“Refund of Condo Down Payment in the Philippines”
A 2025 doctrinal and practical guide for buyers, developers, and counsel
1. What counts as a “down payment”?
| Stage | Typical label in contracts | Legal character |
|---|---|---|
| Reservation fee | ₱10-50 k to “hold” a unit for 30-60 days | Usually earnest money only; not yet part of the price. May be declared non-refundable by contract, but courts will still order its return if the developer is at fault or the clause is unconscionable. (Getting back “reservation” fee for town house : r/phinvest - Reddit, Refund of Down Payment for Delayed Condo Turnover in the ...) |
| Down payment / Spot cash | 5 – 30 % of Total Contract Price (TCP) | Part of the purchase price. Protected by Presidential Decree 957 and, if paid by installments, the Maceda Law (R.A. 6552). |
| Monthly amortizations | Balance of TCP | Covered by R.A. 6552 when paid in installments; likewise protected under P.D. 957 once the project is licensed to sell. |
2. Statutory sources
Presidential Decree 957 – Subdivision and Condominium Buyers’ Protective Decree
Section 23 (Non-Forfeiture of Payments) lets a buyer recover 100 % of everything paid (plus legal interest) if the buyer stops paying because the developer failed to finish or register the project on time. (PD 957 Get Your Money Back If Developer Delays Turnover)Republic Act 6552 – Realty Installment Buyer Protection Act a.k.a. Maceda Law
Applies to all real-estate installment sales, including condominium units (Supreme Court, Villareal v. DMCI, 2023; Orbe v. Filinvest, 2024). ([PDF] ~uprtmt QI:ourt - Supreme Court of the Philippines, PRISCILLA ZAFRA ORBE, PETITIONER, VS. FILINVEST LAND, INC ...)Republic Act 4726 – Condominium Act (definitions; no refund formula, but confirms that units are real property).
Republic Act 11201 (2019) – created DHSUD and HSAC; these bodies now mediate and adjudicate refund disputes. (FAQS - HUMAN SETTLEMENTS ADJUDICATION COMMISSION)
3. Refund formulas at a glance
| Scenario | Buyer’s entitlement | Statute / doctrine |
|---|---|---|
| Developer fails to develop / deliver, or lacks/loses License-to-Sell | 100 % of all payments + 6 % p.a. legal interest until paid | P.D. 957 § 23; HSAC rules (PD 957 Get Your Money Back If Developer Delays Turnover, Refund of Down Payment for Delayed Condo Turnover in the ...) |
| Buyer defaults after ≥ 2 years of installments | Cash-surrender value: 50 % of total payments + 5 % per year beyond the 5th, max 90 % | R.A. 6552 § 3; SC in Villareal ([PDF] ~uprtmt QI:ourt - Supreme Court of the Philippines) |
| Buyer defaults < 2 years of installments | 60-day grace period; payments may be forfeited if buyer fails to catch up | R.A. 6552 § 4 (Maceda Law (RA 6552) - Department of Human Settlements and ...) |
| Contract stipulates “reservation/non-refundable” but developer is at fault | Clause is void; buyer can recover 100 % | Art. 1306 Civil Code + P.D. 957 public-policy nature (see Filinvest CA decision, 2024) (Suka ka! Gotianun's Filinvest ordered to pay condominium buyer it ...) |
4. Procedural roadmap
Put the developer on written notice.
Statutes require notice (P.D. 957 § 23; R.A. 6552 §§ 3-4). Send a demand letter itemizing breaches and the exact refund sought.Mediation at DHSUD Regional Office.
Mandatory, quick (15-day) track; ~₱1 k filing fee. If no settlement, a Complaint is docketed before the HSAC Regional Adjudicator. (FAQS - HUMAN SETTLEMENTS ADJUDICATION COMMISSION, [PDF] EBR-No.-8-S.2021_Rules-of-Procedure-of-HSAC.pdf)HSAC trial-type proceedings.
