By: Atty. Gregorio B. Austral, CPA
Payback for broken promises
A home is meant to be a refuge and sanctuary, and developers who promise safe housing must fulfill their obligations. This case involved Joshua C. Rivera and Phinma Property Holdings Corporation (Phinma), who entered into a Contract to Sell on January 16, 2016, for a condominium unit in Hacienda Balai. Rivera paid PHP209,000.00 in equity and financed the PHP836,000.00 balance through the Home Development Mutual Fund (HDMF/Pag-IBIG). Rivera moved into Unit M on April 6, 2017, after settling move-in fees of PHP29,500.00 and spending PHP25,000.00 on unit improvements.
However, shortly after moving in, Rivera discovered severe defects, including long visible cracks on the main walls, water seepage damaging the vinyl floors, dirty black molds, constant stench, and insect infestation. Moreover, amenities Phinma marketed, such as the swimming pool, playground, and parking area, were not ready. The situation escalated when the Quezon City Building Official issued an Order on September 6, 2018, declaring the Hacienda Balai structures dangerous and ruinous pursuant to the Building Code of the Philippines, advising tenants to vacate immediately. Though Phinma eventually secured an extension to develop the project, the extension was granted without prejudice to buyers’ existing rights under Section 23 of Presidential Decree No. 957 (PD 957). Fed up with the condition of the unit and the lack of completed amenities, Rivera lodged a Complaint on October 8, 2018, seeking cancellation of the contract and a full refund of his equity, HDMF monthly amortizations, cost of improvement, and remaining move-in fees.
Phinma attempted to deny liability by asserting that Rivera was estopped from claiming a refund because he was aware of the extension request and had signed a “Certificate of Inspection and Unit Acceptance”. This brought the central matter before the Supreme Court: whether Rivera was entitled to a refund of all the amounts he paid to Phinma, given the developer’s undeniable failure to complete the development of the Hacienda Balai project within the required time.
The Supreme Court partially granted Phinma’s petition, affirming that developers who fail to provide safe and suitable living spaces shall be held accountable for a refund. The Court found that Phinma was remiss in its obligations under Section 20 of PD 957 (Subdivision and Condominium Buyers’ Protection Decree), particularly by failing to complete the facilities and infrastructure it offered. The Court confirmed that under Section 23 of PD 957, Rivera had the right to cancel the contract and demand a refund because the developer failed to develop the project according to approved plans and within the set time limit. Furthermore, Rivera was not barred by estoppel, as the extension granted to Phinma was explicitly without prejudice to buyers’ rights, and his signing of the “Certificate of Turnover,” a contract of adhesion, did not negate the defects he later discovered.
However, the Court clarified the scope of the refund mandated by Section 23. Applying the maxim expressio unius est exclusio alterius (the express mention of one thing implies the exclusion of all others), the Court determined that the refund covers only the amortization payments or installments made for the purchase of the property, including amortization interests. Payments unrelated to the amortizations are excluded.
Therefore, the Court modified the lower rulings by holding that Phinma was not required to refund the move-in fees (which included administrative, utility, and various service charges) and the cost of improvement (PHP25,000.00) because these items do not constitute amortization payments under Section 23 of PD 957.
The Court ordered Phinma to: Refund Rivera the total equity of PHP209,000.00 and the equivalent value of the HDMF monthly amortizations amounting to PHP93,600.64, plus legal interest; Buy back Rivera’s outstanding loan obligation from the HDMF, as Phinma had received the proceeds of that loan; and Pay Rivera attorney’s fees, increased to PHP80,000.00, along with the costs of litigation. The Court denied Rivera’s claims for moral and exemplary damages, noting that Phinma had already been penalized with a fine for its failure to complete the project on time.
The ruling emphasizes that while the law protects buyers seeking relief from unfinished or dangerous projects, the refund mechanism under the Subdivision and Condominium Buyers’ Protection Decree is strictly confined to payments made toward the purchase price of the unit. The total amount refunded to Rivera, covering his equity and HDMF amortizations, confirms that developers cannot forfeit installment payments when they fail to deliver the promised development, thereby upholding the buyer’s universal right to adequate housing. (Phinma Property Holdings Corp. v. Rivera, G.R. No. 261877, (16 July 2025))