SECOND DIVISION
G.R. No. 219673, September 02, 2019
SOLID HOMES, INC., PETITIONER, v. SPOUSES ARTEMIO JURADO AND CONSUELO O. JURADO, RESPONDENTS.
D E C I S I O N
REYES, J. JR., J.:
This Petition for Review1 under Rule 45 assails the Decision2 dated March 13, 2015 of the Court of Appeals (CA) in CA-GR. SP No. 130627. Also assailed is the CA Resolution3 dated July 22, 2015, which denied petitioner Solid Homes, Inc.'s (Solid Homes) motion for partial reconsideration.4
The assailed CA Decision essentially affirmed the Decision5 dated May 9, 2012 of the Office of the President (OP) which, in turn, affirmed the Decision6 dated May 22, 2008 of the Board of Commissioners of the Housing and Land Use Regulatory Board (HLURB Board), finding Solid Homes liable to herein respondents spouses Artemio and Consuelo O. Jurado (spouses Jurado) under the terms of a contract to sell covering a residential lot.
Wherefore, premises considered, the appeal is GRANTED. The [HLURB Arbiter] decision of June 13, 2007 is REVERSED and SET ASIDE and a new judgment is hereby rendered ordering:Solid Homes moved for reconsideration, arguing that the HLURB Board erred in requiring that the subject lot be replaced, and in ordering that the same be conveyed to spouses Jurado without full payment of the purchase price. After examining the buyers' ledger which spouses Jurado themselves submitted in evidence, the HLURB Board confirmed that spouses Jurado still have a balance of P145,843.35, which they must pay to be entitled to the conveyance of the substitute property. The HLURB, thus, ordered spouses Jurado to pay the balance and imposed interest thereon to commence only from the time when Solid Homes shall make available to spouses Jurado a substitute lot.20
1. Respondent to replace the foreclosed lot and to convey to complainants in absolute ownership a parcel of land of the same area, quality and location as the lot covered by the contract to sell in the event that respondent is unable to do so, respondent Solid Homes is ordered to pay to respondent the current fair market value of the foreclosed lot.
2. Respondent to pay attorney's fees in the amount of Thirty Thousand Pesos ([P]30,000.00) and moral damages in the amount of Thirty Thousand Pesos ([P]30,000.00), and the cost of the suit.
So ordered.19
WHEREFORE, premises considered, our decision of May 22, 2008 is MODIFIED as follows:Consequently, Solid Homes lodged an appeal to the OP.1. Respondent is ordered to replace the foreclosed lot another of the same area, quality and location as the lot covered by the Contract to Sell. Thereupon, complainants are ordered to pay respondents the amount of [P] 145,843.35 with interest at the rate of 12% per annum in accordance with the contract reckoned from the time the lot is made available to them; upon such full payment, respondent is ordered to execute a deed of sale and deliver the title of the substitute lot in complainants' favor.SO ORDERED.22
2. At complainant's option, or if the above is no longer possible, respondent is hereby ordered to pay the complainants the fair market value of the lot they lost with interest at the rate of 12% per annum reckoned from the filing of the complaint until fully paid.
3. Respondent is ordered to pay complainants moral damages of [P]30,000.00, attorney's fees of [P]30,000.00 and the cost of the suit.
WHEREFORE, premises considered, the appeal of [Solid Homes] is hereby DISMISSED.Solid Homes' subsequent motion for reconsideration met similar denial from the OP.
SO ORDERED.24
We MODIFY the Decision dated 09 May 2012 of Office of the President in O.P. Case No. 09-K-581 (which affirmed the Resolution dated 02 October 2008 of the Housing and Land Use Regulatory Board in HLURB Case No. REM-A-070914-0423), as follows: we DELETE the award for moral damages in the amount of Php30,000.00 and the attorney's fees in the amount of Php30,000.00.Solid Homes' motion for partial reconsideration met similar denial from the CA in its Resolution31 dated July 22, 2015.
IT IS SO ORDERED.30
Save for the issue on the propriety of the award for damages, the issues raised in the instant petition were a virtual copy of the issues raised by Solid Homes before the CA.
