Investing in a pre-selling condominium—units sold before or during construction—is a cornerstone of the Philippine real estate market. While it offers lower introductory prices and flexible payment terms, it is a transaction built largely on trust and paper promises. Because the physical product does not yet exist, the legal framework governing these transactions is robust, designed to protect the buyer from delays, substandard construction, and developer insolvency.

The primary law governing this sector is Presidential Decree No. 957 (P.D. 957), also known as "The Subdivision and Condominium Buyers' Protective Decree," as amended and regulated by the Department of Human Settlements and Urban Development (DHSUD)—formerly the HLURB.

1. The Developer’s Prerequisites: License to Sell (LTS)

Before a developer can even advertise or collect a single peso for a pre-selling project, they must secure two critical documents from the DHSUD:

Certificate of Registration: Confirms the project is legally registered.
License to Sell (LTS): This is the developer's legal authority to enter into contracts with buyers.

Buyer’s Right: A buyer has the absolute right to demand proof of the LTS. Selling without a license is a violation that can lead to administrative fines and the suspension of the project.

2. Rights During Delays: Section 23 of P.D. 957

The most common legal issue in pre-selling is the failure to deliver the unit on the date stipulated in the Contract to Sell. Under Section 23, if a developer fails to develop the project according to the approved plans and within the time limit, the buyer has two powerful options:

Option A: Total Refund. The buyer may demand a 100% refund of the total amount paid (including reservation fees, down payments, and amortizations). This refund must include legal interest, and the developer cannot deduct any "processing fees" or "administration costs."
Option B: Suspension of Payment. The buyer may choose to stop paying further installments until the project is back on track.
Note: The buyer must formally notify the DHSUD and the developer of their intention to suspend payments to avoid being tagged as "in default."

3. Protection Against Foreclosure: Section 25

In many cases, developers take out a mortgage on the land or the project to finance construction. Under P.D. 957, no mortgage on any unit or lot can be made by the developer without prior written approval from the DHSUD.

If the developer fails to pay their bank loan and the bank tries to foreclose on the property, the buyer’s rights remain superior. As long as the buyer is updated on their payments, the developer (and the bank) must ensure that the buyer's unit is released from the mortgage once fully paid.

4. The "Maceda Law" (Republic Act No. 6552)

While P.D. 957 protects buyers from developer fault, the Realty Installment Buyer Act (Maceda Law) protects buyers who encounter financial difficulties and default on their own payments.

If at least 2 years of installments are paid:
The buyer is entitled to a Grace Period of one month for every year of installments paid (exerciseable once every five years).
If the contract is cancelled, the buyer is entitled to a Cash Surrender Value (Refund) of 50% of total payments, plus an additional 5% for every year after five years of installments (not to exceed 90%).
If less than 2 years of installments are paid:
The buyer is entitled to a grace period of not less than 60 days. If payment is not made within the period, the developer may cancel the contract after 30 days from the buyer’s receipt of the notice of cancellation or demand for rescission by notarial act.

5. Alterations and Specifications

Developers are legally bound by the brochures and marketing materials they use. Under Section 22 of P.D. 957, no owner or developer shall change the layout, plans, or specifications of a unit without the approval of the DHSUD and the written consent of the affected buyer. If the finished unit significantly deviates from the agreed-upon plan (e.g., smaller floor area, obstructed view promised as "unobstructed"), the buyer may sue for specific performance or a price reduction.

6. Taxes and Hidden Charges

Legal disputes often arise during the "turnover" phase regarding closing costs.

Capital Gains Tax (CGT): Usually for the account of the seller/developer.
Documentary Stamp Tax, Transfer Tax, and Registration Fees: Usually for the account of the buyer, but these must be clearly itemized.
Real Property Tax (RPT): The developer is responsible for RPT until the time the possession is physically turned over to the buyer or until the title is transferred.

7. Dispute Resolution and Jurisdiction

The regular courts (Regional Trial Courts) generally do not have original jurisdiction over disputes involving condominium sales. These cases fall under the quasi-judicial jurisdiction of the Human Settlements Adjudication Commission (HSAC).

Buyers can file verified complaints for:

Unsound real estate business practices.
Claims for refunds due to project delays.
Specific performance (compelling the developer to finish the project or issue a title).

Summary Table of Buyer Protections

Issue	Legal Basis	Buyer Remedy
Project Delay	P.D. 957, Sec. 23	Full refund with interest or suspension of payment.
Buyer Default	R.A. 6552 (Maceda Law)	Grace period or 50%–90% refund (if >2 years paid).
Unlicensed Sale	P.D. 957, Sec. 5	Report to DHSUD; contract may be voidable.
Plan Alteration	P.D. 957, Sec. 22	Right to withhold consent or demand price adjustment.
Developer Mortgage	P.D. 957, Sec. 25	Right to title clearance upon full payment.