1) The basic idea

When you buy a residential condo unit on installment (common in preselling projects) and later default or decide you can’t continue paying, Philippine law gives you minimum protections on grace periods, cancellation rules, and—if you’ve paid long enough—refunds.

The centerpiece law is Republic Act No. 6552 (the “Maceda Law” or Realty Installment Buyer Protection Act). It sets minimum buyer rights that developers/sellers generally cannot waive or contract away.

This article is general legal information, not legal advice for a specific case.

2) Laws that commonly apply to preselling condo refunds

A. Maceda Law (RA 6552)

Applies to sale/financing of real estate on installment payments, including residential condominium units. It governs what happens when the buyer fails to pay installments and the seller wants to cancel.

B. PD 957 (Subdivision and Condominium Buyers’ Protective Decree)

For preselling condos, PD 957 (and rules of the housing regulator now under DHSUD) often matters, especially when the reason for refund is developer fault (delayed completion/turnover, non-development, license issues, misrepresentation, etc.). Practical point: If the developer is at fault, you may be entitled to stronger remedies than Maceda’s minimum cash surrender value (often argued as full refund, sometimes with interest/penalties depending on facts and orders).

C. Civil Code concepts (rescission, obligations & contracts)

Developers sometimes invoke “rescission” or “cancellation” clauses. Maceda modifies how those remedies can be enforced in installment residential sales—especially on notice and refund conditions.

3) Does the Maceda Law apply to your preselling condo?

Usually yes, if:

The property is residential (a condo unit intended for residential use), and
The purchase is payable on installments (reservation + monthly DP + monthly amortization, etc.), and
The issue is buyer non-payment / inability to continue and the seller is moving to cancel (or you are negotiating exit based on your statutory rights).

Usually no / limited, if:

It’s industrial or certain purely commercial real estate arrangements (Maceda is aimed at residential installment buyers), or
You are already in a bank loan/mortgage phase where the developer is fully paid and the dispute is now mainly between you and the bank (foreclosure rules apply), or
You’re not really in an installment sale arrangement (rare for preselling).

Most preselling condo “Contract to Sell” arrangements are treated as installment arrangements for Maceda-protection purposes in practical enforcement—developers still must respect Maceda’s grace periods and cancellation rules when the buyer has paid enough to qualify.

4) Key Maceda thresholds: the “less than 2 years” vs “at least 2 years” divide

Your strongest rights depend on how long you’ve been paying installments.

Category 1: You’ve paid LESS than 2 years of installments

You get:

Grace period: at least 60 days from the due date of the missed installment to pay without additional interest/penalty (as a statutory minimum concept).
Notice requirement before cancellation: the seller may cancel only after a 30-day period from your receipt of a notarial notice of cancellation or demand for rescission.

You generally do not get a statutory refund (cash surrender value) under the Maceda minimum in this category—unless your contract provides better terms or another law (like PD 957) applies due to developer fault.

Category 2: You’ve paid AT LEAST 2 years of installments

You get three major protections:

Grace period (bigger): one (1) month per year of installment payments made, but not less than 60 days.
- This grace period is to update your account (pay arrears) without interest.
- The law also limits how often you can use this specific grace period: once every five (5) years of the contract’s life and its extensions (important if you’ve defaulted before).
Cash Surrender Value (CSV) refund upon cancellation: If the seller cancels, you’re entitled to a minimum refund of:
- 50% of total payments made, if you’ve paid at least 2 years; and
- After 5 years, an additional 5% per year of total payments made, but the total refund cannot exceed 90% of total payments made.
Strict cancellation mechanics + notarial notice: Cancellation requires:
- A notarial notice of cancellation/demand for rescission served to you, and
- A 30-day period after receipt before cancellation can take effect, and
- For buyers entitled to CSV, the law is commonly read/enforced to mean cancellation is not properly effected unless the CSV is paid (the refund is a condition tied to valid cancellation).

5) What counts as “total payments made” for refund computation?

