Buyer Payment Protections
Understand how PD 957 protects buyers' installment payments from forfeiture when developers fail to deliver. Learn the non-forfeiture rule and the connection to the Maceda Law.
Non-Forfeiture of Payments
“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.”
What This Means
This is the buyer's strongest shield when a developer fails to deliver. If the developer does not develop the project according to approved plans and within the required timeline, a buyer who stops paying CANNOT have their payments forfeited. The buyer can demand a full refund of all payments made (including amortization interest), plus legal interest on that amount. The only requirement is that the buyer must first give due notice to the developer before stopping payments.
- Payments cannot be forfeited when the developer fails to develop as planned
- Buyer must give "due notice" to the developer before stopping payments
- Buyer can demand reimbursement of total amount paid plus amortization interests
- Delinquency interests are excluded from the refund
- Legal interest accrues on the refundable amount
Real-World Scenario
Roberto has been paying monthly amortizations of P15,000 for 3 years (P540,000 total) for a subdivision lot. The developer promised complete infrastructure within 1 year of the license date. It has now been 4 years and there are still no roads, drainage, or water system. Roberto wants to stop paying and get his money back.
Can Roberto stop paying and demand a refund?
When the Buyer Defaults: Connection to Maceda Law
“The rights of the buyer in the event of this failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552.”
What This Means
PD 957 distinguishes between two situations: (1) buyer stops paying because the DEVELOPER failed. covered by Section 23 (non-forfeiture); (2) buyer stops paying for PERSONAL reasons (financial hardship, change of mind, etc.). covered by RA 6552 (Maceda Law). The Maceda Law provides grace periods and refund rights based on how long the buyer has been paying, but it is less protective than Section 23 since the developer did nothing wrong.
- Section 23 applies when the developer is at fault (failed to develop)
- Section 24 applies when the buyer defaults for personal reasons
- Buyer defaults are governed by RA 6552 (Maceda Law)
- Maceda Law grants grace periods based on years of installment paid
- Key distinction: who is at fault determines which law applies
Real-World Scenario
Ana has paid 2.5 years of installments on a condominium unit. The developer has delivered everything on time. the building is on schedule for turnover. However, Ana lost her job and can no longer afford the monthly payments. She wants to stop paying and get a refund under PD 957's non-forfeiture rule.
Can Ana invoke Section 23 of PD 957?
Right to Receive Title Upon Full Payment
“The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith.”
What This Means
Once a buyer completes all payments, the developer must deliver the title. period. The developer cannot charge hidden fees beyond the standard Registry of Deeds registration fees. If the property is still mortgaged by the developer (common with bank-financed projects), the developer has 6 months to redeem that mortgage and deliver a clean title. This prevents developers from holding titles hostage or passing their own mortgage obligations to buyers.
- Title must be delivered upon full payment. no conditions
- No extra fees beyond Registry of Deeds registration fees
- If property is mortgaged, developer must redeem within 6 months
- Developer cannot pass mortgage obligations to the buyer
- Applies to both subdivision lot titles (TCT) and condominium unit titles (CCT)
Real-World Scenario
The Santos family fully paid their subdivision lot in 2023. When they request the title, the developer says: "The mother title is still mortgaged with the bank. You need to pay P80,000 for 'title processing fees' and wait until we settle with the bank. could be 2-3 years."
Is the developer's response compliant with PD 957?
Frequently Asked Questions
Can a developer forfeit my payments if I stop paying because they failed to build the subdivision?
No. Under Section 23 of PD 957, no installment payment can be forfeited when the buyer stops paying due to the developer's failure to develop the project as planned and on time. The buyer must give due notice to the developer, then can demand a full refund of all amounts paid (including amortization interest) with legal interest.
What happens if I stop paying installments for personal reasons (not the developer's fault)?
Under Section 24 of PD 957, your rights are governed by RA 6552 (Maceda Law). If you have paid at least 2 years of installments, you get a 60-day grace period and, if you still default, a refund of 50% of total payments (increasing 5% per year after 5 years, up to 90%). If less than 2 years, you get a 60-day grace period.
How long does a developer have to deliver the title after full payment?
PD 957 Section 25 requires the developer to deliver the title "upon full payment." If the lot/unit is mortgaged, the developer has 6 months to redeem the mortgage and deliver a clean title. No additional fees beyond Registry of Deeds registration fees can be charged.