Dear Atty. Gab,

Musta Atty! I’m writing to you today because I’m in a really confusing situation and I hope you can shed some light on my rights. Back in 1973, my husband and I excitedly signed a contract to buy a plot of land in a subdivision on installment. It was our dream to build our family home there. We diligently paid our monthly installments for a few years. However, the subdivision never really developed as promised. The roads were unpaved, there was no proper drainage, and basic amenities were missing.

Feeling frustrated and seeing no progress, we decided to stop our payments in 1977, hoping it would push the developer to act. Now, after all these years, we received a notice from the developer saying they are cancelling our contract due to non-payment and are claiming we’ve forfeited all our previous payments! Can they do this? Is it legal for them to cancel our contract and keep our money when they themselves didn’t fulfill their promises to develop the subdivision? We are simple people and don’t understand the law. Any guidance you can provide would be a huge help.

Maraming salamat po,

Elena Sison

Dear Elena,

Musta Elena! Thank you for reaching out to me. I understand your distress regarding the notice from your developer. It’s indeed concerning when your dream of owning a home is threatened, especially when it feels like the developer hasn’t held up their end of the bargain. Let’s clarify your rights in this situation. Based on established legal principles in the Philippines, particularly concerning real estate and subdivision developments, developers cannot simply cancel your contract and forfeit your payments if they have failed to develop the subdivision as promised.

Protecting Subdivision Buyers: Retroactive Application of the Law

Philippine law, specifically Presidential Decree No. 957, also known as “The Subdivision and Condominium Buyers’ Protective Decree,” is designed to protect individuals like you who invest in subdivision lots. This law, even though enacted after your initial contract in 1973 (it was enacted in 1976), is often applied retroactively to cover contracts made before its effectivity. This retroactivity is a crucial aspect of the law, ensuring that its protective mantle extends to buyers who entered into agreements prior to its enactment but were still vulnerable to developer inaction or misconduct.

The Supreme Court has consistently upheld this retroactive application, recognizing the law’s intent to remedy the widespread issues of developers failing to deliver on their promises. The intent of the law is clear: to shield buyers from unscrupulous practices and ensure decent human settlements. As the Supreme Court emphasized:

‘The intent of a statute is the law x x x. The intent is the vital part, the essence of the law, and the primary rule of construction is to ascertain and give effect to the intent. The intention of the legislature in enacting a law is the law itself and must be enforced when ascertained, although it may not be consistent with the strict letter of the statute. Courts will not follow the letter of a statute when it leads away from the true intent and purpose of the legislature and to conclusions inconsistent with the general purpose of the act x x x.’

This underscores that the spirit and purpose of the law—protecting buyers—takes precedence, even over a strict literal interpretation of its effective date. The law aims to correct past injustices and prevent future exploitation in real estate transactions. This protective stance is rooted in the recognition that in many instances, individual buyers are in a weaker position compared to large developers.

Furthermore, the preamble of P.D. 957 explicitly addresses the problems it seeks to solve:

“WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers;“

This preamble highlights the very scenario you described – the failure of developers to provide basic amenities. The law directly targets this issue, recognizing the danger and unfairness it poses to buyers. It’s not just about contracts; it’s about ensuring habitable and safe communities for Filipinos.

Section 23 of P.D. 957 is particularly relevant to your situation. It clearly states:

“Sec. 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, 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.”

This section directly addresses your right to stop payments due to the lack of development and, crucially, prevents forfeiture of your payments under such circumstances. It even grants you the option to seek reimbursement of all payments made, plus interest. This provision is a powerful tool for buyers in your position.

The rationale behind this retroactivity and buyer protection is deeply rooted in social justice. The law recognizes the imbalance of power between developers and individual buyers and aims to level the playing field. It’s designed to be an instrument of social justice, favoring the vulnerable and disadvantaged, such as small lot buyers and aspiring homeowners. The law aims to prevent the exploitation of ordinary citizens by unscrupulous developers.

Practical Advice for Your Situation

Here are some steps you can consider given your situation:

• Document Everything: Gather all documents related to your land purchase, including the contract, payment receipts, and any notices from the developer. Also, document the lack of development with photos and videos if possible.
• Formal Notice to Developer: Send a formal written notice to the developer reiterating your position – that you stopped payments due to the lack of development, referencing P.D. 957 and its protection against forfeiture in such cases. Demand that they fulfill their development obligations.
• HLURB Complaint: Consider filing a formal complaint with the Housing and Land Use Regulatory Board (HLURB). HLURB is the government agency tasked with regulating subdivision and condominium developments and can mediate and adjudicate disputes between buyers and developers.
• Legal Consultation: Seek advice from a lawyer specializing in real estate law. They can assess your specific case in detail, provide tailored advice, and represent you in negotiations or legal proceedings if necessary.
• Explore Mediation: Before resorting to lengthy legal battles, explore mediation with the developer, possibly facilitated by HLURB. This could lead to a faster and more amicable resolution.
• Understand Your Options: Be aware of your options under Section 23 of P.D. 957 – you may have the right to demand development or seek a refund of your payments with interest.

Remember, Elena, Philippine law provides significant protection to subdivision lot buyers like yourself. The principles discussed here, drawn from established Philippine jurisprudence, are intended to ensure fairness and accountability in real estate developments. Do not hesitate to seek further clarification or assistance as you navigate this process.

Sincerely,
Atty. Gabriel Ablola

For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.