G.R. No. 189755 - Liwag vs. Happy Glen Loop Homeowners Association, Inc.

Case Summary (G.R. No. 189755)

Factual Background

The dispute arose from a water facility located on Lot 11, Block 5 of Happy Glen Loop Subdivision in Deparo, Caloocan City. The original developer, F.G.R. Sales, obtained a loan from Ernesto Marcelo, who thereafter became successor-in-interest and represented to subdivision lot buyers and government agencies that a water facility existed in the subdivision. For more than thirty years the residents relied on that facility as their sole source of water. Marcelo sold Lot 11, Block 5 to Hermogenes Liwag in September 1995, and Transfer Certificate of Title No. C-350099 issued to him. After Hermogenes died in 2003, petitioner Emeteria Liwag demanded removal of the overhead water tank from the parcel, prompting the Respondent Association to initiate administrative proceedings.

Proceedings Before the HLURB Arbiter

The Respondent filed a Complaint before the HLURB praying, inter alia, for specific performance, confirmation and maintenance and donation of water facilities, annulment of sale, and cancellation of TCT No. C-350099. Housing and Land Use Arbiter Joselito Melchor heard the case and rendered a Decision dated 5 October 2004. The Arbiter declared the existence of an easement for the water system on Lot 11, Block 5; made permanent a Temporary Restraining Order to allow continued use and maintenance of the deep well and overhead tank by the complainants; declared void ab initio the deed of sale dated 26 February 2001 and TCT No. C-350099; recommended possible criminal action against respondents Marcelo and Liwag; and ordered joint and several payment of P10,000.00 as attorneys fees and P20,000.00 as damages.

HLURB Board of Commissioners' Decision

On appeal the HLURB Board of Commissioners reversed aspects of the Arbiter’s ruling. The Board found that Lot 11, Block 5 was not an open space and that Marcelo had complied with the open space requirements of P.D. No. 1216 by donating 9,047 square meters of open space and road lots. The Board further held that there was no proof Marcelo or the original developer had represented Lot 11 as open space and concluded that the use of the lot as the site of the water tank was merely tolerated, not constituting an easement or a reserved open space.

Office of the President Review

The Respondent appealed to the Office of the President, which set aside the HLURB Board Decision and affirmed the Arbiter’s Decision. The OP held that Lot 11, Block 5 constituted open space because it hosted the subdivision’s water installation and because Marcelo’s official representations on file with the HLURB National Capital Region Field Office showed the lot’s public purpose. The OP also ruled that the open space required under P.D. No. 957 excluded road lots, leaving the subdivision short of the required open space, and it found that petitioner was aware of the water installation in view of Hermogenes Liwag’s 1982 affidavit.

Court of Appeals Ruling

The Court of Appeals, in CA-GR SP No. 100454, affirmed the OP Decision with modification. The CA held that the HLURB possessed jurisdiction to invalidate the sale and the issuance of the TCT, agreed that an easement for a water facility existed on Lot 11 and that this easement formed part of the subdivision’s required open space under P.D. No. 1216, but it deleted the Arbiter’s recommendation for criminal action against petitioner and struck down the awards of attorneys fees and damages that had been granted by the Arbiter.

Issues Presented to the Supreme Court

The principal legal questions presented were whether the HLURB possessed exclusive jurisdiction over the dispute; whether an easement for the water facility existed on Lot 11, Block 5; whether that parcel formed part of the subdivision’s open space as required by P.D. No. 1216 and thus was beyond the commerce of man; whether the sale and the subsequent issuance of TCT No. C-350099 were void; and whether petitioner could invoke indefeasibility of title or the prohibition against collateral attacks on Torrens titles to defeat the administrative action.

Parties' Contentions

Petitioner maintained that the sale was valid, that her title was protected by the indefeasibility and conclusiveness of Torrens registration, and that the proceedings amounted to an impermissible collateral attack on her title under P.D. No. 1529, Sec. 48. The Respondent contended that the sale of the lot hosting the sole water source violated obligations imposed on subdivision developers by P.D. No. 957 and implementing rules, that Marcelo had represented the existence of a water facility to buyers and government agencies, and that the continued use of the lot as a water installation created an easement and formed part of the open space required by law.

