G.R. No.
L-52361 April 27, 1981 Condominium Project with La Perla Commercial, Incorporated, as
SUNSET VIEW CONDOMINIUM CORPORATION, petitioner,
vs.
THE HON. JOSE C. CAMPOS, JR. OF THE COURT OF FIRST INSTANCE,
BRANCH XXX, PASAY CITY and AGUILAR-BERNARES
REALTY, respondents.
G.R. No. L-52524 April 27, 1981
SUNSET VIEW CONDOMINIUM CORPORATION, petitioner,
vs.
THE HON. JOSE C. CAMPOS, JR., PRESIDING JUDGE OF THE COURT
OF FIRST INSTANCE, BRANCH XXX, PASAY CITY, and LIM SIU
LENG, respondents.
FERNANDEZ, J.:
These two cases which involve similar facts and raise Identical
questions of law were ordered consolidated by resolution of this Court
dated March 17, 1980. 1
The petitioner, Sunset View Condominium Corporation, in both cases, is
a condominium corporation within the meaning of Republic Act No.
4726 in relation to a duly registered Amended Master Deed with
Declaration of Restrictions of the Sunset View Condominium Project
located at 2230 Roxas Boulevard, Pasay City of which said petitioner is
the Management Body holding title to all the common and limited
common areas. 2
G.R. NO. 52361
The private respondent, Aguilar-Bernares Realty, a sole proprietorship
with business name registered with the Bureau of Commerce, owned
and operated by the spouses Emmanuel G. Aguilar and Zenaida B.
Aguilar, is the assignee of a unit, "Solana", in the Sunset View
assignor. 3 The La Perla Commercial, Incorporated bought the "Solana"
unit on installment from the Tower Builders, Inc. 4 The petitioner,
Sunset View Condominium Corporation, filed for the collection of
assessments levied on the unit against Aguilar-Bernares Realty, private
respondent herein, a complaint dated June 22, 1979 docketed as Civil
Case No. 7303-P of the Court of First Instance of Pasay City, Branch
XXX. The private respondent filed a Motion to Dismiss the complaint on
the grounds (1) that the complaint does not state a cause of action: (2)
that the court has no jurisdiction over the subject or nature other
action; and (3) that there is another action pending between the same
parties for the same cause. The petitioner filed its opposition thereto.
The motion to dismiss was granted on December 11, 1979 by the
respondent Judge who opined that the private respondent is, pursuant
to Section 2 of Republic Act No. 4726, a "holder of a separate interest"
and consequently, a shareholder of the plaintiff condominium
corporation; and that "the case should be properly filed with the
Securities & Exchange Commission which has exclusive original
jurisdiction on controversies arising between shareholders of the
corporation." the motion for reconsideration thereof having been
denied, the petitioner, alleging grave abuse of discretion on the part of
respondent Judge, filed the instant petition for certiorari praying that
the said orders be set aside.
G.R. NO. 52524
The petitioner filed its amended complaint dated July 16, 1979
docketed as Civil Case No. 14127 of Branch I of the City Court of Pasay
City for the collection of overdue accounts on assessments and
insurance premiums and the interest thereon amounting to P6,168 06
as of March 31, 1979 against the private respondent Lim Siu Leng 5 to
whom was assigned on July 11, 1977 a unit called "Alegria" of the
Sunset. View Condominium Project by Alfonso Uy 6 who had entered
into a "Contract to Buy and Sell" with Tower Builders, Inc. over the said
unit on installment basis. 7
The private respondent filed a motion to dismiss on the ground of lack
of jurisdiction, alleging that the amount sought to be collected is an
assessment. The correctness and validity of which is certain to involve a
dispute between her and the petitioner corporation; that she has
automatically become, as a purchaser of the condominium unit, a
stockholder of the petitioner pursuant to Section 2 of the Condominium
Act, Republic Act No. 4726; that the dispute is intra-corporate and is
consequently under the exclusive jurisdiction of the Securities &
Exchange Commission as provided in Section 5 of P.D. No. 902-A. 8
The petitioner filed its opposition thereto, alleging that the private
respondent who had not fully paid for the unit was not the owner
thereof, consequently was not the holder of a separate interest which
would make her a stockholder, and that hence the case was not an
intra-corporate dispute. 9
After the private respondent had filed her answer to the opposition to
the motion to dismiss 10 of the petitioner, the trial court issued an order
dated August 13, 1979 denying the motion to dismiss. 11 The private
respondent's motion for reconsideration thereof was denied by the
trial court in its Order dated September 19, 1979. 12
The private respondent then appealed pursuant to Section 10 of Rule
40 of the Rules of Court to the Court of First Instance, where the appeal
was docketed as Civil Case No. 7530P. The petitioner filed its "Motion to
Dismiss Appeal" on the ground that the order of the trial court appealed
from is interlocutory. 13
The motion to dismiss the appeal was denied and the parties were
ordered to submit their respective memorandum on the issue raised
before the trial court and on the disputed order of the trial
judge. 14 After the parties had submitted their respective memoranda
on the matter, the respondent Judge issued an order dated December
14, 1979 in which he directed that "the appeal is hereby dismissed and
d the judgment of the lower court is reversed. The case is dismissed and
the parties are directed to ventilate their controversy with the
Securities & Exchange Commission. 15 The petitioner's motion for
reconsideration thereof was denied in an order dated January 14,
1980. 16 Hence this petition for certiorari, alleging grave abuse of
discretion on the part of the respondent Judge.
Issues Common to Both Cases
It is admitted that the private respondents in both cases have not yet
fully paid the purchase price of their units. The Identical issues raised
in both petitions are the following:
1. Is a purchaser of a condominium unit in the condominium project
managed by the petitioner, who has not yet fully paid the purchase
price thereof, automaticaly a ,stockholder of the petitioner
Condominium Corporation
2. Is it the regular court or the Securities & Exchange Commission that
has jurisdiction over cases for collection of assessments assessed by the
Condominium Corporation on condominium units the full purchase
price of which has not been paid?
The private respondents in both cases argue that every purchaser of a
condominium unit, regardless of whether or not he has fully paid the
purchase price, is a "holder of a separate interest" mentioned in Section
2 of Republic Act No. 4726, otherwise known as "The Condominium
Act" and is automatically a shareholder of the condominium
corporation.
The contention has no merit. Section 5 of the Condominium Act
expressly provides that the shareholding in the Condominium
Corporation will be conveyed only in a proper case. Said Section 5
provides:
Any transfer or conveyance of a unit or an apartment,
office or other space therein, shall include the transfer
or conveyance of the undivided interests in the
common areas or, in a proper case, the membership or
shareholding in the condominium corporation ...
It is clear then that not every purchaser of a condominium unit is a
shareholder of the condominium corporation. The Condominium Act
leaves to the Master Deed the determination of when the shareholding
will be transferred to the purchaser of a unit. Thus, Section 4 of said Act
provides:
The provisions of this Act shall apply to property
divided or to be divided into condominium only if
there shall be recorded in the Register of Deeds of the
province or city in which the property lies and duly
annotated in the corresponding certificate of title of
the land ... an enabling or master deed which shall
contain, among others, the following:
xxx xxx xxx
(d) Astatement of the exact nature of the interest
acquired or to be acquired by the purchaser in the
separate units and in the common areas of the
condominium project ...
The Amended Master Deeds in these cases, which were duly registered
in the Register of Deeds, and which contain, by mandate of Section 4, a
statement of the exact nature of the interest acquired by a purchaser of
a unit, provide in Section 6 of Part 1:
(d) Each Unit owner shall, as an essential condition to
such ownership, acquire stockholding in the
Condominium Corporation herein below provided ... 17
The Amended Master Deeds likewise provide in Section 7 (b), thus.
(b) All unit owners shall of necessity become
stockholders of the Condominium Corporation.
TOWER shall acquire all the shares of stock of SUNSET
VIEW and shall allocate the said shares to the units in
proportion to the appurtenant interest in the
COMMON AREAS and LIMITED COMMON AREAS as
provided in Section 6 (b) above. Said shares allocated
are mere appurtenances of each unit, and therefore,
the same cannot be transferred, conveyed,
encumbered or otherwise disposed of separately from
the Unit ... 18
It is clear from the above-quoted provisions of the Master Deeds that
the shareholding in the Condominium Corporation is inseparable from
the unit to which it is only an appurtenant and that only the owner of a
unit is a shareholder in the Condominium Corporation.
Subparagraph (a) of Part 1, Section 6, of the Master Deeds determines
when and under what conditions ownership of a unit is acquired by a
purchaser thus:
(a) The purchaser of a unit shall acquire title or
ownership of such Unit, subject to the terms and
conditions of the instrument conveying the unit to
such purchaser and to the terms and conditions of any
subsequent conveyance under which the purchaser
takes title to the Unit, and subject further to this
MASTER DEED ... 19
The instrument conveying the unit "Solana" in G.R. NO. 52361 is the
"Contract to Buy and Sell" dated September 13, 1977, Annex "D", while
that conveying the unit "Alegria" in G.R. NO. 52524 is the "Contract to
Buy and Sell" dated May 12, 1976, Annex "C". In both deeds of
conveyance, it is provided:
4. Upon full payment by the BUYER of the total
purchase price and full compliance by the BUYER of an
its obligations herein, the SELLER will convey unto the
BUYER, as soon as practicable after completion of the
construction, full and absolute title in and to the
subject unit, to the shares of stock pertaining thereto
and to an rights and interests in connection therewith
... 20
The share of stock appurtenant to the unit win be transferred
accordingly to the purchaser of the unit only upon full payment of the
purchase price at which time he will also become the owner of the unit.
Consequently, even under the contract, it is only the owner of a unit
who is a shareholder of the Condominium Corporation. Inasmuch as
owners is conveyed only upon full payment of the purchase price, it
necessarily follows that a purchaser of a unit who has not paid the full
purchase price thereof is not The owner of the unit and consequently is
not a shareholder of the Condominium Corporation.
That only the owner of a unit is a stockholder of the Condominium
Corporation is inferred from Section 10 of the Condominium Act which
reads:
SEC. 10. ... Membership in a condominium corporation,
regardless of whether it is a stock or non-stock
corporation, shall not be transferable separately from
the condominium unit of which it is an appurtenance
When a member or stockholder ceases is to own a unit
in the project in which the condominium corporation
owns or holds the common areas, he shall
automatically cease to be a member or stockholder of
the condominium corporation.
Pursuant to the above statutory provision, ownership of a unit is a
condition sine qua non to being a shareholder in the condominium
corporation. It follows that a purchaser of a unit who is not yet the
owner thereof for not having fully paid the full purchase price, is not a
shareholder By necessary implication, the "separate interest" in a
condominium, which entitles the holder to become automatically a
share holder in the condominium corporation, as provided in Section 2
of the Condominium Act, can be no other than ownership of a unit. This
is so because nobody can be a shareholder unless he is the owner of a
unit and when he ceases to be the owner, he also ceases automatically
to be a shareholder.
The private respondents, therefore, who have not fully paid the
purchase price of their units and are consequently not owners of their
units are not members or shareholders of the petitioner condominium
corporation,
Inasmuch as the private respondents are not shareholders of the
petitioner condominium corporation, the instant case for collection
cannot be a "controversy arising out of intracorporate or partnership
relations between and among stockholders, members or associates;
between any or all of them and the corporation, partnership or
association of which they are stockholders, members or associates,
respectively" which controversies are under the original and exclusive
jurisdiction of the Securities & Exchange Commission, pursuant to
Section 5 (b) of P.D. No. 902- A. The subject matters of the instant cases
according to the allegations of the complaints are under the jurisdiction
of the regular courts: that of G.R. NO. 52361, which is for the collection
of P8,335.38 with interest plus attorney's fees equivalent to the
principal or a total of more than P10,000.00 is under the jurisdiction of
the Court of First Instance; and that of G.R. NO. 52524, which is for the
collection of P6,168-06 is within the jurisdiction of the City Court.
In view of the foregoing, it is no longer necessary to resolve the issue
raised in G.R. NO. 52524 of whether an order of the City Court denying
a motion to dismiss on the ground of lack of jurisdiction can be
appealed to the Court of First Instance.
WHEREFORE, the questioned orders of the respondent Judge dated
December 11, 1979 and January 4, 1980 in Civil Case No. 7303-P,
subject matter of the Petition in G.R. No. 52361, are set aside and said
Judge is ordered to try the case on the merits. The orders dated
December 14, 1979 and January 14, 1980 in Civil Case No. 7530-P,
subject matter of the petition in G.R. No. 52524 are set aside and the
case is ordered remanded to the court a quo, City Court of Pasay City,
for trial on the merits, with costs against the private respondents.
SO ORDERED.
G.R. No. 181416 November 11, 2013
MEDICAL PLAZA MAKATI CONDOMINIUM
CORPORATION, Petitioner,
vs.
ROBERT H. CULLEN, Respondent.
 DECISION
which read:
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the Court of Appeals (CA) Decision1 dated July 10, 2007
and Resolution2 dated January 25, 2008 in CA-G.R. CV No. 86614. The
assailed decision reversed and set aside the September 9, 2005
Order3 of the Regional Trial Court (RTC) of Makati, Branch 58 in Civil
Case No. 03-1018; while the assailed resolution denied the separate
motions for reconsideration filed by petitioner Medical Plaza Makati
Condominium Corporation (MPMCC) and Meridien Land Holding, Inc.
(MLHI).
The factual and procedural antecedents are as follows:
Respondent Robert H. Cullen purchased from MLHI condominium Unit
No. 1201 of the Medical Plaza Makati covered by Condominium
Certificate of Title No. 45808 of the Register of Deeds of Makati. Said
title was later cancelled and Condominium Certificate of Title No.
64218 was issued in the name of respondent.
On September 19, 2002, petitioner, through its corporate secretary, Dr.
Jose Giovanni E. Dimayuga, demanded from respondent payment for
alleged unpaid association dues and assessments amounting to
₱145,567.42. Respondent disputed this demand claiming that he had
been religiously paying his dues shown by the fact that he was
previously elected president and director of petitioner.4 Petitioner, on
the other hand, claimed that respondent’s obligation was a carry-over
of that of MLHI.5 Consequently, respondent was prevented from
exercising his right to vote and be voted for during the 2002 election of
petitioner’s Board of Directors.6 Respondent thus clarified from MLHI
the veracity of petitioner’s claim, but MLHI allegedly claimed that the
same had already been settled.7 This prompted respondent to demand
from petitioner an explanation why he was considered a delinquent
payer despite the settlement of the obligation. Petitioner failed to make
such explanation. Hence, the Complaint for Damages8 filed by
respondent against petitioner and MLHI, the pertinent portions of
xxxx
6. Thereafter, plaintiff occupied the said condominium unit no.
1201 and religiously paid all the corresponding monthly
contributions/association dues and other assessments
imposed on the same. For the years 2000 and 2001, plaintiff
served as President and Director of the Medical Plaza Makati
Condominium Corporation;
7. Nonetheless, on September 19, 2002, plaintiff was
shocked/surprised to receive a letter from the incumbent
Corporate Secretary of the defendant Medical Plaza Makati,
demanding payment of alleged unpaid association dues and
assessments arising from plaintiff’s condominium unit no.
