FIL-ESTATE PROPERTIES, INC., PETITIONER, VS. RUDOLPH CHARLES LL. TAMULA, RESPONDENTS.

This Petition for Review under Rule 43 of the 1997 Rules of Court seeks to set aside and reverse the 8 February 2011 Decision of the Office of the President^[1] (hereinafter referred to as OP) rendered in O.P Case No. 08-F-212 (HLURB Case No. REM-A-040401-0052) the fallo of which reads:

 

“WHEREFORE, based on the foregoing, the instant appeal is hereby DENIED due to lack of merit and the subject Decision of the HLURB is hereby AFFIRMED in toto.

 

SO ORDERED.” 

The consequent motion for reconsideration of the petitioner was likewise denied by the OP in its 27 June 2011 Resolution.^[2]

The Antecedents

The undisputed facts show that petitioner Fil-Estate Properties, Inc. (hereinafter referred to as FEPI) is the project developer of the Mountain Meadows Residential & Golf Estates (Mountain Meadows for brevity) located at Gusa, Cagayan de Oro City. Sometime in 1998, respondent Rudolph Charles Ll. Tamula (Tamula) bought on installment basis Lot 4, Block 2B of the subdivision and made partial payments in the total amount of Eight Hundred Sixty-One Thousand One Hundred Ten Pesos (P861,110.00). Tamula later suspended further payments when he received information that FEPI was having problems continuing the development of the project.^[3]

When FEPI failed to develop the Mountain Meadows project, Tamula demanded a refund of all the payments he had made from the former but FEPI failed to accede to the demands. This prompted Tamula to file a case for rescission of contract and refund of payments before the Housing and Land Use Regulatory Board (HLURB likewise for brevity) Regional Field Office 10^[4] in July 2003. FEPI alleged in its defense that it is not true that there is non-development in Mountain Meadows and that it still continues to construct the project albeit in a scaled down manner because of the economic crisis and the presence of squatters which are occurrences beyond its control.^[5]

In the HLURB decision of 12 February 2004,^[6] Housing and Land Use Arbiter Gonzalo Ch. Tumulak ruled, viz:

 

“WHEREFORE, premises considered, judgment is hereby rendered DECLARING subject contract involving Lot No. 4 of Block 2B of the Mountain Meadows Residential and Golf Club as RESCINDED/CANCELLED and ORDERING respondent Fil-Estate Properties, Inc. to pay/refund the complainant the amount of EIGHT HUNDRED SIXTY-ONE THOUSAND ONE HUNDRED TEN PESOS (PhP861,110.00), in Philippine currency, within thirty (30) days from receipt thereof with interest thereon at the legal rate from the date of the filing of this complaint on July 8, 2003 until fully paid.

 

Likewise, within the same period of time and in the same currency, respondent Fil-Estate is also ORDERED to pay the complainant TWELVE THOUSAND PESOS (PhP12,000.00) in attorney’s and appearance fees, FIVE THOUSAND PESOS (PhP5,000.00) in litigation expenses and SIX THOUSAND FOUR HUNDRED SIXTY-NINE PESOS & 60/100 CENTAVOS (PhP6,469.60) as the costs of this suit in the form of the filing fees.

 

All other claims are hereby DISMISSED for lack of merit. 

 

Let a copy of this Decision be furnished each the parties herein. 

 

IT IS SO ORDERED.^[7]” 

FEPI filed a petition for review^[8] of the above decision before the HLURB Board of Commissioners which on 23 April 2008 rendered its Decision^[9] as follows:

 

“WHEREFORE, the respondent’s appeal is DENIED and the decision of the Regional Office dated February 2004 is AFFIRMED with clarification that the legal interest on the refundable amount of P861,110.00 is 6% per annum reckoned from August 6, 2002, the date of extrajudicial demand until fully paid.

 

SO ORDERED.^[10]” 

Unconvinced, FEPI appealed before the OP which on 8 February 2011 issued its assailed Decision and Resolution denying the appeal and the subsequent motion for reconsideration filed by petitioner.

