Executive Summary

“Non-refundable” on a reservation agreement or contract to sell does not always mean zero refund. Your rights depend on:

What you paid for (reservation/option money vs. earnest money/down payment),
What kind of project and payment scheme (subdivision/condo; cash, deferred, or installments),
How much you’ve already paid and for how long, and
Who breached (buyer, seller/developer, or neither).

Three legal pillars frame refunds and forfeitures:

Civil Code (general contract rules: consent, cause, rescission, penalties),
Special housing laws: Maceda Law (Realty Installment Buyer Protection Act) for sales by installment, and PD 957 (Subdivision and Condominium Buyers’ Protective Decree) for licensed projects, and
Regulatory/venue rules under DHSUD/HSAC (formerly HLURB) for disputes.

Below is a practical, doctrine-heavy guide you can rely on when facing “non-refundable” clauses.

I. First Principles: What exactly did you pay?

A. Reservation Fee (often paid before a contract to sell)

Usually secures a unit and price for a short period while documents and financing are processed.
In law, this commonly functions as option money (payment to keep an offer open). If expressly treated as option money, it is separate from the purchase price and may be forfeited when the buyer backs out without seller fault, because its purpose is the exclusivity/time you consumed.
If the parties (or the receipt) treat it as part of the price (i.e., earnest money), it becomes down payment subject to stricter refund rules if the sale is later unwound not due to buyer’s fault.

B. Down Payment / Equity

A portion of the purchase price. For installment sales, it forms part of the payments counted under Maceda Law.
If the deal fails due to seller’s breach (e.g., misrepresentation, unlicensed sale, failure to develop), down payment is generally returnable (often with legal interest and/or damages).
If the buyer defaults, forfeiture may be allowed but must respect statute-mandated procedures (Maceda Law and PD 957) and the Civil Code limits on unconscionable penalties.

II. When “Non-Refundable” Can Still Be Refundable

1) Sales by Installment: Maceda Law rights

Maceda Law protects buyers of real estate on installment (residential lots, houses & lots, condos offered on installment), regardless of what the contract labels payments.

If you’ve paid at least 2 years of installments
- Grace period: 1 month per year of paid installments (no interest or penalties) to update arrears.
- Cancellation: Effective only after the developer sends a notarial notice and 30 days elapse after your receipt.
- Cash Surrender Value (CSV): 50% of all payments made; plus 5% per year after the 2nd year, capped at 90% of total payments.
- Result: Even if the contract says “non-refundable,” you are statutorily entitled to CSV upon valid cancellation.
If you’ve paid less than 2 years of installments
- Grace period: Not less than 60 days to update the account.
- Cancellation: Requires notarial notice and becomes effective 30 days after you receive it.
- Refund: No CSV is mandated by Maceda Law at this tier. Contractual forfeiture is common—but still subject to fairness limits (see Civil Code penalties below).
- Tip: Even here, some buyers negotiate partial refunds or conversion of forfeited sums into transfer fees for a reassignment.

Important: Maceda Law applies to installment sales. Pure cash sales or deferred single-balance deals may fall outside it, unless the structure is effectively installment in substance.

2) Subdivision/Condominium Projects: PD 957 protections

For licensed projects (with License to Sell), PD 957 bolsters buyer rights:

Failure to develop per approved plans/advertised amenities or serious regulatory violations can justify rescission and refund (commonly of all payments made, often with legal interest).
If a developer does not have a valid License to Sell when it took your money, you can typically demand full restitution and may pursue administrative sanctions.

3) Civil Code: Rescission, conditions, and penalties

Reciprocal obligations (Art. 1191): If the seller/developer breaches (e.g., title defects, unlawful changes, unbuildable unit, material misrepresentation), buyer may cancel and demand return of what was paid plus damages.
Unlawful or unconscionable penalties (Art. 2227): Courts may reduce excessive forfeitures or liquidated damages. A blanket “non-refundable” forfeiture, disproportionate to actual loss, is vulnerable.
Earnest vs. option money (Arts. 1482, 1479): Labels matter. If your “reservation” was actually earnest money, it is part of the price and not freely forfeitable without a lawful basis.
Failure of a suspensive condition (e.g., bank loan approval is expressly a condition precedent): If financing is rejected despite buyer’s good-faith effort, and the contract or seller’s representations tied the sale to loan approval, the buyer may walk away with a refund (often net of reasonable processing charges).

III. Procedures and Forums to Claim Refunds

A. Developer-level remedies

Demand letter identifying legal basis (Maceda Law/PD 957/Civil Code), timeline, and exact amount of refund or CSV sought.
Document trail: Reservation agreement, payment receipts, ads/brochures, text/email promises, LTS number, bank loan correspondence, photos of project status.

B. Administrative & quasi-judicial route

HSAC (Human Settlements Adjudication Commission): Handles buyer vs. developer disputes (formerly under HLURB). You can file for rescission, refund, damages, and compliance with PD 957 obligations.
DHSUD (policy/regulatory): For developer licensing issues, complaints may prompt regulatory action that supports your refund claim.