1201. The said letter further stressed that plaintiff is
considered a delinquent member of the defendant Medical
Plaza Makati.
x x x;
8. As a consequence, plaintiff was not allowed to file his
certificate of candidacy as director. Being considered a
delinquent, plaintiff was also barred from exercising his right
to vote in the election of new members of the Board of
Directors x x x;
9. x x x Again, prior to the said election date, x x x counsel for
the defendant [MPMCC] sent a demand letter to plaintiff, anent
the said delinquency, explaining that the said unpaid amount is
a carry-over from the obligation of defendant Meridien. x x x;
10. Verification with the defendant [MPMCC] resulted to the
issuance of a certification stating that Condominium Unit 1201
has an outstanding unpaid obligation in the total amount of
₱145,567.42 as of November 30, 2002, which again, was
attributed by defendant [MPMCC] to defendant Meridien. x x x;
11. Due to the seriousness of the matter, and the feeling that
defendant Meridien made false representations considering
that it fully warranted to plaintiff that condominium unit 1201
is free and clear from all liens and encumbrances, the matter
was referred to counsel, who accordingly sent a letter to
defendant Meridien, to demand for the payment of said unpaid
association dues and other assessments imposed on the
condominium unit and being claimed by defendant [MPMCC]. x
x x;
12. x x x defendant Meridien claimed however, that the
obligation does not exist considering that the matter was
already settled and paid by defendant Meridien to defendant
[MPMCC]. x x x;
13. Plaintiff thus caused to be sent a letter to defendant
[MPMCC] x x x. The said letter x x x sought an explanation on
the fact that, as per the letter of defendant Meridien, the
delinquency of unit 1201 was already fully paid and settled,
contrary to the claim of defendant [MPMCC]. x x x;
14. Despite receipt of said letter on April 24, 2003, and to date
however, no explanation was given by defendant [MPMCC], to
the damage and prejudice of plaintiff who is again obviously
being barred from voting/participating in the election of
members of the board of directors for the year 2003;
15. Clearly, defendant [MPMCC] acted maliciously by insisting
that plaintiff is a delinquent member when in fact, defendant
Meridien had already paid the said delinquency, if any. The
branding of plaintiff as delinquent member was willfully and
deceitfully employed so as to prevent plaintiff from exercising
his right to vote or be voted as director of the condominium
corporation; 16. Defendant [MPMCC]’s ominous silence when
confronted with claim of payment made by defendant Meridien
is tantamount to admission that indeed, plaintiff is not really a
delinquent member;
17. Accordingly, as a direct and proximate result of the said
acts of defendant [MPMCC], plaintiff experienced/suffered
from mental anguish, moral shock, and serious anxiety.
Plaintiff, being a doctor of medicine and respected in the
community further suffered from social humiliation and
besmirched reputation thereby warranting the grant of moral
damages in the amount of ₱500,000.00 and for which
defendant [MPMCC] should be held liable;
18. By way of example or correction for the public good, and as
a stern warning to all similarly situated, defendant [MPMCC]
should be ordered to pay plaintiff exemplary damages in the
amount of ₱200,000.00;
19. As a consequence, and so as to protect his rights and
interests, plaintiff was constrained to hire the services of
counsel, for an acceptance fee of ₱100,000.00 plus ₱2,500.00
per every court hearing attended by counsel;
20. In the event that the claim of defendant [MPMCC] turned
out to be true, however, the herein defendant Meridien should
be held liable instead, by ordering the same to pay the said
delinquency of condominium unit 1201 in the amount of
₱145,567.42 as of November 30, 2002 as well as the above
damages, considering that the non-payment thereof would be
the proximate cause of the damages suffered by plaintiff; 9
Petitioner and MLHI filed their separate motions to dismiss the
complaint on the ground of lack of jurisdiction.10MLHI claims that it is
the Housing and Land Use Regulatory Board (HLURB) which is vested
with the exclusive jurisdiction to hear and decide the case. Petitioner,
on the other hand, raises the following specific grounds for the
dismissal of the complaint: (1) estoppel as respondent himself
approved the assessment when he was the president; (2) lack of
jurisdiction as the case involves an intra-corporate controversy; (3)
prematurity for failure of respondent to exhaust all intra-corporate
remedies; and (4) the case is already moot and academic, the obligation
having been settled between petitioner and MLHI.11
On September 9, 2005, the RTC rendered a Decision granting
petitioner’s and MLHI’s motions to dismiss and, consequently,
dismissing respondent’s complaint.
The trial court agreed with MLHI that the action for specific
performance filed by respondent clearly falls within the exclusive
jurisdiction of the HLURB.12 As to petitioner, the court held that the
complaint states no cause of action, considering that respondent’s
obligation had already been settled by MLHI. It, likewise, ruled that the
issues raised are intra-corporate between the corporation and
member.13
On appeal, the CA reversed and set aside the trial court’s decision and
remanded the case to the RTC for further proceedings. Contrary to the
RTC conclusion, the CA held that the controversy is an ordinary civil
action for damages which falls within the jurisdiction of regular
courts.14 It explained that the case hinged on petitioner’s refusal to
confirm MLHI’s claim that the subject obligation had already been
settled as early as 1998 causing damage to respondent.15 Petitioner’s
and MLHI’s motions for reconsideration had also been denied. 16
Aggrieved, petitioner comes before the Court based on the following
grounds:
I.
THE COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE, NOT
THERETOFORE DETERMINED BY THE SUPREME COURT, OR HAS
DECIDED IT IN A WAY NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
DECLARED THE INSTANT CASE AN ORDINARY ACTION FOR DAMAGES
INSTEAD OF AN INTRA-CORPORATE CONTROVERSY COGNIZABLE BY
A SPECIAL COMMERCIAL COURT.
II.
THE COURT A QUO HAS DECIDED THE INSTANT CASE IN A WAY NOT
IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE
SUPREME COURT WHEN IT TOOK COGNIZANCE OF THE APPEAL
WHILE RAISING ONLY PURE QUESTIONS OF LAW.17
The petition is meritorious.
It is a settled rule that jurisdiction over the subject matter is
determined by the allegations in the complaint. It is not affected by the
pleas or the theories set up by the defendant in an answer or a motion
to dismiss. Otherwise, jurisdiction would become dependent almost
entirely upon the whims of the defendant.18 Also illuminating is the
Court’s pronouncement in Go v. Distinction Properties Development
and Construction, Inc.:19
Basic as a hornbook principle is that jurisdiction over the subject
matter of a case is conferred by law and determined by the allegations
in the complaint which comprise a concise statement of the ultimate
facts constituting the plaintiff’s cause of action. The nature of an action,
as well as which court or body has jurisdiction over it, is determined
based on the allegations contained in the complaint of the plaintiff,
irrespective of whether or not the plaintiff is entitled to recover upon
all or some of the claims asserted therein. The averments in the
complaint and the character of the relief sought are the ones to be
consulted. Once vested by the allegations in the complaint, jurisdiction
also remains vested irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein. x x
x20
Based on the allegations made by respondent in his complaint, does the
controversy involve intra-corporate issues as would fall within the
jurisdiction of the RTC sitting as a special commercial court or an
ordinary action for damages within the jurisdiction of regular courts?
In determining whether a dispute constitutes an intra-corporate
controversy, the Court uses two tests, namely, the relationship test and
the nature of the controversy test.21
An intra-corporate controversy is one which pertains to any of the
following relationships: (1) between the corporation, partnership or
association and the public; (2) between the corporation, partnership or
association and the State insofar as its franchise, permit or license to
operate is concerned; (3) between the corporation, partnership or
association and its stockholders, partners, members or officers; and (4)
among the stockholders, partners or associates themselves.22 Thus,
under the relationship test, the existence of any of the above intra-
corporate relations makes the case intra-corporate.23
Under the nature of the controversy test, "the controversy must not
only be rooted in the existence of an intra-corporate relationship, but
must as well pertain to the enforcement of the parties’ correlative
rights and obligations under the Corporation Code and the internal and
intra-corporate regulatory rules of the corporation."24 In other words,
jurisdiction should be determined by considering both the relationship
of the parties as well as the nature of the question involved.25
Applying the two tests, we find and so hold that the case involves intra-
corporate controversy. It obviously arose from the intra-corporate
relations between the parties, and the questions involved pertain to
their rights and obligations under the Corporation Code and matters
relating to the regulation of the corporation.26
Admittedly, petitioner is a condominium corporation duly organized
and existing under Philippine laws, charged with the management of
the Medical Plaza Makati. Respondent, on the other hand, is the
registered owner of Unit No. 1201 and is thus a stockholder/member of
the condominium corporation. Clearly, there is an intra-corporate
relationship between the corporation and a stockholder/member.
The nature of the action is determined by the body rather than the title
of the complaint.1âwphi1 Though denominated as an action for
damages, an examination of the allegations made by respondent in his
complaint shows that the case principally dwells on the propriety of the
assessment made by petitioner against respondent as well as the
validity of petitioner’s act in preventing respondent from participating
in the election of the corporation’s Board of Directors. Respondent
contested the alleged unpaid dues and assessments demanded by
petitioner.
The issue is not novel. The nature of an action involving any dispute as
to the validity of the assessment of association dues has been settled by
the Court in Chateau de Baie Condominium Corporation v. Moreno.27 In
that case, respondents therein filed a complaint for intra-corporate
dispute against the petitioner therein to question how it calculated the
dues assessed against them, and to ask an accounting of association
dues. Petitioner, however, moved for the dismissal of the case on the
ground of lack of jurisdiction alleging that since the complaint was
against the owner/developer of a condominium whose condominium
project was registered with and licensed by the HLURB, the latter has
the exclusive jurisdiction. In sustaining the denial of the motion to
dismiss, the Court held that the dispute as to the validity of the
assessments is purely an intra-corporate matter between petitioner
and respondent and is thus within the exclusive jurisdiction of the RTC
sitting as a special commercial court. More so in this case as respondent
repeatedly questioned his characterization as a delinquent member
and, consequently, petitioner’s decision to bar him from exercising his
rights to vote and be voted for. These issues are clearly corporate and
the demand for damages is just incidental. Being corporate in nature,
the issues should be threshed out before the RTC sitting as a special
commercial court. The issues on damages can still be resolved in the
same special commercial court just like a regular RTC which is still
competent to tackle civil law issues incidental to intra-corporate
disputes filed before it.28
Moreover, Presidential Decree No. 902-A enumerates the cases over
which the Securities and Exchange Commission (SEC) exercises
exclusive jurisdiction:
xxxx
 b) Controversies arising out of intra-corporate or partnership
relations, between and among stockholders, members or
associates; between any or all of them and the corporation,
partnership or association of which they are stockholders,
members, or associates, respectively; and between such
corporation, partnership or association and the State insofar as
it concerns their individual franchise or right to exist as such
entity; and
c) Controversies in the election or appointment of directors,
trustees, officers, or managers of such corporations,
partnerships, or associations.29
To be sure, this action partakes of the nature of an intra-corporate
controversy, the jurisdiction over which pertains to the SEC. Pursuant
to Section 5.2 of Republic Act No. 8799, otherwise known as the
Securities Regulation Code, the jurisdiction of the SEC over all cases
enumerated under Section 5 of Presidential Decree No. 902-A has been
transferred to RTCs designated by this Court as Special Commercial
Courts.30 While the CA may be correct that the RTC has jurisdiction, the
case should have been filed not with the regular court but with the
branch of the RTC designated as a special commercial court.
Considering that the RTC of Makati City, Branch 58 was not designated
as a special commercial court, it was not vested with jurisdiction over
cases previously cognizable by the SEC.31The CA, therefore, gravely
erred in remanding the case to the RTC for further proceedings.
Indeed, Republic Act (RA) No. 9904, or the Magna Carta for
Homeowners and Homeowners’ Associations, approved on January 7,
2010 and became effective on July 10, 2010, empowers the HLURB to
hear and decide inter-association and/or intra-association
controversies or conflicts concerning homeowners’ associations.
However, we cannot apply the same in the present case as it involves a
controversy between a condominium unit owner and a condominium
corporation. While the term association as defined in the law covers
homeowners’ associations of other residential real property which is
broad enough to cover a condominium corporation, it does not seem to
be the legislative intent. A thorough review of the deliberations of the
bicameral conference committee would show that the lawmakers did
not intend to extend the coverage of the law to such kind of association.
We quote hereunder the pertinent portion of the Bicameral Conference
Committee’s deliberation, to wit:
THE CHAIRMAN (SEN. ZUBIRI). Let’s go back, Mr. Chair, very quickly on
homeowners.
THE ACTING CHAIRMAN (REP. ZIALCITA). Ang sa akin lang, I think our
views are similar, Your Honor, Senator Zubiri, the entry of the
condominium units might just complicate the whole matters. So we’d
like to put it on record that we’re very much concerned about the plight
of the Condominium Unit Homeowners’ Association. But this could very
well be addressed on a separate bill that I’m willing to co-sponsor with
the distinguished Senator Zubiri, to address in the Condominium Act of
the Philippines, rather than address it here because it might just create
a red herring into the entire thing and it will just complicate matters,
hindi ba?
THE CHAIRMAN (SEN. ZUBIRI). I also agree with you although I
sympathize with them---although we sympathize with them and we feel
that many times their rights have been also violated by abusive
condominium corporations. However, there are certain things that we
have to reconcile. There are certain issues that we have to reconcile
with this version.
In the Condominium Code, for example, they just raised a very peculiar
situation under the Condominium Code --- Condominium Corporation
Act. It’s five years the proxy, whereas here, it’s three years. So there
would already be violation or there will be already a problem with their
version and our version. Sino ang matutupad doon? Will it be our
version or their version?
So I agree that has to be studied further. And because they have a law
pertaining to the condominium housing units, I personally feel that it
would complicate matters if we include them. Although I agree that
they should be looked after and their problems be looked into.
Probably we can ask our staff, Your Honor, to come up already with the
bill although we have no more time. Hopefully we can tackle this again
on the 15th Congress. But I agree with the sentiments and the inputs of
the Honorable Chair of the House panel.
May we ask our resource persons to also probably give comments?
Atty. Dayrit.
MR. DAYRIT.
Yes I agree with you. There are many, I think, practices in their
provisions in the Condominium Law that may be conflicting with this
version of ours.
For instance, in the case of, let’s say, the condominium, the so-called
common areas and/or maybe so called open spaces that they may have,
especially common areas, they are usually owned by the condominium
corporation. Unlike a subdivision where the open spaces and/or the
common areas are not necessarily owned by the association. Because
sometimes --- generally these are donated to the municipality or to the
city. And it is only when the city or municipality gives the approval or
the conformity that this is donated to the homeowners’ association. But
generally, under PD [Presidential Decree] 957, it’s donated. In the
Condominium Corporation, hindi. Lahat ng mga open spaces and
common areas like corridors, the function rooms and everything, are
owned by the corporation. So that’s one main issue that can be
conflicting.
THE CHAIRMAN (SEN. ZUBIRI). I’ll just ask for a one-minute
suspension so we can talk.
THE ACTING CHAIRMAN (REP. ZIALCITA). Unless you want to put a
catchall phrase like what we did in the Senior Citizen’s Act. Something
like, to the extent --- paano ba iyon? To the extent that it is practicable
and applicable, the rights and benefits of the homeowners, are hereby
extended to the --- mayroon kaming ginamit na phrase eh...to the extent
that it be practicable and applicable to the unit homeoweners, is hereby
extended, something like that. It’s a catchall phrase. But then again, it
might create a...
MR. JALANDONI. It will become complicated. There will be a lot of
conflict of laws between the two laws.
THE ACTING CHAIRMAN (REP. ZIALCITA). Kaya nga eh. At saka, I don’t
know. I think the --- mayroon naman silang protection sa ano eh, di ba?
Buyers decree doon sa Condominium Act. I’m sure there are provisions
there eh. Huwag na lang, huwag na lang.
MR. JALANDONI. Mr. Chairman, I think it would be best if your previous
comments that you’d be supporting an amendment.1âwphi1 I think that
would be --- Well, that would be the best course of action with all due
respect.
THE ACTING CHAIRMAN (REP. ZIALCITA). Yeah. Okay. Thank you. So
iyon na lang final proposal naming ‘yung catchall phrase, "With respect
to the..."32
xxxx
THE CHAIRMAN (SEN. ZUBIRI). xxx And so, what is their final decision
on the definition of homeowners?
THE ACTING CHAIRMAN (REP. ZIALCITA).
