3
Cancellation must follow the required process
For buyers who have paid at least two years of installments, cancellation carries a refund called the cash surrender value. It starts at 50 percent of total payments. After five years of installments, an additional five percentage points is added for each further year, up to a maximum of 90 percent.
As an illustration, a covered buyer with ₱600,000 in total payments and three years of installments would have a cash surrender value of ₱300,000. The actual payment record and applicable percentage still need to be checked.
For this group, actual cancellation requires both the passing of 30 days from the buyer’s receipt of a notice of cancellation or demand for rescission through a notarial act, and full payment of the cash surrender value. The seller cannot treat an ordinary collection message as a substitute for all those requirements.
For buyers below the two-year threshold, the seller must first allow the required grace period. If the buyer still fails to pay, cancellation can take place only after 30 days from receipt of the required notarial notice. Section 4 does not provide the same automatic 50 percent refund. Any other refund claim needs its own basis in the contract, the facts or another applicable law.
WHAT TO WATCH
Keep the notice and proof of when you received it. Check its form, the cancellation date and, when applicable, whether the full required refund has actually been paid.