Cash Surrender Value is the refund to the BUYER of the payments equivalent to fifty percent thereof and, after five years of installments, an additional five percent (5%) for every year but not to exceed ninety (90%) of the total payments made.The Cash Surrender Value is paid to the BUYER after a valid cancellation of the contract between the SELLER and the BUYER has taken place. Without payment of the Cash Surrender Value, there can be no valid cancellation of the contract.
The process of cancelling a contract validly by the SELLER was discussed in the case SPOUSES NOYNAY v. CITIHOMES BUILDER AND DEVELOPMENT, INC (G.R. No. 204160, September 22, 2014), to wit:
"WHERE the BUYER has paid atleast two (2) years of installments and he defaults in the payment of three (3) consecutive monthly installments, the SELLER shall be entitled:
a. To pay, without additional interest, the unpaid installment due within the total grace period earned by the BUYER which is fixed at the rate of one (1) month grace period for every one (1) year of installment payment made; Provided, that this right shall be exercised by the BUYER only once for every five (5) years of the life of this agreement.
b. If this agreement is cancelled, the SELLER shall refund to the BUYER the cash surrender value of the payments equivalent to fifty percent thereof and, after five years of installments, an additional five percent (5%) for every year but not to exceed ninety (90%) of the total payments made; Provided, that the actual cancellation of this agreement shall take place after thirty (30) days from receipt by the BUYER of the notice of cancellation or demand for rescission by a notarial act and upon full payment of the cash surrender value to the BUYER."