We stick to the original, Mr. Chairman. We’ll just open up a whole can of
worms and a whole new ball game will come into play. Besides, I am
not authorized, neither are you, by our counterparts to include the
condominium owners.
THE CHAIRMAN (SEN. ZUBIRI).
Basically that is correct. We are not authorized by the Senate nor –
because we have discussed this lengthily on the floor, actually, several
months on the floor. And we don’t have the authority as well for other
Bicam members to add a provision to include a separate entity that has of the Regional Trial Court of Makati City for re-raffle purposes among
already their legal or their established Republic Act tackling on that the designated special commercial courts.
particular issue. But we just like to put on record, we sympathize with
the plight of our friends in the condominium associations and we will SO ORDERED.
just guarantee them that we will work on an amendment to the
Condominium Corporation Code. So with that – we skipped, that is DIOSDADO M. PERALTA
correct, we have to go back to homeowners’ association definition, Your Associate Justice
Honor, because we had skipped it altogether. So just quickly going back
to Page 7 because there are amendments to the definition of
homeowners. If it is alright with the House Panel, adopt the opening WE CONCUR:
phrase of Subsection 7 of the Senate version as opening phrase of
Subsection 10 of the reconciled version.

x x x x33 .R. No. 123552 February 27, 2003

To be sure, RA 4726 or the Condominium Act was enacted to TWIN TOWERS CONDOMINIUM CORPORATION, petitioner,
specifically govern a condominium. Said law sanctions the creation of vs.
the condominium corporation which is especially formed for the THE COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT
purpose of holding title to the common area, in which the holders of CORPORATION, ANTONIO LITONJUA and SECURITIES AND
separate interests shall automatically be members or shareholders, to EXCHANGE COMMISSION, respondents.
the exclusion of others, in proportion to the appurtenant interest of
their respective units.34 The rights and obligations of the condominium DECISION
unit owners and the condominium corporation are set forth in the
above Act. CARPIO, J.:

Clearly, condominium corporations are not covered by the amendment. The Case
Thus, the intra-corporate dispute between petitioner and respondent is
still within the jurisdiction of the RTC sitting as a special commercial
Before us is a petition for review on certiorari1 to nullify the
court and not the HLURB. The doctrine laid down by the Court in
Decision2 dated August 31, 1995 of the Court of Appeals and its
Chateau de Baie Condominium Corporation v. Moreno35 which in turn
Resolution3 dated January 16, 1996 denying petitioner’s motion for
cited Wack Wack Condominium Corporation, et al v. CA36 is still a good
reconsideration. The Court of Appeals dismissed petitioner’s appeal
law.
from the Decision en banc4 of the Securities and Exchange Commission,
which reversed the order of the SEC Hearing Officer.5 The Court of
WHEREFORE, we hereby GRANT the petition and REVERSE the Court of Appeals dismissed the appeal for lack of merit and for non-compliance
Appeals Decision dated July 10, 2007 and Resolution dated January 25, with the requirement on certification of non-forum shopping.6
2008 in CA-G.R. CV No. 86614. The Complaint before the Regional Trial
Court of Makati City, Branch 58, which is not a special commercial
The Antecedent Facts
court, docketed as Civil Case No. 03-1018 is ordered DISMISSED for
lack of jurisdiction. Let the case be REMANDED to the Executive Judge
On June 30, 1988, petitioner Twin Towers Condominium Corporation
("petitioner" for brevity) filed a complaint7 with the Securities and
Exchange Commission ("SEC" for brevity) against respondents ALS
Management & Development Corporation ("ALS" for brevity) and
Antonio Litonjua ("Litonjua" for brevity). The complaint prayed that
ALS and Litonjua be ordered to pay solidarily the unpaid condominium
assessments and dues with interests and penalties covering the four
quarters of 1986 and 1987 and the first quarter of 1988.
The complaint alleged, among others, that petitioner, a non-stock
corporation, is organized for the sole purpose of holding title to and
managing the common areas of Twin Towers Condominium
("Condominium" for brevity). Membership in petitioner corporation is
compulsory and limited to all registered owners of units in the
Condominium. ALS, as registered owner of Unit No. 4-A ("Unit" for
brevity) of the Condominium, is a member of petitioner. Litonjua, who
is the corporate president of ALS, occupies the Unit.
Petitioner collects from all its members quarterly assessments and
dues as authorized by its Master Deed and Declaration of Restrictions
("Master Deed" for brevity) and its By-Laws. As of the filing of the
complaint with the SEC, petitioner’s records of account show that ALS
failed to pay assessments and dues starting 1986 up to the first quarter
of 1988. Petitioner claimed against both ALS and Litonjua P118,923.20
as unpaid assessments and dues. This amount includes accrued
interests of P30,808.33 and penalty charges of P7,793.34, plus P
1,500.00 as unpaid contingency fund assessment for 1987.8
In their joint Answer with Counterclaim, ALS and Litonjua asserted that
petitioner failed to state a cause of action against Litonjua. ALS and
Litonjua argued that petitioner’s admission that ALS and not Litonjua is
the registered owner of the Unit and member of petitioner exonerates
Litonjua from any liability to petitioner. While ALS is a juridical person
that cannot by itself physically occupy the Unit, the natural person who
physically occupies the Unit does not assume the liability of ALS to
petitioner. Neither does the agent who acts for the corporation become
personally liable for the corporation’s obligation.
As counterclaim, ALS claimed damages against petitioner arising from
petitioner’s act of repeatedly preventing ALS, its agents and guests
from using the parking space, swimming pool, gym, and other facilities
of the Condominium. In addition, Litonjua claimed damages against
petitioner for the latter’s act of including Litonjua’s name in the list of
delinquent unit owners which was posted on petitioner’s bulletin
board.9
On December 11, 1991, the SEC Hearing Officer ordered petitioner to
pay Litonjua moral and exemplary damages for maliciously including
Litonjua’s name in the list of delinquent unit owners and for impleading
him as a respondent. On the other hand, the SEC Hearing Officer
ordered ALS to pay the assessments and dues to petitioner.10 However,
the Hearing Officer did not determine the exact amount to be paid by
ALS because petitioner failed to lay down the basis for computing the
unpaid assessments and dues.11 The dispositive portion of the decision
reads thus:
"WHEREFORE, premises considered, judgment is hereby rendered as
follows:
1. Ordering respondent ALS to pay the legal assessments/dues
due the complainant within thirty (30) days from finality of
this Decision; and
2. Ordering the complainant to pay respondent Antonio
Litonjua the sum of THREE HUNDRED THOUSAND PESOS
(P300,000.00) as moral damages, FIFTY THOUSAND PESOS
(P50,000.00) as exemplary damages, and TWO HUNDRED
THOUSAND PESOS (P200,000.00) as and by way of attorney’s
fees.
SO ORDERED."12
Not satisfied with the SEC Hearing Officer’s decision, both parties filed
their respective appeals to the SEC en banc.13 Petitioner assailed the
award of moral and exemplary damages as well as attorney’s fees in
favor of Litonjua. On the other hand, ALS appealed that portion of the
decision ordering it to pay to petitioner the assessments and dues.
In a decision dated July 30, 1993, the SEC en banc nullified the award of
damages and attorney’s fees to Litonjua on the ground that the SEC had
no jurisdiction over Litonjua. The SEC en banc held that there is no
intra-corporate relationship between petitioner and Litonjua who is
not the registered owner of the Unit and thus, not a member of
petitioner. The SEC en banc stated that petitioner could not invoke the
doctrine of piercing the veil of ALS’ corporate fiction since disregarding
the corporate entity is a function of the regular courts.
Furthermore, the SEC en banc remanded the case to the Hearing Officer
to determine the value of the services petitioner failed to render to ALS
because of the latter’s non-use of the Condominium facilities. The
SEC en banc ruled that the value of these services could be deducted
from the unpaid assessments and dues that ALS owes petitioner.
Thus, the SEC en banc declared:
"WHEREFORE, in view of the foregoing, the order appealed from is
hereby reversed insofar as it awards moral and exemplary damages
and attorney’s fees to respondent Litonjua as the same is null and void
for lack of jurisdiction of this Commission over the said party.14
As regards that portion of the appealed Order directing respondent ALS
to pay the legal assessment/dues to the complainant TTC within thirty
(30) [days] from finality of the said decision, the same is hereby
modified by remanding the case to the hearing officer
for determination of the value of the services withheld by the
complainant TTC from respondent ALS in order that the same may be
deducted from the amount of legal assessments and dues which the
respondent corporation shall pay to the complainant.
SO ORDERED."15 (Emphasis supplied)
Petitioner appealed the SEC en banc Decision to the Court of Appeals
contending grave error or grave abuse of discretion by the SEC en banc.
The Ruling of the Court of Appeals
The Court of Appeals dismissed petitioner’s appeal on both procedural
and substantive grounds. Procedurally, the Court of Appeals found the
petition defective for failure to contain a sworn certification of non-
forum shopping as required by Section 6 of Administrative Circular No.
1-95 and Section 2 of Revised Circular No. 28-91.
On the merits, the Court of Appeals substantially affirmed the decision
of the SEC en banc that there is no ground to pierce the veil of ALS’
corporate fiction. The Court of Appeals held that there is nothing in the
records to show that ALS is engaged in unlawful, business or that
Litonjua is using ALS to defraud third parties. The fact alone that ALS is
in arrears in paying its assessments and dues does not make ALS or
Litonjua guilty of fraud which would warrant piercing the corporate
veil of ALS. Thus, it was improper for petitioner to post Litonjua’s name
instead of ALS’ in the list of delinquent unit owners since Litonjua is not
a member of petitioner.
The Court of Appeals also sustained the claim of petitioner against ALS
for unpaid assessments and dues but found that petitioner failed to
substantiate by preponderance of evidence the basis for computing the
unpaid assessments and dues. Thus, the Court of Appeals remanded the
case to the SEC Hearing Officer for further reception of evidence and for
determination of the exact amount of ALS’ liability to petitioner. The
Court of Appeals, however, directed the SEC Hearing Officer to deduct
from ALS’ unpaid assessments and dues the value of the services
denied to ALS because of the latter’s non-use of the Condominium
facilities. In allowing the deduction, the Court of Appeals declared the
Condominium’s House Rule 26.3 as ultra vires. House Rule 26.3, which
petitioner claims as its basis for denying the use of the Condominium
facilities to ALS, authorizes withholding of the use of the Condominium
facilities from delinquent unit owners. The Court of Appeals, however,
ruled that petitioner is not expressly authorized by its Master Deed and
By-Laws to prohibit delinquent members from using the facilities of the
Condominium.
The Court of Appeals went further and declared the interest and
penalty charges prescribed by House Rule 26.516on delinquent
accounts as exorbitant or grossly excessive, although this was not
raised as an issue. While in its complaint, petitioner sought to recover
P118,923.20 as unpaid assessments and dues, in its amended petition
for review, petitioner sought P994,529.75, more than eight times the
amount it originally claimed from ALS.17
In the dispositive portion of its assailed decision, the Court of Appeals
declared:
"WHEREFORE, the instant petition is hereby DENIED and is accordingly
DISMISSED."18
Hence, this petition.
The Issues
In its Memorandum, petitioner assigns the following errors in the
decision of the Court of Appeals:
1. "IN DISMISSING THE PETITION ALLEGEDLY BECAUSE OF
PETITIONER’S FAILURE TO COMPLY WITH THE PERTINENT
PROVISIONS OF SUPREME COURT CIRCULAR NOS. 1-95 AND
28-91 ON THE CERTIFICATION AGAINST FORUM SHOPPING;"
2. "IN ORDERING A REMAND OF THE CASE BACK TO THE
HEARING OFFICER FOR THE RECEPTION OF EVIDENCE FOR
SERVICES SUPPOSEDLY NOT RENDERED BY PETITIONER;"
3. "IN DECLARING HOUSE RULE NO. 26.3 AS ULTRA VIRES;"
4. "IN FINDING THE PENALTIES AND INTERESTS PRESCRIBED
IN HOUSE RULE 26.519 AS EXORBITANT AND GROSSLY
EXCESSIVE;"
5. "IN REFUSING TO RECOGNIZE THE FACT THAT
RESPONDENT LITONJUA AND NOT ALS IS THE REAL OWNER
OF APARTMENT UNIT 4-A;" and
6. "IN FAILING TO FIND THAT THERE IS ON RECORD
OVERWHELMING EVIDENCE TO SHOW THE BASIS OF THE
DUES AND ASSESSMENTS BEING COLLECTED FROM THE
PRIVATE RESPONDENTS."20
The Ruling of the Court
The petition is partly meritorious.
A perusal of the foregoing issues readily reveals that petitioner raises
two aspects of the case for consideration - the procedural aspect and
the substantive aspect.
We will discuss the procedural aspect first.
Non-compliance with Supreme Court Circular No. 1-95 and Revised
Circular No. 28-91.
Petitioner submits that the Court of Appeals erred in dismissing its
appeal for non-compliance with Supreme Court Circular No. 1-95 and
Revised Circular No. 28-91. Petitioner asserts that when it filed its
petition, both circulars were not yet in full force.
Petitioner filed its petition for review with the Court of Appeals on
August 18, 1993 and its amended petition on September 3, 1993. Both
the original and amended petitions were filed before the effectivity of
Revised Administrative Circular No. 1-95 on June 1, 1995. However,
contrary to petitioner’s claim, before the issuance of Revised
Administrative Circular No. 1-95, there was already an existing circular
requiring a sworn certification of non-forum shopping from a party
filing a petition for review with the Court of Appeals.1a\^/phi1.net
Circular No. 28-91, which took effect on January 1, 1992, required a
sworn certification of non-forum shopping in cases filed with the Court
of Appeals and the Supreme Court. Circular No. 28-91 specifically
provides for summary dismissal of petitions which do not contain a
sworn certification of non-forum shopping. Sections 2 and 3 of Circular
No. 28-91 state:
"2. Certification - The party must certify under oath that he has not
commenced any other action or proceeding involving the same issues
in the Supreme Court, the Court of Appeals, or different Divisions
thereof, or any other tribunal or agency, and that to the best of his
knowledge, no such action or proceeding is pending in the Supreme
Court, the Court of Appeals, or different Divisions thereof, or any other
tribunal or agency. If there is any action pending, he must state the
status of the same.1awphi1.nét If he should learn that a similar action or
proceeding has been filed or is pending before the Supreme Court, the
Court of Appeals, or different Divisions thereof, or any other tribunal or
agency, he should notify the court, tribunal or agency within five (5)
days from such notice.
3. Penalties -
a. Any violation of this Circular shall be a cause for the summary
dismissal of the multiple petition or complaint.
x x x."
Clearly, petitioner cannot claim that at the time of the filing of its
petitions with the Court of Appeals, it was not required under any
existing Supreme Court Circular to include in its petitions a sworn
certification of non-forum shopping. Circular No. 28-91 applies in the
instant case, being the Circular in force at the time. Petitioner cannot
even feign ignorance of Circular No. 28-91 as its petitions were filed
more than one year after the Circular’s effectivity. The rule against
forum shopping has long been established and Circular No. 28-91
merely formalized the prohibition and provided the appropriate
penalties against violators.21
The Court of Appeals did not err in dismissing the petition for this
procedural lapse. However, special circumstances or compelling
reasons may justify relaxing the rule requiring certification on non-
forum shopping.22 Technical rules of procedure should be used to
promote, not frustrate justice. While the swift unclogging of court
dockets is a laudable objective, granting substantial justice is an even
more urgent ideal.23 The certificate of non-forum shopping is a
mandatory requirement. Nonetheless, this requirement must not be
interpreted too literally to defeat the ends of justice.24
In the instant case, the merits of petitioner’s case should be considered
special circumstances or compelling reasons that justify tempering the
hard consequence of the procedural requirement on non-forum
shopping. In the interest of justice, we reinstate the petition.
