WARRANTY AGAINST EVICTION

EX-IM PHILIPPINES, INC. VS. UNION BANK OF THE PHILIPPINES

FACTS:
In 1984, Alfonso de Leon (Alfonso) mortgaged in favor of Union Bank of the Philippines (Union
Bank) real property situated at Esteban Abada, Loyola Heights, Quezon City, which was registered
in his and his wife Rosarios name and covered by Transfer Certificate of Title (TCT) No. 286130
(TCT 286130).

The property was foreclosed and sold at auction to Union Bank. After the redemption period
expired, the bank consolidated its ownership, whereupon TCT 362405 was issued in its name in
1987.

In 1988, Rosario filed against Alfonso and Union Bank, Civil Case No. Q-52702 for annulment of the
1984 mortgage, claiming that Alfonso mortgaged the property without her consent, and for
reconveyance.

In a September 6, 1989 Letter-Proposal, Bignay Ex-Im Philippines, Inc. (Bignay), through its
President, Milagros Ong Siy (Siy), offered to purchase the property. The written offer stated, among
others, that The property is the subject of a pending litigation between Rosario de Leon and Union
Bank for nullification of the foreclosure before the Regional Trial Court of Quezon City. Should this
offer be approved by your management, we suggest that instead of the usual conditional sale, a
deed of absolute sale be executed to document the transaction in our favor subject to a mortgage in
favor of the bank to secure the balance.

This documentation is intended to isolate the property from any lis pendens that the former owner
may annotate on the title and to allow immediate reconstitution thereof since the original Torrens
title was burned in 1988 when the City Hall housing the Register of Deeds of Quezon City was
gutted by fire.

On December 20, 1989, a Deed of Absolute Sale was executed by and between Union Bank and
Bignay whereby the property was conveyed to Bignay for P4 million. The deed of sale was executed
by the parties through Bignay's Siy and Union Banks Senior Vice President Anthony Robles
(Robles).

On December 27, 1989, Bignay mortgaged the property to Union Bank, presumably to secure a loan
obtained from the latter.

A Decision was rendered in Civil Case No. Q-52702, finding that defendant Alfonso de Leon, Jr. had
alone executed the mortgage on their conjugal property upon a forged signature of his wife plaintiff
Rosario T. de Leon. Further, the Court declares plaintiff Rosario T. de Leon the owner still of the
undivided ONE HALF (1/2) of the subject property. The writ of possession granted in favor of Union
Bank was set aside and quashed.

Alfonso was ordered to pay his co-defendant Union Bank of the Philippines the sum of hisP1M loan
with interest from the time the same was extended to him.

Union Bank appealed the above Decision with the CA. The CA appeal was dismissed for failure to
file appellants brief; the ensuing Petition for Review with this Court was similarly denied for late
filing and payment of legal fees.

Bignay filed a Petition for annulment of the Decision. The CA dismissed the Petition. Bignay's
resultant Petition for Certiorari with this Court suffered the same fate.

Bignay was evicted from the property; by then, it had demolished the existing structure on the lot
and begun construction of a new building.

Bignay filed a case for breach of warranty against eviction under Articles 1547 and 1548 of the Civil
Code, with damages, against Union Bank and Robles.

Union Bank interposed a Motion to Dismiss grounded on lack of or failure to state a cause of action,
claiming that it made no warranties in favor of Bignay when it sold the property to the latter on
December 20, 1989. The trial court deferred the resolution of the motion on finding that the ground
relied upon did not appear to be indubitable.

Union Bank thus filed its Answer Ad Cautelam,where it alleged that Bignay was not an innocent
purchaser for value, knowing the condition of the property as evidenced by Siys September 6, 1989
letter-proposal to purchase the same. It interposed a counterclaim as well, grounded on two
promissory notes signed by Siy in favor of the bank.

The trial court thus declared that Union Bank, through Robles, acted in bad faith in selling the
subject property to Bignay; for this reason, the stipulation in the December 20, 1989 deed of sale
limiting Union Banks liability in case of eviction cannot apply, because under Article 1553 of the
Civil Code, "[a]ny stipulation exempting the vendor from the obligation to answer for eviction shall
be void, if he acted in bad faith."

Art. 1555. When the warranty has been agreed upon or nothing has been stipulated on this point, in
case eviction occurs, the vendee shall have the right to demand of the vendor:

(1) The return of the value which the thing sold had at the time of the eviction, be it greater or less
than the price of the sale;

xxx -
Thus, it held that Bignay was entitled to the return of the value of the property (P4 million), as well
as the cost of the building erected thereon (P20 million), since Union Bank acted in bad faith. At the
same time, the trial court held that the banks counterclaim was not at all connected with Bignays
Complaint, which makes it a permissive counterclaim for which the docket fees should accordingly
be paid. Since the bank did not pay the docket fees, the trial court held that it did not acquire
jurisdiction over its counterclaim; thus, it dismissed the same.

Union Bank appealed to the CA. On the Counterclaim, judgment is rendered ordering plaintiff-
appellee to pay defendant-appellant the principal amount ofP1,500,000.00 and P2,000,000.00
under two Promissory Notes.

