Query: What are the rights of a homebuyer if the developer asks for an additional payment due to a loan differential not covered in the contract, and subsequently refuses a refund request claiming breach of contract?

In the Philippines, real estate transactions are regulated under various legal frameworks that protect consumers, particularly under Presidential Decree No. 957, otherwise known as the "Subdivision and Condominium Buyers' Protective Decree." This decree provides measures against misrepresentation and fraudulent activities in the selling and marketing of real estate projects.

1. Misrepresentation and Non-disclosure:

PD 957 stipulates that all material facts relevant to a transaction must be disclosed to buyers. If a developer advertises certain terms (such as the amount of loan approval expected from facilities like PAG-IBIG), they are obligated to honor these terms. Any significant change, such as requesting additional payments that were not part of the initial agreement or not stipulated in the contract, can be considered a form of misrepresentation or non-disclosure.

2. Handling Loan Differentials:

Typically, the agreed price in the sales contract should cover the cost of the property. If the loan amount approved by PAG-IBIG or any other financing institution is less than the agreed selling price, the developer cannot automatically charge the buyer the difference unless this potential charge was explicitly agreed upon in the contract.

3. Rights to Refund:

Under PD 957, buyers are entitled to a refund of their payments if the developer fails to deliver the title of the property or fails to complete the development as per the agreed terms without just cause. If a buyer decides to cancel the purchase due to the developer’s breach, such as failure to adhere to contractual terms, they may also be entitled to a refund.

4. Resolving Disputes:

Buyers facing issues like these can seek mediation or file a complaint with the Housing and Land Use Regulatory Board (HLURB), now part of the Department of Human Settlements and Urban Development (DHSUD). The DHSUD provides mechanisms for the resolution of disputes and can impose sanctions on developers who fail to comply with regulatory standards.

5. Legal Action:

If satisfactory resolution is not reached through DHSUD or HLURB mediation, the buyer may pursue legal action in court. Legal advice from a qualified attorney can provide guidance based on the specifics of the contract and the situation.

Conclusion: Homebuyers are protected under Philippine law from unreasonable demands and breaches of contract by developers. It is important for both buyers and sellers to understand their rights and obligations as outlined in their contract and the governing laws to ensure fair and lawful dealings in real estate transactions. Buyers should consult legal experts if they encounter issues like loan differentials not covered in the contract or disputes over refunds.