cancel.php

public function retrieveCoupon($observer)
{
    $payment = $observer->getEvent()->getPayment();
    $order = $payment->getOrder();

    if ($code = $order->getCouponCode()) {
        $coupon = Mage::getModel('salesrule/coupon')->load($code, 'code');
        $coupon->setTimesUsed($coupon->getTimesUsed()-1);
        $coupon->save();
        
        $write = Mage::getSingleton('core/resource')->getConnection('core_write');
        $query = "UPDATE salesrule_coupon_usage SET times_used = times_used-1 WHERE customer_id='".$order->getCustomerId()."' AND coupon_id='".$coupon->getId()."'";
        $result = $write->query($query);
        
        if($customerId = $order->getCustomerId()) {
            if ($customerCoupon = Mage::getModel('salesrule/rule_customer')->loadByCustomerRule($customerId, $coupon->getRuleId())) {
                $customerCoupon->setTimesUsed($customerCoupon->getTimesUsed()-1);
                $customerCoupon->save();
            }
        }
    }
}