Essentially, the substantive issues for resolution in the instant petition
can be summarized into four, as follows:
1. Whether petitioner can collect assessments and dues despite
its denial to ALS of the use of the Condominium facilities
pursuant to House Rule 26.3;
2. Whether ALS can validly offset against its unpaid
assessments and dues the value of the services withheld by
petitioner;
3. Whether a remand of the case to the proper trial court is
necessary to determine the amounts involved; and
4. Whether the penalties prescribed in House Rule 26.2 are
grossly excessive and exorbitant.
First Issue: Payment of assessments and dues.
Petitioner’s authority to assess dues.
Petitioner was organized to hold title to the common areas of the
Condominium and to act as its management body. The Condominium
Act, the law governing condominiums, states that:
"Title to the common areas, including the land, or the appurtenant
interests in such areas, may be held by a corporation specially formed
for the purpose (hereinafter known as the "condominium corporation")
in which the holders of separate interests shall automatically be
members or shareholders, to the exclusion of others, in proportion to
the appurtenant interest of their respective units in the common areas.
xxx"25
The Condominium Act provides that the Master Deed may authorize
the condominium corporation to collect "reasonable assessments to
meet authorized expenditures."26 For this purpose, each unit owner
"may be assessed separately for its share of such expenditures in
proportion (unless otherwise provided) to its owner’s fractional
interest in the common areas."27 Also, Section 20 of the Condominium
Act declares:
"Section 20. An assessment upon any condominium made in
accordance with a duly registered declaration of restrictions shall
be an obligation of the owner thereof at the ‘time the assessment is
made. xxx" (Emphasis supplied)
Petitioner is expressly authorized by its Master Deed to impose
reasonable assessments on its members to maintain the common areas
and facilities of the Condominium. Section 4, Part II of petitioner’s
Master Deed provides:
"Section 4. ASSESSMENTS. From and after date Ayala Investment &
Development Corporation formally conveys the condominium project
to the Condominium Corporation, the owner of each unit shall be
proportionately liable for the common expenses of the condominium
project, which shall be assessed against each unit owner in the
project and paid to the Condominium Corporation as provided in
Part I Section 8 (b) hereof at such times and in such manner as shall be
provided in the By-Laws of the Condominium Corporation,
a.) Regular assessments for such amounts as shall be
necessary to meet the operating expenses of the
Condominium Corporation as well as such amounts,
determined in accordance with the provisions of the By-Laws,
to be made for the purpose of creating and maintaining a
special fund for capital expenditures on the common areas of
the project; including the cost of extraordinary repairs,
reconstruction or restoration necessitated by damage,
depreciation, obsolescence, expropriation or condemnation of
the common areas or part thereof, as well as the cost of
improvements or additions thereto authorized in accordance
with the provisions of the By-Laws;
b.) xxx
c.) There may be assessed against the unit owners, in the
manner prescribed herein or in the By-Laws of the
Condominium Corporation, such other assessments as are
not specifically provided for herein;
d.) The amount of any such assessment, plus interest penalties,
attorney’s fees and other charges incurred for the collection of
such assessment, shall constitute a lien upon the unit and on
the appurtenant interest of the unit owner in the
Condominium Corporation. Such lien shall be constituted in the
manner provided in the By-Laws of the Condominium
Corporation. The foreclosure, transfer of conveyance, as well as
redemption of the unit shall include the unit owner’s
appurtenant interest in the Condominium Corporation. The
Condominium Corporation shall have the power to bid at the
foreclosure sale."28
Thus, petitioner’s right to collect assessments and dues from its
members and the corollary obligation of its members to pay are beyond
dispute.
There is also no question that ALS is a member of petitioner
considering that ALS is the registered owner of the Unit. Under the
automatic exclusive membership clause in the Master Deed,29 ALS
became a regular member of petitioner upon its acquisition of a unit in
the Condominium.
As a member of petitioner, ALS assumed the compulsory obligation to
share in the common expenses of the Condominium. This compulsory
obligation is further emphasized in Section 8, paragraph c, Part I of the
Master Deed, to wit:
"Each member of the Condominium Corporation shall share in the
common expenses of the condominium project in the same sharing or
percentage stated xxx"30 (Emphasis supplied)
Undoubtedly, as a member of petitioner, ALS is legally bound to pay
petitioner assessments and dues LO maintain the common areas and
facilities of the Condominium. ALS’ obligation arises from both the law
and its contract with the Condominium developer and other unit
owners.
Petitioner’s Master Deed provides that a member of the Condominium
corporation shall share in the common expenses of the condominium
project.31 This obligation does not depend on the use or non-use by the
member of the common areas and facilities of the Condominium.
Whether or not a member uses the common areas or facilities, these
areas and facilities will have to be maintained. Expenditures must be
made to maintain the common areas and facilities whether a member
uses them frequently, infrequently or never at all.
ALS asserts that the denial by petitioner to ALS and Litonjua of the use
of the Condominium facilities deprived petitioner of any right to
demand from ALS payment of any condominium assessments and dues.
ALS contends that the right to demand payment of assessments and
dues carries with it the correlative obligation to allow the use of the
Condominium facilities. ALS is correct if it had not defaulted on its
assessment and dues before the denial of the use of the facilities.
However, the records clearly show that petitioner denied ALS and
Litonjua the use of the facilities only after ALS had defaulted on its
obligation to pay the assessments and dues. The denial of the use of the
facilities was the sanction for the prior default incurred by ALS.
In essence, what ALS wants is to use its own prior non-payment as a
justification for its future non-payment of its assessments and dues.
Stated another way, ALS advances the argument that a contracting
party who is guilty of first breaching his obligation is excused from such
breach if the other party retaliates by refusing to comply with his own
obligation.
This obviously is not the law. In reciprocal obligations, when one party’
fulfills his obligation, and the other does not, delay by the other begins.
Moreover, when one party does not comply with his obligation, the
other party does not incur delay if he does not perform his own
reciprocal obligation because of the first party’s non-compliance. This
is embodied in Article 1169 of the Civil Code, the relevant provision of
which reads:
"In reciprocal obligations, neither party incurs in delay if the other does
not comply or is not ready to comply in a proper manner with what is
incumbent upon him. From the moment one of the parties fulfills his
obligation, delay by the other begins."
Thus, before ALS incurred its arrearages, petitioner allowed ALS to use
the facilities. However, ALS subsequently defaulted and thus incurred
delay. It was only then that petitioner disallowed ALS and Litonjua from
using the facilities. Clearly, petitioner’s denial to ALS of the
Condominium facilities, after ALS had defaulted, does not constitute a
valid ground on the part of ALS to refuse paying its assessments and
dues.
Validity of House Rule 26.3.
Petitioner’s House Rules and Regulations ("House Rules" for brevity)
expressly authorize denial of the use of condominium facilities to
delinquent members. Specifically, House Rule 26.3 provides that:
"26. ASSESSMENTS:
xxx
26.3 Names of unit owners with delinquent accounts who fail to pay
two consecutive quarters shall be posted in the bulletin board. Unit
owners with delinquent accounts, their tenants, guests/visitors and
relatives shall not be allowed the use of all facilities of the
condominium such as the swimming pool, gym, social hall,
etc."(Emphasis supplied)
The issue on the validity of House Rule 26.3 was raised for the first time
on appeal. It is settled that an issue not raised during trial could not be
raised for the first time on appeal as to do so would be offensive to the
basic rules of fair play, justice, and due process.32 Nonetheless, the
Court of Appeals opted to address this issue.
Petitioner justifies House Rule 26.3 by invoking Section 36, paragraph
11 of the Corporation Code which grants every corporation the power
"to exercise such powers as may be essential or necessary to carry out
its purpose or purposes as stated in its Articles of Incorporation."
Petitioner was organized for the main purpose of holding title to and
managing the common areas of the Condominium. Petitioner claims
that there is here implied the power to enact such measures as may be
necessary to carry out the provisions of the Articles of Incorporation,
By-Laws and Master Deed to deal with delinquent members. This,
asserts petitioner, includes the power to enact House Rule 26.3 to
protect and safeguard the interests not only of petitioner but also of its
members.
For their part, ALS and Litonjua assail the validity of House Rule 26.3
alleging that it is ultra vires. ALS and Litonjua maintain that neither the
Master Deed nor the By-Laws of petitioner expressly authorizes
petitioner to prohibit delinquent members from using the
Condominium facilities. Being ultra vires, House Rule 26.3 binds no one.
Even assuming that House Rule 26.3 is intra vires, the same is
iniquitous, unconscionable, and contrary to morals, good customs and
public policy. Thus, ALS claims it can validly deduct the value of the
services withheld from the assessments and dues since it was barred
from using the Condominium facilities for which the assessments and
dues were being collected.
The Court of Appeals sustained respondents’ argument and declared
House Rule 26.3 ultra vires on the ground that petitioner is not
expressly authorized by its Master Deed or its By-Laws to promulgate
House Rule 26.3.
House Rule 26.3 clearly restricts delinquent members from the use and
enjoyment of the Condominium facilities. The question is whether
petitioner can validly adopt such a sanction to enforce the collection of
Condominium assessments and dues.
We rule that House Rule 26.3 is valid.
Section 45 of the Corporation Code provides:
"Sec. 45. Ultra vires acts of corporations. - No corporation under this
code shall possess or exercise any corporate powers except those
conferred by this Code or by its articles of incorporation and except
such as are necessary or incidental to the exercise of the powers so
conferred."
The term ultra vires refers to an act outside or beyond corporate
powers, including those that may ostensibly be within such powers but
are, by general or special laws, prohibited or declared illegal.33 The
Corporation Code defines an ultra vires act as one outside the powers
conferred by the Code or by the Articles of Incorporation, or beyond
what is necessary or incidental to the exercise of the powers so
conferred. Moreover, special laws governing certain classes of
corporations, like the Condominium Act, also grant specific corporate
powers to corporations falling under such special laws.
The Condominium Act, petitioner’s By-Laws and the Master
Deed expressly empower petitioner to promulgate House Rule 26.3.
Section 9 of the Condominium Act provides:
"Section 9. The owner of a project shall, prior to the conveyance of any
condominium therein, register a declaration of restrictions relating to
such project, which restrictions xxx shall inure to and bind all
condominium owners in the project. xxx The Register of Deeds shall
enter and annotate the declaration of restrictions upon the certificate of
title covering the land included within the project, if the land is
patented or registered under the Land Registration or Cadastral acts.
xxx
Such declaration of restrictions, among other things, may also provide:
(a) As to any management body-
1. For the powers thereof, Including power to enforce the
provisions of the declaration of restrictions;
xxx
3. Provisions for maintenance xxx and other services
benefiting the common areas, xxx" (Emphasis supplied)
The Condominium Act clearly provides that the Master Deed may
expressly empower the management body, petitioner in the instant
case, to enforce all provisions in the Master Deed and Declaration of
Restrictions.
Pursuant to Section 9 (a) (1) and (3) of the Condominium Act, the
Master Deed expressly authorizes petitioner to exercise all the powers
granted to the management body by the Condominium Act, petitioner’s
Articles of Incorporation and By-Laws, the Master Deed, and the
Corporation Code. Section 3, Part II of the Master Deed reads:
"Section 3. MANAGEMENT BODY. - The Condominium Corporation to
be formed and organized pursuant to Section 7 of Part I, above, shall
constitute the management body of the project. As such management
body, the powers of the Condominium Corporation shall be such as
are provided by the Condominium Act, by the Articles of
Incorporation and the By-Laws of the Corporation, by this
instrument and by the applicable provisions of the Corporation Code
as are not inconsistent with the Condominium Act. Among such
powers but not by way of limitation, it shall have the power to enforce
the provisions thereof in accordance with the By-Laws of the
corporation." (Emphasis supplied)
Thus, the Master Deed clearly empowers petitioner to enforce the
provisions of the Master Deed in accordance with petitioner’s By-Laws.
Petitioner’s By-Laws expressly authorize petitioner’s Board of
Directors to promulgate rules and regulations on the use and
enjoyment of the common areas. Thus, paragraph 2, Section 2 of
petitioner’s By-Laws states:
"Without limiting the general nature of the foregoing powers, the Board
of Directors shall have the power to enforce the limitations,
restrictions, and conditions contained in the Master Deed and
Declaration of Restrictions of the project; promulgate rules and
regulations concerning the use, enjoyment and occupancy of the
units, common areas and other properties in the condominium
project, to make and collect assessments against members as unit
owners to defray the costs and expenses of the condominium project
and the corporation and to secure by legal means the observance of the
provisions of the Condominium Act, the Master Deed, the Articles of
Incorporation, these By-Laws, and the rules and regulations
promulgated by it in accordance herewith. The members of the
corporation bind themselves to comply faithfully with all these
provisions."34 (Emphasis supplied)
Evidently, the Condominium Act, the Master Deed and petitioner’s By-
Laws grant petitioner the express power to promulgate rules and
regulations concerning the use, enjoyment and occupancy of the
common areas.
Moreover, House Rule 26.3, which prohibits delinquent members from
using the common areas, is necessary to ensure maintenance of the
common areas. Petitioner’s purpose in enacting House Rule 26.3 is to
enforce effectively the provisions of the Master Deed. House Rule 26.3
is well within the powers of petitioner to adopt as the same is
reasonably necessary to attain the purpose for which both petitioner
and the Condominium project were created. Thus, Section 7 of the
Master Deed declares:
"Section 7. CONDOMINIUM CORPORATION. - A corporation to be
known as THE TWIN TOWERS CONDOMINIUM (hereinafter referred to
as the "Condominium Corporation"), shall be formed and organized
pursuant to the Condominium Act and the Corporation Code to hold
title to all the aforestated common areas of the condominium project
including the land, to manage THE TWIN TOWERS CONDOMINIUM
and to do such other things as may be necessary, incidental and
convenient to the accomplishment of said purposes xxx"35(Emphasis
supplied)
Petitioner would be unable to carry out its main purpose of maintaining
the Condominium common areas and facilities if members refuse to pay
their dues and yet continue to use these areas and facilities. To impose
a temporary ban on the use of the common areas and facilities until the
assessments and dues in arrears are paid is a reasonable measure that
petitioner may undertake to compel the prompt payment of
assessments and dues.
Second Issue: Offsetting the value of services withheld against ALS’
unpaid assessments and dues.
ALS’ claim for reduction of its assessments and dues because of its non-
use of the Condominium facilities.
We rule that ALS has no right to a reduction of its assessments and dues
to the extent of its non-use of the Condominium facilities. ALS also
cannot offset damages against its assessments and dues because ALS is
not entitled to damages for alleged injury arising from its own violation
of its contract. Such a breach of contract cannot be the source of rights
or the basis of a cause of action.36 To recognize the validity of such claim
would be to legalize ALS’ breach of its contract.
ALS’ claim for unrendered repair services barred by estoppel.
ALS also justifies its non-payment of dues on the ground of the alleged
failure of petitioner to repair the defects in ALS’ Unit. However, this
claim for unrendered repairs was never raised before the SEC Hearing
Officer or the SEC en banc. The issue on these alleged unrendered
repairs, which supposedly caused ALS’ Unit to deteriorate, was raised
for the first time on appeal. The Court of Appeals did not pass upon the
same.
Neither in the proceedings in the SEC nor in the appellate court did ALS
present evidence to substantiate its allegation that petitioner failed to
render the repair services. Also, ALS failed to establish whether it
claimed for the costs of the repair because ALS advanced these
expenses, or for the value of damages caused to the Unit by the water
leakage.
ALS is therefore barred at this late stage to interpose this claim. In Del
Rosario v. Bonga,37 the Court held:
"As a rule, no question will be entertained on appeal unless it has been
raised in the court below. Points of law, theories, issues and arguments
not brought to the attention of the lower court need not be, and
ordinarily will not be, considered by a reviewing court, as they cannot
be raised for the first time at that late stage. Basic considerations of due
process impel this rule."
