Dear PAO,

My wife and I bought a parcel of land in a subdivision which was payable in monthly installments. We started paying in January 2023. Unfortunately, we failed to pay the remaining balance because of the steep hospital bills we have incurred when our son was hospitalized due to a car accident. Hence, our last installment payment was made in October 2024. We asked the developer for a grace period to pay, but we were only given a 30-day grace period. We intend to continue paying the balance, however, as a safety measure, we asked the developer to issue the title to the land before we pay the remaining balance to which the developer refused. Can the developer refuse to issue the title before the payment of the remaining balance? Also, do we have a right to demand an extension of the given grace period?

Kevin

Dear Kevin,

Please be informed of Section 25 of Presidential Decree (PD) 957, otherwise known as “The Subdivision And Condominium Buyers’ Protective Decree,” which provides that:

“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 fee, 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.”

Thus, as a security measure, the full payment of the lot is usually required by the sellers and developers before they may be compelled to deliver the title to the purchased lot. However, the rights of a buyer can still be protected in the event of failure to pay the installments. Sections 3 and 4 of Republic Act (RA) 6552, which is an Act to Provide Protection to Buyers of Real Estate on Installment Payments, otherwise known as the “Realty Installment Buyer Act,” which provides that:

“Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due.

“If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.”

The abovementioned provision of law was enacted to protect buyers of real estate on installment payments against onerous and oppressive conditions. In your case, as per your schedule of payment, it would seem that you have made installment payments for one (1) year and nine (9) months, counting from January 2023 until October 2024. Considering that less than two (2) years of installments were paid, then Section 4 of RA 6652 will be applicable in your case. Thus, you are entitled to a grace period of at least sixty (60) days from the date the installment became due. Therefore, you may demand the developer for an additional grace period of thirty (30) days. On the other hand, in the unfortunate event that you failed to pay despite the grace period provided to you, the developer still cannot automatically cancel your contract. The developer may only cancel the contract only after the lapse of thirty (30) days from your receipt of the notice of cancellation or the demand for rescission of the contract by a notarial act.

We hope that we are able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]