Title
Lefebre vs. A Brown Co., Inc.
Case
G.R. No. 224973
Decision Date
Sep 27, 2017
Lefebre reserved a lot in Xavier Estates based on a promised golf course. After non-development and contract cancellation, she sued for misrepresentation. SC ruled in her favor, invalidating rescission due to RA 6552 violations and awarding a refund under PD 957.
dispute
buyer
developer

Case Summary (G.R. No. 224973)

Factual Background

Petitioners reserved a residential lot in Xavier Estates in 1998 after respondent advertised that a Manresa 18-Hole All Weather Championship Golf Course would be developed. GINA LEFEBRE upgraded her reservation to a 1,107-square meter lot priced at P5,313,600.00. The parties executed a Contract to Sell providing a thirty percent down payment of P1,594,080.00, which included a P10,000.00 reservation fee, and an amortization of the balance in eighty-four monthly installments. The purported golf-course amenity was not developed. Respondent cancelled the Contract to Sell for nonpayment after Lefebre failed to pay the remaining balance despite having offered to settle within six months. Lefebre claimed she had paid a total of P8.1 million including interests and surcharges and alleged an unpaid balance of P1,345,722.18. She filed before the HLURB a complaint for misleading and deceptive advertisement, annulment of rescission of the Contract to Sell, damages and other relief, praying for development of the amenity or refund with interest. Respondent maintained that Lefebre was remiss in payments as early as 2001, that notices of cancellation had been issued, and that the misrepresentation claim was raised only as an afterthought to justify default.

Proceedings Before the HLU Arbiter

The HLU Arbiter, in a Decision dated January 5, 2011, found for respondent on the issue of misleading and deceptive advertisement. The Arbiter concluded that Lefebre presented the misrepresentation claim only after she defaulted and after several notices of cancellation had been sent, and therefore she could not invoke Section 23 of PD 957 regarding nonforfeiture of payments because she did not give prior notice of her desistance from further payment. The Arbiter nonetheless held that Lefebre was entitled to the cash surrender value of payments already made prior to the actual cancellation pursuant to Section 3 of RA 6552, and indorsed the matter to the HLURB Monitoring Section for investigation of respondent’s admitted failure to develop the advertised golf course.

HLURB Board of Commissioners' Ruling

The HLURB-BOC, in a Decision dated May 10, 2011, set aside the Arbiter’s decision. The Board held that respondent did not validly cancel the Contract to Sell because it failed to tender the cash surrender value required by Section 3(b) of RA 6552, and that the contract therefore remained subsisting. Given respondent’s admission that it no longer intended to develop the golf course, the HLURB-BOC ruled that Lefebre was entitled to a full refund of the payments made amounting to P8.1 Million with interest, less penalties or surcharges. The Board also awarded moral damages and attorney’s fees of P20,000.00 each, plus costs of suit, and imposed an administrative fine of P10,000.00 for failure to provide the amenity. Respondent’s motion for reconsideration was denied in a Resolution dated August 26, 2011.

Proceedings Before the Court of Appeals

Respondent filed an original petition for certiorari under Rule 65, Rules of Court, before the Court of Appeals. The CA initially dismissed the petition in a February 6, 2012 Resolution for failure to exhaust administrative remedies, including the available appeal to the Office of the President. On reconsideration the CA vacated the dismissal, applying the doctrine that exhaustion may be dispensed with under exceptional circumstances. In a Decision dated July 8, 2015, the CA set aside the HLURB-BOC Decision and reinstated the HLU Arbiter’s Decision. The CA concluded that Lefebre’s failure to pay outstanding installments constituted a valid ground to rescind the Contract to Sell, that she was estopped from attributing nonpayment to the non-development of the golf course because she did not notify respondent between 2001 and 2008, and that her remedy was therefore limited to the cash surrender value under RA 6552. The CA denied reconsideration in a Resolution dated May 24, 2016.

Parties' Contentions Before the Supreme Court

Petitioners contended that the CA erred in reinstating the Arbiter’s Decision because respondent failed to invoke and exhaust the administrative remedies available after the HLURB-BOC Decision and therefore lost the right to judicial review by certiorari. Respondent argued that exceptions to the doctrine of exhaustion of administrative remedies justified its direct resort to the CA and invoked equitable considerations to excuse noncompliance with procedural requirements. The CA had relied on enumerated exceptions to exhaustion drawn from prior decisions to permit respondent’s direct judicial action.

Issues Presented

The essential issue before the Court was whether the Court of Appeals properly reinstated the HLU Arbiter’s Decision despite respondent’s direct filing of a petition for certiorari without first appealing the HLURB-BOC Decision to the Office of the President and without complying with the prescribed modes of appeal.

The Supreme Court's Ruling

The Supreme Court granted the petition. The Court reversed and set aside the Court of Appeals Decision dated July 8, 2015 and its Resolution dated May 24, 2016, and reinstated the HLURB-BOC Decision dated May 10, 2011. The Court held that respondent plainly failed to observe the doctrine of exhaustion of administrative remedies by not appealing the HLURB-BOC Decision to the Office of the President as required by HLURB rules and resolutions, and by not taking an appeal under Rule 43 of the Rules of Court. The Court found no adequate or persuasive justification to relax the exhaustion requirement or to apply equity jurisdiction. Consequently, the HLURB-BOC Decision had attained finality and the CA lacked jurisdiction to reverse it by an original action in certiorari.

Legal Basis and Reasoning

The Court relied on Section 60(b), Rule 17 of the HLURB Rules (HLURB BOC Resolution No. 871, Series of 2011) which provides that decisions of the Board of Commissioners become final and executory fifteen days after receipt if no appeal has been filed, and on Section 2, Rule XXI of HLURB Resolution No. 765, Series of 2004 which prescribes an appeal from HLURB-BOC decisions to the Office of the President. The Court cited Teotico v. Baer for the settled doctrine that available administrative remedies must be exhausted before invoking judicial action. The Court observed that exceptions to the exhaustion doctrine exist but that respondent had not adequately pleaded or demonstrated

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