Phinma Property Holdings Corporation vs. Rivera

Under Section 23 of Presidential Decree No. 957, a condominium buyer's refund is limited to amortization payments made for the purchase of the unit — including equity and monthly amortization installments — and does not extend to move-in fees or improvement costs, which are unrelated to the amortization. The buyer is not estopped from claiming a refund despite signing a Certificate of Turnover, which is a contract of adhesion, where defects were discovered only after a cursory inspection and the developer admittedly failed to complete the project's amenities on time.

Phinma Property Holdings Corporation is the developer of Hacienda Balai Condominium, a residential condominium project in Quezon City. Joshua C. Rivera is a buyer who entered into a Contract to Sell with Phinma for a condominium unit, financing part of the purchase through the Home Development Mutual Fund (HDMF or Pag-IBIG). The dispute arises under Presidential Decree No. 957, the Subdivision and Condominium Buyers' Protection Decree, which was enacted to address widespread reports of developers reneging on their obligations to provide and maintain subdivision and condominium facilities, thereby endangering the health and safety of buyers. Sections 20 and 23 of the decree impose on developers a duty to complete project facilities within a prescribed period and grant buyers remedies — including refund — when developers fail to do so.

On January 16, 2016, Rivera and Phinma entered into a Contract to Sell involving Unit M at the 5th floor of Building 5, Hacienda Balai Condominium, a 30-square-meter unit priced at PHP 1,110,000.00. Rivera agreed to pay PHP 209,000.00 as equity, with the balance of PHP 836,000.00 to be settled through the Home Development Mutual Fund (HDMF) via projected monthly installments of PHP 5,850.04. On April 6, 2017, Rivera moved into his unit after paying a move-in fee of PHP 29,500.00, which covered an administrative processing fee, city engineer fee, construction bond, Meralco service deposit, one-time condominium corporation registration/membership fee, temporary power service charge, and water service deposit. He also spent PHP 25,000.00 on improvements to the unit.

Weeks after moving in, Rivera noticed long visible cracks on the main walls supporting the unit, as well as in the living room, toilet, and wash area. Water seeped through the unit, damaging the vinyl floors and backdoor, and dirty black molds formed along the walls, causing a constant stench. The unit was also infested with insects. In addition, Rivera discovered that the amenities Phinma had marketed — including the swimming pool, playground, and parking area — were not available, and the areas where the swimming pool and parking lot were slated to be located had been replaced with buildings. Rivera filed a report with the Department of the Building Official of Quezon City, which led to an inspection of all eight buildings of Hacienda Balai.

On September 6, 2018, Engineer Isagani R. Verzosa, Jr., City Building Official of Quezon City, issued an Order declaring Hacienda Balai dangerous and ruinous pursuant to Sections 214 and 215 of Presidential Decree No. 1096 (the Building Code of the Philippines), ordering Phinma to "rectify/repair/demolish" the structures immediately and advising all occupants to vacate. Phinma sought reconsideration. Around the same period, Phinma requested an extension of time to develop the project, which the HLURB-NCR-FO granted on September 7, 2018, extending the deadline to June 30, 2020, but expressly warned that the extension was without prejudice to buyers' rights under Section 23 of PD 957. On September 21, 2018, the City Building Official set aside its earlier order to demolish and vacate. Three days later, the HLURB-NCR-FO issued a Notice and Order directing Phinma to pay an administrative fine of PHP 10,000.00 and to cease and desist from further selling, advertising, and collecting amortizations from unit buyers.

On October 8, 2018, Rivera lodged a complaint before the HLURB-NCR-FO against Phinma and HDMF, seeking clearance from his housing loan and a full refund of PHP 209,000.00 in paid equity, PHP 93,600.64 in HDMF monthly amortizations, PHP 25,000.00 in unit improvement costs, and PHP 14,500.00 as the remaining balance of move-in fees, along with moral and exemplary damages of PHP 50,000.00 each, attorney's fees of PHP 60,000.00, and costs of suit. Phinma countered that upon reinspection, the City Building Official found no structural deficiencies or imminent threat, and that the HLURB-NCR-FO had granted it an extension of time to complete development. Rivera subsequently moved to withdraw his complaint against HDMF, which was dismissed for lack of jurisdiction.