Regarding the banks counterclaim, the CA held that Union Bank timely paid the docket fees therefor
amounting to P32,940.00 at the time it filed its Answer Ad Cautelam.

Bignay filed its Motion for Partial Reconsideration questioning the appellate courts ruling on Union
Banks counterclaim. On the other hand, Union Bank in its Motion for Reconsideration took
exception to the CAs application of Articles 1548 and 1549 of the Civil Code, as well as its finding
that the bank was negligent in the handling and prosecution of Civil Case No. Q-52702.

The CA issued the second assailed Resolution denying the parties respective motions for
reconsideration.

ISSUE:
Is Petitioner entitled to the warranties against Eviction under Article 1555 of the Civil Code?

HELD:
The gross negligence of the seller in defending its title to the property subject matter of the sale -
thereby contravening the express undertaking under the deed of sale to protect its title against the
claims of third persons resulting in the buyer's eviction from the property - amounts to bad faith,
and the buyer is entitled to the remedies afforded under Article 1555 of the Civil Code.
Art. 1555. When the warranty has been agreed upon or nothing has been stipulated on this point, in
case eviction occurs, the vendee shall have the right to demand of the vendor:
(1) The return of the value which the thing sold had at the time of the eviction, be it greater or less
than the price of the sale;
(2) The income or fruits, if he has been ordered to deliver them to the party who won the suit
against him;
(3) The costs of the suit which caused the eviction, and, in a proper case, those of the suit brought
against the vendor for the warranty;
(4) The expenses of the contract, if the vendee has paid them;
(5) The damages and interests, and ornamental expenses, if the sale was made in bad faith.
Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act
imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased. In
case eviction occurs, the vendee shall have the right to demand of the vendor, among others, the
return of the value which the thing sold had at the time of the eviction, be it greater or less than the
price of the sale; the expenses of the contract, if the vendee has paid them; and the damages and
interests, and ornamental expenses, if the sale was made in bad faith.

It adds that since Union Bank is guilty of negligence and bad faith in transacting with Bignay, it
should be penalized through the proper dismissal of its counterclaim; the Court should instead
require Union Bank to prosecute its claims in a separate action.
 WARRANTY AGAINST HIDDEN DEFECTS

CARLOS B. DE GUZMAN VS. TOYOTA CUBAO, INC.

G.R. NO. 141480, November 29, 2006

FACTS:
On November 27, 1997, petitioner purchased from respondent a brand new white Toyota Hi-Lux
2.4 SS double cab motor vehicle, 1996 model, in the amount of P508,000. Petitioner made a down
payment of P152,400, leaving a balance of P355,600 which was payable in 36 months with 54%
interest. The vehicle was delivered to petitioner two days later. On October 18, 1998, petitioner
demanded the replacement of the engine of the vehicle because it developed a crack after
traversing Marcos Highway during a heavy rain. Petitioner asserted that respondent should replace
the engine with a new one based on an implied warranty. Respondent countered that the alleged
damage on the engine was not covered by a warranty.

ISSUE:
Whether or not there was an implied warranty.

HELD:
Under Article 1599 of the Civil Code, once an express warranty is breached, the buyer can accept or
keep the goods and maintain an action against the seller for damages. In the absence of an existing
express warranty on the part of the respondent, as in this case, the allegations in petitioner's
complaint for damages were clearly anchored on the enforcement of an implied warranty against
hidden defects, i.e., that the engine of the vehicle which respondent had sold to him was not
defective. By filing this case, petitioner wants to hold respondent responsible for breach of implied
warranty for having sold a vehicle with defective engine. Such being the case, petitioner should
have exercised this right within six months from the delivery of the thing sold.[7] Since petitioner
filed the complaint on April 20, 1999, or more than nineteen months counted from November 29,
1997 (the date of the delivery of the motor vehicle), his cause of action had become time-barred.

Petitioner contends that the subject motor vehicle comes within the context of Republic Act No.
7394. Thus, petitioner relies on Article 68 (f) (2) in relation to Article 169 of Republic Act No. 7394.
Article 4 (q) of the said law defines "consumer products and services" as goods, services and
credits, debts or obligations which are primarily for personal, family, household or agricultural
purposes, which shall include, but not limited to, food, drugs, cosmetics, and devices. The following
provisions of Republic Act No. 7394 state:

Art. 67. Applicable Law on Warranties. The provisions of the Civil Code on conditions and
warranties shall govern all contracts of sale with conditions and warranties.

Art. 68. Additional Provisions on Warranties. In addition to the Civil Code provisions on sale with
warranties, the following provisions shall govern the sale of consumer products with warranty:
e) Duration of warranty. The seller and the consumer may stipulate the period within which the
express warranty shall be enforceable. If the implied warranty on merchantability accompanies an
express warranty, both will be of equal duration.

Any other implied warranty shall endure not less than sixty (60) days nor more than one (1) year
following the sale of new consumer products.

f) Breach of warranties xxx

xxx

2) In case of breach of implied warranty, the consumer may retain in the goods and recover
damages, or reject the goods, cancel the contract and recover from the seller so much of the
purchase price as has been paid, including damages. (Emphasis supplied.)

