ASG Law

Tag: HLURB

  • HLURB vs. RTC: Determining Jurisdiction in Memorial Lot Contract Annulment Cases

    The Supreme Court clarified that while the Housing and Land Use Regulatory Board (HLURB) has primary jurisdiction over complaints involving the annulment of contracts for memorial lots due to a developer’s lack of license, the Regional Trial Court (RTC) maintains jurisdiction when no specific law grants exclusive jurisdiction to another court at the time the complaint was filed. This ruling emphasizes the importance of determining the proper forum for resolving disputes and understanding the evolving jurisdiction of administrative bodies like the HLURB, now the Human Settlements Adjudication Commission (HSAC), in real estate matters. The Court also underscored that procedural rules can be relaxed to ensure justice and equity are served.

    Sanctuary Lost: Who Decides Disputes Over Memorial Lot Contracts?

    In this case, Elizabeth D. Daclan sought to annul her contract with Park Developers, Inc. (PDI) for a family estate memorial lot, citing PDI’s lack of a license to sell as certified by the Housing and Land Use Regulatory Board (HLURB). Daclan filed her case with the Regional Trial Court (RTC) of Pasig City, which ruled in her favor, annulling the contract and awarding damages. PDI appealed, arguing that the HLURB, not the RTC, had primary jurisdiction over the matter. The Court of Appeals (CA) dismissed the appeal based on procedural grounds. The central legal question revolves around determining which body, the HLURB or the RTC, has the authority to hear complaints regarding contracts for memorial lots when the developer allegedly lacks the necessary licenses.

    The Supreme Court acknowledged that the CA correctly dismissed the appeal due to procedural errors. Petitioners raised a pure question of law, which should have been brought directly to the Supreme Court via a petition for review on certiorari. However, to ensure a just resolution, the Court opted to address the substantive issue of jurisdiction. The principle of primary jurisdiction dictates that matters requiring the special competence of administrative agencies should first be addressed in administrative proceedings, even if courts also have jurisdiction. This doctrine is particularly relevant when the enforcement of a claim requires resolving issues that fall under the specialized purview of an administrative body.

    Executive Order No. 648 grants the HLURB the power to issue rules and regulations regarding land use policies, including those related to memorial parks and cemeteries. HLURB Resolution No. 681-00 further specifies that developers intending to convert land into a memorial park must seek approval from the HLURB or the relevant city/municipality. Given these regulations, the Court recognized that Daclan’s complaint fell within the HLURB’s primary jurisdiction. However, the Court also noted a critical timeline: at the time Daclan filed her complaint in 2005, the legal landscape regarding HLURB’s exclusive jurisdiction was not as clearly defined as it is today. Prior to later amendments and rulings, HLURB’s jurisdiction was primarily outlined in Presidential Decree No. (PD) 1344, which focused on cases involving buyers of subdivision lots or condominium units. The pivotal section of PD 1344 states:

    Sec. 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority [later transferred to the HLURB] shall have exclusive jurisdiction to hear and decide cases of the following nature:

    A. Unsound real estate business practices;

    B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and

    C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer or salesman.

    In 2007, the Supreme Court in Delos Santos v. Spouses Sarmiento clarified that not all real estate disputes fall under HLURB’s jurisdiction, which is limited to cases filed by buyers or owners of subdivision lots or condominium units, based on causes of action in Section 1 of PD 1344. Subsequently, Republic Act No. (RA) 9904, the “Magna Carta for Homeowners and Homeowners’ Associations,” expanded HLURB’s authority, granting it the power to resolve intra-association disputes. The jurisdictional boundaries of HLURB were further clarified with the issuance of HLURB Resolution No. 963-17, the “Revised Rules of Proceedings Before Regional Arbiters” in 2017.

    The evolving jurisdictional landscape culminated in the enactment of RA 11201, the “Department of Human Settlements and Urban Development Act,” in 2019. This law reconstituted the HLURB into the Human Settlements Adjudication Commission (HSAC) and transferred its adjudicatory functions to the HSAC, attached to the Department of Human Settlements and Urban Development. The Implementing Rules and Regulations (IRR) of RA 11201 explicitly include memorial parks within the definition of “real estate projects” subject to the Department’s regulatory jurisdiction. The IRR further clarifies the jurisdiction of the HSAC’s Regional Adjudicators and the Commission Proper.

    The Supreme Court emphasized that because these later rules and laws were not yet in effect when the controversy arose, the RTC’s jurisdiction over Daclan’s case was valid. The RTC, as a court of general jurisdiction, retains authority over cases unless specifically assigned to another court by law. The Court cited Durisol Phils., Inc. v. Court of Appeals, stating, “All cases, the jurisdiction over which is not specifically provided for by law to be within the jurisdiction of any other court, fall under the jurisdiction of the regional trial court.”

    Having established the RTC’s jurisdiction, the Court upheld the RTC’s decision to annul the Application for Continual Use and award damages to Daclan. The Court noted that PDI did not dispute the RTC’s factual findings or challenge the judgment’s specifics, implying their acceptance of liability. The RTC correctly annulled the agreement based on mistake, as Daclan’s consent was vitiated by misleading advertisements and PDI’s lack of authority to sell memorial lots. Under Article 1331 of the Civil Code, mistake can invalidate consent if it refers to the substance of the contract’s object or the conditions that primarily motivated a party to enter the agreement.

    The Court also affirmed the award of moral and exemplary damages, as well as attorney’s fees. Moral damages are justified when there is willful injury to property, and exemplary damages serve as a public example or correction, especially when the acts are accompanied by bad faith. The RTC found that Daclan suffered sleepless nights due to PDI’s actions, supporting the award of damages. Furthermore, the award of attorney’s fees was proper because Daclan was compelled to litigate and incur expenses to protect her rights, as allowed under Article 2208(2) of the Civil Code.

    FAQs

    What was the key issue in this case? The main issue was whether the Regional Trial Court (RTC) or the Housing and Land Use Regulatory Board (HLURB) had jurisdiction over a complaint to annul a contract for a memorial lot due to the developer’s lack of a license to sell.
    What is the doctrine of primary jurisdiction? The doctrine of primary jurisdiction states that cases requiring the expertise of an administrative agency should first be resolved through administrative proceedings, even if courts also have jurisdiction. This ensures that specialized knowledge is applied to the relevant issues.
    When did the HLURB’s jurisdiction over memorial parks become clear? The HLURB’s jurisdiction over memorial parks became explicitly clear with the enactment of Republic Act No. 11201 (the Department of Human Settlements and Urban Development Act) and its Implementing Rules and Regulations (IRR) in 2019.
    What is the Human Settlements Adjudication Commission (HSAC)? The HSAC is the reconstituted version of the HLURB, created by Republic Act No. 11201. It handles the adjudicatory functions related to housing and land use disputes, and is attached to the Department of Human Settlements and Urban Development.
    Why did the RTC have jurisdiction in this particular case? The RTC had jurisdiction because, at the time the complaint was filed in 2005, existing laws did not explicitly grant the HLURB exclusive jurisdiction over disputes involving memorial parks. The laws and regulations clarifying this came later.
    What is the significance of Article 1331 of the Civil Code in this case? Article 1331 of the Civil Code allows for the annulment of a contract if consent is vitiated by mistake, referring to the substance of the thing or the conditions that primarily motivated a party to enter the agreement. In this case, the buyer’s consent was vitiated by misleading advertisements.
    What damages were awarded in this case? The RTC awarded the buyer moral and exemplary damages, as well as attorney’s fees. These were justified because the developer’s actions caused the buyer to suffer sleepless nights and were accompanied by bad faith, necessitating litigation to protect her rights.
    What is the effect of RA 11201 and its IRR on real estate disputes? RA 11201 and its IRR have clarified and broadened the jurisdiction of the HSAC (formerly HLURB) to include various real estate disputes, specifically including those involving memorial parks. This provides a clearer framework for resolving such issues.

    In conclusion, this case illustrates the evolving nature of administrative jurisdiction and the importance of adhering to procedural rules while ensuring equitable outcomes. The Supreme Court’s decision underscores that while administrative agencies like the HLURB (now HSAC) have specialized expertise, courts retain jurisdiction in the absence of explicit legal provisions to the contrary. This balance ensures that all parties have access to justice, even as regulatory frameworks adapt to changing circumstances.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: PARK DEVELOPERS INCORPORATED vs. ELIZABETH D. DACLAN, G.R. No. 211301, November 27, 2019

  • Road Lots vs. Private Property: Navigating HLURB Jurisdiction in Subdivision Disputes

    In Spouses Jose and Corazon Rodriguez v. Housing and Land Use Regulatory Board (HLURB), the Supreme Court affirmed the HLURB’s jurisdiction over a road lot within a subdivision, preventing its consolidation with private properties. The Court emphasized that until a valid alteration permit is obtained to convert a road lot into a regular lot, it remains for public use and within the HLURB’s regulatory purview. This decision clarifies the extent of HLURB’s authority in ensuring compliance with subdivision regulations, safeguarding public access and communal spaces within residential developments.