• Estoppel: Petitioner argued that Rivera was estopped from claiming a refund because he was aware of the extension of time to develop the project yet signed the "Certificate of Inspection and Unit Acceptance" (Certificate of Turnover), certifying that his unit conformed to the approved plans.
• Acquiescence: Petitioner maintained that Rivera's acquiescence to the extension was evident from his continued enjoyment of the economic benefits of his unit.
• Habitability: Petitioner asserted that Rivera's acceptance of the unit proved that it was safe and habitable.
• Scope of Refund: Petitioner contended that assuming Rivera was entitled to a refund, it should cover only the amount paid for the unit, excluding move-in fees and cost of improvement.
• Attorney's Fees: Petitioner averred that Rivera could have filled out a Concerns Form or written a letter rather than filing a complaint before the HLURB, and that by opting to litigate, Rivera should bear his own expenses without an award of attorney's fees and costs of litigation.

• Reiteration of Settled Issues: Respondent countered that Phinma raised the same questions of fact and law already resolved by Arbiter Balasolla, the HSAC Board of Commissioners, and the CA.
• Non-Completion of Amenities: Respondent argued that Phinma failed to complete the facilities and amenities of Hacienda Balai when his unit was delivered, causing him undue prejudice.
• Contract of Adhesion: Respondent averred that the Certificate of Inspection and Unit Acceptance freeing Phinma from liabilities for construction defects is a contract of adhesion contrary to law and public policy.
• Active Assertion of Rights: Respondent contended that he never remained silent but, together with his neighbors, complained before the condominium administration, the Quezon City Building Official, and the HSAC to defend their rights and safety.
• Damages: Respondent insisted that due to Phinma's delay, he was entitled to moral and exemplary damages, asserting that Phinma acted in bad faith and in a wanton, fraudulent, reckless, oppressive, or malevolent manner in refusing to satisfy his valid claim.
• Attorney's Fees: Respondent urged that he was entitled to attorney's fees and costs of litigation since he was compelled to litigate to protect his interests.
• Procedural Bar: Respondent pointed out that Phinma failed to question the award of move-in fees and costs of improvement during the hearing before the HSAC, and thus could not raise the issue for the first time on appeal.

• Scope of Refund under Section 23: Whether the refund under Section 23 of Presidential Decree No. 957 covers all amounts paid by the buyer, including move-in fees and improvement costs, or is limited to amortization payments.
• Estoppel: Whether Rivera is estopped from claiming a refund under Section 23 by virtue of his signing the Certificate of Turnover, his awareness of the extension of time, and his continued occupancy of the unit.
• Attorney's Fees and Damages: Whether Rivera is entitled to attorney's fees, costs of suit, moral damages, and exemplary damages.

• Scope of Refund under Section 23: No. The refund under Section 23 is limited to amortization payments — equity and Pag-IBIG monthly amortizations — and does not extend to move-in fees or improvement costs, which are unrelated to the purchase of the unit.
• Estoppel: No. Rivera is not estopped from claiming a refund; the Certificate of Turnover is a contract of adhesion, defects were discovered only after a cursory inspection, and the extension was expressly granted without prejudice to buyers' rights under Section 23.
• Attorney's Fees and Damages: Yes as to attorney's fees (increased to PHP 80,000.00) and costs of suit; No as to moral and exemplary damages, Rivera having failed to prove bad faith, sleepless nights, or wounded feelings.

• Scope of Refund under Section 23: Section 23 of PD 957 grants buyers two remedies when a developer fails to complete the project on time: (i) to continue with the contract but suspend payments, or (ii) to cancel the contract and demand a refund of all payments made, excluding delinquency interests. Applying the maxim expressio unius est exclusio alterius, the express mention of "amortization interests" and "delinquency fees" immediately after the phrase "total amount paid" reveals legislative intent to limit the refund to amortization payments — the installments made for the purchase of the property. The first part of Section 23 speaks of the option to "desist from further payment," referring to the suspension of amortization payments; the refund option must be read in conjunction with this alternative remedy, meaning only payments that could have been stopped are refundable. In Fil-Estate Properties, Inc. vs. Spouses Go, the Court awarded buyers the total amortizations actually paid, not the lump sum price, confirming that the refund under Section 23 pertains to actual amortization payments. Move-in fees (administrative processing fee, city engineer fee, construction bond, Meralco service deposit, condominium registration fee, temporary power service charge, and water service deposit) and improvement costs are not amortization payments and thus fall outside the statute's coverage. The Court noted it could order this deduction despite Phinma's alleged failure to question the award of these items before the HSAC, as it stems from a proper interpretation of the law.