Consequently, even if the complaint is made to fall under the Republic Act No. 7394, the same
should still be dismissed since the prescriptive period for implied warranty thereunder, which is
one year, had likewise lapsed.
 WARRANTY AGAINST HIDDEN DEFECTS

Ang vs. CA
G.R. No. 177874, Sept. 29, 2008

FACTS:
Ang, a buyer and seller of used vehicles, later offered the Mitsubishi GSR for sale through Far
Eastern Motors, a second-hand auto display center. The vehicle was eventually sold to a certain
Paul Bugash (Bugash) for P225,000.00, by Deed of Absolute Sale dated August 14, 1992. Before the
deed could be registered in Bugashs name, however, the vehicle was seized by virtue of a writ of
replevin dated January 26, 1993 issued by the Cebu City Regional Trial Court (RTC), Branch 21 in
Civil Case No. CEB-13503, BA Finance Corporation vs. Ronaldo and Patricia Panes, on account of the
alleged failure of Ronaldo Panes, the owner of the vehicle prior to Soledad, to pay the mortgage
debt constituted thereon.

In order to secure the release of the vehicle, Ang paid BA finance. However, Soledad refused to
reimburse despite repeated demand, drawing Ang to charge him for Estafa by abuse of confidence.
It was dismissed due to insufficiency of evidence.

Ang filed a complaint for damages yet it was dismissed for failure to submit the controversy to
barangay conciliation. He, thereafter, secured a certificate to file action and again filed a complaint
for damages which was dismissed by the trial court due to lack of jurisdiction.

Ang filed with the MTCC a complaint for the same petition. Later on, it was dismissed by the court
on the ground of prescription. He appealed to the RTC but it affirmed the dismissal of the complaint.
Nonetheless, it rendered a favorable decision to Ang for the sake of equity and justice and in line
with the principle of non-enrichment at anothers expense.

Aggrieved of the decision, Soledad appealed to the CA. The appellate court reversed the decision of
the trial court and denied the petition. According to its decision, Ang cannot anymore seek refuge
under the Civil Code provisions granting award of damages for breach of warranty against eviction
for the simple fact that three years and ten months have lapsed from the execution of the deed of
sale in his favor prior to the filing of the instant complaint.

Hence, the petition.

ISSUE:
Whether or not the action for damages had already prescribed based on the determination of what
kind of warranty is provided in the Deed of Absolute Sale.

HELD:
The Supreme Court denied the petition.
A warranty is a statement or representation made by the seller of goods, contemporaneously and as
part of the contract of sale, having reference to the character, quality or title of the goods, and by
which he promises or undertakes to insure that certain facts are or shall be as he then represents
them. Warranties by the seller may be express or implied. Article 1546 of the Civil Code defines
express warranty while Article 1548, 1561, and 1562 define implied warranty.

In declaring that he owned and had clean title to the vehicle at the time the Deed of Absolute Sale
was forged, Soledad gave an implied warranty of title. In pledging that he will defend the same from
all claims or any claim whatsoever [and] will save the vendee from any suit by the government of
the Republic of the Philippines, Soledad gave a warranty against eviction.

Given Angs business of buying and selling used vehicles, he could not have merely relied on
Soledads affirmation that the car was free from liens and encumbrances. He was expected to have
thoroughly verified the cars registration and related documents.
Since what Soledad, as seller, gave was an implied warranty, the prescriptive period to file a breach
thereof is six months after the delivery of the vehicle, following Art. 1571.
 MACEDA LAW: REALTY INSTALLMENT BUYER PROTECTION ACT

MOLDEX REALTY, INC., Petitioner, vs. FLORA A. ABERON, Respondent.

G.R. No.176289 April 8, 2013

FACTS:
Respondent Flora asked Moldex, to reserve the lot for her as shown by a Reservation Application6
Flora opted to pay on installment and began making a periodical payments Moldex sent Flora
notices reminding her to update her account. Upon inquiry, however, Flora was shocked to find out
that as of July 1996, she owed Moldex P247,969.10. Moldex thus suggested to Flora to execute a
written authorization for the sale of the subject lot to a new buyer and a written request for refund
so that she can get half of all payments she made. However, Flora never made a written request for
refund.

Moldex, then sent Flora a Notarized Notice of Cancellation of Reservation Application and/or
Contract to Sell.9 Flora, on the other hand, filed before the Housing and Land Use Regulatory Board
(HLURB) Regional Field Office IV a Complaint10 for the annulment of the contract to sell, recovery
of all her payments with interests, damages, and the cancellation of Moldexs license to sell. Flora
alleged that the contract to sell between her and Moldex is void from its inception. According to
Flora, Moldex violated Section 5 of Presidential Decree (PD) No. 95711 when it sold the subject lot
to her on April 11, 1992 or before it was issued a license to sell on September 8, 1992.12 Flora
likewise claimed that Moldex violated Section 17 of the same law because it failed to register the
contract to sell in the Registry of Deeds.13In its defense, Moldex exercised its right under Republic
Act (RA) No. 6552,14 or the Maceda Law, by cancelling the reservation Agreement/Contract to Sell
and forfeiting all payments made. Finally, Moldex alleged that since Flora was at fault, the latter
cannot be heard to make an issue out of Moldexs lack of license or demand relief from it.

