CASA FILIPINA DEVELOPMENT CORPORATION, PETITIONER, VS. THE DEPUTY EXECUTIVE SECRETARY, OFFICE OF THE PRESIDENT, MALACAÑANG, MANILA, AND JOSE VALENZUELA, JR., RESPONDENTS.

This is a petition for review on certiorari (treated as a
petition for certiorari) seeking reversal of the decision of the Office
of the President dated April 11, 1989, in O.P. Case No. 3722, entitled “Casa
Filipina Development Corporation, Respondent-Appellant, v. Jose Valenzuela,
Jr., Complainant-Appellee,” which affirmed the decision of the Housing and Land
Use Regulatory Board dated October 6, 1987; and its resolution dated September
26, 1989, which denied the motion for reconsideration for lack of merit.

The antecedent facts are, as follows:

On June 30, 1986, private respondent Jose Valenzuela, Jr. filed a
complaint against petitioner Casa Filipina Development Corporation before the
Office of Appeals, Adjudication and Legal Affairs (OAALA) of the then Human
Settlements Regulatory Commission (now Housing and Land Use Regulatory Board)
for its failure to execute and deliver the deed of sale and transfer
certificate of title. He alleged
therein that on May 2, 1984, he entered into a contract to sell with petitioner
for the purchase of a 120 sq. m. lot denominated as Lot 8, Block 9, Phase II of
Casa Filipina, Sucat II, Bo. San Dionisio, Parañaque, Metro Manila, for a total
purchase price of P68,400.00 with P16,416.00 as downpayment and the balance of
P51,984.00 to be paid in 12 equal monthly installments of P4,915.16 with 24%
interest per annum starting September 3, 1984; that on October 7, 1985, he made
his full and final payment under O.R. No. 6266; that despite full payment of
the lot, petitioner refused to execute the necessary deed of absolute sale and
deliver the corresponding transfer certificate of title to him; that since
October 1985, he had offered to pay for or reimburse petitioner the expenses
for the transfer of the title but the latter refused to accept the same; and
that he was constrained to hire a lawyer for a fee to protect his interests.

For petitioner’s defense, it contended that private respondent’s
action is premature because of his failure to comply with the other conditional
requirements of their contract such as payment of transfer expenses, and that
had the latter paid said fees, it would have been very much willing to effect
the transfer of the title.

On January 21, 1987, the OAALA rendered judgment in favor of
private respondent, relying on Section 25 of Presidential Decree No. 957
(Regulating the Sale of Subdivision Lots and Condominiums, Providing Penalties
for Violations thereof), which provides:

SEC. 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
of 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.

The dispositive portion of its decision
reads (p. 19, Rollo):

“WHEREFORE, PREMISES CONSIDERED, judgment is rendered ordering
respondent, within 15 days from finality of this decision, to execute the deed
of absolute sale for Lot 8, Block 9, Phase II, Casa Filipina, Sucat II, Bo. San
Dionisio, Parañaque, Metro Manila in favor of the complainant and thereafter to
bill complainant the total amount due for the registration and transfer
expenses of the title. Respondent is
further ordered, within 15 days from receipt of complainant’s payment for
registration and transfer expenses, to deliver to the latter the transfer
certificate of title of subject lot free from all liens and encumbrances. In the event respondent is unable to deliver
the title to the said lot, respondent is hereby ordered to refund (to)
complainant his total payments amounting to SEVENTY SIX THOUSAND ONE HUNDRED
EIGHTY PESOS and 82/100 (P76,180.82) plus 24% interest per annum from June 30,
1986, the date of the filing of the complaint, until fully paid. Respondent is likewise ordered to pay
complainant TWO THOUSAND PESOS (P2,000.00) by way of attorney’s fees, for
compelling the latter to litigate and incur expenses in the protection of his
rights.

“It is SO ORDERED.”

Petitioner then filed an appeal before the Housing and Land Use
Regulatory Board. In petitioner’s
memorandum, it narrated the events that transpired which led to its failure to
deliver the title, namely: its original
mortgagee bank was Royal Savings Bank which was absorbed by Comsavings Bank
apparently due to bankrun; Comsavings Bank is not amenable to petitioner’s
earlier arrangement with Royal Savings Bank on individual redemption of title,
thus, it demanded that petitioner’s obligations should be paid prior to the
release of any individual title; petitioner cannot seasonably meet such demand
due to the inability of the past administration to put up a viable and
progressive economic program that brought it into a fix situation wherein it
has no participation either intentionally or by negligence.

