How to Claim a Refund and Use the Grace Period (Philippine Context)

1) What the Maceda Law is (and why it matters for condo buyers)

The Maceda Law (Republic Act No. 6552, also called the Realty Installment Buyer Protection Act) protects buyers of residential real estate on installment when they default (fail to pay on time). Its core purpose is to prevent harsh forfeitures and ensure buyers get:

a grace period to catch up on unpaid installments, and/or
a refund (called cash surrender value) if the contract is cancelled after substantial payments.

Condominium units sold on installment—especially during pre-selling or in-house financing—are commonly covered.

2) When the Maceda Law applies to condo payments

Maceda Law generally applies if all these are true:

The property is residential real estate (condo unit used or intended for dwelling), and
The purchase is paid via installments (monthly/periodic payments), and
The buyer pays the seller/developer directly (typical in-house financing or pre-selling installment structures).

Common covered situations (condo context)

Pre-selling condo with monthly installments to the developer
In-house financing to the developer after turnover
Installment payments where title is not yet transferred to the buyer

3) When the Maceda Law may NOT apply (important limitations)

Maceda Law protection can be limited or unavailable in some setups:

Bank financing / housing loan amortizations to a bank: once the buyer is paying the bank (not the seller) under a loan/mortgage, Maceda Law typically does not govern the bank-borrower relationship.
Non-residential units (purely commercial/industrial property): Maceda is meant for residential realty.
Short-term reservation-only arrangements: whether the “reservation fee” counts as part of “installments” depends on how it’s treated in the contract (for example, if it’s credited to the price). Treat this as contract-specific.

4) Key concepts you must know before claiming anything

A. “Default”

Default usually means you missed one or more due dates under the contract (monthly amortizations, milestone payments, etc.).

B. “Total payments made”

This is the base for computing refunds (cash surrender value). It generally refers to amounts paid toward the purchase price—often including downpayment installments and amortizations—subject to how the contract classifies payments.

C. “Cash surrender value” (CSV)

This is the minimum refund the seller must pay a buyer who has paid enough years under the law, when the contract is cancelled.

D. “Notarial notice” requirement

Cancellation is not as simple as the developer sending a regular email. The law requires a formal notice of cancellation or demand for rescission by a notarial act, plus a waiting period, and for certain cases, payment of the refund before cancellation is effective.

5) Your rights depend on how long you’ve been paying

Maceda Law splits protections into two tracks:

Track 1: Buyer has paid LESS THAN 2 YEARS of installments

If you have paid under 2 years, you are still entitled to a minimum grace period:

Grace period (less than 2 years paid)

At least 60 days grace period from the date the installment became due.
During this grace period, you can pay the unpaid installments without additional interest (this is the protective idea of the law; contracts may still try to impose charges—these can be disputed if they defeat the statute’s protection).

If you still fail to pay after the grace period

The seller can cancel the contract only after:
1. sending a notarial notice of cancellation/demand, and
2. waiting 30 days from your receipt of that notice.

Under this “less than 2 years” track, the law does not grant a guaranteed cash refund the same way it does for buyers who have paid at least 2 years.

Track 2: Buyer has paid AT LEAST 2 YEARS of installments

This is where the strongest protections apply.

A. Grace period (at least 2 years paid)

You get a grace period of one month for every one year of installments paid.
- Example: If you paid 3 years of installments, you get 3 months grace period.
This grace period is typically without additional interest.
The grace period is commonly understood as usable once every five (5) years of the contract’s life (a special limit in the statute meant to prevent repeated rolling defaults).

During this grace period, you may:

Pay the unpaid installments and reinstate good standing, or
If you decide not to continue, prepare for cancellation/refund rights below.

B. Right to refund if the contract is cancelled (cash surrender value)

If cancellation happens after you’ve paid at least 2 years, the seller must refund a cash surrender value:

50% of the total payments made, at minimum, if you’ve paid 2–5 years; and
If you’ve paid more than 5 years:
- 50% + 5% per year after the 5th year,
- BUT capped at 90% of total payments made.

Refund computation examples

Paid 2 years total payments = ₱600,000
- CSV = 50% × ₱600,000 = ₱300,000
Paid 7 years total payments = ₱1,200,000
- Base 50% = ₱600,000
- Add 5% per year after 5th year = 2 years × 5% = 10%
- Additional 10% × ₱1,200,000 = ₱120,000
- Total CSV = ₱600,000 + ₱120,000 = ₱720,000 (60%)
Paid 14 years total payments = ₱2,000,000
- Base 50% = ₱1,000,000
- After 5th year: 9 years × 5% = 45%
- Total would be 95%, but cap is 90%
- CSV = 90% × ₱2,000,000 = ₱1,800,000

C. Cancellation is not effective until legal steps are followed

For buyers with at least 2 years paid, cancellation typically requires:

Notarial notice of cancellation/demand for rescission, and
At least 30 days from your receipt of the notice, and
Payment of the cash surrender value (the refund).

A practical way to think of it:

The seller must not treat the contract as cancelled “instantly.”
The law is designed so the buyer gets the required process and—when entitled—the refund.

6) Refund vs. “Forfeiture,” and what developers often try to deduct

Developers sometimes claim they can forfeit large amounts due to “liquidated damages,” “admin fees,” or “penalties.” Maceda Law sets minimum refund standards (and minimum process), so attempts to reduce your refund below what the law guarantees can be challenged.

That said, contracts and facts vary. Common dispute points include:

whether certain fees were part of “total payments made,”
whether penalties/interest are enforceable in a way that defeats Maceda protections,
whether the seller followed the required notarial notice and timing, and
whether the seller can offset legitimate unpaid obligations (this is often contested and should be reviewed carefully).

