GOTESCO PROPERTIES, INC., JOSE GO, EVELYN GO, LOURDES ORTIGA, GEORGE GO AND VICENTE GO, PETITIONERS, VS. SPS. ROMEO AND VIOLETA ABALLA, RESPONDENTS.
BARRIOS, M. M., J.:
dated 07 February 2011 of the Office of the President in O.P. Case No.
08-A-030, which dismissed petitioners’ appeal and consequently affirmed
the Decision of the Housing and Land Use Regulatory Board (HLURB) Board
of Commissioners which also affirmed the decision of the Housing and
Land Use Regulatory Board-Expanded National Capital Region Field Office
(HLURB-ENCRFO).
The decretal portion of the HLURB-ENCRFO decision relevantly states:
“WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered:
- Respondent Gotesco Properties, Inc. is ordered to execute
a Deed of Absolute Sale in favor of complainants spouses Romeo and
Violeta Aballa and to deliver the Transfer Certificate of Title over
Block 7, Lot 14, Evergreen Executive Village Phase IV, Deparo Road,
Novaliches, Caloocan City; or, at the option of complainants spouses
Aballa, to refund to them the amount P169,176.40 plus legal interest
reckoned from September 2002 until fully paid;
- Respondents, jointly and severally, are ordered to pay to complainants spouses Romeo and Violeta Aballa:
- the amount of P50,000.00 as and by way of moral damages;
- the amount of P20,000.00 as and by way of exemplary
damages; the amount of P10,000.00 as and by way attorney’s fees and the
cost of the litigation.” - the amount of P10,000.00 as and by way attorney’s fees and the cost of the litigation.”
The Antecedents
From the records, it is undisputed that on 24 January 1995,
respondent spouses entered in to a Contract to Sell with petitioner
Gotesco Properties, Inc. for the purchase of the 100-square meter Lot
No. 14, Block 7 situated at Phase IV of the Evergreen Executive Village
in Caloocan City, a subdivision project owned and developed by
petitioner corporation. The subject lot is a portion of a bigger lot
covered by a mother title identified as Transfer Certificate of Title
No, 244220. Pursuant to their contract, private respondents undertook
to pay the purchase price of One Hundred Twenty Six Thousand Pesos (Php
126,000.00) for a period of Ten (10) years with interest rate of nine
percent (9%) per annum. On the other hand, petitioner-corporation
agreed to execute the deed of absolute sale and to deliver the title and
possession of the subject lot upon full payment of the purchase price.
However, despite full payment by respondent spouses and ensuant
demands, petitioner-corporation failed to comply with its aforesaid
obligation. Consequently, on 03 May 2006, respondent-spouses filed a
complaint for specific performance or rescission of contract with
damages against herein petitioners before the HLURB-ENCRFO.
For
its part, petitioners postulate that they cannot be compelled to execute
the deed of absolute sale and to deliver the title and possession of
the subject property nor refund the payment of private respondents for
the reason that the cause of delay is beyond their control. Petitioners
argue that their petition for inscription of the technical description
(LRC Case No. 4211) that was favorably granted by the Regional Trial
Court of Caloocan City, Branch 131 was reversed by the Court of Appeals
in CA G.R. CV No. 72187 entitled “Gotesco Properties, Inc.,
petitioner-appellee versus Republic of the Philippines,
oppositor-appellant due to material defects in the petition. Hence, a
new petition was filed which is still pending and which, thus, caused
the delay in the subdivision of the property into individual lots with
individual titles. Further, petitioners maintain that at the time of
the execution of the contract to sell, private respondents were aware
that the mother title had no technical description inscribed on it, and
that said title was free from any liens or encumbrances. The BSP’s
adverse claim/levy was annotated long after the execution of the
contract to sell with private respondents.
After due hearing,
the HLURB-ENCRFO rendered the afore-quoted decision which, on appeal,
was affirmed both by the HLURB Board of Commissioners and later, by the
Office of the President.
Hence, this petition arguing that:
THE HONORABLE OFFICE OF THE PRESIDENT HAD GRIEVOUSLY
ERRED WHEN IT DISMISSED THE APPEAL THEREBY AFFIRMING THE FINDINGS OF THE
HOUSING ARBITER AND THE HLURB.
The Court’s Ruling
The petition is bereft of merit.
Section 25 of PD 957[2]
unequivocably imposes upon the subdivision owner or developer the
obligation to cause the transfer of the corresponding certificate of
title to the buyer upon full payment.
In the present case, there is no dispute that
respondent-spouses already paid in full the purchase price, but this
nothwithstanding, petitioner corporation still failed to execute the
deed of sale and to deliver the title and possession over the subject
lot to respondent-spouses.
Petitioners seeks to exonerate
themselves because their failure to comply with their prestation was
largely impelled by circumstances beyond its control i.e., the legal
proceedings concerning the subdivision of the property into individual
lots. Moreso, given the foregoing situation, the provisions of Article
1191 of the Civil Code is not applicable in the instant case.