On October 6, 1987, the
HLURB dismissed petitioner’s appeal for lack of merit and affirmed in toto
the questioned decision of the OAALA (p. 23, Rollo). It opined that (ibid):

“x x x. Suffice it to state
that the payment in full by the complainant-appellee of the purchased (sic)
price of the lot should warrant the immediate delivery of the title to the lot
so purchased. Section 25 of P.D. 957
clearly provides that the redemption by the mortgagor or (sic) any mortgage
(sic) property shall be within a period of six (6) months from (the) date of
issuance of the title in favor of the buyer. Obviously from the moment full payment is made by the buyer to (sic) his
purchased lot, the maximum period contemplated by law for delivery of title is
only six (6) months. Within this period
it becomes mandatory upon the owner or developer of a subdivision to deliver
(the) title to the lot buyer. In the
case at bar, full payment was made on October 7, 1985 and despite the lapse of
one (1) year more or less from (the) date of full payment, delivery of (the)
title is still uncertain.

“The defense of the respondent-appellant that its failure to
deliver the title allegedly due to the inability of the past administration to
put up a viable and progressive economic program which led to the closure of
the Royal Savings Bank as its original mortgagee bank is not well-taken since
there is no proof submitted to this Board to substantiate appellant’s claim. On the contrary it was only the OAALA
decision that made the respondent-appellant change its line of justification
which happened to be just an allegation which need not be passed upon by this
Board.”

Petitioner appealed further to the Office of the President. Again, on April 11, 1989, its appeal was
dismissed for lack of merit and the questioned decision of the HLURB was
affirmed (p. 32, Rollo). On
September 26, 1989, the motion for reconsideration was denied for lack of merit
(p. 36, Rollo). Hence, the present
petition, wherein petitioner raises the following issues (pp. 9-10 Rollo):

“1. THE RESPONDENT
DEPUTY EXECUTIVE SECRETARY, WITH DUE RESPECT ERRED IN NOT APPLYING SETTLED
JURISPRUDENCE AND THE PROVISION OF LAW APPLICABLE IN THIS CASE.

“2. THE RESPONDENT
DEPUTY EXECUTIVE SECRETARY, WITH DUE RESPECT, ERRED IN ARRIVING AT A CONCLUSION
CONTRADICTORY OF (sic) THE FACTS AND EVIDENCE, AMOUNTING TO GRAVE ABUSE OF
DISCRETION.”

Mainly, petitioner
asseverates that in granting both remedies of specific performance and
rescission, public respondent ignored a well-pronounced rule that these
remedies cannot be availed of at the same time. There is no evidence showing that private respondent had offered
to pay the expenses for the transfer of the title. Furthermore, the amount of 24% interest imposed by the OAALA in
case of refund is high and without basis: firstly, HLURB Resolution No. R-421, series of 1988, strictly enjoins
the maximum interest to be awarded in case of refund to 12%; secondly, although
condition no. 1 of their contract to sell provides for said rate of interest,
it merely applies to interest on installment payments but not with respect to
refunds; thirdly, since the contract between them is not a forbearance of money
or loan, the doctrine laid down in the case of Reformina v. Tomol, Jr., G.R.
No. 59096, 139 SCRA 260 applies, that is, except where the action involves
forbearance of money or loan, interest which courts may award is only up to 12%
(should be 6%). Finally inasmuch as
issuance of the title has not yet been effected because of the take over by
Comsavings Bank of Royal Savings Bank, the period specified under Section 25 of
P. D. No. 957 has not begun to run for the
purpose of redemption.

The arguments advanced by petitioner utterly lack merit.

It is plain enough in the OAALA decision that rescission is being
ordered only in the event specific performance is not feasible. Moreover, petitioner is already estopped
from raising this issue because in its appeal memorandum submitted before the
HLURB, it pleaded that (p. 28, Rollo):

“5.  Appellant prays that it be
given a period/time to redeem title
or the demand for issuance of title
be suspended from the ComSavings Bank
before any deed of absolute sale be
executed so that the Transfer Certificate
of Title be issued and/or refund be
ordered.”