    Whose Road Is It Anyway? A Subdivision Dispute Over Public Access

    The case revolves around the Ruben San Gabriel Subdivision, where a road lot intended for public access became the subject of contention. Spouses Jose and Corazon Rodriguez, owners of several lots within the subdivision, sought to consolidate their properties, including the road lot, under a single title. Other residents, including Spouses John Santiago and Helen King, Imelda Rogano, and Spouses Bonie and Nancy Gamboa, opposed this move, arguing that the road lot was essential for accessing their properties and could not be closed or converted without proper authorization. The core legal question was whether the HLURB had jurisdiction to prevent the Spouses Rodriguez from consolidating the road lot with their private properties, or if the matter fell under the purview of regular courts.

    The legal framework governing this dispute is rooted in Presidential Decree No. 957 (PD 957), also known as the Subdivision and Condominium Buyers’ Protective Decree. This law empowers the HLURB to regulate and supervise the development of subdivisions and condominiums, ensuring that developers adhere to approved plans and protect the interests of lot buyers. Central to the case is the concept of open spaces within subdivisions, which, according to HLURB regulations, are intended for public use and cannot be appropriated for private gain without proper authorization. The complainants argued that the road lot was an integral part of the subdivision’s open space and essential for providing access to inner lots.

    The HLURB-RFO III initially ruled in favor of the complainants, ordering the Spouses Rodriguez to cease and desist from including the road lot in their property consolidation. The HLURB-RFO III highlighted that subdivision owners must set aside open spaces, including road lots, for public use, stating:

    Subdivision owners are mandated to set aside such open spaces before their proposed subdivision plans may be approved by this Office and other the (sic) government authorities, and that such open spaces shall be devoted exclusively for the use of the general public and the subdivision owner need not be compensated for the same.

    This initial decision underscored the HLURB’s commitment to upholding the rights of subdivision residents to access communal spaces. However, the HLURB Board of Commissioners initially overturned this decision, suggesting that the closure of a road lot could be permissible if done with an approved alteration plan. This perspective shifted upon reconsideration, with the HLURB Board ultimately reinstating the RFO III’s ruling, emphasizing that without a valid alteration permit specifically converting the road lot into a regular lot, it must remain open for public use.

    The Spouses Rodriguez then filed a Petition for Certiorari, Prohibition, and Mandamus with the Court of Appeals (CA), arguing that the HLURB lacked jurisdiction over the road lot, which they claimed was private property. However, the CA dismissed the petition for failure to exhaust administrative remedies, as the Spouses Rodriguez had not appealed the HLURB Board’s decision to the Office of the President (OP) before seeking judicial intervention. This procedural lapse proved fatal to their case, as the principle of exhaustion of administrative remedies requires parties to pursue all available avenues within the administrative system before resorting to the courts.

    The Supreme Court upheld the CA’s decision, emphasizing the importance of adhering to established administrative procedures. The Court reiterated that certiorari is not a substitute for a lost appeal, stating, “Certiorari lies only when there is no appeal nor any plain, speedy, and adequate remedy in the ordinary course of law.” Furthermore, the Court affirmed the HLURB’s jurisdiction over the road lot, rejecting the Spouses Rodriguez’s claim that it was merely private property. The Court noted that the HLURB had factually determined that the road lot had not been validly converted into a regular lot, and the Court defers to the factual findings of administrative agencies when supported by substantial evidence.

    An important principle highlighted in this case is the limited scope of judicial review over administrative decisions. Courts generally respect the factual findings of administrative agencies, especially when those findings are supported by substantial evidence. In the context of HLURB decisions, this deference is crucial, as the HLURB possesses specialized expertise in land use and housing regulations. This expertise enables them to make informed judgments on matters such as subdivision planning, zoning regulations, and the appropriate use of open spaces.

    In a related development, Spouses Nicolas filed a Petition for Indirect Contempt against the Spouses Rodriguez and Edjie Manlulu, alleging that they had defied the HLURB’s Cease and Desist Order by continuing to dump filling materials on the road lot. The Supreme Court dismissed this petition for lack of jurisdiction, clarifying that contempt charges against quasi-judicial bodies like the HLURB must be filed with the regional trial court where the contemptuous acts occurred. The Court emphasized that it is not a trier of facts and that the determination of whether contempt had been committed was within the province of the lower courts.

    FAQs

    What was the key issue in this case? The key issue was whether the HLURB had jurisdiction to prevent the Spouses Rodriguez from consolidating a road lot within a subdivision with their private properties. The residents argued that the road lot was for public access.
    What is a road lot in a subdivision? A road lot is a designated area within a subdivision intended for use as a road, providing access to the various lots within the development. It’s considered part of the subdivision’s open space and for public use.
    Can a road lot be converted into private property? Yes, but only with a valid alteration permit from the HLURB, specifically approving the conversion of the road lot into a regular lot. Without such a permit, the road lot remains designated for public use.
    What is the role of the HLURB in subdivision disputes? The HLURB is responsible for regulating and supervising the development of subdivisions and condominiums, ensuring compliance with approved plans and protecting the interests of lot buyers. They have the authority to resolve disputes related to land use and subdivision regulations.
    What does ‘exhaustion of administrative remedies’ mean? It means that before seeking recourse in the courts, a party must first pursue all available avenues within the relevant administrative agency. In this case, the Spouses Rodriguez should have appealed to the Office of the President before filing a case in court.
    What happens if someone violates a Cease and Desist Order from the HLURB? Violating a Cease and Desist Order can lead to contempt charges, which must be filed with the regional trial court where the violation occurred. The court will then determine whether the individual is guilty of indirect contempt.
    Why did the Supreme Court dismiss the Petition for Indirect Contempt? The Supreme Court dismissed the petition because it lacked jurisdiction. Cases of indirect contempt against quasi-judicial bodies, such as the HLURB, must be filed with the regional trial court.
    What is the significance of the HLURB’s factual findings? The HLURB’s factual findings are given significant weight by the courts, provided they are supported by substantial evidence. Courts generally defer to the expertise of administrative agencies in their respective fields.

    This case serves as a reminder of the importance of adhering to subdivision regulations and respecting the designated use of open spaces. Developers and lot owners must obtain the necessary permits and approvals before altering approved subdivision plans, ensuring that the rights of all residents are protected. The decision reinforces the HLURB’s authority to enforce these regulations, safeguarding the integrity of subdivision developments and promoting the welfare of communities.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Spouses Jose and Corazon Rodriguez v. Housing and Land Use Regulatory Board (HLURB), G.R. Nos. 183324 & 209748, June 19, 2019

  • Laches and Jurisdiction: When Delaying a Challenge Can Validate an Invalid Forum

    The Supreme Court ruled that a party’s failure to timely question a court’s jurisdiction can bar them from raising the issue later, under the principle of estoppel by laches. Even if a court initially lacks jurisdiction over a case’s subject matter, a party’s prolonged delay in objecting, active participation in proceedings, and seeking of affirmative relief can prevent them from later challenging that court’s authority. This decision underscores the importance of promptly raising jurisdictional concerns to avoid being deemed to have waived the right to do so, which could lead to a final judgment from a court that otherwise would have had no power to decide the matter.

    Land Dispute Decades in the Making: Can a Belated Jurisdictional Challenge Overturn a Trial?

    In 1969, the Ballado Spouses entered into contracts with St. Joseph Realty to purchase two subdivision lots on installment. Years later, after disputes over payments and alleged rescission of the contracts, the Ballado Spouses filed a complaint for damages, injunction, and annulment of titles against St. Joseph Realty and the Amoguis Brothers, who had subsequently purchased the same lots. The Regional Trial Court (RTC) ruled in favor of the Ballado Spouses, a decision affirmed with modifications by the Court of Appeals (CA). The Amoguis Brothers then appealed to the Supreme Court, raising the issue of the RTC’s lack of jurisdiction for the first time, arguing that the Housing and Land Use Regulatory Board (HLURB) should have had original jurisdiction over the case.

    The central legal question before the Supreme Court was whether the Amoguis Brothers were barred by estoppel from challenging the RTC’s jurisdiction after actively participating in the proceedings for over two decades. Jurisdiction over the subject matter is conferred by law, as the Court emphasized, citing Magno v. People of the Philippines: “Jurisdiction over the subject matter of a complaint is conferred by law. It cannot be lost through waiver or estoppel. It can be raised at any time in the proceedings, whether during trial or on appeal.” Normally, a court’s lack of subject matter jurisdiction can be raised at any time. However, the Court considered the doctrine of estoppel by laches, established in Tijam v. Sibonghanoy, as an exception.

