[G.R. No. 139512. January 23, 2002]

SOLID HOMES, INC., etc. vs. MANUEL SANCHEZ, et al.

FIRST DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated 23 JAN 2002.

G.R. No. 139512 (Solid Homes, Inc., etc. vs. Manuel Sanchez, et al.)

Petitioner assails the decision of the Court of Appeals in CA-G.R. SP No. 47907 affirming the decision of the Office of the President. The procedural antecedents are undisputed. As found by the Court of Appeals:

Medina Foods, Industries, Inc. entered into several contracts to sell parcels of land to Manuel Sanchez. The following are the terms and considerations in the transactions, to wit:

“1. Contract to sell dated March 19, 1991 for Lot Nos. 8-A, 8-B, 8-D, 8-E, 8-F, 8-G, 7-A, 7-B and Lot 7-G all located at Loyola Grand Villas, Quezon City.

Contract Price : P36,308,572.50

Down Payment : 5,000,000.00

Balance : 31,308,572.50

Terms : P 2,850.00/sq.m. for all the above lots except for Lot No. 7-B which has a Contract Price of P4,773,322.50 at P1.5 M/month for 15 months and p8,808,572.50 on or before 16th month.

2. Contract to Sell dated July 3, 1990 for Lot No. 7-F.

Contract Price : P2,707,500.00

Down Payment : 1,000,000.00

Balance : 1,707,500.00

Terms : P 2,707.50/sq.m.

P 106,718.75/month

for 16 months

3. Contract to Sell dated July 14, 1990 for Lot No. 7-E.

Contract Price : P2,780,602.50

Down Payment : 1,500,000.00

Balance : 2,707.50/sq.m.

P 28,060.25/month

for 10 months”

To insure compliance with their respective obligations under the said contracts, the parties entered into an Escrow Agreement with Far East Bank and Trust Company (FEBTC). Pursuant to the Escrow Agreement, Medina Foods Industries, Inc., through its attorney-in-fact Solid homes, Inc., surrendered and delivered to FEBTC the owner’s duplicate copies of Transfer Certificates of Titles for the following lots: 7-A, 7-B, 7-E, 7-F, 7-G, 8-A to 8-G.

Manuel Sanchez thereafter commenced to pay his obligation, which was, however, suspended in October 1990. On account of said suspension, Solid Homes on August 13, 1991 made a demand on Sanchez to pay his obligations. Sanchez replied asserting that under their contract, he is justified to suspend payment of his obligation since Solid Homes had failed to develop the projects within six (6) months from the execution of the contracts. Repeated demands were made on Sanchez but the latter merely reiterated his position that there was non-development of the project.

When Sanchez failed to comply with his obligation, Solid Homes wrote to Sanchez on March 18, 1992 informing him of its desire to rescind and cancel the contracts to sell and apply and credit whatever payments made to an equivalent area based on P2,850.00 per square meter, in accordance with paragraph 7 of the Contracts to Sell. On April 1, 1993, Solid Homes sent Sanchez a Notice of Formal Notarial Rescission with Affidavit of Formal Notarial Rescission.

On July 3, 1993, Solid Homes, Inc. filed a petition for Confirmation of Rescission, Delivery of Title and Damages against Manuel Sanchez and FEBTC before the Housing and Land Use Regulatory Board (HLURB). The petition was docketed as HLRB Case No. REM-070293-5483.

x x x

On April 27, 1994, the Arbiter issued a decision in favor of the complainant, the dispositive portion of which reads:

“WHEREFORE, judgment is hereby rendered as follows:

1. Confirming the rescission and cancellation of the Contract to Sell respectively dated March 19, 1991, July 3, 1990 and June 14, 1990 and the crediting of whatever payments made by Manuel Sanchez to an equivalent area based on P2,850.00 per square meter;

2. Requiring Far East Bank and Trust Company within 30 days from finality hereof to return to the Complainant the following Transfer Certificate of Title Nos. 22457, 22456, 22458, 22455, 22459, 22460, 22422, 22438, 22443, 22439 and 22442 and all titles delivered into it because of escrow agreement;

3. Adjudging Sanchez and FEB to pay jointly and solidarily the Complainant the amount of P20,000.00 as damages and P20,000.00 as attorney’s fees. No pronouncement as to cost of suit.”

Sanchez filed a petition for review of the said decision with the HLURB Commissioners. On October 11, 1995, Sanchez filed a motion for ocular inspection contending that the primary issue in the case, which is whether or not there is full development of the subject properties, can best be settled by an ocular inspection of the said properties. This motion was granted by the HLURB in an Order dated December 1, 1995. The HLURB then ordered the creation of an inspection team to perform an ocular inspection “to finally assess and evaluate the situation in the subdivision site.”

