Four Years of Condo Payments, One Letter of Cancellation: The Buyer's Rights

Law stated as of October 7, 2026

The facts

Liza is buying a residential condominium unit in Davao City from a developer under a contract to sell. She pays the developer directly, in monthly installments. She paid a down payment of ₱200,000 and then 48 monthly installments of ₱15,000, all on time, for a total of ₱920,000.

After she lost her job, Liza missed her next installment. A few weeks later, the developer sent her an ordinary letter by email. It says the contract is cancelled and that, under a clause in the contract, everything she has paid is forfeited in the developer's favor.

The question

Is the contract cancelled? Does Liza lose the ₱920,000 she has paid, and what can she do?

The remedies

1. Know that the Maceda Law covers her

Republic Act No. 6552, the Realty Installment Buyer Act (the Maceda Law), protects buyers of real estate on installments, including residential condominium apartments (Section 3). A buyer who has paid at least two years of installments has the rights listed in Section 3 if he or she defaults on later installments. The law adds: Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

Liza paid a down payment and four full years of monthly installments. Section 3 applies to her.

2. Use the grace period to catch up

Section 3(a) gives the buyer this right: To pay, without additional interest, the unpaid installments due within the total grace period earned by him, at the rate of one month grace period for every one year of installment payments made. This right may be used only once in every five years of the life of the contract and its extensions, if any.

With four years of installments paid, Liza has earned a grace period of four months. Section 5 confirms that she may reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The same section allows her, instead, to sell her rights or assign them to another person. The deed of sale or assignment must be done by notarial act. Under Section 6, she may also pay the full unpaid balance at any time without interest.

3. The forfeiture clause does not bind her

If the contract is cancelled, Section 3(b) requires the seller to refund the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made. After five years of installments, this rises by an additional five per cent every year, but not beyond ninety per cent.

The law does not allow a contract to take this away. Section 7 provides: Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void. For Liza, the cash surrender value is at least 50% of ₱920,000, or ₱460,000.

4. A letter is not a cancellation

Under Section 3(b), the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

The Supreme Court has held that a valid and effective cancellation under R.A. 6552 must comply with the mandatory twin requirements of a notarized notice of cancellation and a refund of the cash surrender value. Where these are not met, the contract to sell remains valid and subsisting (Gatchalian Realty, Inc. v. Angeles, 2013). The Court has also ruled that the notice must be notarized with an acknowledgment, and that letters with no acknowledgment before a notary public do not validly cancel the contract (Orbe v. Filinvest Land, Inc., 2017; State Investment Trust, Inc. v. Baculo, 2024).

The developer's email is not a notarial act, and no cash surrender value has been paid. Liza's contract has not been cancelled.

5. If the developer will not comply

Disputes between condominium buyers and developers go to the Human Settlements Adjudication Commission (HSAC), which took over the adjudicatory function of the former Housing and Land Use Regulatory Board under Republic Act No. 11201. Its Regional Adjudicators have original and exclusive jurisdiction over Claims for refund, and other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman (Section 16), as well as cases involving specific performance or contractual and statutory obligations arising from the sale of the unit.

Your remedy · What to do now

Gather your papers. The contract to sell, official receipts or the statement of account, and the developer's letter.
Count your installments. At least two years paid, counting the down payment, puts you under Section 3: one month of grace for every year paid, and a cash surrender value of at least half of what you paid.
Decide what you want. To keep the unit, update your account within the grace period. If you cannot, you may sell or assign your rights by a notarized deed, or insist on the full cash surrender value before any cancellation.
Answer in writing. Tell the developer, and keep proof of receipt, that its letter is not a valid cancellation under Republic Act No. 6552 and state what you will do.
If it will not comply, file a complaint with the HSAC Regional Adjudicator for your region.

The law protects the installment buyer who knows the count and keeps the receipts.

Legal bases and sources

Not legal advice. This post is general legal information prepared by Trinidad & Masungcad Law Office. It is not legal advice or a legal opinion, and reading it does not create a lawyer-client relationship. The outcome of any case depends on its own facts. The law is stated as of the date shown on the post; laws, rules and jurisprudence may change after that date. For advice on your situation, consult a lawyer.

The scenario is hypothetical. The names and facts are invented, and any resemblance to actual persons or cases is coincidental.