As this claim was a separate cause of action which should have been
raised in ALS’ Answer with Counterclaim, ALS’ failure to raise this claim
is deemed a waiver of the claim.
Third Issue: Remand of the case to the proper trial court.
Question of fact.
The Court of Appeals ruled that there is a need to remand the case
considering that there is no sufficient evidence on record to establish
the amount of petitioner’s claim against ALS for unpaid assessments
and dues.
The question of whether petitioner’s claim of P994,529.75 for unpaid
assessments and dues against ALS is supported by sufficient evidence is
a purely factual issue and inevitably requires the weighing of evidence.
This Court is not a trier of facts, and it is not the function of this Court to
re-examine the evidence submitted by the parties.38 In cases brought
before this Court from the Court of Appeals under Rule 45 of the Rules
of Court, this Court’s jurisdiction is limited to reviewing errors of law
which must be distinctly set forth.39 In this mode of appeal, the findings
of fact of the Court of Appeals and other courts of origin are
conclusive.40
Jurisprudence is settled that:
"(a)s a rule, the jurisdiction of this Court in cases brought to it from the
Court of Appeals xxx is limited to the review and revision of errors of
law allegedly committed by the appellate court, as its findings of fact
are deemed conclusive. As such this Court is not duty-bound to analyze
and weigh all over again the evidence already considered in the
proceedings below."41
This rule admits of several exceptions. This Court may review the
findings of fact of the Court of Appeals:
"(a) where there is grave abuse of discretion; (b) when the finding is
grounded entirely on speculations, surmises or conjectures; (c) when
the inference made is manifestly mistaken, absurd or impossible; (d)
when the judgment of the Court of Appeals was based on a
misapprehension of facts; (e) when the factual findings are conflicting;
(F) when the Court of Appeals, in making its findings, went beyond the
issues of the case and the same are contrary to the admissions of both
appellant and appellee; (g) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties and which,
if properly considered, would justify a different conclusion; and, (h)
where the findings of fact of the Court of Appeals are contrary to those
of the trial court, or are mere conclusions without citation of specific
evidence, or where the facts set forth by the petitioner are not disputed
by the respondent, or where the findings of fact of the Court of Appeals
are premised on the absence of evidence and are contradicted by the
evidence on record."42
However, none of these exceptions exists in the instant case.
The SEC Hearing Officer found that, while petitioner is entitled to
collect the unpaid assessments and dues from ALS, petitioner has failed
to establish clearly the basis for computing the correct amount of the
unpaid assessments and dues. Indeed, there is no evidence laying down
the basis of petitioner’s claim other than allegations of previous
demands and statements of accounts. Whether petitioner has
sufficiently established its claim by preponderance of evidence requires
an examination of the probative weight of the evidence presented by
the parties. Evidently, this is a question of fact the resolution of which is
beyond the purview of the petition for review where only errors of law
may be raised. On the other hand, the decision of the Court of Appeals,
finding insufficient evidence on record, was made under its power to
review both questions of fact and law.
Remand to the proper trial court.
While we sustain the ruling of the Court of Appeals, the case can no
longer be remanded to the SEC Hearing Officer. Republic Act No. 8799,
which took effect on August 8, 2000, transferred SEC’s jurisdiction over
cases involving intra-corporate disputes to courts of general
jurisdiction or the appropriate regional trial courts. Section 5.2 of R.A.
No. 8799 reads:
"5.2. The Commission’s jurisdiction over all cases enumerated under
Section 5 of Presidential Decree No. 902-A is hereby transferred to the
Courts of general jurisdiction or the appropriate Regional Trial Court;
Provided, That the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise
jurisdiction over these cases. The Commission shall retain jurisdiction
over pending cases involving intra-corporate disputes submitted for
final resolution which should be resolved within one (1) year from the
enactment of this Code. The Commission shall retain jurisdiction over
pending suspension of payments/rehabilitation cases filed as of 30 June
2000 until finally disposed."
Based on the Resolution issued by this Court in AM No. 00-8-10-
SC,43 the Court Administrator and the Securities and Exchange
Commission should cause the transfer of the records of SEC-AC Nos.
377 and 378 to the proper regional trial court for further reception of
evidence and computation of the correct amount of assessments and
dues that ALS shall pay to petitioner.
Fourth Issue: Penalties prescribed in House Rule 26.2.
ALS and Litonjua did not question before either the SEC or the Court of
Appeals the validity of the penalties prescribed in the Condominium’s
House Rule 26.2. Nevertheless, the Court of Appeals ruled that House
Rule 26.2 prescribes grossly excessive penalties and interests. The
resolution of this issue is not necessary in arriving at a complete and
just resolution of this case. At any rate, we find the interest and
penalties prescribed under House Rule 26.2 reasonable considering the
premier location of the Condominium at the heart of Makati City. It is
inevitable that ALS’ unpaid assessments and dues would escalate
because ALS’ delinquency started since 1986.
House Rule 26.2 clearly provides for a 24% interest and an 8% penalty,
both running annually, on the total amount due in case of failure to pay,
to wit:
"26.2. Late payment of accounts of members shall be charged an
interest rate of 24% per annum. In addition, a penalty at the rate of 8%
per annum shall be charged on delinquent accounts. The 24% interest
shall be imposed on unpaid accounts starting with the 21st day of the
quarter until fully paid."
To reiterate, the Condominium Act expressly provides that the Master
Deed may empower the management body of the Condominium "to
enforce the provisions of the declaration of restrictions."44 The Master
Deed authorizes petitioner, as the management body, to enforce the
provisions of the Master Deed in accordance with petitioner’s By-Laws.
Thus, petitioner’s Board of Directors is authorized to determine the
reasonableness of the penalties and interests to be imposed against
those who violate the Master Deed. Petitioner has validly done this by
adopting the House Rules.
The Master Deed binds ALS since the Master Deed is annotated on the
condominium certificate of title of ALS’ Unit. The Master Deed is ALS’
contract with all Condominium members who are all co-owners of the
common areas and facilities of the Condominium. Contracts have the
force of law between the parties and are to be complied with in good
faith.45 From the moment the contract is perfected, the parties are
bound to comply with what is expressly stipulated as well as with what
is required by the nature of the obligation in keeping with good faith,
usage and the law.46 Thus, when ALS purchased its Unit from petitioner,
ALS was bound by the terms and conditions set forth in the contract,
including the stipulations in the House Rules of petitioner, such as
House Rule 26.2.
In sum, as a member of petitioner, ALS is indisputably bound by the
Condominium’s House Rules which are authorized by the By-Laws, the
Master Deed and the Condominium Act.
Award of attorney’s fees.
The award of attorney’s fees as damages is the exception rather than
the rule. The general rule is that attorney’s fees cannot be recovered as
part of damages because of the policy that no premium should be
placed on the right to litigate.47 Counsel’s fees are not awarded every
time a party prevails in a suit.48 An award of attorney’s fees and
expenses of litigation is proper under the instances provided for in
Article 2208 of the Civil Code, one of which is where the defendant
acted in gross and evident bad faith. In this case, however, we find no
cogent reason to award attorney’s fees in the absence of showing of
gross and evident bad faith on the part of ALS in refusing to satisfy
petitioner’s claim.
WHEREFORE, the petition is GRANTED and the assailed Decision of the
Court of Appeals is SET ASIDE. ALS Management & Development
Corporation is ordered to pay Twin Towers Condominium Corporation
all overdue assessments and dues, including interest and penalties
from date of default, as shall be determined by the proper Regional
Trial Court in accordance with this Decision. The proper Regional Trial
Court shall complete the computation within sixty (60) days from its
receipt of this Decision and the records of SEC-AC Nos. 377 and 378.
Costs of suit against ALS Management & Development Corporation.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug and Azcuna, JJ., concur.

Ynares-Santiago, J., on leave.

 CARLOS R. TAMAYO, G.R. No. 164136
the sales proceeds.[1] The parcels of land were later known as Doa Luisa
Petitioner,
Present: Village (the subdivision).
- versus -
QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES, and
MILAGROS HUANG, JOSEFINO HUANG, HUANG TINGA, JJ. On or about April 30, 1981, Carlos R. Tamayo (petitioner)
SUI SIN, MIGUEL HUANG and IAP TONG HA, Promulgated: entered into a contract to sell[2] (the contract) with respondents through
Respondents.
January 25, 2006 their Attorney-in-Fact and Manager, EAP, for the purchase of Lot No. 15,
Block No. 11 (the lot) of the subdivision, covered by TCT No. T-74582 (a
transfer from TCT-20717) with an area of 1,424 square meters
at P170.00 per square meter or for the total price of P242,080.00.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x Under the contract, petitioner was to pay upon

execution P35,749.60 and the balance, including interest at the rate of
DECISION 14% per annum, in 60 monthly installments of P4,791.40, without

CARPIO MORALES, J.:
On August 14, 1978, respondents Huang Sui Sin, Josefino Huang,
Miguel Huang and Milagros Huang, four of five registered owners of four
parcels of land located in Barangay Matina, Davao City and covered by
Transfer Certificates of Title Nos. T-20694, T-20704, T-20717 and a
portion of TCT No. T-20729, executed a contract of Indenture with EAP
Development Corporation (EAP) under which EAP undertook to manage
and develop said parcels of land into a first class subdivision and sell the
lots therein in consideration for which EAP would retain 55% percent of
necessity of demand; and if petitioner failed to pay the installments,
respondents were given the right to demand interest thereon at the rate
of 14% per annum, to be computed on the same day of the month the
installments became due.
Petitioner did make the down payment alright and paid monthly
installments up to June 1982 after which he stopped paying. At that time,
petitioner had paid a total of P59,706.60.
In the meantime, as EAP had abandoned the development of the
subdivision, respondents filed on June 27, 1985 a complaint against EAP
for rescission of their Indenture contract before the Regional Trial Court
(RTC) of Davao, docketed as Civil Case No. 17625.[3]
More than five years after the parties executed the contract on April 30,
1981,[4] respondents appear to have sent petitioner a letter demanding
payment of the lot, for in a letter[5] dated December 24, 1986 addressed
to respondents, petitioner stated that he intentionally desisted from
paying further monthly installments due to non-development of the
subdivision as agreed upon in the contract.
Nothing had been heard from the parties until January 2, 1991 when,
after noting that the development of the subdivision was in progress,
petitioner issued Prudential Bank Check No. 023014 [6]dated January 2,
1991 in the amount of P270,527.00 purportedly representing full
payment of the purchase price of the lot, for which he was issued a
receipt.[7]
Respondents immediately returned the check to petitioner, however, by
letter of January 9, 1991, they claiming that their employee had
committed a mistake in receiving it. Respondents letter bearing the
check was returned unopened, drawing respondents to return it again,
by letter[8] dated February 28, 1991 addressed to and received by
petitioners son.
Petitioner later filed a complaint[9] on July 24, 1997 against
respondents, for specific performance and delivery of title with damages,
before the Housing and Land Use Regulatory Board (HLURB), Region XI,
Davao City, the subject of the petition at bar, anchoring his rights under
Presidential Decree No. 957 (THE SUBDIVISION AND CONDOMINIUM
BUYERS PROTECTIVE DECREE).
In his complaint before the HLURB, petitioner posited that from
the execution of the contract up to the time he sent his above-said letter
dated December 24, 1986, respondents failed to develop the subdivision,
in support of which he submitted the January 31, 1990 decision[10] of
Branch 14 of the RTC Davao City in Civil Case No. 17625 rescinding the
Indenture forged by respondents and EAP for the latters failure to
develop the subdivision. Petitioner also submitted a
Certification[11] dated November 24, 1997 of the President of
Homeowners Association of the subdivision that the entrance road of the
subdivision connecting to the Quimpo Boulevard was concreted only
about two years earlier, and that as of said date, the drainage system was
not completed and some of the roads were not yet concreted.
In their Answer to the complaint,[12] respondents averred that
the EAP stopped the development of the subdivision only by the end of
1983; petitioner had no factual or legal basis for not paying his monthly
installment beginning July 1982 since the development of the
subdivision was then in progress; the contract was deemed rescinded on
April 30, 1986 five (5) years after its execution, and if petitioner wanted
to go on with the purchase of the lot, it would be under terms different
from those executed in the contract; petitioner was not entitled to the

provisions of Republic Act No. 6552 (THE REALTY INSTALLMENT
BUYER ACT) as the therein prescribed condition of two-year continuous
payment of monthly installments for entitlement to rights thereunder
was not complied with; and if petitioner had any right at all, it was only
to a refund of what he had already paid.
In the interim, petitioner consigned on September 4, 1997 with
the HLURB two checks, one dated August 29, 1997, and the other dated
September 2, 1997, in the amounts of P270,000.00 and P527.00,
respectively.[13]
By a Counter-Manifestation,[14] respondents informed that they
were refusing to accept petitioners checks as these were issued and
consigned long after the expiration of the contract on April 30, 1986.
By Decision[15] of February 16, 1998, HLRUB Arbiter Atty. Joselito F.
Melchor dismissed petitioners complaint, holding that payment by tender
and consignation was not legally effected, the check dated January 9, 1991
having been sent back to petitioners son, and the consignation of the two
checks dated 1997 having failed to meet the requirements set forth by
law for a valid consignation.
And so the HLURB decision disposed:
WHEREFORE, PREMISES CONSIDERED, judgment is
hereby rendered ordering:
1. The DISMISSAL of the instant case for lack
of merit.
2. The complainant to immediately pay in full
his account with the payment of corresponding
interest and penalty under the terms and conditions
of his contract with the respondents. In the event
cancellation procedures of the contract between the
parties have already been effected by respondents
in accordance with RA 6552, the respondent shall
give the complainant a grace period of not less than
sixty days from finality of this judgment to pay his
unpaid obligations as stated above. Failure on the
part of the complainant to pay said unpaid
obligations at the expiration of the grace period, the
respondents may cancel the contract after thirty
days from receipt by the complainant of the notice
of cancellation or demand for rescission of the
contract by notarial act;
3. The complainant to pay respondents the
amount of P100,000.00 as damages because of
formers breach of obligation and P50,000.00
as attorneys fee; and
4. The complainant to pay the cost of
litigation.
SO ORDERED.[16] (Underscoring supplied)
Petitioner thereupon filed a petition for review before the HLURB
Board of Commissioners questioning the award of damages and attorneys
fee to respondents, and praying that respondents be ordered to receive
the amount of P270,527.00 consigned with the HLURB Davao City and
execute the final deed of sale and deliver the title.

By Decision of August 25, 1998, the HLURB Board of Commissioners
affirmed the Arbiters decision, but deleted the award to respondents of
damages and costs.
Respondents appealed the HLURB Board of Commissioners
decision to the Office of the President (OP).
During the pendency of the appeal before the OP, respondents
filed on October 13, 2000 a Manifestation and Motion,[17] averring for the
first time that on April 1997, they sold the disputed lot to one Nene Abijar
in whose favor a Deed of Absolute Sale was executed on November 2,
1997, and to whom was issued on November 11, 1997 TCT No. T-
292279[18] which cancelled respondents TCT No. T-74582.[19] The
records disclose that on September 3, 2001, Abijar oddly filed an Answer
with Counter-claim against petitioner and Cross-claim against
respondents in HLURB REM-A-980316-0042 before the HLURB Davao
after the said case had been resolved by the HLURB Davao and while it
was on appeal before the OP.[20]
Commissioners, the dispositive portion of which reads:
By Decision of December 12, 2001, the OP upheld the HLURB
finding that there was no effective cancellation of the contract, but
nevertheless ruled that Abijars right as an innocent purchaser for value
must be accorded preference over that of petitioner, without prejudice to
the right of petitioner to recover what he had paid under the
contract.[21] Thus the OP held:
x x x M[s]. Abijar, three (3) months before the appellee[-
herein petitioner] instituted the present action, bought
the property from the appellants[-herein
respondents] apparently without notice that some other
person has a right to, or has interest over the same. Fact
is, M[s]. Abijar was able to register title to the property
under h[er] name, and there appears nothing in h[er]
title which indicates any encumbrance, lien or inchoate
right which may subsequently defeat h[er] right thereto.