We quote with approbation the finding of the HLU Arbiter that:
“The law grants the injured parties alternative remedies of
rescission or to enforce fulfillment of the contract, with damages in
either case if the obligor does not comply with what is incumbent upon
him. For the injured party to avail of the remedy of rescission, the
breach must be substantial as to defeat the object of the parties in
entering into the contract. In the case at bar, the failure of
respondents to deliver the title covering the subject property to
complainants, which is the very essence of the contract to sell, is
undoubtedly a substantial breach of obligation under the contract.
Thus, the remedy of rescission is available under the law.For failure of respondent to deliver possession and title
covering the subject lot after repeated demands made by complainants,
without any justifiable reason nor assurance of its delivery causing
complainants serious anxiety, mental anguish and sleepless nights, the
award of 50,000.00 as moral damages is proper; and, so as not to be
emulated by other developers similarly minded, the award of exemplary
damages to complainants in the amount of 20,000.00 is in order. To
enforce their rights under the law and the contract, complainants were
constrained to file this suit, thus an award of P10,000.00 by way of
attorney’s fees, is granted.”
To be sure, from the records, We also gather that the subdivision
project has not been improved in accordance with petitioners’
undertaking. It is substantially undeveloped and hardly considered
habitable; and definitely a great disappointment to respondent spouses’
quest to build a dream home for the family.
This contractual breach committed by petitioners grants to
herein respondents the right to rescind the Contract to Sell pursuant
to Article 1191[3] of the Civil Code of the Philippines.
Rescission does not merely terminate the contract and release
the parties from further obligations to each other, but abrogates the
contract from its inception and restores the parties to their original
positions as if no contract has been made.[4]
Consequently, mutual restitution, which entails the return of the
benefits that each party may have received as a result of the contract,
is thus required.[5]
It is settled that the effects of rescission as provided for in Article 1385[6] of the Code are equally applicable to cases under Article 1191.
On the award of moral and
exemplary damages and attorney’s fees,
including costs of suit
This Court finds that there is proper legal basis to accord
moral and exemplary damages and attorney’s fees, including costs of
suit.
Verily, petitioner’s unjustified failure to comply with its
obligations as above-discussed caused herein respondent-spouses serious
anxiety, mental anguish and sleepless nights, thereby justifying the
award of moral damages. In the same vein, the payment of exemplary
damages remains in order so as to prevent similarly minded subdivision
developers to commit the same transgression.
Furthermore,
considering that respondent-spouses were constrained to engage the
services of counsel to file this suit, the award of attorney’s fees must
be likewise sustained.
WHEREFORE, premises considered, the Decision dated 07 February 2011 of the Office of the President in O.P. Case No. 08-A-030 is AFFIRMED.
SO ORDERED.
Reyes, Jr., (Chairperson) and Pizarro, JJ., concur.
[*] This case was assigned to this ponente by raffle on 22 January 2014 in view of the inhibition
of Justice Victoria Isabel A. Paredes. The case was first raffled to Justice Socorro B. Inting
and was declared submitted for decision on 12 July 2012. It was then raffled to Justice
Rosalinda Asuncion-Vicente as replacement case pursuant to the Zero Backlog Project of this
Court. Thereafter it was raffled to Justice Victoria Isabel A. Paredes as part of her initial
caseload.
[1] Decision dated 07 February 2011, signed by Executive Secretary Paquito N. Ochoa, Jr., Annex
A, Rollo, pages 37 to 39.
[2] Section 25 of Presidential Decree No. 957, explicitly provides:
x x x
“Section 25. Issuance of Title. The owner or developer shall
deliver the title of the lot or unit to the buyer upon full payment of the lot or
unit. No fee, except those required for the registration of the deed of sale
in the Registry of Deeds, shall be collected for the issuance of such title. In
the event a mortgage over the lot or unit is outstanding at the time of the
issuance of the title to the buyer, the owner or developer shall redeem the
mortgage or the corresponding portion thereof within six months from such
issuance in order that the title over any fully paid lot or unit may be
secured and delivered to the buyer in accordance herewith.”x x x
[3] ART. 1191. The power
to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him. The
injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should
become impossible. The court shall decree the rescission claimed,
unless there be just cause
authorizing the fixing of a period. This is understood to be
without prejudice to the rights of
third persons who have acquired the thing, in accordance with
articles 1385 and 1388 and the
Mortgage Law.
[4] Unlad Resources Development Corporation vs. Dragon, G.R. No. 149338, July 28, 2008, 560
SCRA 63, 79.
[5] Goldloop Properties Inc. vs. Government Service Insurance System, G.R. No. 171076, August 1,
2012.
[6] x x x x
ART. 1385. Rescission creates the obligation to return the things which were the object of the
contract, together with their fruits, and the price with its interest; consequently, it can be carried
out only when he who demands rescission can return whatever he may be obligated to restore.
Neither shall rescission take place when the things which are the object of the contract are
legally in the possession of third persons who did not act in bad faith. In this case, indemnity for
damages may be demanded from the person causing the loss.