Aggrieved, the instant petition was filed with the following assignment of errors submitted for resolution:

Assignment of Errors

 

I  

 

THE OP ERRED IN AFFIRMING THE DECISION OF THE HLURB BOARD DECLARING THE CONTRACT INVOLVING BLOCK 2B, LOT 4 OF MOUNTAIN MEADOWS AS RESCINDED/CANCELLED, AND ORDERING FEPI TO PAY/REFUND TO (COMPLAINANT TAMULA THE AMOUNT OF P861,110.00 WITH LEGAL INTEREST AT 6% PER ANNUM RECKONED FROM AUGUST 6, 2002 UNTIL FULLY PAID; 

 

II 

 

ASSUMING REFUND IS PROPER AND INTEREST IS DUE, THE OP ERRED IN AFFIRMING THE HLURB BOARD IN AWARDING INTEREST FROM AUGUST 6, 2002; 

 

III 

 

THE OP ERRED IN AFFIRMING THE HLURB IN AWARDING ATTORNEY’S FEES, LITIGATION EXPENSES AND COSTS OF SUIT IN FAVOR OF TAMULA.^[11]  

The Ruling of This Court

The petition is devoid of merit.

On the first assigned error, petitioner contends that the award of refund of payments to respondent Tamula must be recalled for his failure to attach to his complaint filed before the HLURB the contract to sell between the parties sought to be rescinded in violation of Section 7 of Rule 9 of the 1997 Rules of Court. Since Tamula’s claim for refund is sourced from an actionable document, petitioner was deprived of its right to examine or utilize such document to intelligently raise a defense. Petitioner also accuses respondent of having desisted from further payment of the purchase price of the subject lot without due notice of his intention to the owner or developer as required under Section 23 of Presidential Decree No. 957. The petitioner further claims that it was physically and legally prevented from fully developing the subject lot because of squatter problems and the writ of injunction issued by the court. This left petitioner with no choice but to halt development in contested areas of Mountain Meadows.^[12] According to petitioner, its woes were compounded by the 1997 financial crisis that completely crippled the real estate industry and then followed by the political upheavals in 2000. These circumstances and events were beyond its control and therefore FEPI must be exculpated from liability to Tamula and constitute just causes for it to be given a reasonable period within which to perform its obligation instead of rescinding the contract with respondent.^[13]

These arguments fail to persuade.

The basic issue here is whether the respondent is entitled to reimbursement of the amount he had paid, plus interest and attorney’s fees which this Court answers in the affirmative.

With respect to petitioner’s claim that respondent desisted from further paying the purchase price of the subject lot without due notice of his intention to the owner or developer as required under Section 23 of Presidential Decree No. 957, the record will bear that respondent sent a demand letter dated 9 July 2001^[14] to FEPI which reads:

 

“Dear Mr. Bayanin:

 

We would like to ask for a refund of our hard-earned money which we have invested in your company through the purchase of BLOCK # 2b LOT # 4 at Mountain Meadows Residential & Golf Estate, Cagayan de Oro.

 

Many years have passed and we have waited for so long but still no development has been made. It is due to your non-compliance of the facilities and amenities as advertised by your company which brought us to this decision. 

 

We hope for a favorable action to this request for refund.  

 

Very truly yours, 
(Sgd.) 
RUDOLPH CHARLES LL. TAMULA” 

This was followed by another demand letter dated 6 August 2002^[15] sent by respondent’s counsel apparently after petitioner ignored the earlier letter. Thus, respondent actually made his demand in writing for the refund of the principal while the second letter was with the express notice that legal remedies available will be taken to protect the interests of the respondent. Clearly, respondent has more than complied with the requirement concerning notice to the petitioner.

Section 23 of Presidential Decree No. 957, otherwise known as The Subdivision and Condominium Buyers’ Protective Decree, is clear on this point:

 

“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.” 

P.D. 957 was enacted precisely to provide a protective mantle over citizens who may fall prey to the manipulations and machinations of ‘unscrupulous subdivision and condominium sellers.’^[16]

Further, the Supreme Court has already ruled that the 1997 Asian financial crisis did not constitute a valid justification to renege on obligations.^[17] The same view was emphatically stressed in the earlier case of Mondragon Leisure and Resorts Corporation vs. Court of Appeals^[18] when it was held that the Asian financial crisis in 1997 is not among the fortuitous events contemplated under Article 1174 of the Civil Code which provides:

 

Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable.  

Under this Article, to exempt the obligor from liability for a breach of an obligation due to an act of God or force majeure, the following must concur: (a) the cause of the breach of the obligation must be independent of the will of the debtor; (b) the event must be either unforseeable or unavoidable; (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must be free from any participation in, or aggravation of the injury to the creditor.^[19]

Petitioner admitted that it was forced to develop only the areas of Mountain Meadows that were cleared of squatters. It, however, attributed its failure to perform its obligations to various reasons beyond its control like the 1997 Asian financial crisis, the political upheavals in 2000 and 2001, and the peace and order problems that beset the country in the succeeding years.