The HLURB Arbiter declared as void the Contract to Sell entered into by the parties because Moldex
lacked the required license to sell at the time of the contracts perfection, in violation of Section 5 of
PD 957.
Hence, Moldex was ordered to refund everything Flora had paid, plus legal interest, and to pay
attorneys fees. Moreover, Moldex was ordered to pay a fine for its violation of the above provision
of PD 957.

In its Petition for Review18 before the HLURB Board of Commissioners (HLURB Board), Moldex
argued that the absence of license at the time of the contracts perfection does not render it void.

The HLURB Board, in a Decision19 dated July 29, 1999, dismissed the petition and affirmed in toto
the Arbiters Decision. It held that the law is clear on the prerequisite of a license to sell before a
developer can sell lots. Since Moldex did not have a license to sell at the time it contracted to sell the
subject lot to Flora, the Board agreed with the Arbiter in declaring the contract invalid and in
ordering the refund of Floras payments. Moldex then appealed to the Office of the President
(OP).20. the OP affirmed the finding that the contract to sell was a nullity.
Moldex thus sought relief with the CA via a Petition for Review.23the CA agreed with the findings of
the tribunals. It ratiocinated that Moldexs non-observance of the mandatory provision of Section 5
of PD 957 rendered the contract to sell void, notwithstanding Floras payments and her knowledge
that Moldex did not at that time have the requisite license to sell. It also held that the subsequent
issuance by the HLURB of a license to sell in Moldexs favor did not cure the defect or result to the
ratification of the contract.

ISSUE:
Whether or not the contract to sell entered into between Saberon and Moldex remains valid and
binding.

HELD:
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. 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 (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.

Thus, the contract to sell entered into between Flora and Moldex remains valid despite the lack of
license to sell on the part of the latter at the time the contract was entered into.

Moreover, Flora claims that the contract she entered into with Moldex is void because of the latters
failure to register the contract to sell/document of conveyance with the Register of Deeds, in
violation of Section 1730 of PD 957. However, just like in Section 5 which did not penalize the lack
of a license to sell with the nullification of the contract, Section 17 similarly did not mention that the
developers or Moldexs failure to register the contract to sell or deed of conveyance with the
Register of Deeds resulted to the nullification or invalidity of the said contract or deed.

Under the Maceda Law, the defaulting buyer who has paid at least two years of installments has the
right of either to avail of the grace period to pay or, the cash surrender value of the payments made.
 MACEDA LAW: REALTY INSTALLMENT BUYER PROTECTION ACT

GATCHALIAN REALTY, INC. vs. EVELYN M. ANGELES

G.R. No. 202358, November 27, 2013, 711 SCRA 163

FACTS: Angeles purchased a house and lot under a Contract to Sell from Gatchalian payable for a
period of ten years.

After 48 monthly installment payments, Angeles failed to satisfy her monthly installments with
Gatchalian.

Several demands were made by Gatchalian but the same were continually disregarded by Angeles.
Finally, Gatchalian served Angeles with a Notice of Notarial Rescission thru registered mail.

Consequently, Angeles was furnished by Gatchalian a demand letter demanding her to pay the
outstanding reasonable rentals for her use and occupation of the house and lot to date and to vacate
the same. She was informed in said letter that the 50% refundable amount that she is entitled to has
already been deducted with the reasonable value for the use of the properties.

ISSUES: 1) Whether there is a valid cancellation of the Contract to Sell.

2) Whether Angeles is entitled to the benefit of Maceda Law or

RA 6552.

3) Whether Angeles can be ejected for non-payment of monthly

installments.

HELD: 1) NO. A valid and effective cancellation under RA 6552 must comply with the mandatory
twin requirements of a notarized notice of cancellation and a refund of the cash surrender value.

Although there was a notarial rescission sent thru registered mail but it was not accompanied by
the refund of the cash surrender value equivalent to 50% of the total payments made.

For failure to refund the cash surrender value to the defaulting buyer Angeles, Gatchalian cannot
deduct the same for the amount of the rentals due to Gatchalian as there was nothing in the
contract to apply compensation under Art. 1279 of the New Civil Code.

2) Angeles is entitled to receive the cash surrender value equivalent to 50% of the total payments
made as provided for by Section 3 (b) of RA 6552.

3) In the absence of a valid cancellation of the Contract to Sell between Gatchalian and Angeles, the
contract remains valid and existing. Thus the complaint for unlawful detainer would be a violation
of the mandate of RA 6552.
 MACEDA LAW: REALTY INSTALLMENT BUYER PROTECTION ACT

OPTIMUM DEVELOPMENT BANK vs. SPOUSES JOVELLANOS

G.R. No. 189145, December 4, 2013, 711 SCRA 548

FACTS: Spouses Jovellanos entered into a Contract to Sell with Palmera Homes for the purchase of a
residential house and lot payable for a period of 10 years.

