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Republic of the Philippines

Office of the President of the Philippines

HOUSING AND LAND USE REGULATORY BOARD
NORTHERN TAGALOG REGIONAL OFFICE
3rd Floor, Insular Life Building, Brgy. Dolores,
City of San Fernando, Pampanga

LUISA T. PADORA,
Complainant,
- versus -

HLURB CASE NO. NTR-REM-050814-623

SPS. SERAFIN PAGUIO

& GLORIA PAGUIO,
Respondents.
x-----------------------------------------x

DECISION
This is a case for refund with damages.
The antecedents of this case are as follows:
Sometime in 2003, complainant Luisa T. Padora bought from Sps. Paguio
two (2) parcels of lot consisting of 70 sq. m. more or less each, both situated in
Sitio Tungkong Manga, Bo. Gaya-Gaya, Municipality of San Jose, Province of
Bulacan, each for a price of One Hundred Forty Thousand Pesos( 140,000.00),
to be paid on installment basis for a period of 20 years.
Complainant avers that Sps. Paguio represented the subject property as
part of a subdivision project consisting of 12,489 square meters covered by TCT
No. T-21889 of the Registry of Deeds of Meycauayan Bulacan; that lots were
specified on the subdivision plan as Block 2, Lot 54, and Block 2, Lot 52,
respectively; that trusting and believing the representations made, she agreed
to purchase the lots and signed two deeds of conditional sale; that after
religiously paying her monthly amortizations, no individual titles were shown to
cover the particular lots; and, that several letters were addressed to
respondents demanding for the titles and warning the respondents that she
will discontinue further payment of her amortizations. However, all of these
were left unanswered.
In another letter dated June 26, 2013, complainant claims that she sent
a new letter informing respondents that she will rescind the contract and
demand reimbursement of all payments she made; that sometime in October

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2013, she verified with HLURB Region III Office whether or not Spouses Paguio
have license to sell but she learned that neither they have a certificate of
registration nor a license to sell; that she demanded for the full reimbursement
of her payments in the amount of Two Hundred Eighty Thousand Pesos
(280,000.00) ; that in their letter-reply dated January 18, 2014, respondents
offered to amicably settle the matter; and, that all these remained to be empty
promises until the present time. Thus, this case.
Aggrieved, complainant prays before this Office to refund all payments
made plus legal interest thereon; to pay moral, exemplary, attorneys fees and
other damages.
In the Answer of the respondents with affirmative and special defenses
dated June 20, 2014, respondents through their attorney-in-fact, Antonio
Rafael U. Paguio, refuted the claims of the complainant that they represented
the subject lots as part of a subdivision project, but that the same were
subdivided portions culled or segregated from the land covered by Transfer
Certificate of Title No. T-21889 ; that they are not required to register or secure
a license to sell from HLURB for the purpose of entering into an agreement or
in consummating a sale they are not habitually engaged in; that they also not
operate any business involving the development and/or offering and selling of
real property to the general public; that they have not established or develop
any subdivision project, or caused the subdivision of subject real property in
pursuit of such business and the contract entered into is merely incidental and
exclusive, and was not in the regular course of any such business; that they
are not yet under the obligation to deliver proof of legal title as the complainant
has not yet acquired absolute title and ownership over them; that this Board
does not have jurisdiction over the case; that the complaint partakes of a claim
against the estate of the late Serafin Paguio who had already died even before
the filing of this case; that they have not committed any breach of their
contractual obligation; and that complainant is not entitled to the demanded
attorneys fee for the case is premature, if not groundless.
Mandatory Conference was scheduled however, it was re-set on July 31,
2014. On August 29, 2014 an Order was issued by this Office directing the
parties to file their position papers before this Board.
The issues in this case are whether or not the complainant is entitled to
remedies prayed for.
This Office resolves first the issue of jurisdiction.Section 2. Coverage- These Rules shall be applicable to the following
disputes or controversies:
(a) xxx;

(b) Claims involving refund and other claims filed by

subdivision lot or condominium unit buyer against the
project owner, developer, broker or salesman; xxx