On February 26, 1996, the Inspection Team submitted its report in compliance with the December 1, 1995 Order of the HLTJRB. The Board then rendered its Decision on May 21, 1996, reversing the findings of the Arbiter. It held that according to the evidence, the project has not been completed and therefore, Sanchez “was well within his right in suspending payments of amortization to complainants and hence, the rescission of the contract is not valid as Section 23 of P.D. No. 957.” The dispositive portion of said decision states:

“WHEREFORE, premises considered, the decision of the Office a quo is hereby SET ASIDE and a new judgment is hereby entered as follows:

1. Declaring the cancellation of the contract as null and void.

2. Ordering respondent to continue to pay the amortization to complainant upon complete development of the project in accordance with the original terms of the contracts.

3. Ordering FEBTC to continue to hold the titles of the lots in Escrow until after the parties have fully complied their obligation thereto.

4. Ordering complainant to pay respondent nominal damages in the amount of P100,000.00 within 15 days from finality hereof.

5. Ordering complainant to pay this Board the amount of P10,000.00 as and by way of administrative fine.

SO ORDERED.”

Solid Homes, Inc. moved to reconsider the above-mentioned decision. On February 6, 1997, the Board reconsidered its earlier decision.

As shown in the aforementioned inspection reports, the only significant uncompleted item is the electrical installations. For this purpose, we take judicial notice of the fact that this facility is not put into place until after the houses in the subdivision are constructed. In fact in this project, those lots where houses have been erected have already been provided with electricity. Since what were sold were only parcels of lots, installation of MERALCO electrical lines will necessarily have to be deferred pending construction of houses to be serviced.

While we find evidence pointing to the problem of non-maintenance, the same is brought about by the ordinary wear and tear to which the subject property is exposed and for which we cannot fault the complainant for non-development, for indeed there was development. Non-maintenance of the facilities in the subdivision is not the ground referred to under Section 23 of PD 957, which would justify the buyer in suspending his monthly amortizations, but non-development.

The Board thus reinstated the Arbiter’s Decision with some modifications, to wit:

“1. The amount of P16,820,156.20 paid by respondent Sanchez to complainant be credited to an equivalent area based on the rate agreed upon in the contracts to sell;

2. Complainant to execute the Deed of Sale in favor of respondent Sanchez covering so much area of the lots that the amount of P16,820,156.20 shall fully pay;

3. Ordering complainant to maintain the project in accordance with the approved plan until the same is transferred to the Homeowner’s Association or the Local Government concerned as the case may be; and

4. Ordering FEBTC to continue to hold in escrow the titles equivalent to the aforestated amount and shall deliver the same to respondent Sanchez and release the rest of the titles covered by the Escrow Agreement to the complainant within 30 days from finality of this decision.

SO ORDERED.”

Sanchez then filed an appeal before the Office of the President. On April 16, 1998, the Office of the President rendered a decision reversing the appealed decision and reinstating the May 21, 1996 Decision of the HLURB with some modifications with respect to the amount of P16,820,156.20 which had been paid by Sanchez which is to be credited in payment of an equivalent area to be chosen by Sanchez and the execution of the appropriate deed of sale as well as the holding of the remaining titles by FEBTC under the escrow agreement until after the parties shall have fully complied with their respective obligations.

x x x

It appears from the records that from the time the petitioner made demands on Sanchez to pay his obligations, the latter had consistently claimed that the subdivision has not been developed, thus justifying his non-payment of the lots therein.

It was shown, however, that throughout the pendency of the case, the HLURB or its authorized office had issued three (3) ocular inspection reports on the percentage of developments on the specific properties subject of the sale which were conducted on three (3) separate occasions (June 11, 1993, September 11, 1995 and February 28, 1996). The following reports show the progress of the developments:

6.11.93 9.11.95 2.28.96

1. Road 90% 100%

2. Sidewalk 100% 100% 100%

3. Curbs/Gutter 100% 100%

4. Drainage System 100% 100% 100%

5. Water System 80% 100%

6. Electrical

Distribution

System 100% 20% 50%

7. Pavement 100%

The results of all these inspections show substantial compliance on the part of complainant. It appears, however, that while on appeal before the Office of the President, said office required the HLURB to comment on the said appeal. On the basis of the report of the HLURB, the Office of the President reversed the earlier findings of the HLURB. (Rollo, pp. 238-244.)

Aggrieved, petitioner sought relief before the Court of Appeals, which affirmed the decision of the Office of the President.

Petitioner contends that the order of the Office of the President directing the HLURB to file a comment on the appeal on its own decision was “unprocedural.” The filing of such comment, according to petitioner, is not sanctioned by Administrative Order No. 18, the rules governing appeals to the Office of the President. In this regard, the Court of Appeals held, and this Court agrees, that:

This contention is without merit. In administrative cases, the rules of procedure are not applied in a very rigid, technical sense. Rules of procedure are used only to help secure substantial justice. (City of Cebu vs. Court of Appeals, 258 SCRA 175). (Rollo, p. 244.)

Notably, Administrative Order No. 18 does not prohibit the Office of the President from requiring such comment. In any case, there is no showing that petitioner objected to said order. It is therefore estopped from raising that alleged defect on appeal.