Supreme Court's Ruling

The Court denied the petition for review and affirmed the Court of Appeals Decision and Resolution. The Court held that the HLURB had exclusive jurisdiction under P.D. No. 1344 to hear complaints that amounted to unsound real estate business practices and to adjudicate claims by subdivision lot buyers against developers for failure to provide required facilities. The Court found that an easement for the water facility existed on Lot 11, Block 5; that the easement was continuous and apparent and had been acquired by prescription; that Lot 11 formed part of the subdivision’s open space as contemplated by P.D. No. 1216; and that open spaces are reserved for public use, are beyond the commerce of man, and are not susceptible of private appropriation. Consequently, the sale of the subject parcel by the subdivision owner or developer to petitioner’s late husband was void and the annulment of the deed and cancellation of the TCT were proper. The Court affirmed the appellate court’s deletion of the Arbiter’s recommendation for criminal action and the awards of attorneys fees and damages.

Legal Basis and Reasoning

The Court grounded HLURB jurisdiction in P.D. No. 1344, which grants the HLURB exclusive power to hear claims involving unsound real estate business practices and claims by subdivision lot buyers against developers. The Court reasoned that the allegation that the developer sold the lot where the subdivision’s sole water source was situated sufficiently alleged an unsound real estate business practice and fell squarely within the HLURB’s mandate and within the remedial scope of P.D. No. 957 and its implementing rules, including the duty to provide adequate water facilities (Rules Implementing the Subdivision and Condominium Buyers Protective Decree, Sec. 11(B)(4)). On the nature of the encumbrance, the Court applied Civil Code Arts. 613 through 615 and 620 to conclude that the water installation constituted a continuous and apparent easement that had been acquired by prescription. For the characterization of the parcel as open space, the Court employed the canon of statutory construction of ejusdem generis to inte

Case Syllabus (G.R. No. 189755)

Parties and Procedural Posture

Emeteria Liwag filed a Rule 45 petition assailing the Decision and Resolution of the Court of Appeals in CA-GR SP No. 100454.
Happy Glen Loop Homeowners Association, Inc. instituted the original complaint before the HLURB seeking confirmation, maintenance and donation of water facilities, annulment of sale, and cancellation of title.
The HLURB Housing and Land Use Arbiter rendered a decision in favor of the Association and voided the deed of sale and TCT covering Lot 11, Block 5.
The HLURB Board of Commissioners reversed the Arbiter’s decision, prompting an appeal to the Office of the President, which set aside the Board and affirmed the Arbiter.
The Court of Appeals affirmed the Office of the President with modification, and the present petition sought review of that appellate ruling.

Key Factual Allegations

The original developer, F.G.R. Sales, assigned its rights in Happy Glen Loop Subdivision to Ernesto Marcelo in satisfaction of a loan obligation.
Marcelo represented to lot buyers and government agencies that a water facility existed in the Subdivision, and the residents relied on that facility as their sole water source for almost thirty years.
Marcelo sold Lot 11, Block 5 to Hermogenes Liwag in 1995, and Transfer Certificate of Title No. C-350099 issued to him.
After Hermogenes’s death, Emeteria Liwag demanded removal of the overhead water tank situated on Lot 11, prompting the Association to file the HLURB complaint.
Hermogenes executed an affidavit dated 10 August 1982 acknowledging the sufficiency of the subdivision’s water supply.

Procedural History

The HLURB Arbiter issued a Decision dated 5 October 2004 confirming the existence of an easement for the water system, making a temporary restraining order permanent, declaring the deed of sale void ab initio, cancelling the TCT, and awarding attorney’s fees and damages.
The HLURB Board of Commissioners issued a Decision dated 7 June 2005 finding Lot 11 was not an open space, that Marcelo had complied with P.D. 1216, and that the use of Lot 11 for the water tank was merely tolerated.
The Office of the President issued a Decision dated 5 March 2007 that set aside the Board and affirmed the Arbiter’s finding that Lot 11 was an open space and that an easement for the water facility existed.
The Court of Appeals rendered a Decision dated 13 March 2009 affirming the OP and Arbiter insofar as they found HLURB jurisdiction and the existence of an easement and open space status, but deleting the award of attorney’s fees and damages and disallowing a criminal filing recommendation against Emeteria Liwag.
The Supreme Court denied the Rule 45 petition and affirmed the Court of Appeals’ Decision and Resolution in their entirety.

Issues Presented

Whether the HLURB possessed jurisdiction to hear and decide the Association’s complaint.
Whether an easement for a water facility existed on Lot 11, Block 5.
Whether Lot 11 formed part of the Subdivision’s open space as required under P.D. 1216 and P.D. 957.
Whether the sale of Lot 11 and the issuance of TCT No. C-350099 were void and whether the principle of indefeasibility of title barred relief.

Court's Ruling and Disposition

The Court affirmed the Court of Appeals’ Decision and Resolution and denied the petition for review.
The Court held that the HLURB had exclusive jurisdiction over the