The OAALA found as a fact that “the complainant-appellee was
ready, willing and able to pay for the expenses for the transfer of title as
stipulated in the Contract to Sell x x x” (p. 22, Rollo). We accord respect and finality to this
finding (Filipinas Manufacturers Bank v. NLRC et al., G.R. No. 72805, February
28, 1990, 182 SCRA 848; Vda. de Pineda, et al. v. Peña, etc., et al., G.R. No.
57665, July 2, 1990, 187 SCRA 22).

We adopt the disposition of the Office of the Solicitor General
on the correct rate of interest as Our own (pp. 124-125, Rollo):

“The ruling in Reformina v. Tomol, it must be
underscored, deals exclusively with cases where damages in the form of interest
is due but no specific rate has been previously set by the parties. In such cases, the legal interest of 12% per
annum must be applied. In the present
case, however, the interest rate of 24% per annum was mutually agreed upon by
petitioner and private respondent in their contract to sell — this was the
interest rate imposed on private respondent for the payment of the installments
on the contract price and there is no reason why this same interest rate should
not be equally applied to petitioner which is guilty of violating the
reciprocal obligation.

“In Solid Homes Inc. v. Court of
Appeals (170 SCRA 63 [1989]), a subdivision owner, in violation of their
Offsetting Agreement, incurred delay in the delivery of a house and lot to the
supplier of the construction materials. On review, the issue of which rate of interest — the 6% per annum which
was then the legal interest or the stipulated interest rate of 12% — was
raised. This Honorable Court ruled:

‘On the matter of interest, we agree with the trial court and the
Court of Appeals that the proper rate of interest is twelve (12%) per centum
per annum, which is the rate of interest
expressly agreed upon in writing by the
parties, as appearing in the invoices (Exhibits ‘C’ and ‘D’), and
sanctioned by Art. 2209 of the Civil Code, x x x’

(Underscoring supplied)

“It is, thus, evident that if a particular rate of interest has
been expressly stipulated by the parties, that interest, not the legal rate of
interest, shall be applied.”

Section 25 of P.D. No. 957 imposes an obligation on the part of
the owner or developer, in the event the mortgage over the lot or unit is
outstanding at the time of the issuance of the title to the buyer, to redeem
the mortgage or the corresponding portion thereof within six months from such
issuance. We focus Our attention on the
period of “six months” to be reckoned “from the issuance of the title.”
Supposing there is no such issuance of the title, as in this case, from what
event is the six month period to be counted? Or, will this period not begin to run at all unless the title has been
issued? The argument of petitioner that
the issuance of the title is a prerequisite to the running of the six month
period of redemption, fails to convince Us. Otherwise, the owner or developer can readily concoct a thousand and one
reasons as justifications for its failure to issue the title and in the
process, prolong the period within which to deliver the title to the buyer free
from any liens or encumbrances. Additionally, by not issuing/delivering the title of the lot to private
respondent upon full payment thereof, petitioner has already violated the
explicit mandate of the first sentence of Section 25 of P.D. No. 957. If We were to count the six month period of
redemption from the belated issuance of the title, petitioner will have a lot
to gain from its own non-observance of said provision. We shall not countenance such
absurdity. Of equal importance as the
preceding ratiocination are the reasons behind the enactment of P.D. No. 957,
as expressed succinctly in its “whereas” clauses, to wit:

“WHEREAS, reports of alarming magnitude aIso 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;

“WHEREAS, these acts not only undermine the land and housing program
of the government but also defeat the objectives of the New Society,
particularly the promotion of peace and order and the enhancement of the
economic, social and moral condition of the Filipino people;

“WHEREAS, this state of affairs has rendered it imperative that the
real estate subdivision and condominium businesses be closely supervised and
regulated, and that penalties be imposed on fraudulent practices and
manipulations committed in connection therewith.”

ACCORDINGLY, the petition is hereby DISMISSED. The decision of the Office of the President
dated April 11, 1989 and its resolution dated September 26, 1989 are AFFIRMED.

SO ORDERED.

Cruz, (Chairman), Griño-Aquino, and
Bellosillo, JJ., concur.