In preselling condos, payments usually include:

Reservation fee
Monthly down payment (often spread over months)
Lump sums (spot DP, anniversary payments, etc.)
Installments paid under in-house financing before bank takeout

General approach: Anything credited to the purchase price is typically argued as part of “total payments made.”

Watch-outs:

Some developers label the reservation fee as “non-refundable” or as “processing/option.” If it was actually applied to the price or treated as part of your paid amount, you have a strong argument it should be included in total payments for CSV computation.
Penalties, late payment charges, and admin fees are commonly disputed; Maceda’s “total payments” concept focuses on what you paid toward the purchase price.

6) How to compute the Maceda refund (Cash Surrender Value)

Step 1: Determine eligibility

If you’ve paid <2 data-preserve-html-node="true" years: Maceda does not guarantee a refund (but check PD 957 / contract terms / developer fault).
If you’ve paid ≥2 years: compute CSV.

Step 2: Compute the minimum CSV

Let TP = total payments made (amounts credited to the price).

If 2 to 5 years paid:

Minimum refund = 50% of TP

If more than 5 years paid:

Minimum refund = 50% of TP + (5% × TP × number of years beyond 5)
But cap at 90% of TP

Example A (3 years paid)

TP = ₱600,000 CSV = 50% × 600,000 = ₱300,000

Example B (7 years paid)

TP = ₱1,000,000 Base = 50% × 1,000,000 = 500,000 Extra years beyond 5 = 2 years → extra = 5% × 1,000,000 × 2 = 100,000 CSV = 600,000 (60% of TP)

Example C (15 years paid)

Extra years beyond 5 = 10 → 50% + 50% = 100% but capped at 90% CSV = ₱900,000 (if TP = ₱1,000,000)

7) The legally compliant cancellation process (developer side)

A common source of disputes is improper cancellation. Under Maceda, developers cannot just “auto-cancel” after missed payments.

Minimum requirements

Grace period must be honored (depending on your payment history category).
Developer must send a notarial notice (not just email/text) of cancellation or demand for rescission.
Cancellation can only occur after 30 days from your receipt of that notarial notice.
If you’re entitled to CSV, refund/payment of the cash surrender value is tied to effective cancellation in practical enforcement—developers who refuse to refund but insist the contract is cancelled are often challenged.

Practical takeaway: If the developer did not serve a proper notarial notice and/or did not respect the grace period, you may argue the cancellation is invalid, giving you leverage for reinstatement, proper refund, or settlement.

8) What if you want to cancel voluntarily?

Buyers often ask: “If I’m the one cancelling, do I still get Maceda refund?”

Maceda is framed around buyer protection when the buyer fails to pay and the seller cancels. In real life, “voluntary cancellation” is often treated as:

You stop paying → developer initiates cancellation → Maceda process/CSV applies (if qualified), or
You negotiate a mutual cancellation/termination agreement.

Best practice: Even if you initiate the exit, anchor your request on Maceda minimum rights (if you’ve paid ≥2 years) and insist on:

Written accounting,
Proper computation of CSV, and
A documented refund timeline.

9) Alternatives to cancellation: options Maceda recognizes for long-paying buyers

If you’ve paid ≥2 years, the law recognizes meaningful alternatives:

A. Reinstatement (update the account)

Within the grace period, you can typically pay arrears (without interest as the statutory minimum) to reinstate and continue.

B. Assignment / sale of rights

Maceda recognizes the buyer’s ability to sell or assign rights during the grace period (subject to project rules and documentation). This can be financially better than taking CSV—especially if market value is higher.

10) Common developer tactics vs. what you should check

“Your payments are forfeited.”

If you’ve paid ≥2 years, full forfeiture is generally inconsistent with Maceda minimum CSV.

“Reservation fee is automatically non-refundable.”

Not always. If it’s credited to the price or functionally part of payments, you can argue inclusion in TP for CSV.

“Contract to Sell isn’t covered.”