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in adopting by reference the findings of fact and conclusion of law contained in the assailed Decision and Resolution of the HLURB Board of Commissioners;
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in not holding that res judicata has already set-in in the instant case;
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in not holding that prescription and laches have likewise set-in;
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in not holding that respondents are guilty of forum-shopping;
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in not holding that there was no privity of contract between respondents and petitioner;
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in not holding respondents were in estoppel;
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in ordering to replace the 'alleged' foreclosed lot covered by the Contract to Sell. Thereupon, respondents are ordered to pay petitioner the amount of [P]145,843.35 with interest at the rate of 12% per annum in accordance with the contract reckoned from the time the lot is made available to them; and upon such full payment, petitioner is ordered to execute a deed of sale and deliver title of the substitute lot in respondents['] favor;
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in ordering that at respondents['] option, or if the above is no longer possible, petitioner is hereby ordered to pay the respondents the fair market value of the lot they lost with interest at the rate of 12% per annum reckoned from the filing of the complaint until fully paid; and
- Whether or not the Honorable Office of the President as affirmed by the Honorable Court of Appeals seriously and gravely erred in not awarding petitioner to [sic] its counterclaim.32
The constitutional mandate that, no decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based, does not preclude the validity of memorandum decisions, which adopt by reference the findings of fact and conclusions of law contained in the decisions of inferior tribunals. In fact, in Yao v. Court of Appeals, this Court has sanctioned the use of memorandum decisions, a specie of succinctly written decisions by appellate courts in accordance with the provisions of Section 40, B.P. Blg. 129, as amended, on the grounds of expediency, practicality, convenience and docket status of our courts. This Court likewise declared that memorandum decisions comply with the constitutional mandate.35 (Emphasis and citations omitted)Laserna, citing Francisco v. Permskul,36 reiterated the conditions when incorporation by reference is allowed: (a) the memorandum decision must embody the findings of facts and conclusions of law of the lower court in an annex attached to and made an indispensable part of the decision; (b) the decision being adopted should, to begin with, comply with Article VIII, Section 14 of the Constitution;37 and (c) resort to memorandum decision may be had only in cases where the facts are in the main accepted by both parties and easily determinable by the judge and there are no doctrinal complications involved that will require an extended discussion of the laws involved.
SECTION 10. THE VENDEE AGREES NOT TO SELL, CEDE, ENCUMBER, TRANSFER OR IN TANY1 MANNER DO ANY ACT WHICH WILL AFFECT HIS/HER RIGHT UNDER THIS CONTRACT WITHOUT THE PRIOR WRITTEN APPROVAL OF THE ENDOR AND UNTIL ALL STIPULATIONS OF THIS CONTRACT SHALL HAVE BEEN FULFILLED.38 x x x (Underscoring in the original)Disregarding this contention, the HLURB, the OP, as well as the CA, similarly held that the factual circumstances negate Solid Homes' disavowal of consent.
(1) conduct on the part of the defendant, or of one under whom the defendant claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in asserting the complainant[']s rights, the complainant having had knowledge or notice of the defendant[']s conduct as having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which the defendant bases the suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.55In 1983, when spouses Jurado were made aware that Solid Homes mortgaged the subject property, which mortgage was eventually foreclosed, the latter made representation that it will replace the lot. The factual findings of the HLURB, OP, and CA indicate that indeed such was the case. Relying on this representation, spouses Jurado submitted the required documents to facilitate the replacement and when no such replacement was forthcoming, they made repeated extrajudicial demands on Solid Homes until, eventually, they filed a complaint in the HLURB. By their actions, spouses Jurado could not be charged of having stalled in asserting their rights under the Contract to Sell.
SEC. 18. Mortgages. - No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereto;In Philippine Bank of Communications v. Pridisons Realty Corporation,57 the Court held that the failure to secure the HLURB's approval results in the nullity of the mortgage but that, nevertheless, a contract of indebtedness still exists between the subdivision developer as mortgagor and the mortgagee. In this case, however, considering the dearth of factual finding as to whether or not Solid Homes secured the clearance to mortgage before mortgaging the subject property, that neither of the parties raised this issue in the instant case, and that the parties were factually found to have instead, agreed on the replacement of the property, compel the Court to refrain from delving upon the applicability of Section 18 to the instant case. At any rate, the remedies provided under P.D. 957 are expressly made to be in addition to any and all other rights and remedies that may be available under existing laws.