    The Court weighed the principles of subject matter jurisdiction against the equitable doctrine of estoppel by laches. The doctrine of laches prevents parties from asserting rights after an unreasonable delay that prejudices the opposing party. In essence, it considers it unfair for a party to raise a claim when their delay has misled the other party into believing the claim would not be pursued. This is particularly true when the delayed assertion of the right would cause undue harm or prejudice. In this case, the Court found that the Amoguis Brothers’ delay in questioning jurisdiction, coupled with their active participation in the trial, triggered the application of estoppel by laches.

    The Court noted that Presidential Decree No. 957 and Presidential Decree No. 1344 vested exclusive jurisdiction over cases involving specific performance of contractual obligations related to subdivision lots with the National Housing Authority (now HLURB). This meant that, initially, the RTC was not the proper forum for the Ballado Spouses’ complaint. However, the Court also considered the precedent set in Tijam v. Sibonghanoy, which established that estoppel by laches can prevent a party from raising a jurisdictional challenge if they have unduly delayed doing so and actively participated in the proceedings. In Tijam, the Court stated: “[A] party may be estopped or may waive his right to question the court’s jurisdiction when he has voluntarily submitted himself to the jurisdiction of the court and actively participated in the proceedings.”

    Applying the principles of Tijam, the Supreme Court emphasized the specific circumstances that warrant the application of estoppel. These include the existence of a statutory right, failure to invoke that right, an unreasonable delay in raising the issue of jurisdiction, active participation in the case seeking affirmative relief, knowledge of the proper forum, and the potential for irreparable damage to the other party. The Court found that the Amoguis Brothers met these criteria. St. Joseph Realty had even raised the issue of jurisdiction in their Answer, yet the Amoguis Brothers did not pursue it. This failure, combined with their active participation in the RTC proceedings for over two decades, estopped them from belatedly challenging the court’s jurisdiction.

    Furthermore, the Court addressed the admissibility of evidence that was not formally offered during trial. While the general rule is that evidence must be formally offered to be considered, the Court recognized an exception for evidence that was duly identified and incorporated into the records, especially when the opposing party failed to timely object. The Court cited Catuira v. Court of Appeals, stating that the reason for requiring that evidence be formally introduced is to enable the court to rule intelligently upon the objection to the questions which have been asked. Where the proponent offers evidence deemed by counsel of the adverse party to be inadmissible for any reason, the latter has the right to object. But such right is a mere privilege which can be waived. In this case, the Amoguis Brothers’ failure to object to the testimonial evidence at the appropriate time constituted a waiver of their objection.

    However, the Court clarified that only the contracts to sell, which were attached to the formal offer of evidence, could be considered as documentary evidence for the Ballado Spouses. As for whether the Amoguis Brothers were buyers in good faith, the Court found them to be in bad faith because they had been informed of the Ballado Spouses’ claim to the properties and had seen evidence of their occupancy (fences and trees). A buyer in good faith is one who purchases a property without notice of another’s interest or right. The Court stated that it is incumbent upon a buyer to prove good faith should he or she assert this status. This burden cannot be discharged by merely invoking the legal presumption of good faith. Thus, the Court upheld the CA’s decision.

    FAQs

    What was the key issue in this case? The central issue was whether the Amoguis Brothers could challenge the Regional Trial Court’s jurisdiction after actively participating in the proceedings for many years without raising the issue. The Supreme Court considered the doctrine of estoppel by laches.
    What is estoppel by laches? Estoppel by laches is a principle that prevents a party from asserting a right after an unreasonable delay that prejudices the opposing party. It’s rooted in equity and fairness.
    What is subject matter jurisdiction? Subject matter jurisdiction refers to a court’s power to hear and decide cases of a particular class or type. It is conferred by law and cannot be waived by the parties.
    Why did the Court consider the Tijam v. Sibonghanoy case? Tijam v. Sibonghanoy established an exception to the general rule that lack of subject matter jurisdiction can be raised at any time. It held that estoppel by laches can bar a party from raising a jurisdictional challenge after an unreasonable delay.
    What is the role of the Housing and Land Use Regulatory Board (HLURB)? The HLURB has exclusive jurisdiction over cases involving specific performance of contractual obligations related to subdivision lots. This jurisdiction was originally vested in the National Housing Authority (NHA).
    What are the requirements for evidence to be considered by the court? Generally, evidence must be formally offered to be considered by the court. However, evidence that is duly identified and incorporated into the records may be considered even if not formally offered, especially if there is no timely objection.
    What does it mean to be a buyer in good faith? A buyer in good faith is one who purchases property for a fair price without notice that another party has an interest in or right to the property. Good faith must be proven and cannot be presumed.
    What was the final ruling of the Supreme Court in this case? The Supreme Court denied the petition of the Amoguis Brothers, affirming the Court of Appeals’ decision. The Court held that the Amoguis Brothers were estopped by laches from challenging the RTC’s jurisdiction and were not buyers in good faith.

    This case serves as a reminder of the importance of promptly addressing jurisdictional concerns and diligently participating in legal proceedings. Delaying the assertion of rights can have significant consequences. Particularly, it could lead to an unfavorable outcome and limit avenues for appeal. Furthermore, this case underscores that buyers must undertake due diligence when acquiring property to ensure they are acting in good faith and are protected from potential claims.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: GREGORIO AMOGUIS TITO AMOGUIS, VS. CONCEPCION BALLADO AND MARY GRACE BALLADO LEDESMA, AND ST. JOSEPH REALTY, LTD., G.R. No. 189626, August 20, 2018

  • Protecting Installment Buyers: The Right to a Refund When Promised Amenities Fail

    The Supreme Court ruled that a real estate developer must refund payments to a buyer when it fails to deliver promised amenities, such as a golf course, as advertised in promotional materials. This decision reinforces the protection afforded to real estate buyers under Presidential Decree No. 957 and Republic Act No. 6552, ensuring they receive what they were promised or are fairly compensated when developers fail to fulfill their obligations. The ruling underscores the importance of developers adhering to their representations and the legal recourse available to buyers when these commitments are not met. This case clarifies the rights of buyers in installment contracts and the responsibilities of developers to deliver on their promises, or face the consequences of refunding payments and potential damages.

    Broken Promises: Can a Developer Withhold Refunds for Unbuilt Amenities?

    The case revolves around Gina Lefebre’s purchase of a residential lot in Xavier Estates, enticed by A Brown Company, Inc.’s promise of a Manresa 18-Hole All Weather Championship Golf Course. Relying on this representation, Lefebre upgraded her reservation to a larger lot. However, the golf course never materialized, and when Lefebre faced difficulties in settling her payments, the Contract to Sell was canceled. This led Lefebre to file a complaint, arguing that the developer’s failure to deliver the promised amenity entitled her to a refund. The central legal question is whether A Brown Company, Inc. validly canceled the contract and whether Lefebre is entitled to a refund due to the undelivered golf course amenity.

    The Housing and Land Use Regulatory Board (HLURB) initially ruled in favor of A Brown Company, Inc., but the HLURB Board of Commissioners (BOC) reversed this decision, stating that the Contract to Sell was not validly canceled because the developer failed to tender the cash surrender value of the payments made. This decision highlighted a critical aspect of Republic Act No. 6552, also known as the Realty Installment Buyer Protection Act. This law protects buyers who have paid at least two years of installments by requiring sellers to refund a portion of the payments made if the contract is canceled. The Court of Appeals (CA) then set aside the HLURB BOC’s decision and reinstated the HLU Arbiter’s ruling, leading Lefebre to appeal to the Supreme Court.

    The Supreme Court found that A Brown Company, Inc. failed to exhaust administrative remedies by directly filing a petition for certiorari before the CA instead of appealing to the Office of the President as required by HLURB rules. The doctrine of exhaustion of administrative remedies requires parties to pursue all available administrative channels before seeking judicial intervention. This procedural lapse was a significant factor in the Supreme Court’s decision. As the Court noted in Teotico v. Baer:

    Under the doctrine of exhaustion of administrative remedies, recourse through court action cannot prosper until after all such administrative remedies have first been exhausted. If remedy is available within the administrative machinery, this should be resorted to before resort can be made to courts. It is settled that non-observance of the doctrine of exhaustion of administrative remedies results in lack of cause of action, which is one of the grounds in the Rules of Court justifying the dismissal of the complaint.

    Building on this procedural point, the Supreme Court also examined the substantive issues, particularly the developer’s failure to comply with Republic Act No. 6552. Section 3(b) of RA 6552 states:

    If the contract is canceled, 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 and, after five years of installments, an additional five per cent every year but not to exceed ninety 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.

    The Court emphasized that the failure to cancel the contract in accordance with Section 3 of RA 6552 renders the contract to sell valid and subsisting, citing Active Realty & Development Corp. v. Daroya. Since A Brown Company, Inc. did not fully pay the cash surrender value to Lefebre, the contract remained in effect. Because the contract was still valid, Lefebre had the right to invoke Section 20, in relation to Section 23, of PD 957 which respectively read:

    Section 20. Time of Completion. – Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority.