Petitioner further claims that it was denied due process since it was never furnished a copy of the HLURB’s comment. Assuming this to be true, petitioner had the opportunity to file a motion for reconsideration (Section 7, Administrative Order No. 18) through which it could have refuted the comment as well as the decision of the Office of the President but it did not do so. The essence of due process in administrative proceedings is an opportunity to explain one’s side or an opportunity to seek reconsideration of the action or ruling complained of. (Arboleda vs. National Labor Relations Commission, 303 SCRA 38 [1999].) A party cannot feign denial of due process when he had the opportunity to present his side. (Amion vs. Chiongson, 301 SCRA 614 [1999].)

Petitioner also questions the findings of the Court of Appeals that the property subject of the sale were not developed. This Court agrees with the Court of Appeals that the decision of the Office of the President are supported by substantial evidence:

x x x the HLURB found:

1. That upon a recent report submitted by their staff (attached herewith as Annex “A”) and review of the technical dockets of the entire project, the following new information were only recently brought to their attention;

a. The lots subject of this controversy are actually not included in the approved plans and survey returns of LGV West Ill-East IV on file with this Board, which were earlier used by our staff as basis for the inspections and reports: rather said lots appear to be portions of Loyola Grand Villas that have not been issued License to Sell;

b. The inspectors were apparently led into thinking that the lots in question were part of LGV West III on the account of the fact that the complainant’s application for Certificate of Completion, as well as the Certification issued by Development Monitoring Office (DMO) of this Board dated June 11, 1993, both of which form part of the references/supporting documents incorporated/attached to the complaint filed before our Regional Office, identified or referred to the area in controversy as “Loyola Grand Villas West III (portion only)”, moreover, LGV West III immediately adjoins that unlicensed portion where respondent’s lots are located;

2. That there appears to have been inadvertent misreference to the approved plans of the adjoining licensed Loyola Grand Villas West III and East in the inspection cited by the decisions of this Board.

3. That acting on the foregoing new information, the undersigned Board Members, have caused the Regional Office to conduct a follow up monitoring investigation of said unlicensed portion and the findings thereon are contained in the report attached and incorporated herewith as Annex “B.”

Substantial evidence, which is the quantum required to establish a fact in cases before administrative and quasi-judicial bodies, connotes merely that amount of relevant evidence which a reasonable mind might accept to be adequate in justifying a conclusion. (Equitable Banking Corporation vs. NLRC, 273 SCRA 352). According to the report made by the monitoring investigation committee based on the actual records available in the HLURB (Annex “B”):

“The following properties Blocks/Lot Nos. 7-A, 7-B, 7-E, 7-F, 7-G, 8-A, 8-B, 8-C, 8-D, 8-E, 8-F and 8-G can be located at Phase West III. Records on file show that said Phase has not been issued a Development Permit, License to Sell nor Certificate of Registration up to this date. The development of this Phase were noted to be halted during the time of Inspection. Several houses were already existing and others being built. However, land development remains to be incomplete based on the marketing map available on file. Roadways, drainage, sewerage, electrical facilities and waterlines, particularly the end northeastern part of Finland and two unnamed streets perpendicular to Finland, remain to be incomplete. Cracks already appear on roadways despite (the fact that) few residents occupy the area. A newly installed fire-hydrant was also noted along Hon. Benito Soliven Extension. As indicated at the said map, no development was noted at the alleged site for the country club.”

It is clear, therefore, that the last inspection conducted on the correct actual locations of the subject properties show that there were indeed undeveloped portions thereof thus justifying Sanchez’s suspension of payment of his monthly amortization.

The filing of the Comment amounted to an admission on the part of the HLURB that its issuance of the assailed Resolution of February 6, 1997 was erroneous because in resolving the issues, the Board based its resolution on the technical records of Loyola Grand Villas East III and West IV when in fact, as asserted in the Comment, the subject lots are not included in the approved plans and survey returns of the LGV West Ill-East IV on file with the HLURB but rather are included in another portion which was not fully developed and were in fact not yet been issued a license to sell by the HLURB. Verily, the Office of the President had sufficient basis to reverse the resolution issued by the HLURB and reinstate the earlier decision of the Board which held that respondent Sanchez was justified in suspending payment of his monthly amortization due to the non-development of the properties subject of the sale x x x. (Rollo, pp. 245-247.)

Finally, petitioner contests the award of nominal damages in respondent’s favor since, under Article 2221 of the Civil Code, “Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized.. ..” According to petitioner, respondent was not the plaintiff but the defendant in the proceedings before the HLURB.

Petitioner omits to state, however, that respondent in its answer (Rollo, pp. 142-148.) alleged a counterclaim for damages against petitioner. Viewed from the perspective of the counterclaim, respondent is the plaintiff while petitioner is the defendant. As petitioner, by its failure to fully develop the property pursuant to its obligation, violated respondent’s rights under said contracts, respondent is entitled to nominal damages, with no need of proof of pecuniary loss. (Article 2216, Civil Code.) While respondent did not explicitly pray for an award of nominal damages in its counterclaim, he did pray for “such other reliefs as may be deemed just and equitable under the premises.”

IN VIEW OF THE FOREGOING, the Court Resolved to DENY the petition.

Very truly yours,

(Sgd.) VIRGINIA ANCHETA-SORIANO

Clerk of Court