A person dealing with a registered land is not, as a rule,
required to go behind the register to determine the
condition of the property, and is only charged with
notice of the burdens on the property which are noted
on the face of the register or certificate of
title [Radiowealth Finance Company v. Manuelito S.
Palileo, 197 SCRA 245]. It thus strikes us as rather
unconscionable, if not legally impossible, to take the
literal application of RA 6552. Otherwise, we shall be
asking the appellants to surrender the subject property
to the appellee after its sale to, and registration under
the name of, M[s]. Abijar. If that would be the case, then
our judgment would run counter to the doctrine on the
efficacy and conclusiveness of the certificate of title
which the Torrens system seeks to ensure and
protect.[22](Underscoring supplied)
The OP thus reversed the decision of the HLURB Board of
WHEREFORE, premises considered judgment is
hereby MODIFIED to wit:
1) Ordering appellants[-herein
respondents] to refund to appellee the amount
of P59,706.00, the sum total of the amortizations
paid by the appellee, with legal interest from the
date of conveyance by appellants of the subject
parcel of land to Mr. Nene Abijar;
 2) Ordering the release to appellee
Carlos R. Tamayo of the amount of P270,537.00
which he consigned to the HLURB; and
3) Ordering the appellants[-herein
respondents] to pay to HLURB the amount
of P 20,000 as administrative fine.
SO ORDERED. (Underscoring supplied)
His motion for reconsideration having been denied by
Order[23] of June 17, 2003, petitioner filed a petition for review with the
appellate court before which he argued, inter alia, that the OP erred in
applying equity in favor of Abijar who was not a party to the case.
By decision[24] rendered on January 23, 2004, the appellate court
dismissed the petition for lack of merit. Petitioners motion for
reconsideration having been denied by resolution of June 29, 2004, he
filed the present petition.
It is not disputed that EAP, acting as the Attorney-in-Fact and Manager
of respondents, totally abandoned the development of the subdivision in
1983,[25] thus prompting respondents to continue development thereof
on May 22, 1985[26] and to even file a complaint to rescind its contract
of Indenture with EAP which the RTC Davao granted.
Paragraph 8 of the contract between petitioner and respondents
through EAP provides:
Eight. SUBDIVISION IMPROVEMENTS: - To insure the
beauty of the subdivision in line with the modern trend
of urban development, EAP Development Corporation
hereby obligates itself to provide the subdivision with:
(a) Concrete Paved road or asphalt when price of
cement becomes prohibitive
(b) Concrete curbs and gutters
(c) Underground drainage system
(d) Water distribution system
(e) Electrical lighting system
(f) 24 hour Security Guard Service
x x x x (Underscoring supplied)
The SUBDIVISION AND CONDOMINIUM BUYERS PROTECTIVE
DECREE directs every owner and developer of real property to provide
the necessary facilities, improvements, infrastructures and other forms
of development, failure to carry out which is sufficient cause for the
buyer to suspend payment, and any sums of money already paid shall
not be forfeited.
Sections 20 and 23 of P.D. 957 of the same decree further direct
as follows:
Sec. 20. Time of Completion. - Every owner or developer
shall construct and provide the facilities, improvements,
infrastructures and other forms of development,
including water supply and lighting facilities, which are
offered and indicated in the approved subdivision or
condominium plans, brochures, prospectus, printed
matters, letters or in any form of advertisement, within
one year from the date of the issuance of the license for
the subdivision or condominium project or such other
 period of time as may be fixed by the Authority.
(Underscoring supplied)
Sec. 23. Non-Forfeiture of Payments. No installment
payment made by a buyer in a subdivision or
condominium project for the lot or unit he contracted to
buy shall be forfeited in favor of the owner or
developer when the buyer, after due notice to the owner
or developer, desists from further payment due to the
failure of the owner or developer to develop the
subdivision or condominium project according to the
approved plans and within the time limit for complying
with the same. Such buyer may, at his option, be
reimbursed the total amount paid including
amortization interest but excluding delinquency
interests, with interest thereon at the legal rate.
(Underscoring supplied)
In case the developer of a subdivision or condominium fails in its
obligation under Section 20, Section 23 gives the buyer the option to
demand reimbursement of the total amount paid, or to wait for further
development of the subdivision,[27] and when the buyer opts for the latter
alternative, he may suspend payment of installments until such time that
the owner or developer had fulfilled its obligation to him. [28]
From petitioners earlier-mentioned letter of December 24, 1986, he made
clear his intention not to seek reimbursement of the total amount he had
already paid but to comply with his obligation to pay the balance in full
upon completion of the development of the subdivision.
xxxx
Please be informed that I int[en]tionally
stopped paying my monthly installment because I could
not see any development in your subdivision, like
concrete road, electrical facilities, drainage and water
among others as stipulated in our contract. Under
existing laws, I understand I can suspend my payment
pending your completion of the subdivision facilities as
agreed in our contract. Ill only resume payment if you
complete the development of the subdivision.
x x x x (Underscoring supplied)
The claim-advice of petitioner notwithstanding, respondents were mum
about it. Such silence suggests an admission of the veracity and validity of
petitioners claim.[29]
Respondents nevertheless claim that the contract was deemed rescinded
five years after its execution on April 30, 1981. Respondents demand for
payment of the unpaid balance sometime between the period of April 30,
1986 to December 24, 1986 betrays such claim, however. In any event, it
puts them in estoppel.
As for respondents position that before petitioner could lawfully
withhold his monthly payments, he needed to secure previous clearance
from the HLURB following Section 23 of Rule VI of the Rules
implementing the SUBDIVISION AND CONDOMINIUM BUYERS
PROTECTIVE DECREE, law and jurisprudence are not on their side.
Section 23 of PD 957 -- the law upon which the
Implementing Rule cited was based -- requires only due
notice to the owner or developer for stopping further
payments by reason of the latters failure to develop the
subdivision according to the approved plans and within
the time limit. x x x
To be valid, an administrative rule or regulation
must conform, not contradict, the provisions of the
enabling law. An implementing rule or regulation cannot
modify, expand, or subtract from the law it is intended to
implement. Any rule that is not consistent with the
statute itself is null and void. x x x
Section 23 of Rule VI of the Implementing
Rules cannot rise higher than Section 23 of PD 957,
which is the source of its authority. For that matter, PD
957 would have expressly required the written
approval of the HLURB before any stoppage of
amortization payments if it so intended, in the same
manner that the decree specifically mandates written
consent or approval by the NHA (now the HLURB) in
Section 18.
xxxx
Apropos, to require clearance from the
HLURB before stopping payment would not be in
keeping with the intent of the law to protect innocent
buyers of lots or homes from scheming subdivision
developers. To give full effect to such intent, it would be
fitting to treat the right to stop payment to be
immediately effective upon giving due notice to the
owner or developer or upon filing a complaint before the
HLURB against the erring developer. Such course of
action would be without prejudice to the subsequent
determination of its propriety and consequences, should
the suspension of payment subsequently be found
improper.[30] (Italics supplied)
Section 4 of THE REALTY INSTALLMENT ACT directs as follows in case a
buyer defaults in the payment of succeeding installments where he has
paid less than two years of installments, as in petitioners case:
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. (Underscoring supplied)
As noted earlier, petitioner, by letter of December 24, 1986, informed
respondents that he desisted from further paying monthly installments
and that he would resume payment if the development of the subdivision
had been completed. Yet respondents sent no notarized notice or any
notice of cancellation at all. In fact, it was only after petitioner filed on July
24, 1997 the complaint before the HLURB that respondents offered to
reimburse petitioner of the total amount he had already paid.
The contract not having been cancelled in accordance with law,
it has remained valid and subsisting. It was, therefore, within petitioners
right to maintain his option to await the completion of the development
of and introduction of improvements in the subdivision and thereafter,
upon full payment of the purchase price, without interest, compel
respondents to execute a deed of absolute sale.

The decision of the OP, however, which passed upon the sale of
the lot to Abijar whom it found to be a buyer in good faith and for value
basis of its ruling that petitioner can no longer exercise above-said right,
which decision was deemed affirmed too by the appellate court, does not
lie. For, the subsequent sale was brought to light by respondents only
while their appeal was pending before the OP, and as correctly argued
by petitioner, Abijar was not a party to the case. Parenthetically, the
records of the case do not bear whether the deed of absolute sale in favor
of Abijar was in fact registered, and TCT No. T-74582 in the name of
respondents was indeed cancelled and TCT No. T-292279 in the name of
Abijar was issued in its stead. As petitioner points out, what was
appended to the records of the OP was a plain uncertified photocopy of
TCT No. T-292279.
The decision of the OP which was deemed affirmed by the
appellate court ordering a full refund of the installment payments of
petitioner in the amount of P59,706.00 and the release to petitioner of
the amount of P270,537.00 he had consigned does not lie too, for under
the law, petitioner is entitled to the lot he contracted to purchase after
payment of the outstanding balance which he was ready and willing to
do.[31]
If the sale of the lot to Abijar is eventually declared valid,
respondents should refund petitioner its actual value as resold to Abijar,
to bear 12% interest per annum computed from the date of such sale
until fully paid or deliver a substitute lot at the option of petitioner. So
this Court instructs in Active Realty and Development Corporation v.
Daroya:[32]
In the case at bar, respondent offered to pay for her
outstanding balance of the contract price but
respondent refused to accept it. Neither did petitioner
adduce proof that the respondent's offer to pay was
made after the effectivity date stated in its notice of
cancellation. Moreover, there was no formal notice of
cancellation or court action to rescind the contract.
Given the circumstances, we find it illegal and iniquitous
that petitioner, without complying with the mandatory
legal requirements for canceling the contract, forfeited
both respondent's land and hard-earned money after
she has paid for, not just the contract price, but more
than the consideration stated in the contract to sell.
Thus, for failure to cancel the contract in
accordance with the procedure provided by law, we
hold that the contract to sell between the parties
remains valid and subsisting. Following Section 3(a) of
R.A. No. 6552, respondent has the right to offer to pay
for the balance of the purchase price, without interest,
which she did in this case. Ordinarily, petitioner would
have had no other recourse but to accept payment.
However, respondent can no longer exercise this right
as the subject lot was already sold by the petitioner to
another buyer which lot, as admitted by the petitioner,
was valued at P1,700.00 per square meter. As
respondent lost her chance to pay for the balance of the
P875,000.00 lot, it is only just and equitable that the
petitioner be ordered to refund to respondent the actual
value of the lot resold, i.e., P875,000.00, with 12%
interest per annum computed from August 26, 1991
until fully paid or to deliver a substitute lot at the option
of the respondent. (Italics in the original; underscoring
supplied)

This Court, not being a trier of facts, thus resolves to remand
the case to the HLURB for a proper determination of the respective
rights of the parties vis a vis the alleged sale of the lot to Abijar in
accordance with the foregoing discussions.
WHEREFORE, the decision of the Court of Appeals is REVERSED and SET
ASIDE. The case is REMANDED to the Housing and Land Use Regulatory
Board of Davao City for further proceedings in accordance with the
directive in the immediately preceding paragraph.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice
WE CONCUR:
[G.R. No. 151821. April 14, 2004]
BANK OF THE PHILIPPINE ISLANDS, as Successor-in-Interest of BPI
Investment Corporation, petitioner, vs. ALS MANAGEMENT
& DEVELOPMENT CORP., respondent.
DECISION
PANGANIBAN, J.:
Factual findings of the lower courts are entitled to great respect, but
may be reviewed if they do not conform to law and to the evidence on
record. In the case at bar, a meticulous review of the facts compels us to
modify the award granted by the Court of Appeals.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of
Court, seeking to set aside the November 24, 2000 Decision[2] and the
January 9, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR CV
No. 25781. The assailed Decision disposed as follows:
WHEREFORE, premises considered, the assailed decision is
hereby AFFIRMED in toto and the instant appeal DISMISSED.[4]
The assailed Resolution denied reconsideration.
The Facts
The facts of the case are narrated by the appellate court as follows:
On July 29, 1985, [petitioner] BPI Investment Corporation filed a
complaint for a Sum of Money against ALS Management and
Development Corporation, alleging inter alia that on July 22, 1983,
[petitioner] and [respondent] executed at Makati, Metro Manila a Deed
of Sale for one (1) unfurnished condominium unit of the Twin Towers
Condominium located at Ayala Avenue, corner Apartment Ridge Street,
Makati, Metro Manila designated as Unit E-4A comprising of 271
squares [sic] meters more or less, together with parking stalls
identified as G022 and G-63. The Condominium Certificate of Title No.
4800 of the Registry of Deeds for Makati, Metro Manila was issued after
the execution of the said Deed of Sale. [Petitioner] advanced the
amount of P26,300.45 for the expenses in causing the issuance and
registration of the Condominium Certificate of Title. Under the
penultimate paragraph of the Deed of Sale, it is stipulated that the
VENDEE [respondent] shall pay all the expenses for the preparation
and registration of this Deed of Sale and such other documents as may
be necessary for the issuance of the corresponding Condominium
Certificate of Title. After the [petitioner] complied with its obligations
under the said Deed of Sale, [respondent], notwithstanding demands
made by [petitioner], failed and refused to pay [petitioner] its
legitimate advances for the expenses mentioned above without any
valid, legal or justifiable reason.
In its Answer with Compulsory Counterclaim, [respondent] averred
among others that it has just and valid reasons for refusing to pay
[petitioners] legal claims. In clear and direct contravention of Section
25 of Presidential Decree No. 957 which provides that 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, the [petitioner]
has jacked-up or increased the amount of its alleged advances for the
issuance and registration of the Condominium Certificate of Title in the
name of the [respondent], by including therein charges which should
not be collected from buyers of condominium units. [Petitioner] made
and disseminated brochures and other sales propaganda in and before
May 1980, which made warranties as to the facilities, improvements,
infrastructures or other forms of development of the condominium
units (known as The Twin Towers) it was offering for sale to the public,
which included the following:
The Twin Towers is destined to reflect condominium living at its very
best.
While the twin tower design and its unusual height will make the
project the only one of its kind in the Philippines, the human scale and
proportion [are] carefully maintained.
To be sure, modern conveniences are available as in the installation of
an intercom system and a closed-circuit TV monitor through which
residents from their apartments can see their guests down at the lobby
call station.
Some of the features of each typical apartment unit are: x x x A bar x x x
Three toilets with baths x x x.
The penthouse units are privileged with the provision of an all-around
balcony. x x x
[Respondent] further averred that [petitioner] represented to the
[respondent] that the condominium unit will be delivered completed
and ready for occupancy not later than December 31,
1981. [Respondent] relied solely upon the descriptions and warranties
contained in the aforementioned brochures and other sales propaganda
materials when [respondent] agreed to buy Unit E-4A of the Twin
Tower(s) for the hefty sum of P2,048,900.00 considering that the Twin
Towers was then yet to be built. In contravention of [petitioners]
warranties and of good engineering practices, the condominium unit
purchased by [respondent] suffered from the following defects and/or
deficiencies:
1. The clearance in the walkway at the balcony is not sufficient for
passage;
2. The anodized aluminum used in the door and windows were
damaged;
3. The kitchen counter tops/splashboard suffered from cracks and were
mis-cut and misaligned;
4. The partition between living and masters bedroom was unpainted
and it had no access for maintenance due to aluminum fixed glass
cover;
5. The varifold divider, including the bar and counter top cabinet were
not installed;
6. The toilets had no tiles;
7. No closed circuit TV was installed;
8. Rainwater leaks inside or into the condominium unit.[5]
Respondents Answer prayed that judgment be rendered ordering
[petitioner] to correct such defects/deficiencies in the condominium
unit,[6] and that the following reliefs be granted:
1. The sum of P40,000.00 plus legal interest thereon from the date of
extra-judicial demand, representing the amount spent by the defendant
for the completion works it had undertaken on the premises.