• Estoppel: The doctrine of estoppel requires conduct amounting to false representation or concealment, intent or expectation that such conduct be acted upon, and knowledge of the actual facts, with the essential element being that the invoking party was misled to its prejudice. Rivera's purported silence regarding the extension cannot bar him because the extension was expressly granted without prejudice to buyers' rights under Section 23, and nothing in the law requires a buyer to immediately file a refund claim or contest the developer's request for extension as a prerequisite. Rivera never actually remained silent: he protested before the condominium administrator, complained to the Quezon City Building Official, and pursued his case through the HLURB, HSAC, CA, and the Supreme Court. The Certificate of Turnover he signed is a contract of adhesion — a ready-made contract prepared by Phinma where Rivera's only participation was to sign, under the constraint that he would not receive his unit otherwise. Contracts of adhesion are not void per se but are struck down when the weaker party is deprived of the opportunity to bargain on equal footing. Rivera was afforded only a cursory inspection and, not being an engineer or architect, could not be expected to detect all defects; the cracks, leaks, molds, and infestation manifested only weeks after occupancy. Moreover, the Certificate of Turnover relates only to Rivera's unit and does not pertain to the amenities Phinma admittedly failed to complete — a failure that independently affords relief under Section 23. Rivera's continued stay while awaiting resolution does not negate his right to a refund.

• Attorney's Fees and Damages: Article 2208(2) of the Civil Code authorizes attorney's fees when the defendant's act or omission has compelled the plaintiff to litigate or incur expenses to protect his interest. Phinma's failure to develop the project on time compelled Rivera to retain counsel and litigate. The Court increased the award from PHP 20,000.00 to PHP 80,000.00, noting Rivera's original 2018 request for PHP 60,000.00 and the seven-year duration of the proceedings. Moral damages were denied because Rivera failed to establish that Phinma acted in bad faith or to allege and prove sleepless nights, anxiety, or wounded feelings. Exemplary damages were likewise denied because Phinma had already been penalized through the administrative fine imposed by the HLURB-NCR-FO, and no further basis for exemplary damages was shown.

• Expressio unius est exclusio alterius — The express mention of one person, thing, or consequence implies the exclusion of all others. Where the law enumerates the subject or condition upon which it applies, it is construed as excluding from its effects all those not expressly mentioned. The Court applied this maxim to Section 23 of PD 957, holding that the express mention of "amortization interests" and "delinquency fees" after "total amount paid" indicates that only amortization payments are refundable, excluding move-in fees and improvement costs.

• Doctrine of Estoppel (Estoppel in pais) — A person is estopped if by conduct, representation, admission, or silence when they ought to speak, they cause others to believe certain facts to exist and such persons rightfully rely and act on such belief to their prejudice. The requisites are: (a) conduct amounting to false representation or concealment of material facts; (b) intent or expectation that such conduct be acted upon by the other party; and (c) knowledge, actual or constructive, of the actual facts. The most important element is proof that the party invoking the doctrine was misled to its prejudice. The Court held that Rivera was not estopped because the extension was granted without prejudice to his rights, he never remained silent but actively pursued his claims, and the Certificate of Turnover was a contract of adhesion signed under constraint.

• Contracts of Adhesion — Ready-made contracts prepared by the dominant party and imposed on the weaker party, whose only participation is to sign. They are not invalid per se and are binding as ordinary contracts, but are struck down as void when the weaker party is imposed upon and deprived of the opportunity to bargain on equal footing, reduced to the alternative of taking it or leaving it. The Court held that the Certificate of Turnover was a contract of adhesion that Rivera had no choice but to sign, and that it could not bar claims for defects discovered after a cursory inspection.

• Non-Forfeiture of Payments under Section 23, PD 957 — When a developer fails to develop a subdivision or condominium project according to approved plans and within the prescribed time, the buyer may, at his option, either (i) continue with the contract but suspend payments until the developer complies, or (ii) cancel the contract and demand a refund of the total amount paid, including amortization interests but excluding delinquency interests, with legal interest. The refund is limited to amortization payments and does not extend to move-in fees or improvement costs.

• "However, it must be clarified that Section 23 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." — This passage articulates the ratio decidendi on the scope of refund under Section 23, distinguishing amortization payments from other expenses such as move-in fees and improvement costs.

• "Obviously, a 'substantial' completion does not suffice under the law. Thus, Phinma was clearly remiss in its obligations under Section 20." — This establishes that substantial completion of a condominium project is insufficient to satisfy the developer's statutory obligation under Section 20 of PD 957.

