Case Summary (G.R. No. 109404)
Factual Background and Procedural History
The private respondent bought two lots on installment from petitioner and co-developer Fermin Salazar in 1972, before P.D. 957 took effect. The Delta Village Homeowners’ Association filed complaints alleging petitioner’s failure to develop the subdivision. The National Housing Authority (NHA) issued a cease and desist order against petitioner in 1979, prohibiting further sales. The private respondent suspended payments due to non-development. Despite this suspension, petitioner resold one lot to third parties (the Relevo spouses), who acquired title. The buyer sought annulment of this resale and reconveyance. Initially, the Office of Appeals, Adjudication, and Legal Affairs (OAALA) dismissed the complaint, supporting petitioner's right to cancel the contract. On appeal, the Human Settlements Regulatory Commission (HSRC) reversed OAALA’s decision, applying P.D. 957, ordering petitioner to complete development and reinstate the sale for one lot, and refund payments with interest for the lot now registered to the Relevos. The Executive Secretary affirmed this decision, prompting petitioner’s appeal to the Supreme Court.
Legal Issue
Whether the failure to develop a subdivision legally justifies a buyer’s suspension of amortization payments under land purchase agreements executed before P.D. 957’s enactment. Further, whether P.D. 957 applies retroactively to contracts prior to its effectivity to protect buyers from undeveloped subdivision schemes.
Application of P.D. 957 and Retroactivity
The Court ruled that P.D. 957, though enacted after the contracts were entered into, applies retroactively. This is inferred from the statute’s intent to protect buyers and remedy the serious issues prevalent in subdivision developments. The law’s purpose, derived from its preamble, highlights the need to regulate subdivisions where developers default on their obligations, often preying on buyers’ interests through non-development and other fraudulent acts. Retrospective application aligns with legislative intent, ensuring the law effectively addresses existing protection gaps.
Supporting Statutory Provisions Granting Retroactivity
Several provisions of P.D. 957 explicitly impose obligations on developers for projects sold before the decree:
- Section 20 mandates completion of facilities within one year from license issuance.
- Section 21 requires developers to complete obligations for lots sold before the decree within two years from enactment or provide performance bonds.
- Section 23 protects buyers by prohibiting forfeiture of installment payments if buyers desist from further payments due to developers’ failure to meet development obligations, and entitles buyers to refund with legal interest.
These provisions unequivocally suggest retroactive application of the law to contracts predating the decree.
Contractual Provisions Consistent with P.D. 957
The installment contracts include a clause binding the developer to comply with existing and future laws concerning subdivision and development. This clause validates applying P.D. 957 obligations retroactively and supports the respondent Executive Secretary's application of the law to the contract.
Evidence of Non-Development and Impact on Buyer’s Payments
The HLURB found that petitioner failed to develop the subdivision as agreed, validating the buyer's refusal to continue amortization payments under Section 23 of P.D. 957. Although private respondent defaulted on payments starting May 1975, the petitioner delayed contract cancellation until May 1979, after P.D. 957’s enactment. Moreover, the delay signified petitioner’s tacit condonation of defaults, undermining petitioner’s argument for buyer’s breach.
Refund Ordered and Jurisdi
...continue readingCase Syllabus (G.R. No. 109404)
Background and Factual Context
- The case arose from a dispute involving the failure to develop a subdivision and whether such failure justified a buyer’s suspension of amortization payments under land purchase agreements entered into before the enactment of Presidential Decree No. 957 (P.D. 957), known as "The Subdivision and Condominium Buyers’ Protective Decree," enacted in 1976.
- In 1972, respondent (buyer) purchased two lots in the E & S Delta Village, located in Quezon City, on an installment basis from petitioner and his co-owner/developer, Fermin Salazar.
- Complaints for non-development were filed by the Delta Village Homeowners' Association, leading the National Housing Authority (NHA) in 1979 to order the petitioner to cease and desist from selling further lots in the village.
- While the NHA cases were pending, private respondent suspended payments alleging the petitioner’s failure to develop the subdivision and further complained that one of the lots was resold to third parties (spouses Rodolfo and Adelina Relevo) despite his pending payments.
- The buyer requested annulment of the resale and the reconveyance of the lot.
Procedural History
- The Office of Appeals, Adjudication and Legal Affairs (OAALA) initially ruled in favor of the petitioner, allowing cancellation of the contract and dismissing the buyer’s complaint in 1983.
- On appeal, the Housing and Land Use Regulatory Board (HLURB) Commission Proper reversed OAALA’s decision, applying P.D. 957 retroactively, ordering the developer to complete the project, reinstate the buyer’s contract on one lot, and refund payments on the other with interests.
- The Executive Secretary affirmed HLURB’s decision in 1992, denying the petitioner’s Motion for Reconsideration.
- The petitioner elevates the case to the Supreme Court via a Petition for Review, challenging the application of P.D. 957 to contracts predating its enactment.
Central Legal Issue
- Whether the failure to develop a subdivision legally justifies a buyer’s suspension of amortization payments on installment land purchase agreements executed before P.D. 957 came into effect.
- Whether P.D. 957 applies retroactively to contracts entered into before its promulgation.
- The scope and limits of the Executive Secretary’s jurisdiction in ordering refunds and enforcing P.D. 957.