BUYER'S GUIDEBUYER'S RIGHTSRELATED LAWS
BEFORE BUYING

  1. Check if the Project has a Certificate of Registration and License to Sell.
    You should ask the broker/agent of the owner/developer if the project is registered and has a License to Sell issued by HLURB:
    * This can be verified at the On-line Queries/HLURB website (www.hlurb.gov.ph) for the list of projects covered with Certificate of Registration and License to Sell as well as any encumbrance thereon, e.g. Cease and Desist Order, Suspension of License, etc.;
    * Or you may visit or call the nearest HLURB Regional Office for this information.
  2. Visit the subdivision/condominium, where the house and lot or condo unit to be purchased is located to know its natural topography, viz: susceptibility to landslide, flooding, erosion, etc.;


If the project is covered with a License to Sell, you may already enter into a Contract with the owner/developer. However, there are things which must be checked:

  1. The date of completion of the project as indicated in the License to Sell;
  2. If the property is mortgaged, it should have a Clearance to Mortgage from the HLURB;
  3. The facilities and amenities represented in the advertisement flyers/ brochures are in accordance with the approved subdivision and condominium plan on file with HLURB.

WHEN BUYING

  1. Check if the broker/agent is registered with HLURB/DTI;
  2. Verify if the property has not been sold to other buyers with the Register of Deeds;
  3. Check into your source of income whether you can afford to pay the equity and the monthly installments;
  4. Check if the materials of the house or condo unit conform with the development standards and approved construction specifications submitted to HLURB;
  5. Check whether the developer would payfor the water and electric meters, the subdivision perimeter fence, etc;.
  6. Check who would eventually operate the subdivision/condominium water system.

BEFORE SIGNING THE CONTRACT TO SELL

  1. Don’t sign any blank form of the Contract;
  2. Read thoroughly all the contents of the Contract more especially the terms and conditions in fine print;
  3. Secure a copy of the Contract and all other documents that you have signed;
  4. Make sure that the Contract would be registered by the owner/developer to the Register of Deeds;
  5. Pay directly to the owner/developer or the marketing agent authorized by said owner/developer only; and
  6. Ask an official receipt on all payments for your file.

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RIGHT TO A CLEAN TITLE

The buyer of a subdivision lot or condominium unit shall have a right to a clean title of said lot or unit upon the full payment of the purchase price. If the lot or unit is mortgaged, the owner/developer shall redeem the mortgage within six months from full payment so that the title could be delivered to the buyer. The only fee collectible from the buyer is the registration fee for the deed of sale in the Registry of Deeds.

Realty taxes can be assessed on the buyer if he has actually taken possession and occupied the lot or unit prior to the transfer of the title in his name.
These are so provided under Sections 25 and 26 of PD 957, Subdivision and Condominium Buyers Protective Decree, thus:
“SECTION 25. Issuance of Title. – 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 fees, 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.

“SECTION 26. Realty Tax. – Real estate tax and assessment on a lot or unit shall be paid by the owner or developer without recourse to the buyer for as long as the title has not passed to the buyer; Provided, however, that if the buyer has actually taken possession of and occupied the lot or unit, he shall be liable to the owner or developer for such tax and assessment effective the year following such taking of possession and occupancy.”

NON-FORFEITURE OF PAYMENTS

A buyer’s payment for a subdivision lot or condominium unit cannot be forfeited by the owner or developer when he desists paying on the ground that the project is not develop per approved plans and within the time limit for development. He must, however, notify the owner or developer of his decision to suspend payments.

The said buyer has the option to demand a refund of the total amount paid with legal interest. The total amount includes amortization interest but delinquency interest is excluded. Section 23 of PD 957 Subdivision and Condominium Buyers Protective Decree provides, thus:
SECTION 23. 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, desist from further payment due to the failure of the owner or developer to develop he 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 interest but excluding delinquency interest, with interest thereon at the legal rate.

FAILURE TO PAY INSTALLMENTS

In case the buyer fails to pay his installments for other reasons not attributable to the non-development of the project i.e. he failed to raise the needed money, he may avail of his rights under Republic Act 6552, Realty Installment Buyer Protection Act. This is so provided under Section 24 of PD 957, thus:
SECTION 24. Failure to Pay Installment. – The rights of the buyer in the event of his failure to pay the installment due for reason other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552.

Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to the corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary.

SANCTIONS FOR VIOLATING PD 957

A violation of the provisions of the decree and its implementing rules and regulations will carry administrative and penal sanctions. The liability extends to controlling persons in cases where the violator is a partnership or corporation. The violation usually carries administrative and criminal penalties. The HLURB as a quasi-judicial entity has jurisdiction over administrative aspect of the case while the criminal aspect is lodge before the fiscal’s office and accordingly if there is a finding of probable cause a criminal action is filed in the civil courts.

Section 38, 39 and 40 of PD 957 provides:
“SECTION 38. Administrative Fines. – The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of this Decree or of any rule or regulation thereunder. Fines shall be payable to the Authority and enforceable through writs of execution in accordance with the provisions of the Rules of Court.

“SECTION 39. Penalties. – Any person who shall violate any of the provisions of this Decree and/or any rules or regulation that may be issued pursuant to this Decree shall, upon conviction, be punished by a fine of not more than twenty thousand (P 20, 000.00) pesos and/or imprisonment of not more than ten (10) years: Provided, that in the case of corporations, partnership, cooperatives, or associations, the President, Manager or Administrator or the person who has charge of the administration of the business shall be criminally responsible for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto.

“SECTION 40. Liability of controlling persons. – Every person who directly or indirectly controls any person liable under any provision of this Decree or of any rules or regulation issued thereunder shall be liable jointly and severally with and to the same extent as such controlled person unless the controlling person acted in good faith and did not directly or indirectly induce the acts constituting the violation or cause of action.”

JURISDICTION ON CASES FOR VIOLATION OF PD 957

A violation of the provisions of PD 957, as amended, carries civil and criminal liabilities which are punishable primarily under PD 957 and other applicable penal laws.

An aggrieved buyer of a subdivision house and lot or a condominium unit may file the civil aspect of the violation with the HLURB, a quasi-judicial government agency for housing and land development. The proceedings on the civil case is governed by Rules of Procedure of HLURB. The proceedings is summary in nature and the provisions of the Rules of Court is not applicable except in a suppletory character.

The said buyer may file, or the HLURB through its Regional Office may refer , the criminal aspect of the violation with Task Force Subdivision and Condominium in the Provincial or City Prosecutors Office of the province or city where the subdivision or condominium project is located.

The civil case filed in the HLURB does not constitute as a prejudicial question to the criminal case. The criminal case and the civil case can proceed independently of each other whether the civil action is filed ahead or previous to the criminal case.

This is clarified in the recently issued Department Order 27 dated July 25, 2007 of the Department of Justice, to wit:

“Department Circular No. 27

Subject:

PRESCRIBING RULES AND REGULATIONS GOVERNING THE PRELIMINARY INVESTIGATION OF CRIMINAL CASES ARISING FROM VIOLATIONS OF PRESIDENTIAL DECREE NO. 957 AS AMENDED BY PRESIDENTIAL DECREE NO. 1344

WHEREAS, there are prosecutors investigating criminal cases arising from violations of PD No. 957 as amended by PD No. 1344 who dismiss such cases when there are pending civil actions before the Housing and Land Use Regulatory Board (HLURB) by considering the latter as constitutive of prejudicial question to the criminal cases.

WHEREAS, there are prosecutors who file criminal cases arising from PD 957 as amended by PD No. 1344 with the appropriate courts regardless of the pendency of related civil cases filed in the HLURB.

WHEREAS, it is necessary to have guidelines for all prosecutors investigating cases arising from PD 957 as amended by PD 1344 to avoid confusion on the matter.

NOW, THEREFORE, pursuant to the provisions of exisitng laws, the following rules and regulations are hereby adopted to govern the investigation of criminal cases arising from PD No. 957 as amended by PD No. 1344.

Section 1 – Criminal complaints for violations of PD 957 as amended by PD 1344 may be filed directly with the Office of the Provincial or City Prosecutor of the place where the subdivisions, condominiums, housing projects or developments are located;

Section 2 – The HLURB, throug the Task Force Subdivision and Condominium, may refer to the appropriate Office of Provincial or City Prosecutor, for preliminary investigation criminal cases arising from violations of PD 957 and amended by PD 1344.

