FIRST DIVISION
[G.R. No. 141205.
May 9, 2002]
ACTIVE REALTY & DEVELOPMENT CORPORATION, petitioner, vs. NECITA G. DAROYA, represented by Attorney-In-Fact Shirley Daroya-Quinones, respondents.
D E C I S I O N
PUNO,
J.:
This is a petition for
review on certiorari under Rule 45 of the Revised Rules of Court which
seeks to reverse and set aside the Resolution of the Court of Appeals, dated
August 3, 1999, denying due course to petitioner’s appeal for insufficiency of
form and substance.
Petitioner ACTIVE
REALTY & DEVELOPMENT
CORPORATION is the owner and
developer of Town & Country Hills Executive Village in Antipolo,
Rizal. On January 2, 1985, it entered
into a Contract to Sell[1] with respondent NECITA DAROYA, a contract
worker in the Middle East, whereby the latter agreed to buy a 515 sq. m. lot
for P224,025.00 in
petitioner’s subdivision.
The contract to sell
stipulated that the respondent shall pay the initial amount of P53,766.00
upon execution of the contract and the balance of P170,259.00 in sixty
(60) monthly installments of P4,893.35.
Adding the down payment and installment payments, it would appear that
the total amount is P346,367.00, a figure higher than that stated
as the contract price.
On May 5, 1989,
petitioner accepted respondent’s amortization in the amount of P40,000.00. By August 8, 1989, respondent was in
default of P15,282.85 representing three (3) monthly amortizations. Petitioner sent respondent a notice of
cancellation[2] of their contract to sell, to take effect thirty (30) days from receipt
of the letter. It does not appear from
the records, however, when respondent received the letter. Nonetheless, when respondent offered to pay
for the balance of the contract price, petitioner refused as it has allegedly
sold the lot to another buyer.
On August 26, 1991,
respondent filed a complaint for specific performance and damages[3] against petitioner before the Arbitration
Branch of the Housing and Land Use Regulatory Board (HLURB). It sought to compel the petitioner to
execute a final Deed of Absolute Sale in respondent’s favor after she pays any
balance that may still be due from her.
Respondent claimed that she is entitled to the final deed of sale after
she offered to pay the balance of P24,048.47, considering that she has already
paid the total sum of P314,816.76, which amount is P90,835.76
more than the total contract price of P224,025.00.
On June 14, 1993, HLURB
Arbiter Alfredo M. Tan II found for the respondent. He ruled that the cancellation of the contract to sell was void
as petitioner failed to pay the cash surrender value to respondent as mandated
by law. However, as the subject lot was
already sold to a third party and the respondent had agreed to a full refund of
her installment payments, petitioner was ordered to refund to respondent all
her payments in the amount of P314,816.70, with 12% interest per annum
from August 26, 1991 (the date of the filing of the complaint) until fully paid
and to pay P10,000.00 as attorney’s fees.[4]
On appeal, the HLURB Board
of Commissioners set aside the Arbiter’s Decision. The Board refused to apply the remedies
provided under the Maceda Law and instead deemed it fit to formulate an
“equitable” solution to the case. It
ruled that, as both parties were at fault, i.e., respondent incurred in
delay in her installment payments and respondent failed to send a notarized
notice of cancellation, petitioner was ordered to refund to the respondent
one half of the total amount she has paid or P157,408.35, which was
allegedly akin to the remedy provided under the Maceda Law.[5]
Respondent appealed to
the Office of the President. On June 2, 1998, then Chief Presidential
Counsel Renato C. Corona, acting by authority of the President, modified the
Decision of the HLURB as he found that it was not in accord with the
provisions of the Maceda Law. He held
that as petitioner did not comply with the legal requisites for a valid
cancellation of the contract, the contract to sell between the parties
subsisted and concluded that respondent was entitled to the lot after payment
of her outstanding balance. However, as
the petitioner disclosed that the lot was already sold to another person and
that the actual value of the lot as of the date of the contract was P1,700.00
per square meter, petitioner was ordered to refund to the respondent the
amount of P875,000.00, the true and actual value of the lot as of the
date of the contract, with interest at 12% per annum computed from August 26,
1991 until fully paid, or to deliver a substitute lot at the choice of
respondent.[6]
Upon denial of its motion
for reconsideration, petitioner assailed the Decision in the Court of
Appeals. However, its petition for
review[7] was denied due course for insufficiency in
form and substance,[8] because:
1) no affidavit of service was
attached to the petition; 2) except for
certified true copies of the decision and resolution of the Office of the
President, no other material portions of the record, as would support the
allegations in the petition, were attached;
and, 3) the certification of forum-shopping was signed by the head
counsel and vice-president of the petitioner corporation who was not authorized
by a Board Resolution to represent petitioner.
Petitioner moved for
reconsideration. The Court of Appeals
denied it on an entirely new ground, i.e., for untimely filing of the
petition for review.[9]
Petitioner now impugns
the decision of the Court of Appeals and raises the following procedural
issues:
I
THE HONORABLE COURT OF APPEALS GROSSLY ERRED IN RELYING TOO MUCH ON FORM RATHER THAN ON THE MERITS OF THE PETITION THEREBY DENYING PETITIONER OF ITS RIGHT TO DUE PROCESS.