2. The sum of U.S.$6,678.65 (or its equivalent in the Philippine
currency) representing the unearned rental of the premises which the
defendant did not realize by reason of the late delivery to him of the
condominium unit;
3. Twenty-four percent (24%) interest per annum on the agreed one
(1) year advance rental and one (1) month deposit (totaling
U.S.$15,785.00) corresponding to the period January 1, 1982 to June
17, 1982, which [petitioner] would have earned had he deposited the
said amount in a bank;
4. The sum of U.S.$1,214.30 per month, commencing from May 1, 1985,
which the [respondent] no longer earns as rental on the premises
because the lessee vacated the same by reason of defects and/or
deficiencies;
5. The sum of P50,000.00 plus appearance fees of P300.00 per court
hearing, as attorneys fees;
6. Litigation expenses and costs of suit.[7]
On February 6, 1990, the trial court issued this judgment:
1. Ordering the [respondent] to pay [petitioner] the sum of P26,300.45,
with legal interest from the filing of the complaint up to full payment
thereof, representing the amount spent for the registration of the title
to the condominium unit in [respondents] name;
2. Ordering [petitioner] to deliver, replace or correct at [petitioners]
exclusive expense/cost or appoint a licensed qualified contractor to do
the same on its behalf, the following defects/deficiencies in the
condominium unit owned by the [respondent]:
a) KITCHEN
i) The sides of the kitchen sink covered with
sealants as well as miscut marble
installed as filler at the right side of
the sink;
ii) Miscut marble installed on both sides of the
side wall above the gas range;
b) FOYERS
Water marks at the parquet flooring, near the
main water supply room;
c) MAIDS ROOM
Ceiling cut off about one (1) square foot in
size and left unfinished
d) DINING ROOM
i) Water damaged parquet up to about one (1)
meter from the wall underneath the
open shelves and directly behind the
plant box;
ii) Plant box directly behind the dining room;
iii) The water damaged parquet flooring near
the door of the dining room to the
passage way
e) MASTERS BEDROOM
i) Falling off paint layers at the bathroom wall
behind the bathtub/faucet along the
passageway of the masters bedroom;
ii) Falling off water-damaged plywood ceiling
in the masters bedroom bathroom;
iii) Grinders mark damage at the bathtub;
f) BALCONY WALKWAY
i) PVC pipes installed two (2) inches above
floor level causing water to
accumulate;
ii) Cracks on level of wash out flooring;
iii) 14-inches passageway going to the open
terrace not sufficient as passageway;
iv) PVC pipe installed on the plant box water
drained directly on the balcony floor;
g) BALCONY (OPEN) TERRACE
i) Two (2) concrete cement measuring about
6 x 4 inches with protruding live
wires, purportedly lamp posts which
were not installed;
h) BOYS BEDROOM
i) Water mark on the parquet flooring due to
water seepage;
ii) Asphalt plastered at the exterior wall/floor
joints to prevent water seepage;
i) ANALOC FINISH of the aluminum frames of doors and
windows all around the condominium were
painted with dark gray paint to cover dents
and scratches;
j) LIVING ROOM
Intercom equipment installed without the TV
monitor;
k) STORAGE FACILITIES at the ground floor
3. Ordering [petitioner] to pay [respondent] the following:
a) The sum of P40,000.00 representing reimbursement for expenses
incurred for the materials/labor in installing walls/floor titles in 2
bathrooms and bar counter cabinet.
b) The sum of P136,608.75, representing unearned income for the five-
month period that the defendant had to suspend a lease contract over
the premises.
c) The sum of P27,321.75 per month for a period of twenty-one (21)
months (from May 1985 to January 1987), representing unearned
income when defendants lessee had to vacate the premises and
condominium unit remained vacant, all with legal interest from the
filing of the counterclaim until the same are fully paid.[8]
Ruling of the Court of Appeals
On appeal, after a thorough review and examination of the evidence
on record,[9] the CA found no basis for disbelieving what the trial court
found and arrived at.[10]
The appellate court sustained the trial courts finding that while
[petitioner] succeeded in proving its claim against the [respondent] for
expenses incurred in the registration of [the latters] title to the
condominium unit purchased, x x x for its part [respondent] in turn
succeeded in establishing an even bigger claim under its
counterclaim.[11]
Hence, this Petition.[12]
The Issues
Petitioner raises the following issues for our consideration:
I. Whether or not the Honorable Court of Appeals erred in not
holding that the trial court had no jurisdiction over the
respondents counterclaims.
II. Whether or not the decision of the Court of Appeals is based
on misapprehension of facts and/or manifestly mistaken
warranting a review by this Honorable Court of the factual
findings therein.
III. Whether or not the award of damages by the Honorable
Court of Appeals is conjectural warranting a review by this
Honorable Court of the factual findings therein.[13]
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Jurisdiction
Contending that it was the Housing and Land Use Regulatory Board
(HLURB) -- not the RTC -- that had jurisdiction over respondents
counterclaim, petitioner seeks to nullify the award of the trial court.
Promulgated on July 12, 1976, PD No. 957 -- otherwise known as
The Subdivision and Condominium Buyers Protective Decree -- provides
that the National Housing Authority (NHA) shall have exclusive
authority to regulate the real estate trade and business.[14] Promulgated
later on April 2, 1978, was PD No. 1344 entitled Empowering the
National Housing Authority to Issue Writs of Execution in the
Enforcement of Its Decisions Under Presidential Decree No. 957. It
expanded the jurisdiction of the NHA as follows:
SECTION 1. In the exercise of its function to regulate the real estate
trade and business and in addition to its powers provided for in
Presidential Decree No. 957, the National Housing Authority shall
have exclusive jurisdiction to hear and decide cases of the following
nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot
or condominium unit buyer against the project owner, developer,
dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit
against the owner, developer, broker or salesman. (Italics ours.)
 On February 7, 1981, by virtue of Executive Order No. 648, the
regulatory functions of the NHA were transferred to the Human
Settlements Regulatory Commission (HSRC). Section 8 thereof provides:
SECTION 8. Transfer of Functions. -The regulatory functions of the
National Housing Authority pursuant to Presidential Decree Nos. 957,
1216, 1344 and other related laws are hereby transferred to the
Commission (Human Settlements Regulatory Commission). x x
x. Among these regulatory functions are: 1) Regulation of the real estate
trade and business; x x x 11) Hear and decide cases of unsound real
estate business practices; claims involving refund filed against project
owners, developers, dealers, brokers, or salesmen; and cases of specific
performance.
Pursuant to Executive Order No. 90 dated December 17, 1986, the
functions of the HSRC were transferred to the HLURB.
As mandated by PD No. 957, the jurisdiction of the HLURB is
encompassing. Hence, we said in Estate Developers and Investors
Corporation v. Sarte:[15]
x x x. While PD 957 was designed to meet the need basically to protect
lot buyers from the fraudulent manipulations of unscrupulous
subdivision owners, sellers and operators, the exclusive jurisdiction
vested in the NHA is broad and general -to regulate the real estate trade
and business in accordance with the provisions of said law.
Furthermore, the jurisdiction of the HLURB over cases enumerated
in Section 1 of PD No. 1344 is exclusive. Thus, we have ruled that the
board has sole jurisdiction in a complaint of specific performance for the
delivery of a certificate of title to a buyer of a subdivision lot; [16] for
claims of refund regardless of whether the sale is perfected or
not;[17] and for determining whether there is a perfected contract of
sale.[18]
In Solid Homes v. Payawal,[19] we declared that the NHA had the
competence to award damages as part of the exclusive power conferred
upon it -- the power to hear and decide claims involving refund and any
other claims filed by subdivision lot or condominium unit buyers against
the project owner, developer, dealer, broker or salesman.[20]
Clearly then, respondents counterclaim -- being one for specific
performance (correction of defects/deficiencies in the condominium
unit) and damages -- falls under the jurisdiction of the HLURB as
provided by Section 1 of PD No. 1344.
The Applicability of Estoppel
The general rule is that any decision rendered without jurisdiction
is a total nullity and may be struck down at any time, even on appeal
before this Court.[21] Indeed, the question of jurisdiction may be raised at
any time, provided that such action would not result in the mockery of
the tenets of fair play.[22] As an exception to the rule, the issue may not
be raised if the party is barred by estoppel.[23]
In the present case, petitioner proceeded with the trial, and only
after a judgment unfavorable to it did it raise the issue of
jurisdiction. Thus, it may no longer deny the trial courts jurisdiction, for
estoppel bars it from doing so. This Court cannot countenance the
inconsistent postures petitioner has adopted by attacking the
jurisdiction of the regular court to which it has voluntarily submitted.[24]
The Court frowns upon the undesirable practice of submitting ones
case for decision, and then accepting the judgment only if favorable, but
attacking it for lack of jurisdiction if it is not.[25]
We also find petitioner guilty of estoppel by laches for failing to
raise the question of jurisdiction earlier. From the time that respondent
filed its counterclaim on November 8, 1985, the former could have raised
such issue, but failed or neglected to do so. It was only upon filing its
appellants brief[26] with the CA on May 27, 1991, that petitioner raised
the issue of jurisdiction for the first time.
In Tijam v. Sibonghanoy,[27] we declared that the failure to raise the
question of jurisdiction at an earlier stage barred the party from
questioning it later. Applying the rule on estoppel by laches, we
explained as follows:
A party may be estopped or barred from raising a question in different
ways and for different reasons. Thus, we speak of estoppel in pais, of
estoppe[l] by deed or by record, and of estoppel by laches.
Laches, in general sense, is failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due
diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it
or declined to assert it.
The doctrine of laches or of stale demands is based upon grounds of
public policy which requires, for the peace of society, the
discouragement of stale claims and, unlike the statute of limitations, is
not a mere question of time but is principally a question of the inequity
or unfairness of permitting a right or claim to be enforced or
asserted.[28]
Thus, we struck down the defense of lack of jurisdiction, since the
appellant therein failed to raise the question at an earlier stage. It did so
only after an adverse decision had been rendered.
We further declared that if we were to sanction the said appellants
conduct, we would in effect be declaring as useless all the proceedings
had in the present case since it was commenced x x x and compel the
judgment creditors to go up their Calvary once more. The inequity and
unfairness of this is not only patent but revolting.[29]
Applicable herein is our ruling in Gonzaga v. Court of Appeals,[30] in
which we said:
Public policy dictates that this Court must strongly condemn any
double-dealing by parties who are disposed to trifle with the courts by
deliberately taking inconsistent positions, in utter disregard of the
elementary principles of justice and good faith. There is no denying
that, in this case, petitioners never raised the issue of jurisdiction
throughout the entire proceedings in the trial court. Instead, they
voluntarily and willingly submitted themselves to the jurisdiction of
said court. It is now too late in the day for them to repudiate the
jurisdiction they were invoking all along.[31]
Second and Third Issues:
Appreciation of Facts
It is readily apparent that petitioner is raising issues of fact that
have been ruled upon by the RTC and sustained by the CA. The factual
findings of lower courts are generally binding upon this Court and will
not be disturbed on appeal, especially when both sets of findings are the
same.[32] Nevertheless, this rule has certain exceptions,[33] as when those
findings are not supported by the evidence on record.
We have carefully scrutinized the records of this case and found
reason to modify the award to conform to law and the evidence. We thus
address the arguments of petitioner seriatim.
Warranties and Representations
in the Brochure
The brochure that was disseminated indicated features that would
be provided each condominium unit; and that, under Section 19 of PD
No. 957, would form part of the sales warranties of
petitioner.[34]Respondent relied on the brochure in its decision to
purchase a unit.[35] Since the former failed to deliver certain items stated
therein, then there was a clear violation of its warranties and
representations.
The brochure says that [t]he particulars stated x x x as well as the
details and visuals shown x x x are intended to give a general idea of the
project to be undertaken, and as such, are not to be relied [upon] as
statements or representations of fact.[36] This general disclaimer should
apply only to the general concept of the project that petitioner aptly
characterizes thus:
x x x [D]estined to reflect condominium living at its very best and its
design x x x will make the project the only one of its kind in the
Philippines.[37]
This disclaimer, however, should not apply to the features and the
amenities that the brochure promised to provide each condominium
unit. Petitioner was thus in breach when it failed to deliver a closed-
circuit TV monitor through which residents from their apartments can
see their guests x x x.[38]
Storage Facilities
The trial court erred, though, in requiring petitioner to provide
storage facilities on the ground floor, as the non-delivery had not been
alleged in respondents Answer with Counterclaim.[39]
It is elementary that a judgment must conform to and be supported
by both the pleadings and the evidence, and that it be in accordance with
the theory of the action on which the pleadings were framed and the case
was tried.[40] Indeed, issues in each case are limited to those presented
in the pleadings.[41]
We are aware that issues not alleged in the pleadings may still be
decided upon, if tried with the parties express or implied
consent.[42] Trial courts are not precluded from granting reliefs not
specifically claimed in the pleadings -- notwithstanding the absence of
their amendment -- upon the condition that evidence has been presented
properly, with full opportunity on the part of the opposing parties to
support their respective contentions and to refute each others
evidence.[43] This exception is not present in the case at bar.
Moreover, a cursory reading of the brochure shows that there is no
promise to provide individual storage facilities on the ground floor for
each condominium unit. The brochure reads: Storage facilities in the
apartment units and the ground floor.[44] Apparent from the letter of
petitioner dated June 18, 1982,[45] was its compliance with its promise of
storage facilities on the ground floor. In that letter, respondent was also
informed that it may course a reservation of those facilities through the
building superintendent.
Damages for Delay in Delivery
It is undisputed that petitioner sent respondent a Contract to
Sell[46] declaring that the construction would be finished on or before
December 31, 1981.[47] The former delivered the condominium unit only
in June 1982;[48] thus, the latter claims that there was a delay in the
delivery.
Because of this delay, the trial court ordered petitioner to pay
damages of P136,608.75 representing unearned income for the period
that respondent had to suspend a lease contract. We find a dearth of
evidence to support such award.
To recover actual damages, the amount of loss must not only be
capable of proof, but also be proven with a reasonable degree of
certainty.[49] The lone evidence for this award was the self-serving
testimony of respondents witness that a lease contract had indeed been
intended to commence in January 1982, instead of the actual
implementation on June 18, 1982.[50] Without any other evidence, we fail
to see how the amount of loss was proven with a reasonable degree of
certainty.
Condominium Defects
The rule is that a partys case must be established through a
preponderance of evidence.[51] By such term of evidence is meant simply
evidence that is of greater weight, or is more convincing than that which
is offered in opposition to it.[52] Respondent was able to establish
through its witness testimony that the condominium unit suffered from
defects.[53] This testimony was confirmed by an inspection
report[54]noted and signed by petitioners representative, as well as by a
commissioners report[55] prepared after an ocular inspection by the
clerk of court acting as a commissioner. Furthermore, this conclusion is
supported by the circumstances that occurred during the lease period,
as evidenced by the complaint and the update letters [56] of respondents
lessee.
Petitioners contention that the claim arising from the alleged
defects has already prescribed must fail for being raised for the first time
only on appeal.[57] Well-settled is the rule that issues not raised below
cannot be resolved on review in higher courts.[58]
We agree, however, that the lower courts erred in finding that there
was a defect in a portion of the balcony, which respondent alleges to be
a walkway x x x [that] is not sufficient for passage.[59] Petitioner was able
to prove, however, that the specifications thereof conformed to the
building plan.