Later, Palmera Homes assigned all its rights, title and interest in the Contract to Sell in favor of
Optimum.

A year later, Optimum issued a Notice of Delinquency and Cancellation of Contract to Sell to
Spouses Jovellanos for their failure to pay their monthly installments despite several written and
verbal demands.

A month later, a final Demand Letter by Optimum required Spouses Jovellanos to vacate and deliver
possession of the subject property within seven (7) days, which however remained unheeded.

Optimum instituted the action for unlawful detainer within one year from the final demand to
vacate.

ISSUE: Whether the validity of the cancellation of the Contract to Sell under RA 6552 lies within the
competence or jurisdiction of the Metropolitan Trial Court (MeTC).

HELD: YES. Under RA 6552, the mechanics of cancellation of Contract to Sell is based on the amount
of installments already paid by the buyer under the said contract.

Since Jovellanos had paid less than two years in installments, Section 4 of RA 6552 provides for
three (3) requisites before the seller may actually cancel the subject contract: first, the buyer shall
give the buyer a 60-day grace period to be reckoned from the date the installment became due;
second, the seller must give the buyer a notice of cancellation/demand for rescission by notarial act
if the buyer fails to pay the installments due at the expiration of the said grace period; and
third, the seller may actually cancel the contract only after 30 days from the buyers receipt of the
said notice of cancellation/demand for rescission by notarial act.

There was a valid and effective cancellation of the Contract to Sell in accordance with Section 4 of
RA 6552 and since Spouses Jovellanos had already lost their right to retain possession of the subject
property as a consequence of such cancellation, their refusal to vacate and turn over possession to
Optimum makes out a valid case for unlawful detainer.
 MACEDA LAW: REALTY INSTALLMENT BUYER PROTECTION ACT

Spouses Jaime Sebastian and Evangeline Sebastian v. BPI Family Bank, Inc., Carmelita Itapo
and Benjamin Hao, G.R. No. 160107, 22 October 2014

FACTS: Spouses Sebastian availed themselves of a housing loan from BPI Family as one of the
benefits extended to its employees. To secure the payment of the loan, they executed a REM in favor
of BPI Family.

The petitioners amortizations were regularly deducted from Jaimes salary until the spouses
received a notice of termination from BPI. The notices of termination contain a demand for the full
payment of the outstanding loan balance.

For failure to heed the demand, BPI Family instituted a petition for the foreclosure of the REM. The
spouses contended that their rights under RA 6552 had been disregarded, considering that Section
3 of the law entitled them to a grace period within which to settle their unpaid installments without
interest.

ISSUE: Whether or not RA 6552 applicable in the case at bar.

HELD: No. RA 6552 is aimed to protect buyers of real estate on installment payments, not
borrowers or mortgagors who obtained a housing loan to pay the costs of their purchase of real
estate and used the real estate as security for their loan. The "financing of real estate in installment
payments" referred to in Section 3, should be construed only as a mode of payment vis-a -vis the
seller of the real estate, and excluded the concept of bank financing that was a type of loan.

The Sps. Sebastians insistence would have been correct if the monthly amortizations being paid to
BPI Family arose from a sale or financing of real estate. In their case, however, the monthly
amortizations represented the installment payments of a housing loan that BPI Family had
extended to them as an employees benefit. The monthly amortizations they were liable for was
derived from a loan transaction, not a sale transaction, thereby giving rise to a lender-borrower
relationship between BPI Family and the petitioners.
 MACEDA LAW: REALTY INSTALLMENT BUYER PROTECTION ACT

NOYNAY V. CITIHOMES BUILDER AND DEVELOPMENT INC

G.R. No. 204160 | September 22, 2014

FACTS: On Dec. 29, 2004, Citihomes and Spouses Noynay executed a contract to sell covering the
sale of a house and lot. Under the terms of the contract, the price of the property was fixed at
P915,895, with a downpayment of P183,179, and the remaining balance to be paid in 120 equal
monthly installments with an annual interest rate of 21%. Subsequently, Citihomes executed the
Deed of Assignment of Claims and Accountsin favor of UCPB. Under the said agreement, UCPB
purchased from Citihomes various accounts, including the account of Spouses Noynay, for a
consideration of P100,000,000.00. In turn, Citihomes assigned its rights, titles, interests, and
participation in various contracts to sell with its buyers to UCPB.

In February 2007, Spouses Noynay allegedly started to default in their payments. Months later,
Citihomes decided to declare Spouses Noynay delinquent and to cancel the contract considering
that nine months of agreed amortizations were left unpaid. The notarized Notice of Delinquency
and Cancellation of the Contract to Sell was received by Spouses Noynay. They were given 30 days
within which to pay the arrears and failure to do so would authorize Citihomes to consider the
contract as cancelled. Citihomes sent its final demand letter asking Spouses Noynay to vacate the
premises due to their continued failure to pay the arrears.

