Updated for the current structure of housing regulators and recent jurisprudential baselines; written for buyers, counsel, and practitioners.

1) Why “License to Sell” (LTS) matters

No owner or developer may sell or offer to sell subdivision lots or condominium units without first securing a License to Sell (commonly called “LTS”) from the housing regulator. Historically this was the HLURB; today, policy/regulatory functions sit with the Department of Human Settlements and Urban Development (DHSUD), while adjudication is with the Human Settlements Adjudication Commission (HSAC). The LTS is issued per project (and phase) after the developer secures the LGU development permit, registers the project, and shows adequate development plans and safeguards.

Practical effects of having no LTS:

Selling or even pre-selling without LTS is unlawful. It triggers administrative and criminal exposure for the developer and gives the buyer powerful civil remedies.
Courts and HSAC routinely treat the absence of LTS as bad faith and a fundamental breach—supporting rescission of the contract and full refunds with interest and, where warranted, damages.

2) The two core statutes and how they interact

A. PD 957 (Subdivision and Condominium Buyers’ Protective Decree)

Governs project registration, license to sell, advertising standards, time of completion, and buyer protections.
Key buyer remedy even if the contract says otherwise: if the developer fails to develop in accordance with approved plans and within committed timelines, the buyer may stop paying and demand reimbursement of all payments made, with legal interest (PD 957’s “non-forfeiture” rule).
Selling without an LTS is itself a violation, independently supporting rescission/refund and exposing the developer to administrative/criminal sanctions.

B. RA 6552 (“Maceda Law”)

Protects real-estate sales on installment (residential lots and house-and-lot) when the seller cancels due to buyer default.
It grants grace periods and a cash surrender value (CSV) of at least 50% of total payments after 5 years of installments, plus 5% per year thereafter up to 90%.
Important: Maceda gives minimum rights when the buyer is in default and the seller cancels. When the developer is at fault (e.g., no LTS, fraudulent pre-selling, non-development), PD 957 and the Civil Code’s rescission/damages rules typically control—often yielding a full refund rather than a CSV.

Rule of thumb:

Developer’s breach (e.g., no LTS, non-development): Buyer may pursue rescission + full refund + interest + damages under PD 957 + Civil Code.
Buyer’s default where the seller cancels: Maceda Law ensures CSV/grace periods; PD 957 can still apply if there are separate project violations.

3) Typical buyer remedies when there is no LTS

Rescission of the Contract (Civil Code Art. 1191 for reciprocal obligations)
- Grounds: fundamental violations like selling without LTS, misrepresentation, or failure to develop.
- Effect: Contract unwound. Buyer returns possession/rights; developer returns all payments received.
Full Refund (Restitution)
- Baseline: 100% of all installments and lump-sum payments (down payment, amortizations, official fees paid to the developer).
- Interests: 6% per annum (the prevailing legal interest for forbearance/indemnities since Nacar v. Gallery Frames), usually from demand (extrajudicial demand letter or filing date) until full payment. Tribunals may adjust start date based on equities.
Liquidated Damages
- If the contract provides a liquidated damages clause for the developer’s breach, HSAC/courts will generally enforce it unless iniquitous or unconscionable (Civil Code Art. 2227 allows reduction).
- If the only liquidated damages clause penalizes buyer default, it does not help the developer here; the buyer’s claim proceeds under general damages.
Actual/Moral/Exemplary Damages & Attorney’s Fees
- Actual: provable losses (e.g., rent paid while awaiting turnover, loan processing fees wasted because the sale was voidable, costs of appraisal/inspection).
- Moral: for anxiety, humiliation, or distress caused by fraudulent or oppressive conduct.
- Exemplary: to deter willful violations (e.g., deliberate pre-selling without LTS).
- Attorney’s fees: awarded when the buyer is compelled to litigate due to the developer’s bad faith.
Administrative & Criminal Exposure for Developer
- DHSUD/HSAC can impose fines, cease-and-desist orders, and recommend criminal prosecution. Criminal cases proceed before regular courts.

4) How tribunals analyze “no LTS” cases

Threshold proof: a certification or negative certification from the regulator (or the developer’s own admissions) establishing no LTS for the specific phase/tower/unit at the time of sale/offer.
Materiality: The LTS requirement is not a trivial permit—it’s the central gatekeeping mechanism to ensure a lawful, bankable, and safe sale. Its absence generally defeats the developer’s good-faith defenses.
Outcome pattern: HSAC (and previously HLURB) has consistently ordered rescission + full refund + interest, sometimes plus damages, for sales made without LTS. The Maceda CSV is not the governing remedy here because the breach is developer-side.

5) Computing refunds and damages — worked examples

Scenario A: Straightforward rescission (no LTS)

Total payments made: ₱1,200,000 (down payment + 24 monthly installments)

Demand letter served: 15 March 2024

Decision/award: Full refund ₱1,200,000 + 6% p.a. interest from 15 March 2024 until fully paid

If paid on 15 March 2026: interest ≈ ₱1,200,000 × 0.06 × 2 = ₱144,000; Total: ₱1,344,000

Scenario B: With liquidated damages

Same as A, plus contract clause: “Developer liable for ₱100,000 liquidated damages for failure to deliver due to regulatory violations.”

