G.R. No. 96494 - Casa Filipina Development Corp. vs. Deputy Executive Secretary

Case Summary (G.R. No. 96494)

Factual Background

On June 30, 1986, private respondent filed a complaint before the OAALA against petitioner for failure to execute and deliver the deed of sale and transfer certificate of title. Private respondent alleged that on May 2, 1984, he entered into a contract to sell with petitioner for a 120 sq. m. lot identified as Lot 8, Block 9, Phase II of Casa Filipina, Sucat II, Bo. San Dionisio, Parañaque, Metro Manila, for a total purchase price of P68,400.00. He alleged that he paid a downpayment of P16,416.00, and that the remaining P51,984.00 was payable in twelve (12) equal monthly installments of P4,915.16 with twenty-four percent (24%) interest per annum starting September 3, 1984.

Private respondent further alleged that on October 7, 1985, he made full and final payment under O.R. No. 6266. Despite complete payment, petitioner allegedly refused to execute the deed of absolute sale and deliver the transfer certificate of title. Private respondent also alleged that beginning October 1985, he offered to pay for or reimburse petitioner the expenses for transfer of the title, but petitioner refused to accept such reimbursement. He added that he was compelled to hire a lawyer to protect his interests.

Petitioner’s defense was anchored on prematurity. It contended that private respondent’s action was premature because he supposedly failed to comply with other conditional requirements under their contract, particularly payment of transfer expenses. Petitioner asserted that had private respondent paid the required fees, it would have been willing to effect the transfer of the title.

OAALA Decision Under Section 25 of P.D. No. 957

On January 21, 1987, the OAALA rendered judgment for private respondent. It relied on Section 25 of P.D. No. 957, which provides that the owner or developer shall deliver the title upon full payment, and that no fee except those required for registration may be collected for issuance of such title. The same provision also requires that if a mortgage exists at the time of issuance, the owner/developer must redeem the mortgage or the corresponding portion within six months from the issuance of the title so that a fully paid lot may be secured and delivered to the buyer without liens or encumbrances.

The OAALA ordered petitioner, within fifteen (15) days from finality, to execute the deed of absolute sale for the subject lot in favor of private respondent. It further ordered petitioner to bill private respondent the total amount due for registration and transfer expenses, and required petitioner, within fifteen (15) days from receipt of payment of those expenses, to deliver the transfer certificate of title free from liens and encumbrances. If petitioner could not deliver the title, petitioner was ordered to refund private respondent’s total payments amounting to P76,180.82, plus 24% interest per annum from June 30, 1986 until fully paid, and to pay P2,000.00 as attorney’s fees.

HLURB Proceedings and Affirmance

Petitioner appealed to the HLURB. In its memorandum, petitioner narrated circumstances that purportedly caused its failure to deliver the title. It asserted that its original mortgagee bank was Royal Savings Bank, which was later absorbed by Comsavings Bank due to a bank run. Petitioner claimed that Comsavings Bank was not amenable to petitioner’s earlier arrangement with Royal Savings Bank on individual redemption of title. Petitioner therefore claimed that Comsavings Bank demanded that petitioner’s obligations be paid prior to release of any individual title. Petitioner further maintained that it could not seasonably meet the demand due to conditions brought about by the closure of Royal Savings Bank and the alleged inability of its past administration to put up an adequate economic program.

On October 6, 1987, the HLURB dismissed petitioner’s appeal for lack of merit and affirmed the OAALA decision in toto. The HLURB held that private respondent’s full payment should warrant immediate delivery of the title, and it emphasized that Section 25 of P.D. No. 957 makes delivery mandatory within six (6) months. It reasoned that since full payment was made on October 7, 1985, petitioner had only the maximum period contemplated by law for delivery, and yet delivery remained uncertain after more than a year. It rejected petitioner’s asserted justification regarding past administration and closure of Royal Savings Bank because petitioner submitted no proof to substantiate the claim. The HLURB considered petitioner’s explanation to be merely an allegation that did not warrant approval.