II
THE HONORABLE COURT OF APPEALS ANCHORED THE DENIAL OF PETITIONER’S MOTION FOR RECONSIDERATION ON INCONSISTENT AND CONFLICTING RULINGS NOT BORNE BY THE FACTS AND THE RECORDS OF THE CASE.
On the procedural points
raised, we find for the petitioner.
Our perusal of the record
reveals that petitioner substantially complied with the formal requirements of
Rule 43 of the Rules of Court.[10] First, as to the non-attachment of the affidavit of service, the records bear that the petition was
accompanied by the original registry receipts issued by the post office,
showing that the petition and its annexes were served upon the parties. Moreover, respondent’s counsel of record,
Atty. Sergio Guadiz, actually received a copy of the petition.[11] Second, petitioner likewise complied with Section 6 (c) of Rule 43 requiring
the submission of copies of the award, judgment, final order and resolution
appealed from. Its petition was
accompanied by the duplicate original of the appealed Decision of the Chief
Presidential Legal Counsel and his Resolution denying petitioner’s motion for
reconsideration, the Decision of the HLURB Board of Commissioners and that of
the HLURB arbiter. A perusal of these
documents will reveal that they contained all the relevant facts of the case
from which the appellate body can form its own decision. Its failure to submit the other documents,
like the Complaint, Answer, Position Papers and Appeal Memoranda of the parties
before the HLURB, was due to the refusal of the Office of the President to give
them a certified true copy of these documents which were submitted with said
Office. Third, as to the lack of Board Resolution by
petitioner corporation authorizing Atty. Rene Katigbak, its Chief Legal Counsel
and Vice-President for Legal Affairs, to represent it in the filing of the
appeal, petitioner admits that this was due to its honest belief that such
authority is not required as it was not mentioned in Section 6(c) of Rule 43.[12] To make up for such omission, petitioner
submitted a Secretary’s Certificate[13] confirming and ratifying the authority of
Atty. Katigbak to represent petitioner.
Finally, we find
that the Court of Appeals erred in denying petitioner’s motion for reconsideration
due to untimely filing as the records clearly show that it was filed on June
25, 1999, a day before the expiration of the period to appeal granted by the
Court of Appeals.[14]
In denying due course to
the petition, the appellate court gave premium to form and failed to consider
the important rights of the parties in the case at bar.[15] At the very least, petitioner substantially
complied with the procedural
requirements for appeal, hence, it is best to give due course to the petition
at bar to clarify the rights and duties of a buyer in contracts to sell real
estate on installment basis.
The issue to be resolved
is whether or not the petitioner can be compelled to refund to the respondent
the value of the lot or to deliver a substitute lot at respondent’s option.
We find for the
respondent and rule in the affirmative.
The contract to sell in
the case at bar is governed by Republic Act No. 6552 -- “The Realty Installment Buyer Protection
Act,” or more popularly known as the Maceda Law -- which came into effect in
September 1972. Its declared public
policy is to protect buyers of real estate on installment basis against onerous
and oppressive conditions.[16] The law seeks to address the acute housing
shortage problem in our country that has prompted thousands of middle and lower
class buyers of houses, lots and condominium units to enter into all sorts of
contracts with private housing developers involving installment schemes. Lot buyers, mostly low income earners eager
to acquire a lot upon which to build their homes, readily affix their
signatures on these contracts, without an opportunity to question the onerous
provisions therein as the contract is offered to them on a “take it or leave
it” basis.[17] Most of these contracts of adhesion, drawn
exclusively by the developers, entrap innocent buyers by requiring cash
deposits for reservation agreements which oftentimes include, in fine print,
onerous default clauses where all the installment payments made will be
forfeited upon failure to pay any installment due even if the buyers had made
payments for several years.[18] Real estate developers thus enjoy an
unnecessary advantage over lot buyers who they often exploit with iniquitous
results. They get to forfeit all the installment payments of defaulting buyers
and resell the same lot to another buyer with the same exigent conditions. To help especially the low income lot
buyers, the legislature enacted R.A. No. 6552 delineating the rights and
remedies of lot buyers and protect them from one-sided and pernicious contract stipulations.
More specifically,
Section 3 of R.A. No. 6552 provided for the rights of the buyer in case of
default in the payment of succeeding installments, where he has already paid at
least two (2) years of installments, thus:
“(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made; x x x
(b) If the contract is cancelled, the seller shall
refund to the buyer the cash surrender value of the payments on the property
equivalent to fifty per cent of the total payments made; provided, that the
actual cancellation of the contract shall take place 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 and upon full payment of the cash
surrender value to the buyer.”