7) The grace period: how to use it properly (step-by-step)

If you want to keep the condo:

Confirm your “years paid” status
- Count how many years of installments you’ve actually paid (not merely how long since signing).
Compute the grace period
- <2 data-preserve-html-node="true" years paid → at least 60 days from due date of the missed installment
- ≥2 years paid → 1 month per year paid
Notify the developer in writing
- State you are invoking your statutory grace period under R.A. 6552.
- Ask for an updated statement of account showing:
  - unpaid installments covered by the grace period
  - any charges being imposed (so you can contest improper ones)
Pay within the grace period
- Make payments through traceable methods (bank transfer, official receipt).
- Keep proof: receipts, email acknowledgments, deposit slips.
Get written confirmation
- Request the developer’s written confirmation that your account is reinstated and updated.

8) How to claim your refund (cash surrender value) if you’re defaulted

This section assumes you have paid at least 2 years and the contract is being cancelled, or you are negotiating exit.

Step 1: Gather documents (build your “refund packet”)

Contract to Sell / Purchase Agreement
Official receipts / proof of payments (compile chronologically)
Valid IDs
Latest statement of account (if available)
Copy of any default letters, demand letters, or cancellation notices
Proof of receipt of notices (courier receipts, registry return cards, email trails—though law requires notarial act for cancellation)

Step 2: Compute your minimum refund

Make your own computation using:

Total payments made × applicable percentage
- 50% (2–5 years), or
- 50% + 5% per year after 5th year up to 90%

This establishes a baseline for negotiations and disputes.

Step 3: Send a formal written demand for refund (and accounting)

Deliver a letter to the developer requesting:

confirmation that cancellation is being processed consistent with Maceda Law, and
the cash surrender value refund computation and release schedule, and
a full accounting of how total payments were computed.

Use a method that proves delivery:

personal service with receiving copy signed, and/or
registered mail/courier with tracking.

Step 4: Watch the cancellation process (notarial notice + timing)

If the developer has not served a notarial notice, cancellation may be defective. If you receive a notarial notice:

note the date you received it (this anchors the 30-day period).

Step 5: Coordinate refund release

Ask where the developer will send the refund:

check, bank transfer, or pick-up
required forms, notarized requests, etc.

Keep everything in writing.

9) What if the developer refuses to refund or cancels improperly?

If a developer:

cancels without the required notarial notice,
refuses to recognize your grace period,
refuses to pay the cash surrender value,
delays indefinitely without lawful basis, or
imposes deductions that push your refund below statutory minimum,

you can escalate through formal channels. For condo/subdivision disputes involving developers, complaints are commonly filed with the housing adjudication system under the Department of Human Settlements and Urban Development (DHSUD) framework (the housing regulator/adjudicatory bodies evolved from the former HLURB structure). Remedies may include:

enforcement of statutory refund,
nullification of improper cancellation,
damages and other relief depending on facts.

Because procedure and forum choice can affect results (and time/cost), getting case-specific legal advice is often worth it when large sums are involved.

10) Practical timelines (typical default scenarios)

Scenario A: Paid ≥2 years, missed payments, wants to catch up

Missed installment due date
Grace period starts (months = years paid)
Buyer pays within grace → contract continues

Scenario B: Paid ≥2 years, wants to exit and claim refund

Buyer stops paying / defaults
Developer issues notarial notice of cancellation/demand
30 days from receipt elapse
Developer pays cash surrender value
Cancellation becomes effective consistent with the statute’s process

Scenario C: Paid <2 data-preserve-html-node="true" years, default

Missed due date
60-day grace period
If unpaid, developer sends notarial notice
30 days from receipt → cancellation may proceed

11) A simple demand letter template (customize to your facts)

Subject: Demand for Refund (Cash Surrender Value) and Accounting under R.A. 6552 (Maceda Law)

To: [Developer Name / Collections / Legal Department] Re: [Project], [Unit No.], [Contract No.], Buyer: [Your Name]

I am the buyer of the above condominium unit under a Contract to Sell dated [date]. I have paid installments totaling approximately ₱[amount], as supported by attached proof of payments.

Pursuant to Republic Act No. 6552 (Maceda Law), having paid at least two (2) years of installments, I am entitled to the statutory protections including the cash surrender value in case of cancellation. Based on my records, the minimum cash surrender value is [percentage]% of total payments made, or approximately ₱[amount], subject to your full accounting.

Accordingly, I respectfully demand:

A complete statement of account and accounting of total payments made and your cash surrender value computation;
The release of the cash surrender value in the amount not less than that required under R.A. 6552; and
Written confirmation that any cancellation is being processed in compliance with the notarial notice requirement and applicable statutory periods.

Please respond in writing within [7/10/15] days from receipt.

Sincerely, [Name] [Address / Contact] [Attach: contract, receipts, IDs, notices]

12) Practical tips to protect yourself while negotiating

Don’t rely on phone calls. Confirm everything by email/letter.
Organize payment proofs. A clean spreadsheet and receipt folder can decide the case.
Track receipt of notices. Dates matter (especially the 30-day period after notarial notice).
Avoid signing waivers blindly. Some exit documents try to waive statutory rights or undercut refunds.
Be precise with the computation. Start from the statute’s minimums.

13) Important reminder

This is general legal information for the Philippine setting and is not a substitute for advice on your specific contract and payment history. Developer practices, contract provisions, and documentation can materially affect outcomes—especially in disputes over what counts as “total payments made,” what deductions are permissible, and whether cancellation was procedurally valid.

If you want, share (1) how many months/years you paid, (2) total payments, (3) whether it’s pre-selling/in-house/bank financing, and (4) whether you received a notarial notice—then a precise grace-period and refund computation can be laid out for your scenario.