Tribunal may award: ₱1,200,000 + ₱100,000 + 6% p.a. on the ₱1,200,000 (interest on liquidated damages is discretionary—often from date of finality if treated as damages, not forbearance).

Scenario C: Buyer default vs. developer cancellation (Maceda)

If the developer cancels due to the buyer’s default, with 6 years of installments paid totaling ₱900,000: CSV = 50% + 5% (1 extra year) = 55% → ₱495,000 minimum refund, not a full refund.

But if the buyer shows project violations (e.g., no LTS, non-development), the buyer can flip to PD 957/Civil Code rescission seeking full refund instead of Maceda CSV.

6) Procedure: how to assert your rights

Gather documents
- Contract to Sell/Deed of Sale, official receipts, brochures/ads, correspondence, IDs, proof of payments.
- Request/secure DHSUD certification on LTS status of the specific project/phase around your sale/offer date.
- Photos/site visits proving non-development (if applicable).
Send a formal demand
- Demand rescission, full refund, legal interest, and damages based on PD 957 and the Civil Code; cite no LTS (and non-development, if true).
- Give a reasonable period to comply.
File a case with HSAC (Regional Adjudication Branch)
- Causes of action: violation of PD 957; rescission; refund; damages; attorney’s fees.
- Reliefs: rescission; full refund; 6% interest from demand; damages (actual/moral/exemplary); attorney’s fees; injunctive relief if needed.
- Administrative angle: Parallel complaint for sanctions may be lodged with DHSUD.
Criminal complaint (optional)
- For willful violations (e.g., systematic pre-selling without LTS). Coordinate with prosecutors per PD 957’s penal provisions.
Execution/collection
- Upon a favorable decision, proceed to execution. If the developer is non-compliant, consider garnishment/levy and director/officer liability theories where applicable.

7) Defenses developers raise—and typical counters

“Substantial compliance”: LTS is not a mere formality; “almost approved” is not approved. Counter: the statute requires prior LTS before selling/offering units.
“Buyer knew the risk”: Buyer consent does not legalize an unlawful sale; PD 957 is police-power, public-interest legislation.
“Contract waives refunds/liability”: PD 957 protections are mandatory; unconscionable waivers are void.
“Only Maceda applies”: Maceda governs seller-initiated cancellations for buyer default. Here, the developer’s violation triggers PD 957/Civil Code remedies, often full refund.

8) Interest, timelines, and prescription

Legal interest: 6% per annum on sums due (standard benchmark in modern awards).
When interest starts: Usually from demand or from filing, and then from finality at 6% until satisfaction—subject to tribunal calibration.
Prescriptive periods (guiding principles; assess fact-sensitively):
- Actions upon a written contract: generally 10 years (Civil Code).
- Actions based on fraud: generally 4 years from discovery.
- Quasi-delicts: 4 years.
- Administrative complaints should be filed promptly; delays can affect equitable relief.

9) Special notes for bank-financed or pag-IBIG-financed purchases

If your loan was taken out but no LTS existed, you can still seek rescission and full refund from the developer.
Coordinate with the lender to unwind the loan and cancel encumbrances; lenders typically cooperate when the underlying sale is voidable/unlawful.
Include interest and fees you paid as part of actual damages.

10) Checklist: signs your purchase may be actionable

You never saw (or were refused) the LTS number for your project/phase.
The number shown is for another phase/tower or already expired when you signed.
Marketing materials promised facilities/amenities not built within committed timelines.
The developer pressured you to continue paying despite regulatory red flags.

11) Draft demand letter skeleton (for adaptation)

Subject: Demand for Rescission, Full Refund, and Damages – Sale without License to Sell Dear [Developer], We write regarding our purchase of [Project/Unit/Phase], covered by [Contract to Sell/Reservation Agreement] dated [date]. Records show that at the time of our sale and continuing to date, no License to Sell had been issued for [phase/tower], contrary to PD 957. This constitutes a fundamental breach and an unlawful sale. Accordingly, we rescind the contract and demand within 15 days:

Full refund of all payments totaling ₱[amount];

Legal interest at 6% p.a. from the date of this demand until fully paid;

Damages (actual/moral/exemplary) and attorney’s fees; and

Written confirmation that you will coordinate with [Bank/Pag-IBIG] to unwind any loan/encumbrance. Failing compliance, we will file the appropriate HSAC case and seek administrative and criminal sanctions under PD 957. Sincerely, [Buyer]

12) Key takeaways

No LTS = unlawful sale. That alone can justify rescission.
When the developer is at fault, buyers are often entitled to full refund + 6% interest, not just a Maceda CSV.
Liquidated damages clauses can be enforced (or reduced if unconscionable); actual, moral, and exemplary damages may be added in egregious cases.
Act promptly, document everything, and pursue remedies through HSAC (plus DHSUD administrative/criminal avenues, if warranted).

This article is general information, not legal advice. For specific cases (facts, dates, payment histories, and contract terms matter a lot), consult counsel to calibrate strategy and reliefs.