Spouses Noynay insist that by virtue of the assignment of rights which Citihomes executed in favor
of UCPB, Citihomes did not have a cause of action against them because it no longer had an interest
over the subject property. The monthly installments amounting to three years were already paid,
by reason of which, Section 3(b) of the Maceda Law should apply. This means that for the
cancellation to be effective, the cash surrender value should have been paid first to them by
Citihomes. Citihomes counters that it has the right to ask for the eviction of the petitioners in its
capacity as the registered owner despite the assignment of rights it made to UCPB. It believes that
because Spouses Noynay failed to pay at least 2 years of installments, the cancellation became
effective upon the expiration of the 30-day period following the receipt of the notice of delinquency
and cancellation notice and without the need for the payment of the cash surrender value.

ISSUE: Whether or not the cancellation of the contract to sell was valid.

HELD: No. The Contract to Sell dated December 29, 2004 is enlightening on the matter. The amount
of P183,179, representing full down payment shall be paid upon signing of the contract. Citihomes
claimed that the period of the payment of the amortizations started from May 31, 2005. As can be
gleaned from the contract to sell, however, it appears that the payment of the down payment
started from the signing thereof on December 29, 2004. Moreover, based on the Statement of
Account, dated March 18, 2009, Spouses Noynay started defaulting from January 8, 2008. This
shows that prior to that date, amortizations covering the 3-year period, which started with the
down payment, had been paid. This is consistent with the admission of Citihomes during the
preliminary conference. By its admission that Spouses Noynay had been paying the amortizations
for 3 years, there is no reason to doubt Spouses Noynay's compliance with the minimum
requirement of two years payment of amortization, entitling them to the payment of the cash
surrender value provided for by law and by the contract to sell.

To reiterate, Section 3(b) of the Maceda Law requires that for an actual cancellation to take place,
the notice of cancellation by notarial act and the full payment of the cash surrender value must be
first received by the buyer. Clearly, no payment of the cash surrender value was made to Spouses
Noynay. Necessarily, no cancellation of the contract to selI could be considered as validly effected.
 PD 957 Sec. 23: JURISDICTION - HLURB

ANNIE GERONIMO, SUSAN GERONIMO AND SILVERLAND ALLIANCE CHRISTIAN CHURCH*, vs.
SPS. ESTELA C. CALDERON AND RODOLFO T. CALDERON,
G.R. No. 201781 December 10, 2014

FACTS: Respondents spouse Estela and Rodolfo (Calderon), residents of #31 Silverlane St.,
Silverland Subdivision in Pasong Tamo, Tandang Sora, Quezon City alleged in their complaint for
specific performance and issuance of cease and desist orders against Siverland Realty and
Development Corporation, SV1HA, Silverland Alliance Christian Church (SACC) and the Geronimos
(petitioners), that the spouses Joel and Annie Geronimo and residents of #48 Silverland St; in May,
2005, the latter constructed a building, which according to them was to be used as a playground for
their children, but which turned out to be a church for SACC; the church was used for different
religious activities such as daily worship services; baptisms, summer school, choir rehearsal, band
practices, playing of different musical systems; and us of loud musical instruments which would last
into the evening, affecting their (respondents) health and caused inconvenience to them, such that
they were forced to leave their house if they want peace and tranquility. Silverland Realty and the
homeowners association did not file their reply, but SACC and the Geronimos alleged in their
answer that the HLURB lacked jurisdiction over the case because the case primarily involves
abatement of nuisance, which is cognizable by the regular courts; they also denied privity with the
complainants and aver they are not real-parties-in-interest in the case.

After hearings, the HLURB rendered a decision in favor of the complainants (respondents) and
directed the SACC and the Geronimos to cease and desist from using the property at #46 Silverland
St., for religious purposes and as a location of a church. The HLURB as well as the Office of the
President denied the appeal interposed by the petitioners. On petition for certiorari with the Court
of Appeals, the latter also affirmed the rulings of the HLURB. It ruled that case involves the failure
of a developer of a subdivision project and the homeowners association to ensure that the
construction of structures inside the subdivision conforms to the approved plan.

The CA held that under the Contract to Sell, the parcel of land shall be used exclusively for one
single-family residential buildings thus respondents action which sought the enforcement of the
Contract to Sell clearly falls under the jurisdiction of the HLURB said that the Development Permit
issued for the subdivision project clearly indicates that the subject lots use is residential.
Petitioners, however, succeeded in constructing a church thereon, and the developer and the
homeowners association failed to maintain the residential usage of the lot.

Petitioners elevated their case to the Supreme via petition for review on certiorari. They claim that
the HLURB had no jurisdiction over the case as it is an abatement of nuisance where regular courts
have jurisdiction; they are only necessary parties, not indispensable parties to the case; to bind
them, there should have been a prior judgment directing the developer (Silverland Realty) to
comply with their contractual obligations.
ISSUE:
1. Whether the HLURB had jurisdiction over the case.

2. Whether the property may be used for religious purposes of location of a church.

HELD: We deny the petition and affirm the CA ruling.