Office of the President Proceedings

Petitioner elevated the matter to the Office of the President. On April 11, 1989, the Office of the President dismissed petitioner’s appeal for lack of merit and affirmed the HLURB. It denied petitioner’s motion for reconsideration on September 26, 1989 for lack of merit. Petitioner then filed the present petition seeking reversal of the Office of the President’s actions.

Issues Raised by Petitioner

Petitioner raised two issues. First, it asserted that the Deputy Executive Secretary erred in not applying settled jurisprudence and the law applicable to the case. Second, it claimed that the Deputy Executive Secretary erred in arriving at conclusions contradictory to the facts and evidence, amounting to grave abuse of discretion.

In support, petitioner advanced several arguments. It asserted that the OAALA granted both specific performance and rescission, despite petitioner’s position that these remedies cannot be availed of at the same time. Petitioner also contended that there was no evidence that private respondent had offered to pay transfer expenses. It further argued that the 24% interest imposed by the OAALA was high and without basis. It claimed that HLURB Resolution No. R-421 (series of 1988) allegedly limits interest in refund cases to twelve percent (12%). It also argued that while the contract specified 24% interest, the rate applied only to installment payments, not to refunds. Petitioner relied on Reformina v. Tomol, Jr., G.R. No. 59096, 139 SCRA 260, contending that unless the action involved forbearance of money or loan, courts may award interest only up to twelve percent (12%) (or six percent (6%), as petitioner stated). Finally, petitioner argued that since issuance of title had not yet happened due to Comsavings Bank’s takeover, the six-month redemption period under Section 25 had not begun to run.

Respondents’ Position and the Court’s Approach

The Court held that petitioner’s arguments lacked merit. It noted that the OAALA’s disposition ordered rescission or refund only in the event that specific performance was not feasible, thus negating petitioner’s portrayal that rescission and specific performance were simultaneously granted as independent and inconsistent remedies.

The Court also observed that petitioner was estopped from disputing the evidence on private respondent’s readiness to pay transfer expenses. It cited that, in petitioner’s appeal memorandum before the HLURB, petitioner prayed that it be given a period to redeem and demanded suspension of issuance of title from Comsavings Bank before any deed of absolute sale would be executed, and also prayed for ordering refund. The Court further relied on the HLURB and OAALA factual finding that private respondent was ready, willing, and able to pay the expenses for transfer of title as stipulated in the contract. The Court accorded finality to that finding and referred to precedents stating that factual findings of administrative bodies that are supported by evidence are accorded respect and finality.

Legal Basis on Interest Rate

On the interest issue, the Court adopted the reasoning advanced by the Office of the Solicitor General. It underscored that the case of Reformina v. Tomol, Jr. involved situations where damages in the form of interest were due but no specific rate had been previously set by the parties. The Court explained that here, the 24% interest per annum was mutually agreed upon in the contract to sell and was imposed on private respondent for payment of installments on the contract price. It held that there was no reason why the same interest rate could not apply to petitioner, given petitioner’s breach of its reciprocal obligation. The Court further cited Solid Homes Inc. v. Court of Appeals, where the Court held that the proper interest rate should be the interest expressly agreed upon by the parties in writing, consistent with Article 2209 of the Civil Code.

Redemption Period Under Section 25 of P.D. No. 957

The Court also addressed petitioner’s argument that the six-month period for redemption could not run until issuance of title. It focused on the statutory period of six months from the issuance of the title and asked what would happen when the title was never issued. It reje

Case Syllabus (G.R. No. 96494)

Parties and Procedural Posture

Casa Filipina Development Corporation filed a petition for review on certiorari seeking reversal of the Office of the President decision in O.P. Case No. 3722.
The respondents were the Deputy Executive Secretary, Office of the President, Malacanang, Manila, and Jose Valenzuela, Jr.
The Office of the President affirmed the Housing and Land Use Regulatory Board decision dated October 6, 1987, and its resolution dated September 26, 1989 denying reconsideration.
The Housing and Land Use Regulatory Board had dismissed the appeal for lack of merit and affirmed in toto the Office of Appeals, Adjudication and Legal Affairs (OAALA) decision dated January 21, 1987.
The Supreme Court dismissed the petition and affirmed the Office of the President’s April 11, 1989 decision and September 26, 1989 resolution.