In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and, thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.The foregoing characters of a contract to sell are important in order to determine the laws and remedies applicable in case a party does not fulfill his or her obligations under the contract.61 In Olivarez Realty Corporation v. Castillo62 we held that the prospective buyer's failure to fully pay the purchase price in a contract to sell is not a breach of contract under Article 1191 on the right to rescind reciprocal obligations. Citing Nabus, Olivarez held that "[t]his is because there can be no rescission of an obligation that is still non-existent, the suspensive condition not having happened."63 Thus, in case the prospective buyer does not comply, the contract to sell is cancelled and the parties shall stand as if the obligation to sell never existed.64 When a contract to sell is cancelled, the installments paid for the property are generally ordered reimbursed, especially if possession over the property has not been delivered to the prospective buyer.65
x x x x
Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective seller's obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable x x x x.
x x x x
In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale.
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 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. (Emphasis supplied)It must be emphasized that the obligation to pay the fair market value of the property, as the alternative to the transfer of ownership and delivery of title over the subject lot, becomes demandable only upon the full payment of the purchase price. Since spouses Jurado have yet to pay the purchase price in full, Solid Homes cannot be ordered to convey title over the replacement lot or to pay the value of the lot foreclosed at this point. Otherwise stated, without spouses Jurado's full payment, there can be no breach of the obligation to sell because Solid Homes has no obligation yet to turn over the title, or in the alternative, to pay its value.
On this score, it is apt to mention that it is the intent of PD 957 to protect the buyer against unscrupulous developers, operators and/or sellers who reneged on their obligations. Thus, in order to achieve this purpose, equity and justice dictate that the injured party should be afforded full recompense and as such, be allowed to recover the prevailing market value of the undelivered lot which had been fully paid for. (Emphasis ours)75But since in this case, spouses Jurado have yet to fully pay the purchase price, they should be entitled, not to the entire current market value of the property, but to a refund of the installments they paid with interest, in the event Solid Homes fails to replace the subject property with an acceptable lot.
Endnotes:
1Rollo, pp. 10-36.
2 Penned by Associate Justice Nina G. Antonio-Valenzuela and concurred in by Associate Justices Magdangal M. De Leon and Jane Aurora C. Lantion; id. at 81-99.
3 Id. at 109-110.
4 Id. at 100-104.
5 Id. at 203-204.
6 Id. at 195-198.
7 Id. at 82.
8 Id. at 12.
9 Id. at 82.
10 Id. at 164.
11 Id.
12 Id. at 39.
13 Id. at 13.
14 Id. at 211-212.
15 Id. at 84.
16 Id.
17 Id.
18 Supra note 6, at 196-197.
19 Id. at 198.
20 Id. at 201.
21 Id. at 199-202.
22 Id. at 202.
23 Supra note 5.
24 Id. at 204.
25 Supra note 2, at 90.
26 Id. at 93.
27 Id. at 94.
28 Id. at 95.
29 Id.
30 Supra note 2, at 98.
31 Supra note 3.
32 Supra note 1, at 17-19.
33 716 Phil. 267,281-283 (2013).
34 574 Phil. 69, 79-80 (2008).
35 Id.
36 255 Phil. 311, 324-326 (1989).
37 No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and law on which it is based.
38 Supra note 1, at 12.
39Republic v. Sandiganbayan, 425 Phil. 752, 765-766 (2002), distinguishes a question of law from a question of fact in this wise:A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole, and the probability of the situation.40Pascual v. Burgos, 116 Phil. 167 (2016), citing Medina v. Mayor Asistio, Jr., 269 Phil. 225, 182-183 (1990), enumerates the following exceptions:(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) The findings of the Court of Appeals are contrary to those of the trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based; (9) When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (10) The finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record.41 Id. at 181.
42Project Builders, Inc. v. Court of Appeals, 411 Phil. 264, 274 (2001).
43South City Homes, Inc. v. BA Finance Corporation, 423 Phil. 84, 95 (2001).
