Having experienced a hard-time looking for resources and information on how to go about the proper process of filing a refund, and if such action merits my decision to do so, I decided to blog about it and put this un-related topic for reference of those who, like me, delved into a real property investment that turned unfavorable to your part or simply, due to circumstances brought about by the developer (take note of this).
As a backgrounder, me and my brother partnered together around November, 2011 to purchase in installment a combined unit at one of the upcoming high-rise Condominium in Quezon City, claimed as the first "Sports Condominium" in the Philippines. The developer has earned our trust for having completed already a number of low-cost projects. We were also convinced as it suited our location preference, payment option, living features, and turn-over period (May, 2015) enough for us to build up funds for the transfer/miscellaneous fees before our monthly equity begins.
After completing our reservation and documentary requirements, we've patiently waited and observed the construction progress... for 2-years... and it was very slow until it already seemed like the construction totally halted. Our agent became hard to reach also with our SMS getting no replies and calls un-answered. When he finally kept in touch with us, we only get frustrated with his excuses as to why he wasn't able to attend to our messages and calls (but was very much available when he was still trying to convince us). He gave us many excuses, until at the turn of 1st quarter of 2014, he finally admitted to us that the delay was because their contractors were made to swiftly finish the then on-going construction of a much bigger project in Bulacan -- Ciudad de Victoria -- thus favoring just a single project out of the other pending projects being paid by many of their clients in the Metro.
Looking at the situation, we are at a disadvantage and are no longer happy with this venture. Add to it that during this time, 3-years after closing our deal, the construction progress was still at the 3rd-floor. So thinking hard about it, we've finally decided to end our contract and ask for a total refund. This decision did not came easy as we've had a lot of fears and disinformation coming -- that we will not be able to get our hard-earned money back, or if luck comes with us, only up to a maximum 50% of our payments will be returned as stipulated under Republic Act 6552 (RA 6552) - Realty Installment Buyer Protective Act (26Aug1972) or much popular as the "Maceda Law".
That's what most of the real estate agents are telling us and to other misinformed people who had the same predicament as us. But that policy for me felt so unfair for buyers who have faithfully kept their part of the bargain and obligations on the contract. Luckily, by digging and scouring the internet with all the search keywords I can think of, I've chanced upon a "somewhat" lesser known rule of law under Presidential Decree 957 (PD 957) - Subdivision and Condominium Buyers Protective Decree (12July1976). You may read the specifics at section 23-24 under Title IV of the decree.
I have learned that the difference, and probably short explanation between these two policies is what kind of protection does a buyer get according to who's at fault or who failed from their obligation. Under RA6552, the buyer gets certain refund when they are no longer able to continue paying their installments (buyer is at fault); while in PD957, the buyer gets full refund when the developer failed to complete the development or deliver the project within the required period. You may read more about the differences of these two from this link
Having our fears armed with that new found information, we proceeded with the refund process beginning with a series of calls, intent letter, another follow-up call, and finally a complaint to the office of the Housing and Land Use Regulatory Board (HLURB) in Diliman, Quezon City.
Okay, just for a disclaimer, I am not in any way claiming to be expert in any of these 2 laws or any other law governing the real estate rights of buyer or developer. All the information and steps posted here were all based on our own experience and that which applied to our situation. Study your own circumstances and the protective act that may apply to you and follow according to your understanding and discernment.
So to make it easy, below are the steps on how to file and request for payment refunds from a real property developer under P.D. 957. The steps we've taken were also guided and inspired by another buyer which you may find at this forum
1. Request for your latest Statement of Account (SOA) from the accounting department of the developer's office. This SOA will be used to prove your total payments, outstanding balance, if there are penalties, and if your account is still active.
2. Request for a Certification from HLURB or copy of License to Sell (LTS) (if you don't have one yet) that will prove that a developer is current with its obligations with the government requirements. In our case, the developer was not issued with an LTS on the date of our document signing, nor even during the period of filing our request for refund. We paid Php 288.00 for this Certification.
