G.R. No. 118822 - G.O.A.L., Inc. vs. Court of Appeals

Case Summary (G.R. No. 118822)

Factual Background

GOAL obtained from the NHA a loan of P4.425 million on 23 May 1983 to construct Gemin I Condominium at 941 Gonzales St., Ermita, Manila, and contracted with Matson International Corporation in 1984 to complete construction for P4.2 million within one year; the contractor abandoned the project late in 1984 with approximately sixty percent completion. GOAL thereafter offered condominium units for sale in 1985, with the private respondents among the buyers; subsequent financing from NHA to pursue completion of the fifth floor was conditioned upon NHA's holding of the condominium certificates of title of the buyers.

Complaint and Administrative Decision

In August 1989 the private respondents filed with the HLURB–Office of Appeals, Adjudication and Legal Affairs (OAALA) a complaint alleging illegal construction of the fifth floor, failure to deliver title to private respondent Filomeno Teng, and failure to provide adequate parking spaces. On 31 March 1989 OAALA ordered GOAL to stop construction of the fifth floor, to deliver Teng’s title, and to provide adequate parking for unit owners.

Appeals and Review

OAALA’s decision was appealed to the Office of the President Legal Affairs (OPLA), which affirmed OAALA, and thereafter the Court of Appeals affirmed OPLA’s ruling in toto in CA-G.R. SP No. 31082 on 28 September 1994; GOAL’s motion for reconsideration was denied, prompting the present petition for review on certiorari to the Supreme Court.

Issues Presented

The petition was confined to three principal contentions: that the construction of the fifth floor was lawfully authorized because GOAL obtained the written approval of HLURB under Sec. 22 of P.D. 957; that GOAL’s failure to deliver Teng’s certificate of title was excused by the contractor’s abandonment and consequent financial difficulty amounting to force majeure or good faith; and that GOAL was not obliged to provide indoor parking as part of the free off-street parking mandated by Sec. 12-D, No. 2, Rule V of the Implementing Rules.

Petitioner’s Contentions

GOAL argued that the fifth floor construction had the written approval required by Sec. 22 of P.D. 957, that the abandonment of the first contractor justified retention of Teng’s title because GOAL used it as collateral to secure additional NHA funds, and that the Implementing Rules exempted indoor parking from the free off-street parking requirement; GOAL also challenged the awards of moral, exemplary damages and attorney’s fees as excessive.

Construction of Fifth Floor — Legal Standard

The Court observed that Sec. 22 of P.D. 957 expressly prohibits alteration of approved subdivision development without the permission of the Authority and the written conformity or consent of the duly organized homeowners association or, absent such association, by majority of the lot buyers; the written approval of the Authority alone is insufficient to authorize such alteration.

Construction of Fifth Floor — Application

Applying Sec. 22, the Court found that GOAL’s reliance on NHA approval did not satisfy the statutory prerequisite of the written conformity or consent of the homeowners association or the majority of buyers; therefore the construction of the fifth floor violated P.D. 957, and the Court of Appeals correctly applied the law in affirming OAALA’s order to stop construction.

Delivery of Certificate of Title — Legal Standard

The Court examined the parties' Contract to Sell and Sec. 25 of P.D. 957, which unambiguously mandate that upon full payment the vendor shall convey to the vendee all rights and interests in the unit and deliver the title of the lot or unit to the buyer, subject only to the limited redemption period for outstanding mortgages provided by the decree.

Delivery of Certificate of Title — Application

The Court held that upon full payment GOAL lost its rights and interests in Teng’s unit and therefore had no legal right to retain or use Teng’s certificate of title as collateral for additional loans; the contractor’s abandonment and GOAL’s financial predicament did not excuse noncompliance with Sec. 25 of P.D. 957 or the Contract to Sell, and force majeure or good-faith mistake did not absolve GOAL from the statutory duty to deliver the title.

Parking Spaces — Legal Standard

The Court interpreted the Implementing Rules provision cited by GOAL and clarified the distinction between street parking and off-street parking, and between units and common areas in condominium law, noting that common areas and facilities are portions of the condominium property not included in units and are subject to undivided interest by unit owners.

Parking Spaces — Application

The Court rejected GOAL’s narrowing of “off-street” to exclude indoor parking, observing that the law excludes only street parking; therefore parking provided in a base

Case Syllabus (G.R. No. 118822)

Parties and Procedural Posture

G.O.A.L., INC. filed a petition for review on certiorari seeking to set aside parts of the Court of Appeals decision affirming lower administrative rulings.
The respondents included the Court of Appeals, the Office of the President Legal Affairs (OPLA), the Housing and Land Use Regulatory Board (HLURB), and private complainants Rizalino Simbillo, William Ong, Herminia Mesina, Selfa Martinez, Filomeno Teng, Rafael Javier, Fernando del Mundo, Mildred Pareja, Remedios Lasquete, George Cabigan, and Arcadio Sampang.
Petitioner confined its Supreme Court challenge to the construction of the fifth floor of Gemin I Condominium, the issuance of title to private respondent Filomeno Teng, and the provision of free parking spaces.
The HLURB-OAALA rendered a decision on 31 March 1989 ordering petitioner to stop the fifth-floor construction, to deliver Teng's title, and to provide adequate parking spaces, which was affirmed by OPLA and thereafter by the Court of Appeals.
The Supreme Court entertained the petition and thereafter denied it, affirming the CA and administrative rulings in substance.

Key Factual Allegations

G.O.A.L., INC. obtained a loan from the National Housing Authority (NHA) on 23 May 1983 in the amount of P4.425 million for the construction of Gemin I Condominium.
Petitioner entered into a 1984 Contract Agreement with Matson International Corporation for construction at a price of P4.2 million, but the contractor abandoned the project later in 1984 with approximately sixty percent of work completed.
In 1985 petitioner offered condominium units for sale and private respondents, including Filomeno Teng, purchased units and made payments.
To complete construction of the fifth floor, NHA granted additional funding conditioned on its retention of the condominium certificates of title of the purchasers.
Private respondents filed a complaint before HLURB-OAALA in August 1989 raising illegality of the fifth-floor construction, failure to deliver Teng's title, and lack of adequate parking.

Issues Presented

Whether the construction of the fifth floor complied with Sec. 22, P.D. 957.
Whether G.O.A.L., INC. was obliged to deliver the certificate of title to Filomeno Teng upon full payment despite contractor abandonment.
Whether the free-parking requirement under the Implementing Rules of P.D. 957 includes indoor parking and thus required petitioner to provide such spaces.
Whether the awards of moral damages, exemplary damages, attorney's fees, and administrative fines were proper.

Contentions of the Parties

G.O.A.L., INC. contended that it obtained written approval from HLURB and that such approval satisfied Sec. 22, P.D. 957.
G.O.A.L., INC. argued that contractor abandonment amounted to force majeure and excused its failure to deliver Teng's title.
G.O.A.L., INC. maintained that the free-parking obligation under Sec. 12-D, No