In practice, Maceda protections are still commonly invoked in installment residential purchase arrangements, including those structured as contract-to-sell, because the buyer is still paying in installments toward acquisition.

“We cancelled already via email.”

Maceda requires notarial notice and a 30-day period.

“Refund will take 6–12 months.”

Developers often impose internal timelines. Your leverage depends on your category, paperwork, and enforcement route. You can challenge unreasonable delay—especially where CSV payment is treated as essential to lawful cancellation.

11) Step-by-step: how buyers typically pursue a Maceda refund (practical workflow)

Step 1: Gather documents

Contract to Sell / Purchase Agreement
Official receipts, proof of payments
Statement of account (request updated)
IDs, proof of address
Any emails/letters about delinquency/cancellation

Step 2: Determine your Maceda category

Count how many years of installments you have actually paid (and/or confirm with payment records).

Step 3: Send a formal written demand

Ask for:

Confirmation that the property is treated as covered by RA 6552
Your grace period details (if you plan to reinstate)
If cancelling: computation of total payments and cash surrender value, and a refund schedule
Confirmation that any cancellation will comply with notarial notice requirements

Step 4: Escalate if stonewalled

For preselling condo disputes, buyers frequently file complaints with the housing regulator framework under DHSUD (which absorbed HLURB functions) for mediation/adjudication, or go to court depending on the issue. Administrative complaint routes are commonly used for condo/developer disputes because they are specialized and document-driven.

12) Special situations in preselling condos

A. Bank takeout didn’t happen (loan not approved)

Many contracts state consequences if the buyer fails to qualify for bank financing. If you’re still in developer/in-house financing stages and have paid ≥2 years, Maceda protections can still be raised. If the developer’s documents/turnover issues caused bank disapproval, PD 957 arguments may become relevant.

B. Developer delay / project issues

If your cancellation is because the developer failed to deliver as promised, you may pursue remedies under PD 957 and related rules that can be more favorable than Maceda’s CSV minimum.

C. “Hidden” payment structures

Preselling “down payment” spread over months is still essentially installment payment behavior. Always compute actual TP from receipts.

13) Quick reference checklist

If you’ve paid <2 data-preserve-html-node="true" years

✅ 60-day minimum grace period concept
✅ Notarial notice + 30 days before cancellation
⚠️ No guaranteed Maceda refund (look for better contract terms / PD 957 if developer at fault)

If you’ve paid ≥2 years

✅ Grace period: 1 month per year paid (min 60 days), generally usable once every 5 years
✅ Minimum refund (CSV): 50% of total payments; +5% per year after 5 years; cap 90%
✅ Notarial notice + 30 days; and refund is strongly tied to lawful cancellation

14) Demand letter content (template outline)

You can structure your letter like this:

Background: unit details, contract number, dates, payment history summary
Legal basis: RA 6552 applicability (and PD 957 if relevant)
Request:
- Updated statement of account
- Determination of years paid
- Itemized “total payments made”
- Computation of cash surrender value (if qualified)
- Timeline and method of refund
Notice compliance reminder: notarial notice + 30 days requirement
Settlement proposal: refund/assignment option
Reservation of rights: file complaint if not resolved

15) Bottom line

Maceda Law is the minimum protection for installment buyers of residential condos, especially when the buyer can’t continue paying.
Your refund entitlement mostly hinges on whether you’ve paid at least 2 years.
Developers must follow grace period + notarial notice + 30-day rules, and qualifying buyers are entitled to a cash surrender value refund computed from total payments made, subject to the 50% / +5% after 5 years / 90% cap formula.
In preselling condos, don’t ignore PD 957, especially when the developer’s delay or non-compliance is the real reason you’re exiting.

If you paste (1) your payment timeline (months/years) and (2) a breakdown of amounts you’ve paid (reservation, monthly DP, lump sums), I can compute the Maceda minimum CSV and draft a tight demand letter tailored to that fact pattern.