Key Factual Allegations

Jose Valenzuela, Jr. filed a complaint on June 30, 1986 before the OAALA for failure to execute and deliver the deed of sale and transfer certificate of title.
He alleged that on May 2, 1984, he entered into a contract to sell for a 120 sq. m. lot identified as Lot 8, Block 9, Phase II of Casa Filipina, Sucat II, Bo. San Dionisio, Paranaque, Metro Manila.
He alleged a total purchase price of P68,400.00, with P16,416.00 as downpayment and the balance of P51,984.00 payable in 12 equal monthly installments of P4,915.16 with 24% interest per annum starting September 3, 1984.
He alleged full payment was made on October 7, 1985 under O.R. No. 6266.
He alleged that despite full payment, Casa Filipina Development Corporation refused to execute the deed of absolute sale and deliver the transfer certificate of title.
He alleged that since October 1985, he offered to pay or reimburse the expenses for the transfer of title, but petitioner refused to accept reimbursement.
He alleged that he was constrained to hire a lawyer to protect his interests.

Contractual and Defense Claims

Casa Filipina Development Corporation argued that the complaint was premature due to private respondent’s alleged failure to comply with other conditional requirements in the contract, particularly payment of transfer expenses.
Petitioner asserted that it would have been willing to effect transfer of the title had private respondent paid the transfer fees.
In its HLURB appeal memorandum, petitioner narrated that its failure to deliver title was linked to its mortgage situation involving Royal Savings Bank, later absorbed by Comsavings Bank.
Petitioner asserted that Comsavings Bank was not amenable to petitioner’s arrangement with Royal Savings Bank for individual redemption of titles.
Petitioner asserted that Comsavings Bank demanded that petitioner’s obligations be paid prior to release of any individual title.
Petitioner claimed it could not seasonably meet the demand due to alleged consequences of the closure or instability connected to the bank transition.

Administrative Proceedings Below

The OAALA rendered judgment on January 21, 1987 in favor of private respondent.
The OAALA relied on Section 25 of Presidential Decree No. 957, which required delivery of title upon full payment and limited fees, with mortgage redemption within six months from issuance of title.
The OAALA ordered petitioner, within 15 days from finality, to execute the deed of absolute sale and thereafter bill private respondent for total registration and transfer expenses.
The OAALA further ordered delivery of the transfer certificate of title, free from liens and encumbrances, within 15 days from receipt of complainant’s payment for registration and transfer expenses.
The OAALA ordered refund in the event petitioner could not deliver the title, specifying P76,180.82 plus 24% interest per annum from June 30, 1986, until fully paid.
The OAALA also awarded P2,000.00 as attorney’s fees for compelling litigation.
The HLURB dismissed petitioner’s appeal on October 6, 1987 for lack of merit and affirmed the OAALA in toto.
The HLURB held that full payment in October 1985 warranted immediate delivery and that Section 25 of P.D. No. 957 imposed a mandatory six-month period after issuance of title, rejecting petitioner’s justification for non-delivery based on lack of proof.
The Office of the President dismissed petitioner’s appeal for lack of merit on April 11, 1989 and denied reconsideration on September 26, 1989.

Statutory and Legal Framework

Presidential Decree No. 957 was central, particularly Section 25 (Issuance of Title).
Section 25 required the owner or developer to deliver title upon full payment and forbade collection of fees except those required for registration of the deed of sale.
Section 25 required that if a mortgage was outstanding at the time of issuance of title, the owner or developer must redeem within six months from issuance so title over fully paid units could be secured and delivered free of liens.
The decision also treated the constitutional backdrop as the 1987 Constitution, given the 1992 date of the Supreme Court ruling.
The Court applied principles on interest and