Buying a pre-selling house-and-lot or condominium in the Philippines often means paying a reservation fee and down payments long before turnover. When the developer fails to deliver as promised, buyers have strong remedies—administrative, civil, and (in some cases) criminal—grounded in special housing laws, consumer protection, and the Civil Code. This guide pulls everything together so you can evaluate options, quantify refunds, and navigate the process confidently.

The Legal Foundations

1) PD 957 (Subdivision and Condominium Buyers’ Protective Decree)

Scope. Subdivision lots and condominium units, especially in pre-selling.
Developer duties. Complete the project and amenities according to approved plans and the committed timeline; secure a License to Sell; truthful advertising; proper titling.
Buyer protection for non-development or delay. If a developer fails to develop or deliver as represented, the buyer may desist and demand full reimbursement of all payments made (typically with legal interest), instead of forfeiture. Administrative sanctions and criminal liability can also attach to violations.
Venue and enforcement. Disputes are filed before the Human Settlements Adjudication Commission (HSAC) (formerly HLURB’s adjudicatory arm). HSAC decisions may be executed by writ and are appealable to the Court of Appeals.

2) The “Maceda Law” (RA 6552)

Scope. Buyers of real estate on installment (commonly housing), typically when the buyer defaults.
Key rights.
- If you’ve paid at least 2 years of installments: upon cancellation you are entitled to a cash surrender value equal to 50% of total payments made, plus 5% per year after the 5th year, up to 90%. Also a grace period of 1 month per year paid to cure default without interest.
- If you’ve paid less than 2 years: a minimum 60-day grace period to pay; cancellation requires proper notice. (Cash surrender value is not guaranteed at this tier.)
Important limitation. Maceda is primarily a buyer-default protection statute. When the developer is at fault (e.g., non-delivery), buyers generally rely on PD 957 and the Civil Code, which are more favorable (full refund vs. partial “cash surrender”).

3) Civil Code (Rescission/Resolution; Damages)

Article 1191 (resolution for breach of a reciprocal obligation). If the developer materially breaches (e.g., unreasonable turnover delay, failure to construct), the buyer may rescind and seek mutual restitution (refund of all payments) plus damages and interest.
Damages & interest. Philippine jurisprudence typically applies 6% per annum legal interest on sums due from the time of demand or filing until full payment, with discretion on pre-judgment interest.

4) Consumer Protection & Related Rules

Misrepresentations in ads, brochures, or model units can be actionable. PD 957 treats advertising as part of the sales representations; material variance can support rescission and refund.

When Are You Entitled to a Refund?

You can usually demand a full refund (down payment + subsequent amortizations + officially receipted charges) if any of the following occurs:

Developer fails to deliver the unit by the committed turnover date, and the delay is substantial and not justified (force majeure, buyer’s fault, or properly extended timelines under contract and law).
Project non-development or significant deviation from approved plans (e.g., missing promised amenities, substandard construction, unapproved changes).
Material misrepresentation in marketing or sales talk that induced the purchase (e.g., location, size, view, features).
Absence of required permits/licensing (e.g., no License to Sell at the time of offering).
Failure to deliver clean title or chronic violations of PD 957 and its IRR.

In these scenarios, PD 957 + Civil Code remedies are typically superior to Maceda Law surrender value calculations.

What Exactly Gets Refunded?

Core payments: reservation fees, down payment, monthly amortizations/installments.
Officially receipted charges: VAT (if charged), association dues collected in advance, bank processing fees charged through the developer, upgrade costs, and similar—if they were part of the sale package and receipted.
Interest: typically 6% p.a. on the refundable amount from demand or filing, until paid.
Damages & fees (case-by-case):
- Compensatory damages for proven loss (e.g., rent you had to pay because of delay).
- Moral/exemplary damages if bad faith is proven.
- Attorney’s fees (often a percentage of the amount recovered) when justified.
Less: Legitimate deductions expressly allowed by law or adjudicator (e.g., reasonable use/occupancy, if applicable; but in non-delivery cases the unit is usually not occupied, so deductions rarely apply).

Tip: Keep all official receipts and the contract (Reservation Agreement, Contract to Sell/Deed of Absolute Sale, brochures). These make or break computations.

Maceda Law vs. PD 957 vs. Civil Code: Which Path?

Developer delay/non-delivery: PD 957 + Civil Code (full reimbursement + interest; potential damages).
Buyer default with developer compliant: Maceda Law (cash surrender value formula + grace periods).
Mixed fault or gray areas: HSAC/Courts weigh evidence; often still favor full restitution if developer’s breach is substantial.

Procedure: How to Secure Your Refund

Step 1: Build Your File

Contracts (Reservation Agreement, CTS/Deed).
Official Receipts (reservation, down payment, amortizations, taxes/fees).
Sales materials (brochures, emails, screenshots).
Developer correspondence (promised turnover dates, notices).
Evidence of delay (photos, onsite reports, neighbors’ affidavits).

