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.

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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.

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“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:

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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.

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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:

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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.

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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:

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“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.

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“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.

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“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

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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.

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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.

Buyers' Right