Respondent contends that this portion should have been 65 to 80
centimeters wide, so that it would be sufficient as a passageway. [60] The
building plan[61] had not specified the width, however. Architect Leo
Ramos of W.V. Coscolluela & Associates, the architectural firm that
prepared the building plan, testified thus:
Q I am directing your attention xxx to a certain portion in this
condominium unit x x x it appears x x x [that] there is no
measurement indicated therein, do you know why the
measurement of said portion was not indicated in the
building plan?
A Normally, it is variable.
Q What do you mean by variable?
A It depends on the actual measurement of the building
construction.
Q Could you please tell the Court, what x x x the purpose of the
said portion of the condominium unit [is]?
A It is used for watering the plants and the servicing of some
area[s].
Q How much measurement is made to affix the portion of
watering the plants?
A Approximately .50 [m].[62]
Respondent maintains that this portion should have been .80
meters (or 80 centimeters), similar to another area in the building plan
that it offered as Exhibit 2-A.[63] But an analysis of this plan reveals that
the latter area has a different width from that of the former.
It is readily apparent from the foregoing facts that the portion in
controversy was not intended to be a walkway. Thus, there was no
deviation from the building plan. Because it has not been shown that this
section was insufficient to serve the purpose for which it was intended,
the lower courts erred in considering it as defective.
Reimbursement of P40,000
for Completion Work
The lower courts did not err in ordering petitioner to correct the
defects in the condominium unit, but in requiring it to reimburse
respondent in the amount of P40,000 for completion work done.
Petitioner argues that the trial courts Decision encompassed the
areas beyond those alleged in respondents Answer.[64] This contention is
not convincing, because the allegations in the latter were broad enough
to cover all the defects in the condominium unit. In fact, respondent
prayed that judgment be rendered ordering [petitioner] to correct such
defects x x x in the condominium unit as may be prove[d] during the
trial.[65]
Petitioner further challenges the award of P40,000 as
reimbursement for completion work done by respondent, on the ground
that this claim was not proven during the trial. The latters evidence
partook of a witness testimony[66] and of a demand letter[67] sent to
petitioner requesting reimbursement for completion work
done. Petitioner argues that respondent should have presented receipts
to support the expenses.[68]
We agree with petitioner. While respondent may have suffered
pecuniary losses for completion work done, it failed to establish with
reasonable certainty the actual amount spent. The award of actual
damages cannot be based on the allegation of a witness without any
tangible document, such as receipts or other documentary proofs to
support such claim.[69] In determining actual damages, courts cannot
rely on mere assertions, speculations, conjectures or guesswork, but
must depend on competent proof and on the best obtainable evidence of
the actual amount of loss.[70]
Unearned Lease Income
Respondent entered into a lease contract with Advanced Micro
Device on May 18, 1982, for the period June 18, 1982 to June 17, 1983,
with option to renew.[71] The lease -- which was for an agreed monthly
rental of P17,000 -- was renewed for a period ending May 1, 1985, when
Advanced Micro Device vacated the unit.[72] On the basis of these facts,
the trial court ordered petitioner to pay damages by way of unrealized
income for twenty-one months or from May 1, 1985, until January 1987
-- when respondent decided to move into the condominium unit, which
was unoccupied by then.
Despite the defects of the condominium unit, a lessee stayed there
for almost three years.[73] The damages claimed by respondent is based
on the rent that it might have earned, had Advanced Micro Device chosen
to stay and renew the lease. Such claim is highly speculative, considering
that respondent failed to adduce evidence that the unit had been offered
for lease to others, but that there were no takers because of the defects
therein. Speculative damages are too remote to be included in an
accurate estimate thereof.[74] Absent any credible proof of the amount of
actual damage sustained, the Court cannot rely on speculations as to its
existence and amount.[75]
We recognize, however, that respondent suffered damages when its
lessee vacated the condominium unit on May 1, 1985, because of the
defects therein. Respondents are thus entitled to temperate
damages.[76] Under the circumstances, the amount equivalent to three
monthly rentals of P17,000 -- or a total of P51,000 -- would be
reasonable.
WHEREFORE, this Petition is PARTLY GRANTED, and the assailed
Decision and Resolution of the Court of Appeals MODIFIED, as follows:
Hereby DELETED is the requirement on the part of petitioner to (1)
deliver storage facilities on the ground floor; (2) pay P136,608.75 for
unearned income for the five-month period that the lease contract was
allegedly suspended; (3) correct the alleged passageway in the balcony;
(4) pay P40,000.00 as reimbursement for completion work done by
respondent; (5) pay P27,321.75 per month for a period of twenty-one
months for the alleged unearned income during the period when the
condominium unit remained vacant. Petitioner, however, is ORDERED to
pay P51,000 as temperate damages for the termination of the lease
contract because of the defects in the condominium unit. All other
awards are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna,
JJ., concur.
[G.R. No. 109404. January 22, 1996]
FLORENCIO EUGENIO, doing business under the name E & S Delta
Village, petitioner, vs. EXECUTIVE SECRETARY FRANKLIN
M. DRILON, HOUSING AND LAND USE. REGULATORY BOARD
(HLURB) AND PROSPERO PALMIANO, respondents.
RESOLUTION
PANGANIBAN, J.:
Did the failure to develop a subdivision constitute legal justification
for the non-payment of amortizations by a buyer on installment under
land purchase agreements entered into prior to the enactment of P.D.
957, The Subdivision and Condominium Buyers Protective Decree? This
is the major question raised in the instant Petition seeking to set aside
the Decision of the respondent Executive Secretary dated March 10,
1992 in O.P. Case No. 3761, which affirmed the order of the respondent
HLURB dated September 1, 1987.
On May 10, 1972, private respondent purchased on installment
basis from petitioner and his co-owner/ developer Fermin Salazar, two
lots in the E & S Delta Village in Quezon City.
Acting on complaints for non-development docketed as NHA Cases
Nos. 2619 and 2620 filed by the Delta Village Homeowners Association,
Inc., the National Housing Authority rendered a resolution on January
17, 1979 inter alia ordering petitioner to cease and desist from making
further sales of lots in said village or in any project owned by him.
While NHA Cases Nos. 2619 and 2620 were still pending, private
respondent filed with the Office of Appeals, Adjudication and Legal
Affairs (OAALA) of the Human Settlements Regulatory Commission
(HSRC), a complaint (Case No. 80-589) against petitioner and spouses
Rodolfo and Adelina Relevo alleging that, in view of the above NHA
resolution, he suspended payment of his amortizations, but that
petitioner resold one of the two lots to the said spouses Relevo, in whose
favor title to the said property was registered. Private respondent
further alleged that he suspended his payments because of petitioners
failure to develop the village. Private respondent prayed for the
annulment of the sale to the Relevo spouses and for reconveyance of the
lot to him.
On October 11, 1983, the OAALA rendered a decision upholding the
right of petitioner to cancel the contract with private respondent and
dismissed private respondents complaint.
On appeal, the Commission Proper of the HSRC reversed the OAALA
and, applying P.D. 957, ordered petitioner to complete the subdivision
development and to reinstate private respondents purchase contract
over one lot, and as to the other, it appearing that Transfer Certificate of
Title No. 269546 has been issued to x x x spouses Rodolfo and Ad(e)lina
Relevo x x x, the management of E & S Delta Village is hereby ordered to
immediately refund to the complainant-appellant (herein private
respondent) all payments made thereon, plus interests computed at
legal rates from date of receipt hereof until fully paid.
The respondent Executive Secretary, on appeal, affirmed the
decision of the HSRC and denied the subsequent Motion for
Reconsideration for lack of merit and for having been filed out of time.
Petitioner has now filed this Petition for review before the Supreme
Court.
Under Revised Administrative Circular No. 1-95, appeals from
judgments or final orders of the x x x Office of the President x x x may be
taken to the Court of Appeals x x x. However, in order to hasten the
resolution of this case, which was deemed submitted for decision one
and a half years ago, the Court resolved to make an exception to the said
Circular in the interest of speedy justice.
In his Petition before this Court, petitioner avers that the Executive
Secretary erred in applying P.D. 957 and in concluding that the non-
development of the E & S Delta Village justified private respondents
non-payment of his amortizations. Petitioner avers that inasmuch as the
land purchase agreements were entered into in 1972, prior to the
effectivity of P.D. 957 in 1976, said law cannot govern the transaction.
We hold otherwise, and herewith rule that respondent Executive
Secretary did not abuse his discretion, and that P.D. 957 is to be given
retroactive effect so as to cover even those contracts executed prior to
its enactment in 1976.
P.D. 957 did not expressly provide for retroactivity in its entirety,
but such can be plainly inferred from the unmistakable intent of the law.
The intent of the law, as culled from its preamble and from the
situation, circumstances and conditions it sought to remedy, must be
enforced. On this point, a leading authority on statutory construction
stressed:
The intent of a statute is the law x x x. The intent is the vital part, the
essence of the law, and the primary rule of construction is to ascertain
and give effect to the intent. The intention of the legislature in enacting a
law is the law itself and must be enforced when ascertained, although it
may not be consistent with the strict letter of the statute. Courts will not
follow the letter of a statute when it leads away from the true intent and
purpose of the legislature and to conclusions inconsistent with the
general purpose of the act x x x. In construing statutes the proper course
is to start out and follow the true intent of the legislature and to adopt
that sense which harmonizes best with the context and promotes in the
fullest manner the apparent policy and objects of the
legislature.1 (italics supplied.)
It goes without saying that, as an instrument of social justice, the
law must favor the weak and the disadvantaged, including, in this
instance, small lot buyers and aspiring homeowners. P.D. 957 was
enacted with no other end in view than to provide a protective mantle
over helpless citizens who may fall prey to the manipulations and
machinations of unscrupulous subdivision and condominium sellers,
and such intent is nowhere expressed more clearly than in its preamble,
pertinent portions of which read as follows:
WHEREAS, it is the policy of the State to afford its inhabitants the
requirements of decent human settlement and to provide them with
ample opportunities for improving their quality of life;
WHEREAS, numerous reports reveal that many real estate subdivision
owners, developers, operators, and/or sellers have reneged on their
representations and obligations to provide and maintain properly
subdivision roads, drainage, sewerage, water systems, lighting systems,
and other similar basic requirements, thus endangering the health and
safety of home and lot buyers;
WHEREAS, reports of alarming magnitude also show cases of swindling
and fraudulent manipulations perpetrated by unscrupulous subdivision
and condominium sellers and operators, such as failure to deliver titles
to the buyers or titles free from liens and encumbrances, and to pay
real estate taxes, and fraudulent sales of the same subdivision lots to
different innocent purchasers for value;2 (italics supplied.)
From a dedicated reading of the preamble, it is manifest and
unarguable that the legislative intent must have been to remedy the
alarming situation by having P.D. 957 operate retrospectively even upon
contracts already in existence at the time of its enactment. Indeed, a
strictly prospective application of the statute will effectively emasculate
it, for then the State will not be able to exercise its regulatory functions
and curb fraudulent schemes and practices perpetrated under or in
connection with those contracts and transactions which happen to have
been entered into prior to P.D. 957, despite obvious prejudice to the very
subdivision lot buyers sought to be protected by said law. It is hardly
conceivable that the legislative authority intended to permit such a
loophole to remain and continue to be a source of misery for subdivision
lot buyers well into the future.
Adding force to the arguments for the retroactivity of P.D. 957 as a
whole are certain of its provisions, viz., Sections 20, 21 and 23 thereof,
which by their very terms have retroactive effect and will impact upon
even those contracts and transactions entered into prior to P.D. 957s
enactment:
Sec. 20. Time of Completion. - Every owner or developer shall construct
and provide the facilities, improvements, infrastructures and other
forms of development, including water supply and lighting facilities,
which are offered and indicated in the approved subdivision or
condominium plans, brochures, prospectus, printed matters, letters or
in any form of advertisement, within one year from the date of the
issuance of the license for the subdivision or condominium project or
such other period of time as may be fixed by the Authority.
Sec. 21. Sales Prior to Decree. - In cases of subdivision lots or
condominium units sold or disposed of prior to the effectivity of this
Decree, it shall be incumbent upon the owner or developer of the
subdivision or condominium project to complete compliance with his or
its obligations as provided in the preceding section within two years from
the date of this Decree unless otherwise extended by the Authority or
unless an adequate performance bond is filed in accordance with
Section 6 hereof.
Failure of the owner or developer to comply with the obligations under
this and the preceding provisions shall constitute a violation
punishable under Sections 38 and 39 of this Decree.
Sec. 23. Non-Forfeiture of Payments. - No installment payment made by
a buyer in a subdivision or condominium project for the lot or unit he
contracted to buy shall be forfeited in favor of the owner or developer
when the buyer, after due notice to the owner or developer, desists
from further payment due to the failure of the owner or developer to
develop the subdivision or condominium project according to the
approved plans and within the time limit for complying with the same.
Such buyer may, at his option, be reimbursed the total amount paid
including amortization interests but excluding delinquency interests,
with interest thereon at the legal rate. (italics supplied)
On the other hand, as argued by the respondent Executive
Secretary, the application of P.D. 957 to the contracts in question will be
consistent with paragraph 4 of the contracts themselves, which
expressly provides:
(4) The party of the First Part hereby binds himself to subdivide,
develop and improve the entire area covered by Transfer Certificate of
Title No. 168119 of which the parcels of lands subject of this contract is
a part in accordance with the provisions of Quezon City Ordinance No.
6561, S-66 and the Party of the First Part further binds himself to
comply with and abide by all laws, rules and regulations respecting the
subdivision and development of lots for residential purposes as may be
presently in force or may hereafter be required by laws passed by the
Congress of the Philippines or required by regulations of the Bureau of
Lands, the General Registration Office and other government
agencies. (italics supplied)
Moreover, as P.D. 957 is undeniably applicable to the contracts in
question, it follows that Section 23 thereof had been properly invoked by
private respondent when he desisted from making further payment to
petitioner due to petitioners failure to develop the subdivision project
according to the approved plans and within the time limit for complying
with the same. (Such incomplete development of the subdivision and
non-performance of specific contractual and statutory obligations on the
part of the subdivision-owner had been established in the findings of the
HLURB which in turn were confirmed by the respondent Executive
Secretary in his assailed Decision.) Furthermore, respondent Executive
Secretary also gave due weight to the following matters: although
private respondent started to default on amortization payments
beginning May 1975, so that by the end of July 1975 he had already
incurred three consecutive arrearages in payments, nevertheless, the
petitioner, who had the cancellation option available to him under the
contract, did not exercise or utilize the same in timely fashion but
delayed until May 1979 when he finally made up his mind to cancel the
contracts. But by that time the land purchase agreements had already
been overtaken by the provisions of P.D. 957, promulgated on July 12,
1976. (In any event, as pointed out by respondent HLURB and seconded
by the Solicitor General, the defaults in amortization payments incurred
by private respondent had been effectively condoned by the petitioner,
by reason of the latters tolerance of the defaults for a long period of
time.)
Likewise, there is no merit in petitioners contention that
respondent Secretary exceeded his jurisdiction in ordering the refund of
private respondents payments on Lot 12 although (according to
petitioner) only Lot 13 was the subject of the complaint. Respondent
Secretary duly noted that the supporting documents submitted
substantiating the claim of non-development justified such order
inasmuch as such claim was also the basis for non-payment of
amortizations on said Lot 12.
Finally, since petitioners motion for reconsideration of the
(Executive Secretarys) Decision dated March 10, 1992 was filed only
on the 21st day from receipt thereof, said decision had become final and
executory, pursuant to Section 7 of Administrative Order No. 18 dated
February 12, 1987, which provides that (d)ecisions/ resolutions! orders
of the Office of the President shall, except as otherwise provided for by
special laws, become final after the lapse of fifteen (15) days from receipt
of a copy thereof x x x , unless a motion for reconsideration thereof is
filed within such period.
WHEREFORE, there being no showing of grave abuse of discretion,
the petition is DENIED due course and is hereby DISMISSED. No costs.
SO ORDERED.