FIRST DIVISION
G.R. No. 162090 January 31, 2007SPOUSES HOWARD T. CO CHIEN and SUSAN Y. CO CHIEN, Petitioners,
vs.
STA. LUCIA REALTY & DEVELOPMENT, INC., and ALSONS LAND CORPORATION, Respondents.
D E C I S I O N
PUNO, CJ.:
This case is a Petition for Certiorari under Rule 45
of the Revised Rules of Court appealing the decision of the Court of
Appeals in CA G.R. SP No. 78161 entitled "Spouses Howard T. Co Chien
& Susan Y. Co Chien v. Sta. Lucia Realty & Development, Inc. and
Alsons Land Corporation."
The facts are undisputed.
Sometime in December 1995, private respondents Sta.
Lucia Realty & Development, Inc. (Sta. Lucia) and Alsons Land
Corporation (Alsons) offered for sale to the general public parcels of
land and golf shares to the Eagle Ridge Golf and Residential Estates
(Eagle Ridge) in General Trias, Cavite.1
Sta. Lucia, as the developer, owns 60% of Eagle Ridge while Alsons, the
owner of the land, owns the remaining 40% by virtue of a joint venture
agreement. Fil-Estate Realty Corporation (Fil-Estate) was commissioned
to sell the subdivision lots and/or golf shares under an Exclusive
Marketing Agreement executed on December 5, 1995.2
On December 20, 1995, Sta. Lucia and Alsons entered
into a Contract to Sell, including an addendum to the same, with the
petitioners, spouses Howard T. Co Chien and Susan Y. Co Chien (Spouses
Co Chien). According to the Contract to Sell, Spouses Co Chien shall
purchase Lot No. 16, Block No. 1, Phase I of Eagle Ridge with an area of
three hundred one (301) square meters for a lump sum price of one
million two hundred ninety three thousand three hundred pesos (P1,293,300.00),
with one half of the purchase price as down payment to be paid upon
signing the contract and the balance upon delivery of the title to the
land to Spouses Co Chien. The petitioners were also given a 10% discount
on the purchase price and thereafter they paid a down payment of five
hundred eighty one thousand five hundred thirty five pesos (P581,535.00),
after the discount. It was also agreed in the addendum to the Contract
to Sell that the 10% discount deducted from the down payment shall be
forfeited and added to the balance, should Spouses Co Chien fail to pay
the said balance within seven (7) days from notice that the title to the
subject property is ready for delivery.3
At the time the Contract to Sell was executed, the
private respondents did not possess a License to Sell and a Certificate
of Registration from the Housing and Land Use Regulatory Board (HLURB)
as required under Sections 4 and 5 of Presidential Decree No. 957 (P.D.
957). The License and Certificate were issued only in July 1997, one
year and six months after the execution of the Contract to Sell between
the petitioners and the private respondents.4
On January 19, 1998, Sta. Lucia informed the
petitioners that the title to the property was ready for delivery and
demanded the payment of the balance of the purchase price. Instead of
paying the balance, Spouses Co Chien tried to negotiate for a further
discount or, in the alternative, to exchange the property for a better
lot in Eagle Ridge. When Spouses Co Chien failed to pay within seven
days from notice of the availability of the title, the private
respondents forfeited the 10% discount previously given to the
petitioners in accordance with the contract and its addendum.5
On June 16, 1999, Spouses Co Chien sent a written
demand to Sta. Lucia for the refund of their down payment on the ground
that the Contract to Sell was void for the reason that at the time of
its execution, December 20, 1995, the private respondents had no
Certificate of Registration and License to Sell as required by Sections 4
and 5 of P.D. 957.6
On July 6, 1999, failing to receive a favorable response from the
private respondents, Spouses Co Chien filed a complaint with the HLURB.7
On May 30, 2001, the HLURB Arbiter ruled in favor of
Spouses Co Chien ordering Sta. Lucia and Alsons to refund the down
payment with legal interest from July 6, 1999 and to further pay the
petitioners P10,000.00 as attorney’s fees. The HLURB
Arbiter ruled that the lack of Certificate of Registration and License
to Sell at the time of execution of the Contract to Sell resulted in the
nullification of the contract.8
On appeal, the HLURB Board of Commissioners (the
HLURB Board) reversed the HLURB Arbiter’s decision and held that the
Contract to Sell was valid and ordered Spouses Co Chien to pay the
private respondents the balance of P646,150.00 without
penalty interest. The HLURB Board also ordered Sta. Lucia and Alsons to
pay jointly and severally an administrative fine of P20,000.00 for two counts of violation of Section 4 of P.D. 957 and another P20,000.00 for two counts of violation of Section 5 of the same decree.9
Spouses Co Chien then appealed to the Office of the
President. In a decision dated June 10, 2003, the Office of the
President affirmed the decision of the HLURB Board in toto. Not satisfied with the aforementioned ruling, Spouses Co Chien filed a Petition for Review with the Court of Appeals.10
On February 10, 2004, the Court of Appeals denied the petition and affirmed the decision of the Office of the President.11
Hence, this petition.
