24/12/2025
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SUPREME COURT: BUYERS ENTITLED ONLY TO REFUND OF PURCHASE PAYMENTS WHEN DEVELOPERS FAIL TO COMPLETE AMENITIES
The Supreme Court (SC) has ruled that when a developer fails to complete a property project, the law does not entitle the buyer to a refund of the cost of improvements made to the unit but only to a reimbursement of amortization payments or amounts originally paid for the purchase of the property.
In a 16-page decision penned by Associate Justice Samuel Gaerlan, the SC's Third Division ordered Phinma Property Holdings Corporation to refund the amortization payments made by Joshua Rivera for the purchase of a condominium unit after the structure was declared unsafe.
In 2016, Rivera and Phinma entered into a contract to sell involving Unit Mat on the 5th floor of Building 5, Hacienda Balai Condominium, with an area of 30 square meters in exchange for Php1,110,000.
Rivera agreed to pay Phinma equity in the amount of Php209,000, while the balance of Php836,000 will be settled through HDMF with projected monthly installments of Php5,850.
He moved into his unit after settling a move-in fee of PHP 29,500, and also made several improvements on the subject property, which cost PHP 25,000. Weeks later, Rivera 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. In addition, the unit was infested with insects.
He also discovered that the amenities Phinma marketed, such as the swimming pool, playground, and parking area, were not available. This paved the way for him to file a report with the Department of the Building Official of Quezon City, which led to an inspection of the eight buildings.
After inspection, the Quezon City government engineers issued an order requiring Phinma to rectify, repair, or demolish the building immediately. They also advised all tenants and occupants to vacate the premises, as it is not structurally sound.
Aggrieved, Rivera lodged a complaint before the Housing and Land Use Regulatory Board Expanded National Capital Region Field Office against Phinma, seeking the refund of his monthly amortizations and other expenses he spent for the renovation of the unit.
The Human Settlements Adjudication Commission (HSAC) ruled in favor of Rivera and directed Phinma to refund all his expenses, including the money for the purchase of the said unit. The said decision was later upheld by the Court of Appeals, prompting Phinma to elevate the case before the Supreme Court.
In partially granting the appeal of Phinma, the high court emphasized that under section 24 of the Presidential Decree No. 957, or the Subdivision and Condominium Buyers' Protection Decree, while Rivera is entitled to a refund, it 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.
It emphasized that there is no legal basis to order Phinma to refund the move-in fees and cost of improvement for the unit, as they do not fall within the purview of allowable refunds under Section 23.
But in requiring Phinma to refund the amortization payment, the highest bench cited section 20 of the Presidential Decree No. 957, which gives developers a period of one year from the date of the issuance of the license for the subdivision or condominium project to complete the facilities and infrastructures that they advertise or offer to prospective buyers.
"Records reveal that Phinma failed to complete the Hacienda Balai condominium project within the required period of time," the Supreme Court said.
It directed Phinma to return to Rivera the Php209,000 he paid for the unit, including the Php93,600 monthly amortization and Php80,000 as attorney's fees.
