Presidential Decree No. 957, the Subdivision and Condominium Buyers' Protective Decree, requires a developer to complete the facilities and improvements shown in its approved plans within one year from the issuance of the license to sell (or such other period the housing authority fixes). If the developer fails to deliver, Section 23 entitles the buyer to stop paying installments and demand a full refund of everything already paid — including amortization interest, though not delinquency interest — plus legal interest, rather than losing those payments to forfeiture.
Why PD 957 exists
Pre-selling — buying a condominium unit or subdivision lot before it is actually built — carries an obvious risk: what happens if the developer stalls, under-delivers, or never finishes? PD 957 was enacted specifically to protect buyers in this situation, regulating how developers sell, what they must disclose, and, critically, what happens to a buyer's money if the developer does not perform.
The developer's completion deadline
Section 20 requires every subdivision or condominium developer to construct and provide the facilities, improvements, infrastructure, and other development shown in the approved plans, brochures, prospectus, or advertisements — including water supply and lighting — within one year from the date the license to sell was issued, or such other period the housing authority (now the Department of Human Settlements and Urban Development, successor to the old National Housing Authority in this function) may fix.
The buyer's core protection: non-forfeiture of payments
Section 23, titled “Non-Forfeiture of Payments,” is the provision that matters most once a project stalls. It provides that no installment payment a buyer has made shall be forfeited in favor of the developer when the buyer, after giving due notice to the developer, stops making further payments because the developer failed to develop the project according to the approved plans and within the time limit for doing so. Instead, the buyer may, at their option, be reimbursed the total amount paid, including amortization interest, but excluding delinquency interest, with interest at the legal rate.
This is a significant protection: without it, a buyer who stops paying after a developer's failure would risk the developer simply keeping everything already paid, on the theory that the buyer breached the installment contract. Section 23 flips that outcome — the buyer's decision to stop paying, made after giving notice and specifically because the developer failed to deliver on time, does not forfeit anything. It entitles the buyer to a refund instead.
What a buyer needs to do to invoke this protection
- Confirm the developer actually missed its completion deadline under the approved plan and the license-to-sell timeline, rather than simply feeling the project is progressing slowly;
- Give the developer due notice before stopping payments — the protection is tied to a buyer who has notified the developer, not one who simply stops paying without any communication;
- Keep records of every payment made, the approved plans and marketing materials the developer used, and any communication about delays; and
- Choose between reimbursement and continuing to press for completion — Section 23 gives the buyer the option to be reimbursed, meaning a buyer who still wants the unit delivered is not automatically forced to accept a refund instead.
Other buyer protections under PD 957
The law also requires developers to secure a registration and a license to sell before marketing a project (Sections 4-5), post a performance bond in some cases (Section 6), and file complaints for violations before the housing regulator, which has authority to suspend or revoke a license to sell, issue cease-and-desist orders, and hold developers in contempt for defying its orders (Sections 8, 9, 14, 16).
Where to file a complaint
Complaints against a non-performing developer are generally filed with the Department of Human Settlements and Urban Development (DHSUD), which inherited the regulatory and adjudicatory functions PD 957 originally vested in the National Housing Authority and later the HLURB.
Frequently Asked Questions
What happens to my payments if a pre-selling condo developer fails to finish on time? Under PD 957 Section 23, you may stop paying (after giving the developer due notice) and are entitled to a full refund of everything paid, including amortization interest, plus legal interest — without forfeiting anything to the developer.
How long does a developer have to complete a subdivision or condo project? Generally one year from the issuance of the license to sell, under PD 957 Section 20, or such other period the housing regulator fixes.
Do I have to notify the developer before I stop paying installments? Yes. Section 23's non-forfeiture protection is tied to a buyer who has given the developer due notice before desisting from further payment because of the developer's failure to complete the project on time.
Where do I file a complaint against a non-performing developer? With the Department of Human Settlements and Urban Development (DHSUD), which now exercises the regulatory and adjudicatory authority PD 957 originally vested in the National Housing Authority.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.