    Section 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.

    In Tamayo v. Huang, the Court explained that if a developer fails in its obligations under Section 20, Section 23 gives the buyer the option to demand reimbursement of the total amount paid. The Supreme Court also addressed the issue of estoppel, noting that Lefebre never conceded to the non-development of the golf course, which was a key motivation behind her purchase. Therefore, she was not prevented from raising the issue as a ground for seeking a refund. Despite Lefebre’s failure to timely pay her amortizations, A Brown Company, Inc. also had an obligation to deliver on its promise of the golf course. The Court emphasized that the developer’s advertisements constituted warranties under Section 20 of PD 957.

    Thus, the Supreme Court reinstated the HLURB-BOC’s decision, which ordered A Brown Company, Inc. to refund Lefebre’s payments. The Court reiterated that the perfection of an appeal within the period laid down by law is mandatory and jurisdictional, and failure to do so precludes the appellate court from acquiring jurisdiction. In summary, the Supreme Court’s decision underscores the importance of developers fulfilling their promises and adhering to legal procedures when canceling contracts. It also affirms the rights of buyers to receive what they were promised or to be fairly compensated when developers fail to deliver.

    FAQs

    What was the key issue in this case? The key issue was whether the developer, A Brown Company, Inc., validly canceled the Contract to Sell with Gina Lefebre, and whether Lefebre was entitled to a refund due to the developer’s failure to build a promised golf course.
    What is the Realty Installment Buyer Protection Act (RA 6552)? RA 6552 protects real estate buyers who pay in installments. It requires sellers to refund a portion of payments if the contract is canceled after the buyer has paid at least two years of installments, ensuring buyers receive a cash surrender value.
    What does the doctrine of exhaustion of administrative remedies mean? This doctrine requires parties to pursue all available administrative channels before seeking judicial intervention. In this case, A Brown Company, Inc. failed to appeal to the Office of the President before filing a petition in court.
    What is the significance of Section 20 of PD 957? Section 20 of PD 957 requires developers to construct and provide facilities, improvements, and infrastructure as advertised. The golf course promised by A Brown Company, Inc. fell under this requirement.
    What is the cash surrender value mentioned in the case? The cash surrender value is the amount a seller must refund to a buyer when a contract is canceled, as mandated by RA 6552. It is a percentage of the total payments made by the buyer.
    Why did the Supreme Court reinstate the HLURB-BOC’s decision? The Supreme Court reinstated the HLURB-BOC’s decision because A Brown Company, Inc. failed to exhaust administrative remedies and did not comply with RA 6552 by paying the cash surrender value.
    What was the buyer’s remedy for the developer’s failure to deliver the promised golf course? Lefebre was entitled to a full refund of the payments made, as the developer failed to provide the promised golf course, entitling her to reimbursement under Section 23 of PD 957.
    How did the developer violate PD 957? The developer violated PD 957 by failing to provide the golf course amenity that was advertised as part of the development, thereby not fulfilling the obligations outlined in Section 20 of the decree.

    This case highlights the importance of developers upholding their promises and adhering to legal procedures. It also underscores the protections afforded to real estate buyers who rely on developers’ representations. The ruling reinforces the need for developers to fulfill their obligations or face the consequences of refunding payments and potential damages.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Gina Lefebre vs. A Brown Company, Inc., G.R. No. 224973, September 27, 2017

  • Faulty Notarization Foils Contract Cancellation: Buyer Entitled to Refund Under Maceda Law

    In a real estate dispute, the Supreme Court held that a seller’s cancellation of a contract to sell was ineffectual due to a defective notarial act, specifically, the notarization was done through a jurat with incompetent evidence of identity. Even though the buyer had not paid the equivalent of two years’ worth of installments to be entitled to the benefits under Section 3 of the Maceda Law, the improper cancellation meant the contract remained valid. As the property had already been sold to another buyer, the Court ordered the seller to refund the buyer’s payments with interest. This ruling underscores the strict compliance required for contract cancellations under the Maceda Law, especially concerning proper notarization, to protect the rights of real estate buyers.

    Unpaid Installments and Defective Notices: Can a Contract Be Undone?

    The case of Priscilla Zafra Orbe v. Filinvest Land, Inc. (G.R. No. 208185, September 6, 2017) revolves around a purchase agreement for a lot in Taytay, Rizal. Orbe entered into an agreement with Filinvest Land, Inc. in June 2001 to purchase a 385-square-meter lot for P2,566,795.00 payable on an installment basis. She made payments totaling P608,648.20 from June 2001 to July 2004 but was later unable to continue due to financial difficulties. Consequently, on October 4, 2004, Filinvest sent Orbe a notice of cancellation, which was received on October 18, 2004.

    Filinvest Land argued that Orbe failed to make 24 monthly amortization payments and, therefore, could not benefit from Section 3 of Republic Act No. 6552, also known as the Maceda Law. The Maceda Law protects real estate buyers who pay installments, offering them certain rights in case of default. Section 3 of the Maceda Law states the rights of buyers who have paid at least two years of installments:

    Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments… where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:
    (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.

    Conversely, Section 4 outlines the rights for buyers who have paid less than two years of installments, stating:

    Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract 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.

    Orbe filed a complaint for refund with damages, arguing that the notice of cancellation was not an effective notarial act. The Housing and Land Use Regulatory Board (HLURB) ruled in favor of Orbe, ordering Filinvest to refund 50% of the total payments. The Office of the President affirmed this decision. However, the Court of Appeals reversed the prior rulings, stating that Orbe’s total payments fell short of the required two years’ worth of installments and that Filinvest had sent a valid, notarized notice of cancellation.

    The Supreme Court found that Orbe was not entitled to the benefits of Section 3 of the Maceda Law, agreeing with the Court of Appeals that Orbe failed to pay two years’ worth of installments. The Supreme Court clarified that paying “at least two years of installments” refers to the equivalent of the totality of payments diligently or consistently made throughout a period of two (2) years. The Court emphasized that this means the aggregate value of 24 monthly installments. Thus, Section 4 applied to Orbe’s case. However, the Court disagreed with the Court of Appeals’ finding that Filinvest’s notice of cancellation was a valid notarial act.

    The Supreme Court explained that under Sections 3 and 4 of the Maceda Law, notarization enables the exercise of the statutory right of unilateral cancellation by the seller of a perfected contract. In this case, the notice of cancellation was accompanied by a jurat, not an acknowledgment. An acknowledgment requires the individual to appear in person before the notary public and represent that the signature on the document was voluntarily affixed for the purposes stated in the document. A jurat, on the other hand, is an act in which an individual signs the instrument or document in the presence of the notary and takes an oath or affirmation before the notary public as to such instrument or document.

    Further, the proof of identity used by the signatory to Filinvest’s notice of cancellation was a community tax certificate, which does not meet the requirements of competent evidence of identity under the 2004 Rules on Notarial Practice. The Court cited Baylon v. Almo, stating that community tax certificates were specifically excluded as permissible proof of identity. The Court reasoned that Filinvest’s failure to satisfy the requirements of the 2004 Rules on Notarial Practice meant that its cancellation of the purchase agreement was ineffectual. The Supreme Court emphasized the need to strictly comply with the requirements of Sections 3 and 4 of the Maceda Law, especially considering the law’s purpose of extending benefits to disadvantaged buyers.

    Since there was no valid cancellation and Filinvest had already sold the lot to another person, the Supreme Court ordered Filinvest to refund Orbe the amount of P608,648.20, subject to legal interest. This ruling reinforces the importance of proper notarization in the cancellation of contracts under the Maceda Law and provides guidance on the remedies available when a contract is improperly cancelled and the property is sold to a third party.

    This case provides a sharp reminder that a notice of cancellation must contain an acknowledgement, not a jurat, from a notary public using competent evidence of identity. In this context, the Supreme Court emphasized that it is imperative that the officer signing for the seller indicate that he or she is duly authorized to effect the cancellation of an otherwise perfected contract. The failure to strictly comply with these requirements will render the cancellation ineffectual.