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This provision must be read in the light of the laws preamble, which
explains the reasons for enactment of the law or the contextual basis for its
interpretation. The laws introductory clause states that the HLURB exercises
regulatory authority over cases of swindling and fraudulent manipulations
perpetrated by unscrupulous subdivision sellers and operators, such as failure
to deliver titles to the buyers or titles free from liens and encumbrances.1
Additionally, jurisdiction is determined by the allegations in the
complaint. Jurisdiction is the power or capacity given by the law to a court or
tribunal to entertain, hear and determine certain controversies. 2 Jurisdiction
over the subject matter is conferred by law. But where the actual issues are
evident from the records of the case, then the jurisdiction over the subject
matter need not depend upon the literal assertions in the complaint, but on the
law as applied to established facts based on the evidence that the parties
presented in due course.3 Since in this case, the question on subdividing the
land adverted to by respondent is within the power of this Board to decide, it
stands to reason that this Office is empowered to exercise that authority.
Based on the records submitted to this Office by the parties, it appears
that the dispute between the parties herein involves the question of whether or
not there exists a buyer and subdivision seller or developer relation on contract
between the parties. In their Deed of Conditional Sale, the parties agreed as
follows:
Whereas, the SELLER desires to sell, convey and transfer the
said lot into subdivision herein below described and the BUYER willing to
purchase the same for consideration on installment basis;
xxx

xxx

(2.). It is understood that the seller shall process, facilitate the

documents/papers from the government agency concerned to
properly subdivide the said mother title into subdivision lot as
described above within the period of two (2) years.
xxxx

(8.) That the buyer shall agree that all buildings and other
improvements which may be constructed at any time in said lot/s
must be:
A. of strong materials, properly painted,
B. provided with modern sanitary installment connected either to the
public sewer or to and approved septic tanks, and
(9.) All such constructions must be approved by the engineering,
health, fire, police authorities of the cities or municipality where the
property is situated
1 Cadimas v Carrion, G.r. No. 180394, September 29, 2008, 567 SCRA 101,110.
2 People v Mariano, G.R. No. L-40527, June 30, 1976, 71 SCRA 600, 604
3 Allied Domecq Phil.,Inc. v Villon, 842 Phil. 894, 901 (2004), citing Leoquinco v Canada Dry
Bottling Co. of the Phil.,Inc. Employees Association, 147 Phil. 488, 502 (1971)

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(10.) The Seller shall have the right to enter to property at any
reasonable time for the purpose of inspection, measurement or the
laying of necessary lines for water, gas, light, telephone, etc.
xxx

Based on the above stipulations of the parties, it is quite undeniable that

the contracting parties were referring to a subdivision project which falls under
the definition of P.D. 957 and which the seller-respondents need to register
with HLURB and secure proper documents for governmental approval to legally
subdivide the project. The respondents agreed to process and facilitate the
pertinent documents from the right government agency to properly subdivide
their mother title over the land into subdivision lots one of which they would
sell to the complainant. The parties further agreed on how the housing
structure would be built, what materials shall be utilized, or what facilities and
utilities shall be constructed based on the sound engineering and for health
and health purposes. Clearly, the parties have intended to sell and/or buy a
subdivision lot which the respondents have promised to in a subdivision
project.
Contrary to their denials of being a subdivision project or lot seller
(which P.D. 957 governs,) as well as claims that they are not engaged in
developing a subdivision project or not engaged in real estate development,
even their single or random act of transacting in subdivision development and
selling real estate would already suffice to make their business fall under the
regulatory powers of HLURB.
Here, Spouses Paguio never offered any excuse in refusing to deliver the
title to the complainant other than the alleged lack of jurisdiction of this Board
over the action. They did not deny the sale and their obligation to deliver the
title of the land to the complainant. Hence, this Board has jurisdiction over this
controversy for it pertains to a subdivision project. Basic is the rule that what
characterizes an action is not its designation or caption but the allegations in
the body of the complaint or petition.
In this case, complainant and respondents entered into a Deed of
Conditional Sale which expressly obliges the vendor-respondents to cause
the execution of the deed of sale and the issuance of the corresponding
certificate of title upon full payment of the purchase price. Paragraph 4 of
the terms and conditions of the contract to sell precisely provides this
obligation of the respondent-vendor.
Will the absence of a Certificate of Registration or License to Sell,
necessarily render null and void the Deed of Conditional Sale between the
parties? We rule in the negative.
It has been held that the absence of a Certificate of Registration and
License to Sell, this is not a ground to nullify a validly entered contract. In the
case of Spouses Howard T. Co Chien and Susan Y. Co Chien vs. Sta. Lucia