The primary issues in this case are as follows: (1)
whether the absence of the Certificate of Registration and License to
Sell at the time of execution rendered the Contract to Sell and its
addendum null and void; and (2) whether the petitioners are guilty of
laches or estoppel.
We will discuss the issues seriatim.
It is the contention of the petitioners that the lack
of Certificate of Registration (the Certificate) and License to Sell
(the License) on the part of the private respondents at the time the
contract was executed rendered the Contract to Sell null and void, thus,
entitling them to a refund of their down payment. Spouses Co Chien aver
that the use of the words "shall not" and the phrase "unless he shall
have first obtained a license to sell within two weeks from the
registration of such project" in Section 5 of P.D. 957 indicate that the
absence of the Certificate and License render the contract null and
void.12 The
private respondents, on the other hand, state that the provision of law
invoked by Spouses Co Chien does not provide that the absence of the
Certificate and License at the time the contract was executed would
automatically invalidate the contract.13
The private respondents assert that the Sec. 5, P.D. 957 is merely
directory as it does not affect substantial rights, does not relate to
the essence of a sale and compliance therewith is simply a matter of
administrative convenience.14
Sections 4 and 5 of P.D. 957 state:
Sec. 4. Registration of Projects
. . . .
The owner or the real estate dealer interested in the
sale of lots or units, respectively, in such subdivision project or
condominium project shall register the project with the Authority by filing therewith a sworn registration statement containing the following information:
. . . .
The subdivision project of the condominium project shall be deemed
registered upon completion of the above publication requirement. The
fact of such registration shall be evidenced by a registration
certificate to be issued to the applicant-owner or dealer.
Sec. 5. License to Sell. - Such owner or dealer to
whom has been issued a registration certificate shall not, however, be
authorized to sell any subdivision lot or condominium unit in the
registered project unless he shall have first obtained a license to
sell the project within two weeks from the registration of such project.
The Authority, upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is
convinced that the owner or dealer is of good repute, that his business
is financially stable, and that the proposed sale of the subdivision
lots or condominium units to the public would not be fraudulent.15
The same decree further states:
Sec. 38. Administrative Fines. - The Authority may
prescribe and impose fines not exceeding ten thousand pesos for
violations of the provisions of this Decree or of any rule or regulation
thereunder. Fines shall be payable to the Authority and enforceable
through writs of execution in accordance with the provisions of the
Rules of Court.
Sec. 39. Penalties. - Any person who shall violate
any of the provisions of this Decree and/or any rule or regulation that
may be issued pursuant to this Decree shall, upon conviction, be
punished by a fine of not more than twenty thousand (P20,000.00) pesos
and/or imprisonment of not more than ten years: Provided, That in the
case of corporations, partnership, cooperatives, or associations, the
President, Manager or Administrator or the person who has charge of the
administration of the business shall be criminally responsible for any
violation of this Decree and/or the rules and regulations promulgated
pursuant thereto.16
P.D. 957 is a law that seeks to regulate the sale of
subdivision lots and condominiums in view of the increasing number of
incidents wherein "real estate subdivision owners, developers,
operators, and/or sellers have reneged on their representations and
obligations to provide and maintain properly"17
the basic requirements and amenities, as well as "reports of alarming
magnitude…of swindling and fraudulent manipulations perpetrated by
unscrupulous subdivision and condominium sellers and operators."18
As such, P.D. 957 requires the registration not just of the developers,
sellers, brokers and/or owners of the project but also of the project
itself.19
Upon registration of the project, a license to sell must be obtained
prior to the sale of the subdivision lots or condominium units therein.20
The law also provides for the suspension and revocation of the
registration and license in certain instances, as well as the procedure
to be observed in the event thereof.21
Finally, the law provides for administrative fines and other penalties
in case of violation of, or non-compliance with its provisions.22
A review of the relevant provisions of P.D. 957
reveals that while the law penalizes the selling of subdivision lots and
condominium units without prior issuance of a Certificate of
Registration and License to Sell by the HLURB, it does not provide that
the absence thereof will automatically render a contract, otherwise
validly entered, void. The penalty imposed by the decree is the general
penalty provided for the violation of any of its provisions.23 It is well-settled in this jurisdiction that the clear language of the law shall prevail.24
This principle particularly enjoins strict compliance with provisions
of law which are penal in nature, or when a penalty is provided for the
violation thereof. With regard to P.D. 957, nothing therein provides for
the nullification of a contract to sell in the event that the seller,
at the time the contract was entered into, did not possess a certificate
of registration and license to sell.25
Absent any specific sanction pertaining to the violation of the
questioned provisions (Secs. 4 and 5), the general penalties provided in
the law shall be applied. The general penalties for the violation of
any provisions in P.D. 957 are provided for in Sections 38 and 39. As
can clearly be seen in the aforequoted provisions, the same do not
include the nullification of contracts that are otherwise validly
entered.