On the first issue, we agree with the CA that the HLURB has jurisdiction over the present
controversy. Jurisdiction over the subject matter of a case is conferred by law and determined by
the allegations in the complaint which comprise a concise statement of the ultimate facts
constituting the plaintiffs cause of action. The nature of an action, as well as which court or body
has jurisdiction over it, is determined based on the allegations contained in the complaint of the
plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the
claims asserted therein. The averments in the complaint and the character of the relief sought are
the ones to be consulted. Once vested by the allegations in the complaint, jurisdiction also remains
vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the
claims asserted therein. We have ruled that the jurisdiction of the HLURB to hear and decide cases
is determined by the nature of the cause of action, the subject matter or property involved and the
parties.

Generally, the extent to which an administrative agency may exercise its powers depends largely, if
not wholly, on the provisions of the statute creating or empowering such agency. Presidential
Decree (P.D.) No. 1344, EMPOWERING THE NATIONAL HOUSING AUTHORITY TO ISSUE WRIT OF
EXECUTION IN THE ENFORCEMENT OF ITS DECISION UNDER PRESIDENTIAL DECREE NO. 957,
clarifies and spells out the quasi-judicial dimensions of the grant of jurisdiction to the HLURB in the
following specific terms:

SEC. 1. In the exercise of its functions to regulate the real estate trade and business and in addition
to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have
exclusive jurisdiction to hear and decide cases of the following nature:

Unsound real estate business practices;

Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer
against the project owner, developer, dealer, broker or salesman; and

Cases involving specific performance of contractual and statutory obligations filed by buyers of
subdivision lots or condominium units against the owner, developer, dealer, broker or salesman.

The extent to which the HLURB has been vested with quasi-judicial authority must also be
determined by referring to the terms of P.D. No. 957, THE SUBDIVISION AND CONDOMINIUM
BUYERS PROTECTIVE DECREE. Section 3 of this statute provides:
x x x National Housing Authority [now HLURB]. The National Housing Authority shall have
exclusive jurisdiction to regulate the real estate trade and business in accordance with the
provisions of this Decree.

On the second issue, we uphold the ruling that petitioners cannot use #46 of Silverlane Street for
religious purposes or as a location of a church.

Here, as noted by the HLURB, the Development Permit indicates the use of the property as
residential except for the designated open spaces. Petitioners do not deny that the building built
beside the lot of Annie and Joel Geronimo is used as a church and that other religious activities are
performed there. Clearly, this usage contravenes the land use policy particularly prescribed in the
subdivision plan and in the Development Permit. Respondents, as subdivision lot owners, are
entitled to assert that the use of the said property for religious activities be enjoined since it clearly
violates the intended use of the subject lot.
 PD 957 Sec. 23: JURISDICTION - DTI

G.R. No. 192957, September 29, 2014

EMMANUEL B. MORAN, JR., (DECEASED), SUBSTITUTED BY HIS WIDOW, CONCORDIA V.
MORAN, Petitioner, v. OFFICE OF THE PRESIDENT OF THE PHILIPPINES, AS REPRESENTED BY
THE HONORABLE EXECUTIVE SECRETARY EDUARDO R. ERMITA AND PGA CARS,
INC.,Respondents.

FACTS: On February 2, 2004, the late Emmanuel B. Moran, Jr. filed with the Consumer Arbitration
Office (CAO) a verified complaint against private respondent PGA Cars, Inc. pursuant to the relevant
provisions of Republic Act No. 7394 (RA 7394), otherwise known as the Consumer Act of the
Philippines. Docketed as DTI Administrative Case No. 04-17, the complaint alleged that the private
respondent should be held liable for the product imperfections of a BMW car which it sold to
complainant.

On September 23, 2005, the CAO rendered a decision in favor of complainant and ordered private
respondent to refund the purchase price of the BMW car in addition to the payment costs of
litigation and administrative fines.

After the CAO denied the motion sought for reconsideration filed by the Private respondents, they
appealed such decision to the Secretary of the Department of Trade and Industry who further
dismissed the appeal.

Therwith, an appeal to the Office of the President was files who then granted such and reversed the
DTI resolution and dismissed the complaint holding that private respondent cannot be held liable
for product defects which issue was never raised by the complainant and because the private
respondent was not the manufacturer, builder, producer or importer of the subject BMW car but
only its seller.

On January 23, 2009, complainant filed a petition for certiorari with the CA and alleged lack of
jurisdiction on the part of the OP for ruling on cases involving a violation of RA 7394.

On March 13, 2009, the CA dismissed the petition for certiorari on the ground that it was a wrong
mode of appeal . However, petitioner argues that the CA erred in denying the petition for certiorari
which alleged error of jurisdiction on the part of the OP. She contends that in cases alleging error of
jurisdiction on the part of the OP, the proper remedy is to file a petition for certiorari with the CA
because appeal is not available to correct lack of jurisdiction. Further, the petitioner claims that the
OP lacked appellate jurisdiction to review decisions of the DTI in cases involving a violation of RA
7394 based on Article 16611 thereof, which expressly confers appellate jurisdiction to review such
decisions of the DTI to the proper court through a petition forcertiorari . Hence, the OP cannot be
deemed as the proper court within the purview of Article 166.
The OP however contends that the Presidents power of control over the executive department
grants him the power to amend, modify, alter or repeal decisions of the department secretaries.