In this case, respondent
has already paid in four (4) years a total of P314,860.76 or P90,835.76
more than the contract price of P224,035.00. In April 1989, petitioner decided to cancel
the contract when the respondent incurred in delay in the payment of P15,282.85,
representing three (3) monthly amortizations. Petitioner refused to accept respondent’s subsequent tender of
payment of the outstanding balance alleging that it has already cancelled the
contract and sold the subject lot to another buyer. However, the records clearly show that the petitioner failed to
comply with the mandatory twin requirements for a valid and effective
cancellation under the law,[19] i.e., he failed to send a notarized
notice of cancellation and refund the cash surrender value. At no time, from the date it gave a notice
of cancellation up to the time immediately before the respondent filed the case
against petitioner, did the latter exert effort to pay the cash surrender
value. In fact, the records disclose
that it was only during the preliminary hearing of the case before the HLURB
arbiter when petitioner offered to pay the cash surrender value. Petitioner justifies its inaction on the
ground that the respondent was always out of the country. Even then, the records are bereft of
evidence to show that petitioner attempted to pay the cash surrender value to
respondent through her last known address.
The omission is surprising considering that even during the times
respondent was out of the country, petitioner has been sending her written
notices to remind her to pay her installment arrears through her last known
address. Clearly, had respondent not
filed a case demanding a final deed of sale in her favor, petitioner would not
have lifted a finger to give respondent what was due her – actual payment of
the cash surrender value, among others.
In disregard of basic equitable principles, petitioner’s stance would
enable it to resell the property, keep respondent’s installment payments, not
to mention the cash surrender value which it was obligated to return. The Layug[20] case cited by petitioner is inapropos.
In Layug, the lot buyer did not pay for the outstanding balance
of his account and the Court found that notarial rescission or cancellation was
no longer necessary as the seller has already filed in court a case for
rescission of the contract to sell. 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.
On a final note, it would
not be amiss to stress that the HLURB Board Decision ordering petitioner to
refund to respondent one half of her total payments is not an equitable
solution as it punished the respondent for her delinquent payments but totally
disregarded petitioner’s failure to comply with the mandatory requisites for
a valid cancellation of the contract to sell. The Board failed to consider that the Maceda law was enacted to
remedy the plight of low and middle-income lot buyers, save them
from the exacting default clauses in real estate sales and assure them of a
home they can call their own. Neither
would the Decision of the HLURB Arbiter ordering a full refund of the
installment payments of respondent in the amount of P314,816.70 be
justified as, under the law, respondent is entitled to the lot she purchased
after payment of her outstanding balance which she was ready and willing to
do. Thus, to penalize the petitioner
for failing in its obligation to deliver the subject lot and to give the
respondent what is rightly hers, the petitioner was correctly ordered to refund
to the respondent the actual value of the land (P875,000.00) she lost to
another buyer, plus interest at the rate of 12% per annum from August 26, 1991
until fully paid or to deliver a substitute lot at the choice of the
respondent.
IN VIEW WHEREOF, the Decision of then Chief Presidential
Legal Assistant Renato Corona, Office of the President, dated June 2, 1998, is
AFFIRMED in toto. Costs against
petitioner.
SO ORDERED.
Davide, Jr., C.J.,
(Chairman), Kapunan, Ynares-Santiago, and
Austria-Martinez, JJ., concur.
[1] Rollo, pp.
28-31.
[2] Ibid., p. 32.
[3] Ibid., pp.
33-38.
[4] See Decision,
Rollo, pp. 39-42.
[5] Decision, dated
August 10, 1994, penned by Commissioner and Chief Executive Officer Ernesto C.
Mendiola and concurred in by DPWH Asst. Secretary Jose L. Altea and
Commissioner Luis T. Tungpalan; Rollo, pp. 44-48.
[6] Decision, dated June
2, 1998; Rollo, pp. 49–56.
[7] Rollo, pp.
62-73.
[8] Resolution, dated
August 3, 1999; Rollo, 59-60.
[9] Rollo, p. 61.
[10] Appeals from
quasi-judicial agencies to the Court of Appeals.
[11] Certification of
Postmaster Cipriano Pagaduan; Rollo, p. 76.
[12] “SEC. 6. Contents of the petition. – The
petition for review shall (a) state the full names of the parties to the case,
without impleading the court or agencies either as petitioners or
respondents; (b) contain a concise
statement of the facts and issues involved and the grounds relied upon for the
review; (c) be accompanied by a clearly legible duplicate original or a
certified true copy of the award, judgment, final order or resolution appealed
from, together with certified true copies of such material portions of the
record referred to therein and other supporting papers; and (d) contain a sworn
certification against forum shopping as provided in the last paragraph of
section 2, Rule 42. The petition shall
state the specific material dates showing that it was filed within the period
fixed herein.”
[13] Rollo, p. 78.
[14] See Annex
“N”, Resolution of the Court of Appeals extending the time to file its petition
for review; Rollo, pp. 79-80.
[15] Yao vs. Court
of Appeals, 344 SCRA 202 (2000).
[16] Section 3, R.A.
6552.
[17] Angeles vs.
Calsanz, 135 SCRA 323 (1985).
[18] Realty Exchange
Venture Corporation vs. Sendino, 233 SCRA 665, 668 (1994).
[19] Section 3 (b), R.A.
6552; Siska Development Corporation vs. Office of the President of the
Philippines, 231 SCRA 674 (1994); Jison vs. Court of Appeals, 164 SCRA
339, 345 (1988).
[20] 167 SCRA 227 (1988).