    FAQs

    What was the key issue in this case? The key issue was whether the seller, Filinvest, validly cancelled the contract to sell with the buyer, Orbe, under the Maceda Law, and whether Orbe was entitled to a refund.
    What is the Maceda Law? The Maceda Law (Republic Act No. 6552) protects real estate buyers making installment payments, providing certain rights in case of default, such as grace periods and refunds.
    What are the requirements for a valid cancellation under the Maceda Law? For those who paid less than two years of installments, the requirements include a 60-day grace period, a notice of cancellation by notarial act, and a 30-day period after the buyer receives the notice for the cancellation to take effect.
    What does ‘notarial act’ mean in the context of contract cancellation? A ‘notarial act’ requires that the notice of cancellation is properly acknowledged before a notary public, ensuring that the person signing is authorized and the document is authentic.
    Why was the notice of cancellation deemed invalid in this case? The notice of cancellation was deemed invalid because it was notarized with a jurat and a community tax certificate instead of an acknowledgment and competent evidence of identity.
    What is the difference between a ‘jurat’ and an ‘acknowledgment’? A ‘jurat’ is an oath or affirmation before a notary, while an ‘acknowledgment’ involves a personal appearance before the notary, representation of voluntary signature, and, if applicable, declaration of authority to sign in a representative capacity.
    What was the outcome of the case? The Supreme Court ordered Filinvest to refund Orbe’s payments with legal interest, as the cancellation of the contract was invalid, and the property had already been sold to another buyer.
    What is competent evidence of identity? Competent evidence of identity refers to identification documents issued by an official agency bearing the photograph and signature of the individual, such as a passport, driver’s license, or other government-issued ID.

    This case underscores the importance of strict compliance with the Maceda Law, particularly regarding the proper execution and notarization of cancellation notices. Real estate buyers should be aware of their rights and ensure that any cancellation is done in accordance with legal requirements. Sellers, on the other hand, must ensure they comply with all the procedural requirements, especially regarding the notarial act, to validly cancel contracts to sell.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Orbe v. Filinvest Land, Inc., G.R. No. 208185, September 06, 2017

  • Balancing Property Rights: When Homeowner Access Clashes with Association Control

    The Supreme Court has clarified the scope of a homeowner’s association’s authority to regulate access to common areas within a subdivision. The Court held that while homeowners associations have the right to manage and protect their property, this right is not absolute and must be balanced against the rights of individual homeowners. This decision emphasizes that associations cannot arbitrarily restrict access to common areas without a clear legal basis, such as an easement or a proven nuisance, thus protecting homeowners from unreasonable restrictions on their property rights.

    Whose Park Is It Anyway? Resolving Access Disputes in North Greenhills

    In the heart of North Greenhills Subdivision, a dispute arose between a homeowner, Atty. Narciso Morales, and the North Greenhills Association, Inc. (NGA) over access to McKinley Park. Atty. Morales, a long-time resident, had enjoyed direct access to the park through a side door on his property for over three decades. However, the NGA, responsible for managing the park, constructed a restroom that blocked this access. This led to a legal battle, raising critical questions about the extent of a homeowner association’s power to restrict a resident’s access to shared amenities and what constitutes a nuisance under the law.

    The legal foundation for the NGA’s actions rests on the fundamental property rights enshrined in the Civil Code. Article 429 grants owners the right to exclude others from their property. Article 430 further allows owners to enclose or fence their land, provided that existing servitudes are respected. These provisions seemingly provide broad authority to homeowners’ associations to regulate access to their property.

    However, the concept of nuisance introduces a layer of complexity. Philippine law distinguishes between a nuisance per se and a nuisance per accidens. A nuisance per se is an act, occupation, or structure which is a nuisance at all times and under any circumstances, regardless of location or manner of operation. A nuisance per accidens, on the other hand, becomes a nuisance by reason of circumstances, location, or manner of operation. The determination of a nuisance per accidens requires a careful evaluation of the surrounding facts and their impact on the affected individuals.

    In this case, the Court of Appeals initially sided with Atty. Morales, characterizing the restroom as a nuisance per accidens due to potential sanitary issues and the obstruction of his access to the park. However, the Supreme Court disagreed, finding that the CA’s conclusion was based on speculation rather than concrete evidence. According to the Supreme Court, to classify something as a nuisance per accidens, there must be demonstrable proof of the negative effects it produces. The Court emphasized that there was no evidence presented that the restroom actually caused any discomfort or health issues to Atty. Morales or his family. Therefore, the CA’s finding lacked a factual basis.

    Furthermore, the Supreme Court addressed the issue of Atty. Morales’s access to McKinley Park. While the CA upheld his “unbridled access” the Supreme Court disagreed, asserting that the NGA, as the owner of the park, has the right to control and regulate its use. The Court noted that Atty. Morales had not established any legal basis for his claim of a right of way, such as prescription, agreement, or legal easement. The conditions set forth under the Deed of Donation by Ortigas & Co. Ltd. to NGA could not be used by Atty. Morales in his favor.

    The Court also clarified the nature of NGA’s counterclaim for unpaid association dues. A counterclaim is either compulsory or permissive. A compulsory counterclaim arises out of the same transaction or occurrence as the plaintiff’s claim, while a permissive counterclaim is any other claim. The Supreme Court upheld the CA’s ruling that NGA’s counterclaim was permissive because it was not directly related to the main issue of access to the park or the alleged nuisance. The failure to raise the issue of unpaid association dues in this case or its dismissal if properly raised will not be a bar to the filing of the appropriate separate action to collect it.

    This decision reinforces the principle that while homeowners’ associations play a crucial role in maintaining community standards and managing common areas, their authority is not absolute. It must be balanced against the individual rights of homeowners. Specifically, associations cannot impose restrictions that lack a clear legal basis or are not supported by factual evidence. The Supreme Court’s ruling serves as a reminder that the rights of property owners, the authority of homeowners’ associations, and the concept of nuisance must be carefully balanced to ensure fairness and uphold the rule of law. Cases such as this serve as an important reminder that property rights are constitutionally protected.

    FAQs

    What was the central issue in this case? The main issue was whether the North Greenhills Association (NGA) could restrict a homeowner’s access to a park and whether a restroom constructed by NGA was considered a nuisance.
    What is a nuisance per accidens? A nuisance per accidens is something that becomes a nuisance because of its specific circumstances, location, or the way it’s operated, requiring evidence to prove its negative impact.
    Did the Supreme Court find the restroom to be a nuisance? No, the Supreme Court reversed the Court of Appeals’ decision, stating that there was no factual evidence to support the claim that the restroom was a nuisance per accidens.
    Can a homeowner’s association restrict access to common areas? While homeowner’s associations have the right to manage their property, they cannot arbitrarily restrict access without a legal basis like an easement or evidence of a nuisance.
    What is a compulsory counterclaim? A compulsory counterclaim arises from the same transaction or occurrence as the plaintiff’s claim, while a permissive counterclaim is any other claim.
    Why was NGA’s counterclaim for unpaid dues considered permissive? The counterclaim was permissive because it was not directly related to the main issue of access to the park or the alleged nuisance, and could be pursued in a separate action.
    What evidence is needed to prove a nuisance per accidens? To prove a nuisance per accidens, one must provide factual evidence of the negative effects, such as discomfort, health issues, or other disturbances caused by the condition or activity.
    What are the rights of a property owner according to the Civil Code? Articles 429 and 430 of the Civil Code grant property owners the right to exclude others from their property and to enclose or fence their land, subject to existing servitudes.

    In conclusion, the Supreme Court’s decision in North Greenhills Association, Inc. v. Atty. Narciso Morales underscores the importance of balancing the authority of homeowners’ associations with the rights of individual homeowners. It serves as a reminder that restrictions on property rights must be based on solid legal grounds and factual evidence, not mere speculation. This balance ensures that communities can maintain order and standards without infringing upon the fundamental rights of their residents.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: North Greenhills Association, Inc. v. Atty. Narciso Morales, G.R. No. 222821, August 09, 2017

  • Homeowners’ Association Elections: Clarifying Final Judgments and Upholding Order

    This Supreme Court decision clarifies the extent to which a final judgment can be modified or clarified, especially in the context of homeowners’ association disputes. The Court ruled that the Office of the President (OP) could issue a clarificatory resolution to give full meaning and equitably enforce a prior decision, without violating the doctrine of immutability of final judgments. This ensures that homeowners’ associations can function effectively by allowing for clarifications necessary for the execution of court orders. The decision underscores the importance of respecting the intent behind final judgments while providing mechanisms for addressing ambiguities.

    Multinational Village HOA: Can a Clarification Alter a Final Ruling?

    The case revolves around a protracted election dispute within the Multinational Village Homeowners’ Association, Inc. (MVHAI). Two rival groups, the 2005 directors (petitioners) and the 2004 directors (respondents), clashed over the validity of elections and the authority to manage the association. The core legal question was whether the Office of the President (OP), in issuing a Clarificatory Resolution, improperly modified a final and executory decision of the Housing and Land Use Regulatory Board (HLURB), which the OP had previously reinstated. This delves into the doctrine of immutability of final judgments and the allowable exceptions for clarification or nunc pro tunc orders.