• Verified complaint + proof of payments and contracts
• Developer must file Answer in 15 days
• 30-day mandatory mediation; if failed, adjudication proceeds
• Decision in 60 days; execution after 15 days unless appealed to HSAC Commission en banc, then to the Court of Appeals (Rule 43). (EBR No. 8 S.2021 Rules of Procedure of HSAC - Scribd)Execution & collection.
HSAC sheriff may garnish bank accounts, annotate liens, or levy unsold condo units. Interest continues to run until actual payment.
5. Jurisprudence that shapes refunds
| Case (year) | Lesson |
|---|---|
| Villareal v. DMCI (G.R. 249442, 2023) | Developer who cancels without Maceda-law notice must pay cash-surrender value and 12 % interest. ([PDF] ~uprtmt QI:ourt - Supreme Court of the Philippines) |
| Orbe v. Filinvest (G.R. 225234, 2024) | Buyer who paid < 2 years got no Maceda refund, but SC still voided forfeiture because developer skipped statutory notice. (PRISCILLA ZAFRA ORBE, PETITIONER, VS. FILINVEST LAND, INC ...) |
| Siena Opiz v. Filinvest (CA, 2024) | 100 % refund + interest ordered after developer forced buyer to sign quitclaim under duress. (Suka ka! Gotianun's Filinvest ordered to pay condominium buyer it ...) |
| World Class v. GG Sportswear (SC, 2010) | Reservation-fee forfeiture upheld only because developer finished the project on time; emphasizes link between breach and refund. (Supreme Court E-Library Information At Your Fingertips) |
6. Interest, taxes & offsets
- Statutory interest – SC now applies the Bangko Sentral legal rate (6 % p.a.) from filing until satisfaction, unless the contract grants higher interest. (Refund of Down Payment for Delayed Condo Turnover in the ...)
- VAT & documentary-stamp tax – refunded if already remitted and the BIR issues a tax credit; usually pursued by the developer, not the buyer.
- Broker’s commission & liquidated damages – deductible only when the refund is triggered by buyer’s default and the contract’s penalty clause is reasonable; otherwise void. (preselling condo refund dmci : r/phinvest - Reddit)
7. Practical tips for buyers
- Keep every OR, bank proof-of-remittance, and e-mail.
- Track the promised turnover date in the Contract-to-Sell; photograph construction updates.
- Act within 10 years from the breach to beat the Civil-Code prescriptive period on written contracts.
- Pair P.D. 957 with the Maceda Law. Use whichever gives the larger refund.
- Do not sign a quitclaim without computing your statutory cash-surrender value.
8. Developer’s risk-management checklist
- Secure a License to Sell before collecting any down payment.
- Issue Notarial notices and observe Maceda grace periods before cancelling.
- Escrow refunded amounts so interest stops on the release date.
- Align template CTS clauses with P.D. 957; HSAC voids any “automatic forfeiture.”
9. Frequently-asked “edge” questions
- Does the Maceda Law apply to lump-sum spot-cash buyers? — No. It protects installment buyers; spot-cash refunds rely on contract or general Civil-Code rescission.
- Can I recover the surcharge on late amortizations? — Yes if the developer is at fault; no if you are the defaulter (expressly excluded in P.D. 957 § 23). (NON-FORFEITURE OF PAYMENTS IN THE SALE OF SUBDIVISION ...)
- Is arbitration compulsory? — HSAC has exclusive quasi-judicial jurisdiction; private arbitration clauses are unenforceable for P.D. 957 disputes.
10. Conclusion
In the Philippines, a condo buyer’s right to recover a down payment is anchored on public-interest statutes that override contrary contract clauses. The 100 % refund rule of P.D. 957 protects buyers from developer breach, while the cash-surrender value of the Maceda Law cushions buyer default once two years of installments have been paid. Knowing which rule to invoke—and following the notice-mediation-adjudication sequence before the DHSUD/HSAC—translates legal theory into pesos back in your pocket.
(Updated 30 April 2025. This guide is for information only; consult Philippine counsel for specific cases.)