44 Project Builders, supra, at 274.
45See ALLCOCK, B. (1983). RESTRICTIONS ON THE ASSIGNMENT OF CONTRACTUAL RIGHTS. THE CAMBRIDGE LAW JOURNAL, 42(2), 328-346. Allcock observes that the non-assignment clause had been given restrictive interpretation and admits of at least four possible constructions: (a) as a promise not to assign, in which case the assignment would make the assignor liable in damages but would not prevent the assignee from acquiring rights against the obligor; (b) as preventing an assignee from acquiring rights against the obligor; (c) as purporting to prevent the assignee from acquiring rights against the assignor; and (d) as giving the obligor the right to forfeit the contract. <http://www.jstor.org/stable/450656> (Visited September 2, 2019)
46Strongworld Construction Corporation v. Hon. Perello, 528 Phil. 1080, 1093 (2006).
47Social Security Commission v. Rizal Poultry and Livestock Association, Inc., 665 Phil. 198, 206 (2011) enumerates the elements of res judicata as follows:(1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of parties, subject matter, and causes of action. Should identity of parties, subject matter, and causes of action be shown in the two cases, then res judicata in its aspect as a "bar by prior judgment" would apply. If as between the two cases, only identity of parties can be shown, but not identical causes of action, then res judicata as "conclusiveness of judgment" applies.48 In Dy v. Mandy Commodities Co., Inc., 611 Phil. 74, 85-86 (2009), the Court reiterated the following test for determining whether there is forum shopping:The test for determining the existence of forum shopping is whether a final judgment in one case amounts to res judicata in another or whether the following elements of litis pendentia are present: (a) identity of parties, or at least such parties as representing the same interests in both actions; (b) identity of rights asserted and reliefs prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars, such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. Said requisites are also constitutive of the requisites for auter action pendant or lis pendens.49 Article 1144. The following actions must be brought within ten years from the time the right of action accrues:(1) Upon a written contract;50 See Solid Homes, Inc. v. Tan, 503 Phil. 121, 128 (2005).
(2) Upon an obligation created by law;
(3) Upon a judgment
51 Id.
52 Id., citing Banco Filipino Savings and Mortgage Bank v. Court of Appeals, 388 Phils. 27, 39-40 (2000).
53 See The Overseas Bank of Manila v. Hon. Geraldez, 183 Phil. 493,495 (1979).
54 Id. at 496.
55Estate of the Late Encamacion Vda. de Panlilio v. Dizon, 562 Phil. 518, 544 (2007).
56 Supra note 2, at 82.
57 701 Phil. 178, 191 (2013).
58Coronel v. Court of Appeals, 331 Phil. 294, 310 (1996).
59 Article 1479 of the New Civil Code provides:A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.60 620 Phil. 344, 361 -362 (2009), citing Coronel v. Court of Appels, supra.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price.
61 738 Phil. 737, 764 (2014).
62 Id. at 765.
63 Id.
64 Id.
65 Id. at 766.
66 705 Phil. 294, 300-304 (2013).
67 As a general rule, "rescission will not be permitted for a slight or casual breach of the contract, but only for such breaches as are substantial and fundamental as to defeat the object of the parties in making the agreement." Song Fo and Company v. Hawaiian-Philippine Co., 47 Phil. 821, 827 (1925).
68 Article 1191 of the New Civil Code provides: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.69Rollo, pp. 211-212.
The injured party may choose between 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, x x x x
70See Palay, Inc. v. Clave, 124 SCRA 638, 647-648 (1983).
71 Supra note 66, at 300.
72 Article 1385 of the New Civil Code provides:Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interests; consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore.73 503 Phil. 1121, 133 (2005).
74 In Solid Homes, Inc., v. Spouses Tan, the Court said:Were we to follow the letter of Article 1385, we will in effect be paving the way to an absurd situation whereby subdivision developers who have reneged on their contractual and legal obligation to provide utility systems and facilities for the use of subdivision lot owners may themselves profit from their very own wrongs and shortcomings; Id.75 Supra note 66, at 305.
76 The pertinent portion of which reads:The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:77 CB Circular No. 905 which took effect on December 22, 1982, particularly Section 2 thereof states:
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly. This Circular shall take effect on 01 July 2013.
Sec. 2. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall continue to be twelve per cent (12%) per annum.