As found by the Court of Appeals, in the case at bar,
the requirements of Sections 4 and 5 of P.D. 957 do not go into the
validity of the contract, such that the absence thereof would
automatically render the contract null and void. It is rather more of an
administrative convenience in order to allow for a more effective
regulation of the industry.26
While it is the intent of the prohibition in Section 5 of P.D. 957 "to
prevent cases of swindling and fraudulent manipulations perpetrated by
unscrupulous subdivision and condominium sellers and operators"27 and to ensure that "penalties be imposed on fraudulent practices and manipulations committed in connection therewith,"28
such does not obtain in this case, as it is undisputed that the title
to the subject property has been available for more than a year, and the
Eagle Ridge project was almost 100% completed, before Spouses Co Chien
decided to have the Contract declared void and to seek a refund of their
down payment. Contrary to Spouses Co Chien’s bare allegations of bad
faith on the part of the private respondents, the Court of Appeals found
that at the time the Contract to Sell was executed, the applications
for the Certificate and the License were already pending with the HLURB
but were only issued several months thereafter.29
More importantly, when Spouses Co Chien received notice of the
availability of the title to the subject property, the private
respondents had long since been issued the Certificate and License. It
was in fact Spouses Co Chien who, instead of paying the balance as
required in the contract, sought to renegotiate the same, and failing
therein, sought to nullify the contract a year and a half after notice
that the title to the subject property, free from any liens and
encumbrance, was already available for delivery.
One of the purposes of P.D. 957 is to discourage and
prevent unscrupulous owners, developers, agents and sellers from
reneging on their obligations and representations to the detriment of
innocent purchasers. The law mandates HLURB to closely regulate,
supervise and monitor the real estate industry, particularly residential
developments such as subdivisions and condominium projects. To this
end, P.D. 957 provides for the issuance, suspension, revocation and even
the outright denial of registration and license to developers, agents
and the project itself, as well as penalties for the non-compliance with
the requirements provided therein. It does not, however, provide for
the nullification of a contract, due to the lack of registration and
license at the moment of execution, which in this case was thereafter
undisputedly issued by HLURB. As correctly averred by respondent Alsons,
the requirement for registration and license is primarily directed at
preventing fraudulent schemes from being perpetrated on the public who
seek to have their own abode.30
No fraud has been alleged, much less proven, by Spouses Co Chien in the
present case. The lack of certificate and registration, without more,
while penalized under the law, is not in and of itself sufficient to
render a contract void. Such a deficiency, however, together with other
relevant factors may be duly considered in nullifying a contract, should
the circumstances so demand.
The second issue in the instant petition is whether
or not estoppel bars the claim of Spouses Co Chien. There are generally
three kinds of estoppel:
(1) estoppel in pais;
(2) estoppel by deed; and
(3) estoppel by laches.