Section 3 – Whether the criminal cases are directly filed or through the HLURB Task Force, the preliminary investigation shall be conducted in accordance with the Revised Rules of Criminal Procedure and when warranted, the proper information shall be filed in court.

Section 4 – Any related civil action filed or pending in the HLURB shall not constitute as a prejudicial question to the criminal case. The criminal action and the civil action shall proceed independently of each other whether the civil action is filed ahead on previous to the criminal case.

Section 5 – The criminal action, when pursued, shall not include the civil action when the basis of which is vested exclusively in the HLURB.

Section 6 – This Department Circular is effective immediately.

July 25, 2007\”

(SGD) RAUL M. GONZALES

Secretary

CIVIL ACTION AND CRIMINAL ACTION INDEPENDENT OF EACH OTHER, THE FORMER IS NOT PREJUDICIAL TO THE LATTER

In one case, the buyers filed a criminal complaint against the officers of a realty company. The city prosecutor, in a resolution, dismissed the complaint for being premature. It was contended that a reasonable interpretation of PD 957 requires a prior determination by the HLURB that “a corporation violated PD 957 before criminal charges may be filed against the corporate officers.”
On certiorari, the Court reversed and set aside the resolution and ordered the prosecutor to determine probable cause and the filing of the necessary information, if warranted.
In Chua vs. Ang, G.R. No. 156164, September 04, 2009, the Supreme Court specifically ruled that:
“In the present case, the petitioners have expressly chosen to pursue the criminal prosecution as their remedy but the prosecutor dismissed their complaint. The prosecutor’s dismissal for prematurity was apparently on the view that an administrative finding of violation must first be obtained before recourse can be made to criminal prosecution. This view is not without its model in other laws; one such law is in the prosecution of unfair labor practice under the Labor Code where no criminal prosecution for unfair labor practice can be instituted without a final judgment in a previous administrative proceeding. The need for a final administrative determination in unfair labor practice cases, however, is a matter expressly required by law. Where the law is silent on this matter, as in this case, the fundamental principle – that administrative cases are independent from criminal actions – fully applies, subject only to the rules on forum shopping under Section 5, Rule 7 of the Rules of Court. In the present case, forum shopping is not even a matter for consideration since the petitioners have chosen to pursue only one remedy – criminal prosecution. Thus, we see no bar to their immediate recourse to criminal prosecution by filing the appropriate complaint before the prosecutor’s office.”

TASK FORCE TO MONITOR INVESTMENT SCHEME IN REAL ESTATE PROJECT

There are news of buyers who have invested hard earned money in the purchase of lots or condominium units but find themselves short changed has been a cause for alarm. They found that projects were either not existing or the housing units badly constructed.

Relative to this the Office of the President issued Administrative Order No. 185 creating an Investor Protection Task Force (IPTF).

The IPTF has the power to monitor and give public warning on questionable schemes and products and investigate and recommend prosecution of the perpetrators with the Department of Justice.

Administrative Order No. 185

“Administrative Order No. 185. Creating an Investor Protection Task Force

Section 1. There is hereby created an Investors Protection Task Force (IPTF) to monitor investment schemes, including real estate projects, especially those marked to the public and Overseas Filipino Workers.

Section 2. THE IPTF shall be headed by the Department of Finance, with the following as members:

Securities and Exchange Commission

Department of Trade and Industry

National Bureau of Investigation

Department of Labor and Employment

Housing and Land Use Regulatory Board

Section 3. The IPTF shall undertake the following activities:

1. Monitor investment schemes and products;

2. Give public warnings on questionable schemes and products;

3. File evidence and recommend prosecution to the DOJ; and

4. Recommend appropriate legislation and regulations for investor protection”

 

PROHIBITION AGAINST OWNER/DEVELOPER TO COLLECT FEES FOR COMMUNITY BENEFIT

May an owner/developer collect contributions from buyers to finance certain services for community benefit? No.
Any collections for said purpose may only be done by the duly organized homeowners association but with the consent of the actual residents in the project.
Section 27 of PD 957 provides, thus:
“SECTION 27. Other Charges. – No owner or developer shall levy upon any lot or unit buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowners association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project.”