    The antecedent facts reveal a series of contested elections and administrative decisions. The 2005 directors, led by petitioners, were initially declared invalidly elected by the HLURB-National Capital Region Field Office (NCRFO). This decision was later reversed by the HLURB-Board of Commissioners (BoC), only to be reinstated by the OP. After the OP’s initial decision became final, a Clarificatory Resolution was issued, prompting the respondents, the 2004 directors, to challenge it, alleging that it modified the original HLURB-NCRFO decision. The Court of Appeals sided with the respondents, nullifying the Clarificatory Resolution and all subsequent elections, leading the petitioners to seek recourse before the Supreme Court.

    The Supreme Court addressed three key issues. First, it considered whether a petition for certiorari was the proper remedy for challenging the OP’s Clarificatory Resolution. Petitioners argued that a petition for review under Rule 43 of the Rules of Court should have been used. The Court, however, sided with the respondents, finding that certiorari was appropriate because the petition alleged grave abuse of discretion on the part of the OP in modifying a final and executory decision. The Court emphasized that when the issue involves an error of jurisdiction, rather than an error of judgment, certiorari is the correct remedy, citing Fortich v. Corona:

    It is true that under Rule 43, appeals from awards, judgments, final orders or resolutions of any quasi-judicial agency exercising quasi-judicial functions, including the Office of the President, may be taken to the Court of Appeals by filing a verified petition for review within fifteen (15) days from notice of the said judgment, final order or resolution, whether the appeal involves questions of fact, of law, or mixed questions of fact and law.

    However, we hold that, in this particular case, the remedy prescribed in Rule 43 is inapplicable considering that the present petition contains an allegation that the challenged resolution is “patently illegal” and was issued with “grave abuse of discretion” and “beyond his (respondent Secretary Renato C. Corona’s) jurisdiction” when said resolution substantially modified the earlier OP Decision of March 29, 1996 which had long become final and executory. In other words, the crucial issue raised here involves an error of jurisdiction, not an error of judgment which is reviewable by an appeal under Rule 43. Thus, the appropriate remedy to annul and set aside the assailed resolution is an original special civil action for certiorari under Rule 65, as what the petitioners have correctly done.

    Building on this, the Court then tackled the central question of whether the OP’s Clarificatory Resolution actually modified the HLURB-NCRFO’s decision. The doctrine of immutability of final judgments generally prevents any modification of a final judgment, even if the modification is intended to correct an error. However, the Court recognized an exception: ambiguities in the dispositive portion of a decision may be clarified, even after the judgment has become final. The Court noted that the Clarificatory Resolution did not introduce new substantive elements but merely clarified how the original decision should be implemented. For instance, the OP’s directive for the 2004 BOD to manage the association’s daily operations pending new elections was seen as a logical extension of the order for the 2005 directors to relinquish their positions.

    Furthermore, the Court addressed the argument that the OP Clarificatory Resolution violated the doctrine of immutability of final and executory judgments. The Court emphasized that the resolution did not modify the HLURB-NCRFO decision, but rather clarified ambiguities in its dispositive portion. This clarification was aimed at ensuring the effective enforcement of the original decision. The Court also pointed out that even if the resolution were considered a modification, it would fall under the exception of a nunc pro tunc order, which is permissible when it does not prejudice any party. The Court cited Filipinas Palmoil Processing, Inc. v. Dejapa to support this point:

    As a general rule, final and executory judgments are immutable and unalterable, except under these recognized exceptions, to wit: (a) clerical errors; (b) nunc pro tunc entries which cause no prejudice to any party; and (c) void judgments. What the CA rendered on December 10, 2004 was a nunc pro tunc order clarifying the decretal portion of the August 29, 2002 Decision.

    Lastly, the Supreme Court considered the validity of the elections held during the pendency of the case, particularly the election held on 12 August 2007. The Court upheld the validity of this election, reasoning that it was conducted pursuant to the HLURB-NCRFO’s decision and the OP’s subsequent orders. The Court emphasized that the homeowners’ association could not be held hostage by the refusal of certain members to relinquish their positions. It referred to HLURB Resolution Nos. 770-04 and R-771-04, which provide a framework for governance of homeowners’ associations, including provisions for hold-over directors and the supervision of elections by the HLURB.

    To further illustrate this point, it is important to define the difference between a term and tenure. According to Valle Verde Country Club, Inc. v. Africa, term is distinguished from tenure, where an officer’s “tenure” represents the term during which the incumbent actually holds office. The tenure may be shorter (or, in case of holdover, longer) than the term for reasons within or beyond the power of the incumbent.

    The Court ultimately reversed the Court of Appeals’ decision, affirming the OP’s Clarificatory Resolution and declaring the 2007 election valid. This decision underscores the importance of allowing final judgments to be effectively enforced, even if it requires clarification. The Court recognized that rigid adherence to the doctrine of immutability could lead to impractical or inequitable outcomes, particularly in the context of homeowners’ association disputes where timely and orderly elections are essential for the proper functioning of the community.

    FAQs

    What was the key issue in this case? The central legal question was whether the Office of the President (OP) improperly modified a final and executory decision when it issued a Clarificatory Resolution in a homeowners’ association election dispute. This involved the doctrine of immutability of final judgments and its exceptions.
    What is the doctrine of immutability of final judgments? This doctrine states that a final judgment can no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law. It is rooted in public policy and the need for judgments to become final at some definite point in time.
    What is a nunc pro tunc order? A nunc pro tunc order is an exception to the doctrine of immutability, allowing a court to correct clerical errors or omissions in a judgment to reflect the court’s original intent. It cannot prejudice any party and cannot be used to render a new judgment or correct judicial errors.
    Why did the Supreme Court allow the OP’s Clarificatory Resolution? The Court found that the resolution did not modify the original decision but merely clarified ambiguities in its dispositive portion to ensure effective enforcement. The Court also considered it a valid nunc pro tunc order, as it did not prejudice any party.
    What are hold-over directors in a homeowners’ association? Hold-over directors are incumbents who continue to serve after their term has expired because a new set of directors has not been elected and qualified. HLURB Resolution No. 770-04 allows this arrangement, subject to certain rules.
    What role does the HLURB play in homeowners’ association elections? The HLURB (now the Department of Human Settlements and Urban Development or DHSUD) has the authority to supervise homeowners’ association elections, especially when there are disputes or irregularities. HLURB Resolution No. R-771-04 empowers the Regional Office to call a special election if necessary.
    What was the significance of the 2007 election in this case? The Supreme Court upheld the validity of the 2007 election, as it was conducted pursuant to the HLURB-NCRFO’s decision and the OP’s orders. The Court emphasized that the homeowners’ association could not be held hostage by the refusal of certain members to relinquish their positions.
    What is the difference between term and tenure? Term refers to the period for which an officer is elected, while tenure represents the actual time the officer holds office, which can be shorter or longer than the term due to various circumstances.

    This case serves as a reminder of the delicate balance between upholding the finality of judgments and ensuring their practical enforceability. The Supreme Court’s decision provides guidance on when clarifications are permissible and reinforces the importance of orderly elections in homeowners’ associations. This allows for smoother transitions and stable management within these communities.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: MULTINATIONAL VILLAGE HOMEOWNERS’ ASSOCIATION, INC. VS. ARNEL M. GACUTAN, G.R. No. 188307, August 02, 2017

  • Mortgage Agreements and Due Diligence: Protecting Buyers’ Rights in Condominium Developments

    This case clarifies the responsibilities of banks when providing loans to real estate developers, particularly concerning the rights of condominium unit buyers. The Supreme Court affirmed that banks must exercise a high degree of diligence before accepting properties as collateral, including verifying compliance with regulations like Presidential Decree No. 957, which requires prior approval for mortgages on condominium units. Failure to do so can render the mortgage null and void, especially concerning buyers who were not properly notified of the mortgage. This decision reinforces the protection of buyers’ rights and underscores the banking sector’s duty to conduct thorough due diligence in real estate transactions.

    When Banking Collides with Condominium Rights: Who Bears the Burden of Due Diligence?

    The case of Prudential Bank vs. Ronald Rapanot revolves around a condominium unit buyer’s right to their property versus a bank’s claim as a mortgagee. Ronald Rapanot purchased a unit in the Wack-Wack Twin Towers Condominium from Golden Dragon Real Estate Corporation. Unbeknownst to Rapanot, Golden Dragon had mortgaged the same unit to Prudential Bank (now Bank of the Philippine Islands) as collateral for a loan. When Golden Dragon failed to deliver the unit despite full payment, Rapanot filed a complaint, leading to a legal battle that reached the Supreme Court. The core legal question is whether the bank, as a mortgagee, acted with due diligence and can thus enforce its mortgage against Rapanot, the buyer.

    The facts reveal that Rapanot made a reservation payment for Unit 2308-B2 on May 9, 1995. Subsequently, on September 13, 1995, Golden Dragon secured a loan from Prudential Bank and executed a Mortgage Agreement, which included Unit 2308-B2 as collateral. Rapanot later entered into a Contract to Sell on May 21, 1996, and completed his payments by April 23, 1997, receiving a Deed of Absolute Sale. Despite this, Golden Dragon failed to deliver the unit. The bank denied Golden Dragon’s request to substitute the collateral due to unpaid accounts. Rapanot, finding himself without his purchased unit, initiated legal action.