3. Submit a Refund Letter request to the developer indicating your intent and reason of such action. Attach those pertinent documents in steps 1 and 2. Don't forget to get a receiving copy, and contact person to whom you can follow-up.
4. Give them 3- to 5-days after receipt of your letter to call you back. Follow-up every now and then by calling the person in-charge about the progress of your request.
5. Submit a Follow-up Letter to the developer if there's no valuable feedback yet. Indicate on your letter that you will be filing a complaint at HLURB when there's still no action from their part is taken. Attach your original refund request letter, the original copy of all the ORs, and photocopy of the Contract to Sell (CTS).
Okay, although these are the initial steps that we took, I think you may directly file your complaint to HLURB. I just decided to follow these steps for hopes that the request can be settled sooner with the developer without going thru the once I thought "hassle" steps in dealing under any government office. I was wrong though as our transactions with HLURB went smooth without any red tape. So if you choose not to follow the steps above, you may proceed below:
6. Submit a Complaint Letter to HLURB office in-charge in the area of the project.You may attach the letters you've previously submitted to the developer. Our complaint letter took 2-pages long as I've detailed our purchase history and it also entailed a paragraph of drama about our having a "dream property".
7. Fill-up the "Request for Assistance" form from HLURB. While writing on this form, I realized that you only need a single page complaint letter as this form from HLURB is where you will put most of the information and facts about your complaint.
Note: there was not any payments made or asked by the HLURB office from this process, nor from the succeeding processes.
8. Wait for notice of hearing/conference from HLURB. We received our notice 2-weeks after filing our complaint. The notice though was issued 7-days from the date of our complaint letter.
9. Appear at the hearing date and place stated from HLURB's notice. From hereon, all the succeeding steps will be based according to the results of your conciliation or settlement between you and the developer. The HLURB will act as the arbiter/mediator and will take note of the minutes of the conference.
10. Once all the series of hearing is done, claim your refund. It took us two conciliation meetings/hearings which were scheduled 1-month apart before we were able to agree on each of our terms.
Our term was to ask for full refund including the reservation fee and interests (which were not indicated as we don't know where to base the interest rate). The developer's lawyer told us that the reservation fee may not be refunded anymore if we wish to get the refund as soon as possible. Their soonest timeline for encashing of the cheques were scheduled 5-months after in three equally divided amount which are also dated 1-month apart each. While if we insist with refunding the reservation fee, the cheques may get re-scheduled for another month or two since they still have to defend and present that term to the board and other blah, blah!
We just agreed to the lawyer's term accepting the fact that we will no longer be able to get our reservation payments. A 3rd and last conference was scheduled a month after to receive the cheques. When we finally claimed our cheques, we were surprised that the first cheque was dated 1-month earlier than the previously agreed schedule. But instead of only three equally-amount cheques, there were 5 cheques already, with total amount now including the reservation fees. The result came out still amenable as we've received 100% refund of our amortization payments, except the earned interests and lost time (of course).
From the date of our first letter, it took 3-months before we were able to get the attention of the developer, additional 2-months before we got hold of the refund cheques, plus 2-months before the first schedule of cheque encashment, and final 5-months to complete the cheque encashments. All in all, it took 1-year to complete the refund process, or a total lost investment time of 4-years from the date of our contract.
Investing on a property is not that easy as it seems, there are laws and regulations that we have to know and be armed at. These information may not be readily available just by agreeing with your agent. I've learned that we also have to ask a lot of questions, even if you think that the agent may not be able to answer it. Leave those questions for them as their assignment to you. As a piece of advise, it is okay to trust some not-so-famous developers, just make sure that they have complied with the government requirements and that they are still able to deliver new projects. But for peace of mind, it is always best to trust those with good track of record already.
Sample Refund Request Letter
Sample Refund Request Follow-up Letter