• "Rivera's act of signing the Certificate of Turnover does not estop him from questioning the defects he later discovered while living in his unit. The Certificate of Turnover that Rivera signed is a contract of adhesion." — This defines the Court's treatment of the Certificate of Turnover as a contract of adhesion that cannot bar a buyer from asserting rights over defects discovered after a superficial inspection.

• "However, said refund must be limited to the amortizations for the unit, with legal interest thereon, and does not pertain to an unbridled claim for expenses unrelated to the purchase of the unit." — This encapsulates the Court's final formulation of the scope of refund under Section 23, confining it to amortization payments tied to the purchase price.

• Fil-Estate Properties, Inc. vs. Spouses Go, 557 Phil. 377 (2007) — Followed. The Court cited this case to confirm that the refund under Section 23 of PD 957 pertains to the actual amortization payments made by the buyer, not the lump sum price, reinforcing the holding that only amortization-related payments are refundable.

• G.G. Sportswear Mfg. Corp. vs. World Class Properties, Inc., 627 Phil. 703 (2010) — Cited for the proposition that Section 23 grants buyers two remedies: to continue with the contract but suspend payments, or to cancel the contract and demand a refund.

• De La Salle Araneta University vs. Bernardo, 805 Phil. 580 (2017) — Cited for the maxim expressio unius est exclusio alterius, which the Court applied to interpret the scope of "total amount paid" in Section 23.

• Philippine Savings Bank vs. Chowking Food Corp., 579 Phil. 589 (2008) — Cited for the definition and requisites of estoppel in pais, including the principle that the most important element is proof that the invoking party was misled to its prejudice.

• Spouses Co Chien vs. Sta. Lucia Realty & Devt. Inc., 542 Phil. 558 (2007) — Cited for the enumeration of the three kinds of estoppel: estoppel in pais, estoppel by deed, and estoppel by laches.

• Pasion vs. Melegrito, 548 Phil. 302 (2007) — Cited for the doctrine of estoppel by silence, which arises when a person under a duty to speak refrains from doing so and thereby leads others to rely on a state of facts to their prejudice.

• United Coconut Planters Bank, Inc. vs. E. Ganzon, Inc., 914 Phil. 254 (2021) — Cited for the principle that contracts of adhesion are not invalid per se but are struck down when the weaker party is imposed upon and deprived of the opportunity to bargain on equal footing.

• Section 20, Presidential Decree No. 957 (Subdivision and Condominium Buyers' Protection Decree) — Requires every owner or developer to construct and provide the facilities, improvements, infrastructures, and other forms of development offered in approved plans, brochures, or advertisements within one year from issuance of the license or such other period fixed by the Authority. The Court found Phinma remiss in its obligations under this section for failing to complete the Hacienda Balai project, including its amenities.

• Section 23, Presidential Decree No. 957 — Provides that no installment payment made by a buyer shall be forfeited when the buyer desists from further payment due to the developer's failure to develop the project according to approved plans and within the time limit. The buyer may opt to be reimbursed the total amount paid, including amortization interests but excluding delinquency interests, with legal interest. The Court interpreted this provision as limiting the refund to amortization payments only, excluding move-in fees and improvement costs.

• Sections 214 and 215, Presidential Decree No. 1096 (Building Code of the Philippines) — Define dangerous and ruinous buildings and authorize the Building Official to order repair, vacation, or demolition. The Quezon City City Building Official invoked these provisions to declare Hacienda Balai dangerous and ruinous, though the order was later set aside.

• Article 2208(2), Civil Code of the Philippines — Authorizes an award of attorney's fees when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. The Court applied this provision to award Rivera attorney's fees, increased to PHP 80,000.00, due to Phinma's failure to complete the project compelling Rivera to litigate.

• Article 25(1), Universal Declaration of Human Rights — Recognizes the right to a standard of living adequate for health and well-being, including housing. The Court cited this provision to underscore the universal human right to adequate housing that it stringently protects.

• Inting, J. — Concurred in the majority opinion.
• Dimaampao, J. — Concurred in the majority opinion.
• Caguioa, Acting C.J. (Chairperson) — Concurred in the result and ultimate disposition but registered a sole reservation regarding the ponencia's exclusion of move-in and improvement costs from the reimbursable amount. Justice Caguioa argued that Section 23's use of the word "total" in describing reimbursable costs is non-exhaustive and inclusive in nature, and that amortization is included as a reimbursable cost but is not the only cost reimbursable. Justice Caguioa reasoned that move-in fees paid by the buyer, unlike delinquency interests incurred by the tenant's fault, are forfeited as a loss due to the developer's failure, and that a total reimbursement would be more in accord with the protective spirit behind PD 957.