Step 2: Make a Written Demand

Addressed to the developer (and marketing agent, for notice).
Identify the breach (e.g., turnover date promised vs. actual status).
State your remedy: rescission under PD 957/Civil Code and refund of all payments with 6% interest, plus damages if applicable.
Give a clear pay-by date (e.g., 15 calendar days) and say you’ll file with HSAC if not paid.

Step 3: File an HSAC Complaint (if unresolved)

Parties: You (complainant) vs. developer/seller (respondent).
Reliefs: rescission; refund (with interest); damages; attorney’s fees; costs; administrative sanctions.
Process:
1. Docket and mediation (often yields settlement/refund plans).
2. Adjudication (position papers, evidence; hearings if necessary).
3. Decision & writ of execution if refund is granted.
Parallel criminal/administrative action for PD 957 violations may be pursued through DHSUD/Prosecution, especially for unlicensed selling or fraudulent representations.

Step 4: Enforcement

HSAC may issue writs of execution (levy/garnish) against developer assets/bank accounts.
Settlements are typically structured as lump sum or installments (with interest/penalties for missed tranches).

Computation Walk-Through (Illustrative)

Facts:

Reservation: ₱50,000
Down payment: ₱600,000 (paid over 12 months)
Monthly amortizations thereafter: ₱20,000 × 10 = ₱200,000
Total paid: ₱850,000 (all receipted)
Demand letter sent: March 1, 2024
HSAC decision awards full refund + 6% p.a. interest from March 1, 2024 until full payment.

If paid on December 1, 2025:

Interest period: ~ 21 months
Interest = ₱850,000 × 6% × (21/12) ≈ ₱89,250
Total refund due ≈ ₱939,250, plus any awarded damages/fees.

(This is a simple-interest illustration. Actual awards depend on evidence and the adjudicator’s ruling.)

Common Developer Defenses—and Typical Counterpoints

Force majeure (pandemic, typhoons). Can justify reasonable delay if causally proven and properly noticed. But open-ended or prolonged delays without mitigation can still be material breach.
Contract says ‘indicative’ turnover date. Courts/HSAC still weigh the reasonableness of delay and statutory duties under PD 957; marketing representations count.
Offer to swap units or extend timelines. You may accept—but you don’t have to if breach is substantial.
Maceda Law limitation to partial surrender value. Not controlling when developer is in breach; PD 957/Civil Code generally prevail for full reimbursement.

Prescription and Timing

Contract actions on written CTS/Deeds generally have a 10-year prescriptive period counted from breach or accrual of action.
Administrative complaints should be filed promptly; while HSAC does not rigidly apply civil prescriptive rules, delays can weaken evidence and equities.
Interest usually runs from written demand or filing date—earlier demand generally means more recoverable interest.

(Consult counsel for precise computation; special facts can change the analysis.)

Practical Tips to Improve Outcomes

Keep communications in writing. Email is fine; acknowledge receipt.
Ask for construction/permits status and License to Sell copies early.
Document site visits (photos with dates).
Join with co-buyers in the same project to align strategy; consolidated complaints can be efficient.
Be settlement-ready. Propose an enforceable refund schedule (with default interest and acceleration) if lump sum isn’t feasible.
Mind taxes/fees. If VAT or other charges were receipted, include them in your refund demand.
Bank financing. If you took a loan, coordinate cancellation with the bank and developer; seek reversal of any take-out fees that stemmed from developer breach.

FAQ

Q: Can I stop paying while my case is pending? A: Stopping payments carries risk if the breach is disputed. Many buyers escrow payments or pause after formal rescission—ideally on counsel’s advice—to avoid a “buyer default” narrative.

Q: What if the developer offers turnover, but the unit is substandard? A: You can reject acceptance for material defects and still pursue rectification or rescission if defects are substantial or unremedied within a reasonable time.

Q: Can I recover moral or exemplary damages? A: Yes, when bad faith, malice, or fraud is proven (e.g., selling without a License to Sell; knowing misrepresentations).

Q: What rate of interest applies? A: Courts commonly apply 6% per annum legal interest to money awards; from demand or filing until full satisfaction.

Checklist: Demand Letter Essentials

Project & unit details; dates of purchase/turnover commitment.
Specific breaches (non-delivery; variance from plans; misrepresentations).
Legal bases: PD 957 + Civil Code Art. 1191 (and cite Maceda only if buyer default is at issue).
Reliefs sought: rescission; full refund with 6% p.a. interest; damages; attorney’s fees.
Deadline to pay (e.g., 15 days) and stated plan to file with HSAC.

Bottom Line

If your housing unit is undelivered or unduly delayed, Philippine law strongly favors you. PD 957 and the Civil Code support rescission and full reimbursement (with interest and possible damages) when the developer is at fault. The Maceda Law mainly limits forfeiture when the buyer defaults, and should not be used to shrink your recovery in a developer-breach case. Move promptly: document everything, issue a solid demand, and—if needed—bring the case to HSAC for swift, enforceable relief.