However, as correctly pointed out by the Office of the President in its assailed Decision, viz:

 

“The excuse that the presence of squatters in the case at bar does not fall within the contemplation of any of the fortuitous events, which would allow the appellant to escape liability. Lot buyers in high-end development projects, such as the Mountain Meadows Residential Estates and Golf Club, expectedly purchase because of the first-class facilities and amenities in the subdivision. It is also expected that sellers, like the appellant, advertise and sell it to the hilt, drawing plans and feasibility studies. This Office cannot be expected to accept the contention that the presence of squatters is beyond the control of the appellants. As a business engaged in real estate, the appellant surely had knowledge of the presence of squatters in the area and it should have done something about so that the progress of the subject development project will not be stymied.^[20] “ 

Petitioner also bewails the awarding of 6% interest to the amount to be refunded of P861,110.00 from 6 August 2002, the date of extrajudicial demand until fully paid.

Conformably with the decision in the 2007 case of Fil-Estate Properties, Inc. vs. Spouses Gonzalo and Consuelo Go,^[21] the order of the HLURB fixing the interest rate to be paid by the petitioner to 6% starting from the date of the filing of the complaint must be modified to be in accord with current jurisprudence.^[22] Petitioner is thus mandated to refund to respondent his full payment of P861,110.00 plus legal interest of 6 percent per annum beginning 6 August 2001, the date the extrajudicial demand for the refund was made.

Anent the third error, petitioner argues that the OP erred in affirming the HLURB in awarding attorney’s fees, litigation expenses and costs of suit in favor of Tamula.

The award of P12,000.00 as attorney’s fees, P5,000.00 as litigation expenses and P6, 496.60 as costs of suit is also deemed just and equitable considering that by the unjustified acts of the petitioner, the respondent was obviously compelled to litigate and incur expenses to protect his interests over the subject property due to petitioner’s delay in the performance of its clear obligation. This is in line with prevailing jurisprudence that attorney’s fees may be awarded when a party is compelled to litigate or incur expenses to protect his interest by reason of an unjustified act of the other party.^[23]

In fine, from the pleadings submitted, no persuasive arguments were presented to convince this Court to reverse the assailed Decision and Resolution and find for the petitioner.

WHEREFORE, premises considered, the instant petition for review is DENIED for lack of merit. The assailed 8 February 2011 Decision of the Office of the President in OP Case No. 08-F-212 and its Resolution of 27 June 2011 are hereby AFFIRMED with the MODIFICATION that the refund of P861,110.00 with 6% interest due to respondent shall be reckoned from 6 August 2002, the date the extrajudicial demand was made.

SO ORDERED.

Dimaampao, Chairperson, and Sadang, JJ., concur.

^[1] Rollo, Annex “A,” pp. 22-25.

^[2] Id., Annex “B,” p. 26.

^[3] Id., Annex “A,” p. 22.

^[4] Id.

^[5] Id., Annex “E,” p. 50.

^[6] Id., pp. 50-52.

^[7] Id., p. 52.

^[8] Id., Annex “F,” pp. 53-58.

^[9] Id., Annex “G,” pp. 59-62.

^[10] Id..

^[11] Id., pp. 10-11.

^[12] Id., pp. 11-12.

^[13] Id., p. 13.

^[14] Rollo, p. 34.

^[15] Id., pp. 35-36.

^[16] Florencio Eugenio, doing business under the name E & S Delta Village vs. Executive Secretary Franklin M. Drilon, Housing and Land Use Regulatory Board (HLURB) and Prospero Palmiano, G.R. No. 109404, 22 January 1996, 252 SCRA 106.

^[17] Asian Construction and Development Corporation vs. Philippine Commercial International Bank, G.R. No. 153827, 25 April 2006, 488 SCRA 192, 206.

^[18] G.R. No. 154188, 15 June 2005, 460 SCRA 279, 289.

^[19] Philippine Realty and Holdings Corporation vs. Ley Construction and Development Corporation, G.R. No. 165548, 13 June 2011, 651 SCRA 719; Ley Construction and Development Corporation vs. Philippine Realty and Holdings Corporation, G.R. No. 167879, 13 June 2011, 651 SCRA 719

^[20] Rollo, p. 25.

^[21] Supra, see Note 23.

^[22] Eastern Shipping Lines, Inc. vs. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78, 96-97; Oceaneering Contractors (Phils.), Inc. vs. Nestor N. Barretto, doing business as N.N.B. Lighterage, G.R. No. 184215, 9 February 2011, 642 SCRA 596.

^[23] Metropolitan Waterworks and Sewerage System vs. ACT Theater, Inc., G.R. No. 147076, 17 June 2004; See also Equitable PCI Bank vs. Arcelito B. Tan, G.R. No. 165339, ^[23] August 2010.