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The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

AT A GLANCE:

A home is one’s refuge from harm, a fortress that offers safety, and a sanctuary that provides comfort. Developers who promise to offer safe and suitable homes must faithfully fulfill their undertaking. Failing therein, they shall be liable to return the amortization payments made by the hopeful buyers.

On January 16, 2016, Rivera and Phinma entered into a Contract to Sell involving Unit M at the 5th floor of Building 5, Hacienda Balai Condominium for PhP1,110,000.00. Rivera agreed to pay Phinma equity the amount of PhP209,000.00, while the balance of PHP836,000.00 will be settled through HDMF with projected monthly installments of PhP5,850.04. 

On April 6, 2017, Rivera moved into his unit after settling a move-in fee of PHP29,500.00, which consisted of an administrative processing fee, city engineer fee, construction bond, Meralco service deposit, one-time condominium corporation registration/membership fee, temporary power service charge, and water service deposit. Rivera also made several improvements on the subject property, which cost PhP25,000.00. 

Unfortunately, weeks after Rivera moved in, he noticed long visible cracks on the main walls supporting the unit, as well as in the living room, toilet, and wash area. Likewise, water seeped through the unit, thereby damaging the vinyl floors and backdoor. Dirty black molds had also formed along the walls, causing a constant stench in the place. Worse, the unit was infested with insects. In addition to the damages in the unit, Rivera discovered that the amenities Phinma marketed, such as the swimming pool, playground, and parking area, were not available. Moreover, the areas where the swimming pool and parking lot were slated to be located were replaced with buildings. 

Frustrated, Rivera filed a report with the Department of the Building Official of Quezon City, which led to an inspection of the eight buildings of Hacienda Balai. On September 6, 2018, the City Building Official of Quezon City, issued an Order declaring Hacienda Balai dangerous and ruinous and ordered Phinma to “rectify/repair/demolish” the subject structures immediately while for all tenants and occupants to vacate the premises immediately.

Thereafter, Phinma sought reconsideration of the Order of the City Building Official. Around the same period, Phinma requested for an extension of time to develop the Hacienda Balai project which was granted by the Housing and Land Use Regulatory Board Expanded National Capital Region Field Office (HLURB-NCR-FO). Phinma was given an extension of time until June 30, 2020 and warned that said extension is without prejudice to the buyers’ rights under Section 23 of Presidential Decree (P.D.) No. 957 or the Subdivision and Condominium Buyers’ Protection Decree.

Meanwhile, on September 21, 2018, the City Building Official set aside its earlier Order to demolish the structure and advised to vacate the premises. Then, on September 24, 2018, HLURB-NCR-FO issued a Notice and Order directing Phinma to pay an administrative fine of PhP10,000.00 and to cease and desist from further selling, advertising, and collecting amortizations from unit buyers until expressly permitted by said office.

Fed up, on October 8, 2018, Rivera lodged a Complaint before the HLURB-NCR-FO against Phinma and the HDMF or Pag-IBIG. Rivera asked for clearance from his housing loan and requested a full refund of his payments. For their part, Phinma countered that upon a reinspection of the Hacienda Balai, the City Building Official found that the structures in the said condominium complex did not manifest structural deficiencies and pose an imminent threat to its occupants. Likewise, responding to the allegation of delay in the development of Hacienda Balai, Phinma retorted it was granted an extension of time until June 30, 2022. As such, it maintained that it should not be held liable for a refund. Finally, Phinma avowed that it never deceived its buyers.

HSAC ruled ordering the cancellation of the Contract to Sell between Rivera and Phinma and directed Phinma to return to Rivera the equity, move-in fees, cost of improvement, and Rivera’s Pag-IBIG monthly amortizations, as well as to buy back Rivera’s loan and attorney’s fees and costs of suit.

Aggrieved, Phinma filed an appeal before the HSAC Board of Commissioners which denied the same on August 25, 2020. They held that the grant of an extension of time to complete the development of the condominium project does not prejudice the rights of buyers that have already accrued prior to such extension. The HSAC Board of Commissioners explained that in case of a delay in the development of the condominium project, Section 23 stringently mandates that the payments made by the buyers shall not be forfeited by the developer. 

Dissatisfied with the ruling, Phinma filed a Petition for Review before the CA which ruled denying Phinma’s Petition for Review. Phinma sought reconsideration which the CA denied in its June 23, 2022 Resolution. Undeterred, Phinma filed the instant Petition for Review on Certiorari before this Court.

The crux of the case rests on whether Rivera is entitled to a refund of all the amounts he paid to Phinma, in view of the latter’s failure to complete the development of the Hacienda Balai project.

The Supreme Court partially granted the petition. 

To ensure the fulfillment of the objectives of P.D. No. 957, Section 20 thereof gives developers within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority to complete the facilities and infrastructures that they advertise or offer to prospective buyers.

However, in case the developer reneges on its obligation to complete the project on time, Section 23 steps in to protect the buyers wherein no installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate. 

Specifically, Section 23 grants buyers two remedies in case the subdivision or condominium developer fails to complete the project on time, namely:

(i) to continue with the contract but suspend payments until the developer complies with its obligation to finish the project; or 

(ii) to cancel the contract and demand a refund of all payments made, excluding delinquency interests

Records reveal that Phinma failed to complete the Hacienda Balai condominium project within the required period of time. No less than Phinma admitted the non-completion of said project when it requested for an extension of time from the HLURB-NCR-FO. Moreover, Phinma did not rebut Rivera’s contention that it failed to develop the promised amenities. Rather, it merely retorted that it had “substantially completed” the project. Obviously, a “substantial” completion does not suffice under the law. Thus, Phinma was clearly remiss in its obligations under Section 20.

In the same vein, Phinma cannot harp on the extension of time granted to it as it bears noting that the order granting the extension clearly indicates that it is without prejudice to the rights of buyers under Section 23. Hence, the extension did not preclude Rivera from availing of the refund.

However, it must be clarified that Section 23 does not authorize the return of all the amounts paid or spent by the buyer, but only the amortization payments or those remitted to purchase the property. Applying the rule of expressio unius est exclusio alterius, the Court held that only amortization payments and related interests may be refunded, and that other payments not related to the purchase of the property are excluded. Moreover, the payments that may be refunded are also those that may have been stopped, depending on the buyer’s chosen remedy.

The Court also ruled that Rivera is not estopped from claiming a refund. His silence regarding the request for extension, his signing of the Certificate of Turnover, and his continued stay in the unit do not bar him from exercising his rights under Section 23.

All told, the right to a standard of living adequate for one’s health and well-being is a universal human right that this Court stringently protects. Thus, the developer’s failure to provide safe and suitable living for its buyers shall render it accountable for a refund, among other remedies. However, said refund must be limited to the amortizations for the unit, with legal interest thereon, and does not pertain to an unbridled claim for expenses unrelated to the purchase of the unit.

Source: PHINMA PROPERTY HOLDINGS CORPORATION V. JOSHUA C. RIVERA (G.R. No. 261877, July 16, 2025)

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

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