C. Judicial route

File a civil action (e.g., rescission with damages; recovery of sum of money; specific performance) in the proper RTC. Courts can reduce unconscionable forfeitures, enforce Maceda CSV, or grant full refunds for seller breach.

IV. Computation Playbook

1) Maceda Law CSV (2+ years paid)

CSV = 50% of all payments made + 5% of all payments for each year beyond 2, max 90%.
“All payments” typically include down payment and installments (excluding interest, taxes, and charges not part of the price).
Examples
- Paid ₱600,000 over 3 years: CSV = 50% (₱300,000) + 5% (₱30,000) = ₱330,000.
- Paid ₱2,000,000 over 9 years: 50% (₱1,000,000) + 5%×7 years (₱700,000) = ₱1,700,000, but cap at 90% ⇒ ₱1,800,000.

2) Interest on refunds

For seller breach or PD 957 violations, courts/HSAC commonly award legal interest (usually per annum from demand or from filing) on refundable amounts.

3) Lawful charges that may be netted

Documented and reasonable processing fees actually incurred for the buyer’s benefit (e.g., bank appraisal) may be deducted if the buyer’s own decision caused the collapse and the contract so provides.
Hidden/undeclared penalties or duplicative charges are frequently struck down.

V. Special Situations

No License to Sell / pre-selling without authority: Buyer can cancel and recover all payments; “non-refundable” clauses won’t save an unlawful sale.
Material misrepresentation in ads (amenities, size, view): Ads are treated as part of the offer for PD 957 projects; substantial deviation supports rescission/refund.
Change in unit or re-blocking without consent: Grounds for cancellation and refund.
Force majeure delays: Developers may claim extensions; buyers can still withhold payments per contract but refunds depend on causation and notice requirements.
Lease-to-own schemes: If the “lease” is a disguised installment sale, Maceda Law protections may still be invoked (substance over form).

VI. Strategy: How to Maximize (or Defend) a Refund

Classify the payment: Was “reservation” truly option money or earnest/down payment? Your receipt and wording matter.
Identify the regime: Is this a PD 957 project with a License to Sell? Is your plan installment (Maceda applies) or not?
Timeline and notices: Track dates of payment, developer notices, and whether a notarial cancellation was properly served.
Compute CSV early (if 2+ years): Put a number on the table; attach your worksheet to your demand.
Document breach: Photos of development delays, emails/texts, brochures, floor plans, non-delivery of promised features.
Challenge penalties: Invoke Art. 2227 to reduce excessive forfeitures.
Choose venue wisely: HSAC for specialized, faster housing disputes; RTC if broader damages or third parties are involved.
Preserve interest: Demand in writing to start legal interest running on refundable sums.

VII. FAQs

Q1: My reservation agreement says “STRICTLY NON-REFUNDABLE.” Can I still get money back? Yes, sometimes. If it is actually earnest/down payment, if Maceda Law applies (and you’ve paid 2+ years), if the developer breached, or if the sale was unlicensed or misrepresented, refunds are available despite the label.

Q2: I paid less than two years on installment and stopped. Do I get anything? Maceda Law does not mandate CSV at this tier. However, you still have grace-period and notice protections, and you can invoke Civil Code doctrines to reduce unconscionable forfeitures or seek a partial refund in equity—especially where the developer suffered minimal loss or contributed to the failure.

Q3: Loan disapproved. Do I lose my reservation/down payment? It depends on the contract. If financing approval was a condition precedent (or the seller promised it as part of the deal), a refund (net of reasonable costs) is defensible. If financing was entirely the buyer’s risk, forfeiture is more likely—subject to fairness limits.

Q4: Can the developer cancel without a notarial notice? For installment buyers, no—valid cancellation under Maceda Law requires notarial notice and a waiting period. Without it, forfeiture is vulnerable.

Q5: The unit delivered is smaller / missing amenities. Material deviations support price reduction or rescission with refund under PD 957 and the Civil Code.

VIII. Quick Checklists

Buyer’s Refund Checklist

Reservation slip, CTS/Deed, official receipts
Project License to Sell number and ads/brochures
Payment ledger (down payment + installments)
Loan application results and emails with the seller
Photos/status reports proving breach or delay
Draft CSV computation (if 2+ years)
Demand letter asserting legal grounds and interest

Developer’s Risk-Management Checklist

Clear labeling (option vs. earnest) and consistent receipts
Proper LTS/permit on file; truthful ads
Maceda-compliant notices (grace periods, notarial cancellation)
Fair and documented processing costs; avoid windfall penalties
HSAC-ready documentation of buyer default and damages

IX. Bottom Line

“Non-refundable” is not absolute. Statutes (Maceda Law, PD 957) and the Civil Code frequently override blanket forfeitures.
If you’ve paid at least two years on installment, you’re typically entitled to a cash surrender value (50%+, up to 90%) upon valid cancellation.
Even below two years, developers must follow strict notice and grace-period rules, and excessive forfeitures can be reduced.
For seller breach, unlicensed sales, or material misrepresentation, buyers can pursue rescission and full refunds (often with interest).
The most powerful tools are paper trails, timely written demands, and choosing the right forum (HSAC or court) to enforce your refund.