In the first classification, a person is
considered in estoppel if by his conduct, representations or admissions
or silence when he ought to speak out, whether intentionally or through
culpable negligence, "causes another to believe certain facts to exist
and such other rightfully relies and acts on such belief, as a
consequence of which he would be prejudiced if the former is permitted
to deny the existence of such facts."31
Estoppel by deed, on the other hand, occurs when a party to a deed and
his privies are precluded from denying any material fact stated in the
said deed as against the other party and his privies.32
Estoppel by laches is considered an equitable estoppel wherein a person
who failed or neglected to assert a right for an unreasonable and
unexplained length of time is presumed to have abandoned or otherwise
declined to assert such right and cannot later on seek to enforce the
same, to the prejudice of the other party, who has no notice or
knowledge that the former would assert such rights and whose condition
has so changed that the latter cannot, without injury or prejudice, be
restored to his former state.33
In the present case, Spouses Co Chien only demanded a
refund and alleged the nullity of the Contract due to lack of the
Certificate and License after it failed to renegotiate for a better lot
or a bigger discount, or three and a half (3-1/2) years after the
execution of the contract, and one and a half (1-1/2) years from notice
of the availability of the title and the demand for full payment. Due to
the unexplained delay in the assertion of their rights despite the
opportunity to do so, Spouses Co Chien are now estopped from raising the
issue of lack of the Certificate and License, particularly since the
same have long since been issued to the private respondents. In fact,
there is nothing left for the fulfillment of the obligations set forth
in the Contract to Sell and its addendum, except for the payment of the
balance by Spouses Co Chien so that the title to the property can
finally be transferred in their name. Further, the act of renegotiating
the Contract to Sell may be considered a tacit ratification of whatever
defect the contract allegedly suffers from.
It is well-settled that the terms of a contract have the force of law between the parties.34
As such, the terms thereof shall govern their relationship, rights and
obligations in connection with the same. Obligations arising from
contracts should be complied with in good faith. Unless the stipulations
in the contract are contrary to law, morals, good customs, public order
or public policy, the same are binding as between the parties.35
In the instant case, as previously discussed, the Contract to Sell
between Spouses Co Chien and private respondents Sta. Lucia and Alsons
has all the essential requisites of a valid and binding contract. While
there is non-compliance with the requirements in Sections 4 and 5 of
P.D. 957 due to the lack of the Certificate and License at the moment of
execution, such defect does not affect the intrinsic validity of the
contract, particularly in this case wherein the said Certificate and
License have been issued prior to the demand for the payment of the
balance of the purchase price and the project is almost 100% complete
and operational.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 78161 is AFFIRMED in toto.
Costs against petitioners.
SO ORDERED.
REYNATO S. PUNO
Chief Justice
WE CONCUR:
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
Associate Justice
| RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA Asscociate Justice |
CANCIO C. GARCIA
Associate Justice
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, I certify that the conclusions in the above decision had
been reached in consultation before the case was assigned to the writer
of the opinion of the Court’s Division.
REYNATO S. PUNOChief Justice
Footnotes
1 Rollo, p. 9.
2 Id. at pp. 241-242.
3 Id.
4 Id. at p. 6.
5 Id. at pp. 242-243.
6 Id. at p. 11.
7 Id. at p. 12.
8 Id. at pp. 12-13.
9 Id. at pp. 79-92.
10 Id. at pp. 93-115.
11 Id. at pp. 38-44.
12 Rollo, p. 224.
13 Id. at p. 163.
14 Id. at p. 244.
15 Presidential Decree No. 957, July 12, 1976; emphasis supplied.
16 Id.
17 Id.
18 Id.
19 Id. at Secs. 4 and 11.
20 Id. at Sec. 5.
21 Id. at Secs. 8, 9, 12-16.
22 Id. at Secs. 38-40.
23 Id. at supra note 15.
24 Government Service Insurance System v. Commission on Audit, G.R. Nos. 138381 and G.R. No. 141625, November 10, 2004.
25 Presidential Decree No. 957, Sec. 5.
26 Rollo, pp. 43-44.
27 Id.
28 Id. at Preamble par. 4.
29 Id.
30 Rollo, p. 255.
31 31 Corpus Juris Secundum 237.
32 31 Corpus Juris Secundum 155.
33 Placewell International Services Corporation v. Ireneo B. Camote, G.R. No. 169973, June 26, 2006; Heirs of Eulalio Ragua v. Court of Appeals, G.R. Nos. 88521-22 and 89366-67, January 31, 2000.
34 Spouses Ponciano Almeda and Eufemia P. Almeda v. The Court of Appeals and Philippine National Bank, G.R. No. 113412, April 17, 1996.
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