove dates of receipt).
Project documents given to you (e.g., brochure, advertising), especially if misrepresentations are involved.
Any communications proposing reinstatement or rescheduling.

Keep originals; submit copies in proceedings.

Typical Developer Arguments (And Buyer Responses)

“You waived Maceda rights in the CTS.”
- Response: Waivers of statutory rights are void.
“We can cancel immediately per contract.”
- Response: The law requires (a) notarized notice; (b) 30-day period; and for ≥2 years paid—(c) CSV payment first.
“CSV is just a credit note, not cash.”
- Response: The law contemplates actual payment; withholding cash to coerce a settlement is improper.
“Interest and penalties keep running during the grace period.”
- Response: No interest may be imposed on installments paid within the statutory grace period.
“Equity isn’t covered by Maceda.”
- Response: If equity is part of the price under an installment sale, Maceda protections apply.

Where and How to File a Case

Forum: HSAC (regional office with jurisdiction over the project or buyer’s residence).
Reliefs: Nullify illegal cancellation; compel reinstatement; order payment of CSV; damages; attorney’s fees; interest; compliance with P.D. 957 obligations.
Process (high level): Complaint with verification and evidence → developer’s answer → mediation/conciliation → adjudication → decision → appeal as allowed by rules.
Urgent measures: You may seek interim relief (e.g., to stop transfer/sale of your unit to another buyer) if warranted.

Prescription: Actions on written contracts generally prescribe in ten (10) years from breach. Don’t delay.

Special Scenarios

Reservation-only stage: If you only paid a reservation fee and no installment sale exists yet, Maceda protections may not have kicked in; still, unfair forfeitures or deceptive practices can be challenged under P.D. 957 and consumer laws.
Post take-out default (bank mortgage): Once the bank has taken out the balance, your relationship with the developer changes; cancellation threats shift to foreclosure rules with the bank, not equity cancellation by the developer.
Project noncompliance or misrepresentation: Separate grounds for relief exist under P.D. 957 (e.g., missing amenities, delays, changes to plans).

Practical Scripts You Can Adapt

1) Grace-Period Cure & Reinstatement Request

Subject: Account [Buyer’s Name, Unit/Block/Lot] — Payment Cure Within Statutory Grace Period I acknowledge receipt on [date] of your notarized demand/cancellation notice. Under R.A. 6552, I am within my statutory grace period of [60 days / one month per year paid (specify years)]. Enclosed is payment of ₱[amount] covering all arrears cured within the grace period, without interest as provided by law. Kindly reinstate my account and confirm in writing that no penalties or interest were charged for amounts paid within the grace window.

2) CSV Demand (≥2 Years Paid) & Protest of Premature Cancellation

Subject: Illegal/Premature Cancellation; Demand for Cash Surrender Value I have paid [Y] full years of installments totaling ₱[TP]. Under R.A. 6552, any cancellation requires (a) notarized notice, (b) a 30-day period, and (c) prior payment of CSV computed at not less than 50% of TP plus 5% per year after the 5th year, up to 90%. Your cancellation is ineffective absent actual CSV payment. I demand payment of ₱[CSV] within [X] days. I reserve my rights to file before HSAC for nullification of the cancellation and damages.

Frequently Asked Questions

Q: Can the developer keep everything I paid if I miss a few equity months? A: Not if Maceda applies. For ≥2 years paid, you’re entitled to CSV and the cancellation is ineffective until you’re paid. For <2 data-preserve-html-node="true" years, you still get a 60-day grace period and proper notarized notice.
Q: The notice wasn’t notarized. Does it count? A: A non-notarized letter does not start the Maceda cancellation timeline.
Q: Can I still be reinstated after cancellation? A: Often yes, by mutual agreement. If cancellation was illegal or premature, you can seek HSAC relief for reinstatement.
Q: Do penalties keep accruing while I’m within the grace period? A: No; installments paid within the statutory grace period should be interest-free.

Quick Reference—Your Buyer Rights at a Glance

Situation	Your Rights	What Developer Must Do Before Cancellation
< 2 years of payments	≥ 60-day grace to pay arrears without interest	Serve notarized demand; wait 30 days after your receipt if you still don’t cure
≥ 2 years of payments	Grace of 1 month per year paid without interest; CSV ≥ 50% of total payments (+5%/yr after 5th, max 90%)	Serve notarized cancellation; wait 30 days and pay CSV; only then may cancellation take effect
“Waiver” clauses	Void if they reduce or remove your statutory rights	N/A
Disputes	File with HSAC for reinstatement, refund, damages	N/A

Final Pointers

Dates and notarization decide many cases—document both.
Do not ignore a notice: respond in writing within your grace period.
Pay only against official receipts, and keep copies.
If the developer won’t honor statutory rights, escalate to HSAC.

If you want, share (1) your CTS or conditional sale contract, (2) the cancellation letter (with dates), and (3) your payment ledger. I can draft a tailored response and compute an exact CSV based on your figures.