    The Housing and Land Use Regulatory Board (HLURB) initially ruled in favor of Rapanot, declaring the mortgage null and void due to violations of Presidential Decree No. 957 (PD 957). This decree is crucial because it mandates that developers obtain prior written approval from the HLURB before mortgaging any condominium unit. It also requires developers to notify buyers of the mortgage. The HLURB found that Golden Dragon failed to comply with these requirements. The HLURB Board modified the Arbiter’s Decision, reducing some damages but affirming the core ruling. The Office of the President (OP) and later the Court of Appeals (CA) upheld the HLURB’s decision, leading Prudential Bank to seek recourse with the Supreme Court.

    The Supreme Court emphasized the limited scope of review under Rule 45 of the Rules of Court, which generally confines appeals to questions of law. While exceptions exist, the Court found that none applied in this case. The Bank argued that it was denied due process before the HLURB and that it should be considered a mortgagee in good faith. However, the Court rejected these arguments, highlighting that the essence of due process is the opportunity to be heard, which the Bank had through its participation in preliminary hearings and submission of its Answer.

    Regarding the due diligence, the Supreme Court stated that the Mortgage Agreement was null and void as against Rapanot. The Court cited Section 18 of PD 957, which explicitly requires prior written approval from the HLURB for any mortgage on a condominium unit. Further, the buyer must be notified before the release of the loan. According to the Supreme Court, acts executed against the provisions of mandatory or prohibitory laws are void, referencing Far East Bank & Trust Co. v. Marquez, where it was stated that,

    “the mortgage over the lot is null and void insofar as private respondent is concerned.”

    The Court elaborated on the bank’s duty to exercise a higher degree of diligence than private individuals, especially when dealing with real estate developers. This is because the banking business is impressed with public interest, according to Philippine National Bank v. Vila,

    “the highest degree of diligence is expected, and high standards of integrity and performance are even required, of it.”

    The Court found that the Bank failed to ascertain whether Golden Dragon had obtained the required HLURB approval and whether the units offered as collateral already had buyers.

    Moreover, the Court noted that Rapanot had made his initial payment four months before the Mortgage Agreement, a fact the Bank could have easily verified. Thus, the Supreme Court concluded that the Bank’s failure to exercise the required diligence constituted negligence, negating its claim as a mortgagee in good faith. The Court affirmed the lower courts’ decisions, emphasizing the protection of buyers’ rights in real estate transactions and the banking sector’s responsibility to conduct thorough due diligence. This underscores the principle that banks cannot simply rely on clean titles but must actively investigate potential encumbrances and compliance with relevant laws.

    FAQs

    What was the key issue in this case? The key issue was whether Prudential Bank (now BPI) could be considered a mortgagee in good faith and thus enforce its mortgage on a condominium unit against the buyer, Ronald Rapanot, who had fully paid for the unit.
    What is Presidential Decree No. 957 (PD 957)? PD 957, also known as the Subdivision and Condominium Buyers’ Protective Decree, aims to protect real estate buyers from fraudulent practices. It requires developers to secure HLURB approval before mortgaging properties and to notify buyers of the mortgage.
    What does it mean to be a mortgagee in good faith? A mortgagee in good faith is someone who, without knowledge of any defect in the title, accepts a mortgage on a property. However, banks are held to a higher standard and must exercise due diligence in verifying the property’s status.
    Why was Prudential Bank not considered a mortgagee in good faith? Prudential Bank failed to verify whether Golden Dragon had secured HLURB approval for the mortgage, as required by PD 957, and whether the property already had a buyer. This lack of diligence disqualified them from being considered a mortgagee in good faith.
    What is the significance of HLURB approval in mortgaging condominium units? HLURB approval ensures that the proceeds of the mortgage loan are used for the development of the condominium project and protects the interests of the buyers. Mortgaging without approval violates PD 957 and can render the mortgage void.
    What is the bank’s responsibility when dealing with real estate developers? Banks must exercise a higher degree of diligence than private individuals. They must verify the developer’s compliance with relevant laws, such as PD 957, and investigate the property’s status to protect the interests of potential buyers.
    What was the outcome of the case? The Supreme Court affirmed the lower courts’ decisions, ruling that the mortgage was null and void concerning Ronald Rapanot. Prudential Bank was ordered to cancel the mortgage and release the title to Rapanot.
    What does this case mean for condominium buyers? This case reinforces the protection of condominium buyers’ rights, ensuring that banks cannot simply rely on clean titles but must actively investigate potential encumbrances and compliance with relevant laws before granting loans to developers.

    This case serves as a crucial reminder of the importance of due diligence in real estate transactions, particularly for banks and financial institutions. It highlights the need to go beyond surface-level checks and actively investigate compliance with regulations like PD 957 to protect the rights of property buyers. The ruling reinforces the principle that banks must exercise a higher standard of care, ensuring transparency and fairness in real estate dealings.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Prudential Bank vs. Rapanot, G.R. No. 191636, January 16, 2017

  • Assignment of Credit vs. Subrogation: Clarifying UCPB’s Role in Property Disputes

    In the case of Liam vs. United Coconut Planters Bank, the Supreme Court clarified the distinction between assignment of credit and subrogation. The Court ruled that UCPB, as an assignee of credit, could not be held liable for the developer’s failure to deliver a condominium unit. This distinction is vital for understanding the rights and obligations of parties when financial institutions take over receivables from property developers, safeguarding consumers from misdirected claims.

    When Condo Dreams Meet Bank Realities: Who’s Responsible for a Developer’s Broken Promises?

    Florita Liam entered into a contract with Primetown Property Group, Inc. (PPGI) to purchase a condominium unit, with PPGI later assigning its receivables from Liam to United Coconut Planters Bank (UCPB). When PPGI failed to deliver the unit, Liam sought recourse against both PPGI and UCPB. This legal battle hinged on whether UCPB, by accepting the assignment of receivables, stepped into the shoes of PPGI regarding the obligation to deliver the property. The Supreme Court’s analysis centered on distinguishing between an assignment of credit and subrogation, which are distinct legal concepts with different implications for the parties involved.

    The Court emphasized that an assignment of credit is an agreement where the owner of a credit (the assignor) transfers their right to another (the assignee) without needing the debtor’s consent. In contrast, subrogation requires the agreement of all three parties: the original creditor, the debtor, and the new creditor. The critical difference lies in the debtor’s consent: assignment of credit does not require it, whereas subrogation does. To illustrate, the Court quoted:

    “An assignment of credit is an agreement by virtue of which the owner of a credit, known as the assignor, by a legal cause, such as sale, dation in payment, exchange or donation, and without the consent of the debtor, transfers his credit and accessory rights to another, known as the assignee, who acquires the power to enforce it to the same extent as the assignor could enforce it against the debtor.”

    In Liam’s case, the Memorandum of Agreement (MOA) and Deed of Sale/Assignment between PPGI and UCPB clearly indicated an assignment of credit. The MOA explicitly stated that PPGI sold its outstanding receivables to UCPB as partial settlement of its loan. The Deed of Sale/Assignment reinforced this, granting UCPB the right to pursue condominium buyers like Liam for outstanding balances. The Supreme Court highlighted that the intention of the parties is paramount in interpreting contracts. It stated that:

    “The primary consideration in determining the true nature of a contract is the intention of the parties. If the words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. Such intention is determined not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the parties.”

    Here, the Court found no ambiguity in the agreements between PPGI and UCPB. The absence of Liam’s consent to these agreements further solidified their nature as an assignment of credit. Liam was only notified of the arrangement after it was finalized, reinforcing that UCPB was merely acquiring PPGI’s right to collect receivables, not assuming PPGI’s obligations as the property developer. Moreover, PPGI explicitly stated that the transfer of receivables to UCPB would not alter the terms of the original Contract to Sell, meaning UCPB never replaced PPGI as the responsible party for delivering the unit. This point is vital because it preserves the original agreement between the buyer and developer and ensures that the bank’s involvement is limited to financial aspects.

    Therefore, the Supreme Court sided with UCPB, stating that it could not be held liable for PPGI’s failure to deliver the condominium unit. As a mere assignee, UCPB’s role was limited to collecting receivables, not fulfilling the developer’s contractual obligations. The Court cited previous cases with similar circumstances to bolster its decision. The Supreme Court relied on this precedent to show that the principle was consistently upheld. It affirmed the Court of Appeals’ ruling that UCPB was improperly impleaded in Liam’s complaint for specific performance.

