Title
AFP Retirement and Separation Benefits System vs. Sanvictores
Case
G.R. No. 207586
Decision Date
Aug 17, 2016
Buyer paid in full for land; sellers failed to deliver title. Court ruled sellers jointly liable for refund, damages, and administrative fine.
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Case Digest (G.R. No. 207586)

Facts:

Background of the Case:

  • In 1994, Prime East Properties, Inc. (PEPI), formerly Antipole Properties, Inc., offered Eduardo Sanvictores (Sanvictores) a parcel of land in Village East Executive Homes, a subdivision project, for sale on an installment basis. The lot was designated as Lot 5, Block 64, Phase II, covering 204 square meters in Tayuman, Pantok, Binangonan, Rizal.

Payment and Contract Execution:

  • On April 20, 1994, Sanvictores paid the down payment of P81,949.04.
  • On June 9, 1994, a Contract to Sell was executed between PEPI and AFP Retirement and Separation Benefits System (AFPRSBS) as the "Seller" and Sanvictores as the "Buyer."

Full Payment and Failure to Deliver Title:

  • On February 27, 1999, Sanvictores paid the full purchase price of P534,378.79.
  • Despite full payment, PEPI and AFPRSBS failed to execute the deed of absolute sale or deliver the title to the property.
  • On September 6, 2000, Sanvictores demanded the execution of the deed of sale and delivery of the title. PEPI claimed the title was still with the Philippine National Bank (PNB) due to the economic crisis.
  • After four years of no communication, Sanvictores filed a complaint for rescission of the contract, refund of payment, damages, and attorney's fees before the Housing and Land Use Regulatory Board (HLURB).

Defenses of PEPI and AFPRSBS:

  • PEPI argued that the delay was due to force majeure and that it acted in good faith.
  • AFPRSBS claimed it was not the owner or developer of the subdivision and that it was not a party to the contract, as the signatory, Norma Espina, was not its authorized representative.

Issue:

  1. Whether AFPRSBS is jointly and severally liable with PEPI for the refund, damages, and administrative fine.
  2. Whether AFPRSBS is liable for moral and exemplary damages, attorney's fees, and costs of litigation.
  3. Whether AFPRSBS should pay an administrative fine for violating Section 20 in relation to Section 38 of PD 957.

Ruling:

The Supreme Court denied the petition and upheld the decisions of the HLURB, the Office of the President (OP), and the Court of Appeals (CA). The Court ruled that:

  1. AFPRSBS is jointly and severally liable with PEPI under the Contract to Sell, as both were referred to as the "Seller" without any delineation of their rights and obligations. The nature of their obligation was solidary under Article 1207 of the Civil Code.
  2. AFPRSBS is liable for moral and exemplary damages, attorney's fees, and costs of litigation due to its failure to fulfill its obligations under the contract.
  3. AFPRSBS is liable for the administrative fine for violating PD 957, as it was part of the "Seller" in the contract.

The Court modified the interest rate on the actual damages from 12% to 6% per annum.

Ratio:

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