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Realty & Development, Inc., and Alsons land Corporations 4 where the issue was
involved, the Supreme Court explained the rationale:
"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
validly
entered contract, void. The penalty imposed by the decree is the
general penalty provided for the violation of any of its provisions. It
is well-settled in this jurisdiction that the clear language of the law
shall prevail. 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. Absent any specific sanction pertaining to the
violation of the questioned provisions (Sees. 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."
In the case of Ernesto R. Ang and Rosalinda Ang vs. The Court of Appeals
and Lee Chuy Realty Corps.5 the Supreme Court held that:
"xxx While it is true that in reciprocal obligations, such as the
contract of purchase and sale in this case, the power to rescind is
implied and any of the contracting parties may, upon non-fulfillment by
the other party of his part of the obligation, resolve the contract,
rescission will not be permitted for a slight or casual breach of the
contract. Rescission may be had only for such breaches that are so
substantial and fundamental so to as defeat the object of the parties in
making the agreement."
However, in case the respondents still fail to deliver such clean title of
the lots at the end of the period, they ought to pay complainant actual or
compensatory damages. Article 1191 of the Civil Code sanctions the right to
rescind the obligation in the event specific performance becomes impossible,
to wit:
Art.1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply
4 G.R. No. 162090, January 31, 2007
5 G.R. No 80058, February 13, 1989.

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with what is incumbent upon him. The injured party may
choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He
may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible. The court
shall decree the rescission claimed, unless there be just
cause authorizing the fixing of a period.
Rescission creates the obligation to return the object of the contract. It
can be carried out only when the one who demands rescission can return
whatever she may be obliged to restore. Rescission abrogates the contract
from its inception and requires a mutual restitution of the benefits received. 2
Thus; respondents must return the benefits they received from the contract
to sell if they cannot comply with their obligation to deliver the
corresponding certificate of title to complainant.
In the event that respondents cannot deliver a clean certificate of titles
to the complainant, the latter must be reimbursed not only of the purchase
price of the subdivision lot sold to her but also of the incremental value
arising from the appreciation of the lot. Thus, complainant is entitled to
actual damages equivalent to the current market value of the subdivision
lot.5 In Solid Homes, Inc. v. Spouses Tan,6 the Supreme Court ordered instead
the payment of the current market value of the subdivision lot after it was
established that the subdivision owner could no longer comply with its
obligation to develop the subdivision property in accordance with the
approved plans and advertisements.
Wherefore, premises considered, judgment is hereby rendered as
follows:
1. ORDERING Spouses Serafin and Gloria Paguio to cease and desist from
further selling lot/s at Sitio Tungkong Manga, Bo. Gaya-Gaya, Municipality of
San Jose, Province of Bulacan, until and unless a Certificate of Registration
and License to Sell over the project is issued to the owner-developer by this
office;
2. DECLARING the agreement between the complainant, Luisa Padora,
respondents Spouses Serafin and Gloria Paguio valid and enforceable
ordering the complainant to continue paying her monthly amortizations
update her account pursuant to the Deed of Conditional Sale without
interest/ penalties until the purchase price is fully paid;

and
and
and
any

3. ORDERING Spouses Serafin and Gloria Paguio to register the Deed of

Conditional Sale covering Block 2, lot 54, and Block 2, Lot 52 before the Office
of Registry of Deeds of Meycauyan, Bulacan within thirty (30) days from receipt
of this Decision;

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4. Upon full payment of the price provided in the Deed of Conditional Sale, the
Spouses Serafin and Gloria Paguio are ordered to execute a Deed of Sale and
Deliver title thereof to the complainant. In the event respondents- Paguio refuse
to accept the payment, they are ordered to promptly refund the full value of the
payment made by the complainant plus legal interest of 6% per annum
reckoned from the date of the filing of the complaint until fully paid;6
5. ORDERING Spouses Serafin and Gloria Paguio to pay to this Board an
administrative fine of 10,000.00 for violating Section 4 and 5 of the
Presidential Decree 957.
Let a copy of this decision be furnished to the Monitoring Unit of this
Office which is hereby ordered to conduct further investigation on the extent of
Spouses Paguios selling activities at Sitio Tungkong Manga, Bo. Gaya-Gaya,
Municipality of San Jose, Province of Bulacan, project in violation of Section 4
and 5 of PD 957.
SO ORDERED.
City of San Fernando, Pampanga, _____________________.

ATTY. JOCELYN C. TALENS-SATUROS

Housing and Land Use Arbiter
Cc:
ATTY. FELIX VOLTAIRE P. LERIO, II
No. 73 F. Mariano Ave.,
Brgy. Dela Paz,
Pasig City
LUISA T. PADORA
No. 739 Banal St.,
Gagalangin, Tondo, Manila

6 G.R. No. 145156-57, 29 July 2005, 465SCRA 137

GLORIA PAGUIO
As represented by her Atty-in-Fact,
Antonio Rafael U. Paguio
No. 157 A. Bonifacio Avenue
Corner Pag-asa and Agudo Street,
Brgy. San Jose, Quezon City