    Furthermore, Liam argued that UCPB’s appeal to the HLURB Board of Commissioners should have been dismissed for failure to post an appeal bond. The Supreme Court rejected this argument, clarifying that the HLURB rules mandate an appeal bond only in cases involving a monetary award. Since the initial HLURB decision ordered UCPB to allow Liam to choose another unit or maintain her original unit, it did not constitute a monetary judgment requiring a bond.

    What is the key difference between assignment of credit and subrogation? Assignment of credit does not require the debtor’s consent, while subrogation requires the agreement of all three parties involved. This distinction is crucial in determining the rights and obligations of parties in financial transactions.
    Was UCPB liable for PPGI’s failure to deliver the condominium unit? No, the Supreme Court ruled that as a mere assignee of credit, UCPB was not liable for PPGI’s contractual obligations as the property developer. UCPB’s role was limited to collecting receivables.
    Did Liam’s consent matter in the assignment of credit to UCPB? No, the Supreme Court emphasized that the debtor’s consent is not necessary for an assignment of credit to take effect. Notice to the debtor is sufficient.
    What was the effect of PPGI’s statement that the agreement would not alter the terms of the Contract to Sell? This statement reinforced that UCPB was not stepping into PPGI’s shoes as the developer. The original contractual obligations remained with PPGI.
    Why was UCPB not required to post an appeal bond before the HLURB Board of Commissioners? The HLURB rules require an appeal bond only for judgments involving a monetary award. The initial HLURB decision did not order UCPB to pay a specific sum of money.
    What were the agreements between PPGI and UCPB? The parties entered into a MOA and Deed of Sale/Assignment that transferred the receivables from PPGI’s condominium buyers to UCPB.
    What did HLURB Arbiter Marino Bernardo M. Torres decide? The HLURB Arbiter ruled in favor of Liam. It ordered that UCPB should allow Liam to choose from among the available units, or to maintain the unit. Further, the arbiter said that realty taxes and documentary stamp tax must be charged to UCPB.
    What did the CA rule in this case? The Court of Appeals ruled in favor of UCPB. It reversed the Office of the President’s decision, holding that Liam had no right to demand specific performance from UCPB.

    The Supreme Court’s decision in Liam vs. United Coconut Planters Bank provides critical clarity on the scope of liability for assignees of credit in property development projects. By differentiating between assignment and subrogation, the Court reinforces the principle that financial institutions taking over receivables do not automatically inherit the contractual obligations of the original developers. This ruling underscores the importance of carefully examining the nature of agreements between developers and financial institutions to determine the extent of each party’s responsibilities.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: FLORITA LIAM, PETITIONER, VS. UNITED COCONUT PLANTERS BANK, RESPONDENT., G.R. No. 194664, June 15, 2016

  • HLURB Jurisdiction: Enforcing Contempt Powers in Housing Disputes

    This Supreme Court decision clarifies that if a party believes another is defying a Housing and Land Use Regulatory Board (HLURB) order, the contempt proceedings must be initiated within the HLURB itself, not directly in the courts. The Court emphasized that HLURB, as a quasi-judicial body, has the power to enforce its orders. Therefore, individuals must first exhaust remedies within the HLURB before seeking court intervention. This ruling underscores the importance of respecting the authority and processes of specialized administrative bodies in resolving disputes within their expertise.

    Unraveling Real Estate Disputes: Who Holds the Power to Enforce Rulings?

    The case of Spouses Gerardo and Corazon Trinidad vs. Fama Realty, Inc. and Felix Assad arose from a decades-long dispute over the purchase of subdivision lots. In 1991, the Trinidads agreed to buy 14 lots from Fama Realty but disagreements over payments led to legal battles before the HLURB. The HLURB eventually ruled in favor of the Trinidads, ordering Fama Realty to execute contracts to sell for some of the lots. Despite multiple appeals that reached the Supreme Court, this decision became final. However, when the Trinidads sought to execute the HLURB’s ruling, Fama Realty allegedly delayed compliance and sought to alter the purchase price, prompting the Trinidads to file a contempt petition directly with the Supreme Court. This action raised a crucial question: Where should contempt charges be filed when a party defies a quasi-judicial body like the HLURB?

    The Supreme Court anchored its decision on the principle that when a quasi-judicial body like the HLURB has the power to cite for contempt, that power must be invoked first. The Court cited Section 12, Rule 71 of the Rules of Court, which stipulates that the rule on contempt applies to quasi-judicial entities unless otherwise provided by law. More importantly, the Court emphasized that Article 218 of the Labor Code grants the National Labor Relations Commission (NLRC) the power to hold any offending party in contempt. The court referenced Robosa v. National Labor Relations Commission, reiterating that Rule 71 of the Rules of Court is to be observed only when there is no law granting them contempt powers.

    Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt proceedings before the trial court. This mode is to be observed only when there is no law granting them contempt powers.

    Building on this principle, the Supreme Court highlighted that Executive Order No. 648, the HLURB Charter, explicitly grants the HLURB Board the power to cite and declare any person, entity, or enterprise in direct or indirect contempt. The HLURB can do so when there is disorderly conduct, refusal to comply with lawful orders, or interference with official functions. This authority is further reinforced by Rule 22 of the 2011 HLURB Revised Rules of Procedure, which outlines the process and penalties for indirect contempt. Given these provisions, the Court found that the Trinidads should have initially sought to cite Fama Realty for contempt before the HLURB itself, instead of directly filing a petition with the Supreme Court.

    The ruling underscores the importance of exhausting administrative remedies before resorting to judicial intervention. This principle ensures that specialized bodies like the HLURB, equipped with the expertise and authority to handle specific types of disputes, are given the first opportunity to resolve the issues. Allowing parties to bypass these administrative processes would undermine the authority of these bodies and create unnecessary delays and complications. Moreover, the Court’s decision reinforces the idea that HLURB’s processes should be respected. This means following the prescribed procedures and timelines for resolving disputes.

    The decision also implicitly touches on the concept of forum shopping, even though the Court did not explicitly rule on it in this context. Forum shopping occurs when a party attempts to have their case heard in a particular court or tribunal that is likely to provide a favorable outcome. The Court’s emphasis on exhausting administrative remedies suggests that parties should not attempt to circumvent established procedures by directly seeking relief from higher courts. This principle helps maintain the integrity of the legal system and prevents parties from manipulating the process to their advantage.

    In summary, this case serves as a reminder of the specific powers and jurisdiction granted to quasi-judicial bodies like the HLURB. It emphasizes that the HLURB’s contempt powers must be invoked within its own processes before seeking intervention from the regular courts. This ruling promotes efficiency, respects administrative expertise, and reinforces the importance of adhering to established procedures in resolving disputes.

    FAQs

    What was the main legal issue in this case? The central issue was whether a party could directly file a contempt petition with the Supreme Court for an alleged violation of a HLURB order, or if the contempt proceedings should first be initiated within the HLURB itself.
    What did the Supreme Court decide? The Supreme Court ruled that because the HLURB has the power to cite for contempt under its charter and rules, the contempt proceedings should have been initiated within the HLURB before seeking intervention from the regular courts.
    Why does the HLURB have the power to cite for contempt? Executive Order No. 648, the HLURB Charter, grants the HLURB Board the power to cite and declare any person, entity, or enterprise in direct or indirect contempt, especially when there is refusal to comply with lawful orders or interference with official functions.
    What is the significance of exhausting administrative remedies? Exhausting administrative remedies means that parties must first utilize the processes available within administrative bodies like the HLURB before seeking judicial intervention. This respects the expertise and authority of these specialized bodies.
    What constitutes indirect contempt in the context of HLURB proceedings? Under Rule 22 of the 2011 HLURB Revised Rules of Procedure, indirect contempt includes failure or refusal to comply with or obey any lawful order, decision, writ, or process of the Board of Commissioners or its Arbiters.
    What is the penalty for indirect contempt in HLURB cases? The HLURB can impose a fine of P2,000.00, plus an additional fine of P500.00 for each day that the violation or failure to comply continues. They can also order the confinement of the offender until the order or decision is complied with.
    What is forum shopping, and how does it relate to this case? Forum shopping is when a party tries to have their case heard in a court likely to provide a favorable outcome. By emphasizing the need to exhaust administrative remedies, the Court discourages attempts to circumvent established procedures.
    What should someone do if they believe a party is not complying with a HLURB order? They should initiate contempt proceedings within the HLURB, following the procedures outlined in the 2011 HLURB Revised Rules of Procedure.

    In conclusion, the Trinidad vs. Fama Realty case clarifies the jurisdictional boundaries for contempt proceedings related to HLURB orders. It reinforces the need to respect administrative processes and utilize the specific powers granted to quasi-judicial bodies in resolving disputes. This case serves as a guide for those involved in real estate disputes and administrative law, providing clarity on the appropriate channels for seeking redress.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: SPOUSES GERARDO AND CORAZON TRINIDAD, VS. FAMA REALTY, INC. AND FELIX ASSAD, G.R No. 203336, June 06, 2016