ISSUE:
Whether CA is correct in dismissing the petition for certitorari on the ground that petitioner
resorted to a wrong mode of appeal as the OP having jurisdiction of the case in controversy.

HELD: No. The CA is incorrect in dismissing the petition as the OPs executive control is not
absolute.

The procedure for appeals to the OP is governed by Administrative Order No. 18,14 Series of 1987.
Section 1 thereof provides:
SECTION 1. Unless otherwise governed by special laws, an appeal to the Office of the President
shall be taken within thirty (30) days from receipt by the aggrieved party of the
decision/resolution/order complained of or appealed from (Emphasis supplied.)

In Phillips Seafood (Philippines) Corporation v. The Board of Investments,15 we interpreted the

above provision and declared that a decision or order issued by a department or agency need not
be appealed to the Office of the President when there is a special law that provides for a different
mode of appeal.

Such executive power of control over the acts of department secretaries laid down in Section 17
Article VII of the 1987 Constitution is not absolute. It may be effectively limited by the Constitution,
by law, or by judicial decisions. All the more in the matter of appellate procedure as in the instant
case.

Administrative Order (A.O.) No. 18 expressly recognizes an exception to the remedy of appeal to the
Office of the President from the decisions of executive departments and agencies. Under Section 1
thereof, a decision or order issued by a department or agency need not be appealed to the Office of
the President when there is a special law that provides for a different mode of appeal.
In this case, a special law, RA 7394, likewise expressly provided for immediate judicial relief from
decisions of the DTI Secretary by filing a petition for certiorari with the proper court. Hence,
should have elevated the case directly to the CA through a petition for certiorari .

In filing a petition for certiorari before the CA raising the issue of the OPs lack of jurisdiction,
complainant Moran, Jr. thus availed of the proper remedy.
 CONVENTIONAL REDEMPTION

VILLARICA v. COURT OF APPEALS

26 SCRA 189

FACTS: On May 19, 1951, the spouses Angel Villarica and Nieves Palma Gil de Villarica sold to the
spouses Gaudencio Consunji and Juliana Monteverde a lot containing an area of 1,174 sq. meters,
situated in the poblacion of the City of Davao, for the price of P35,000. The instrument of absolute
sale dated May 19, 1951 in the form of a deed poll, drafted by Counselor Juan B. Espolong who had
been appointed by the Villaricas as their agent to sell the lot, was acknowledged on May 25, 1951,
before the same Juan B. Espolong who was also a Notary Public. The public instrument of absolute
sale and the vendors' TCT were delivered to the vendees.

On the same day, the spouses Consunji executed another public instrument whereby they granted
the spouses Villarica an option to buy the same property within the period of one year for the price
of P37,750. In July, same year, the spouses Consunji registered the absolute deed of sale in
consequence of which TCT in the names of the spouses Villarica was cancelled and a new TCT was
issued in the names of the spouses Consunji. In February, 1953, the spouses Consunji sold the lot to
Jovito S. Francisco for the price of P47,000 by means of a public instrument of sale. This public
instrument of sale was registered in view of which the TCT in the names of the spouse Consunji was
cancelled and a new TCT in the name of Jovito S. Francisco was issued.

On April 14, 1953, the spouses Villarica brought an action in the Court of First Instance of Davao
against the spouses Consunji and Jovito S. Francisco for the reformation of the instrument of
absolute sale into an equitable mortgage as a security for a usurious loan of P28,000 alleging that
such was the real intention of the parties. Defendants answered that the deed of absolute sale
expressed the real intention of the parties and they also alleged a counterclaim for sums of money
borrowed by the plaintiffs from the Consunjis which were then due and demandable.

- CFI says yes it is an equitable mortgage. Francisco deemed purchaser in good faith.

- CA reversed the decision. Case is not one of those under art. 2208 ncc.

ISSUE:
Whether or not Villarica has the right of redemption.

HELD: No, the court has held that Consunjis as new owners of the lot granted the Villaricas an
option to buy the property within the period of one year from May 25, 1951 for the price of
P37,750. Said option to buy is different and distinct from the right of repurchase which must be
reserved by the vendor, by stipulation to that effect, in the contract of sale. This is clear from Article
1601 of the Civil Code, which provides:
Conventional redemption shall take place when the vendor reserves the right to repurchase the
thing sold, with the obligation to comply with the provisions of article 1616 and other stipulation
which may have been agreed upon.

The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument,
but is a right reserved by the vendor in the same instrument of sale as one of the contract. Once the
instrument of absolute sale is executed, the vendor can no longer reserve the right to repurchase,
and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a
right of repurchase but some other right like the option to buy in theinstant case. Hence, Exhibits
"B" and "D" cannot be considered as evidencing a contract of sale with pacto de retro. Since Exh. "D"
did not evidence a right to repurchase but an option to buy, the extension of the period of one year
for the exercise of the option by one month does not fall under No. 3, of Article 1602 of the Civil
Code, which provides that:

When upon or after the expiration of the right to repurchase another instrument extending the
period of redemption or granting a new period is executed.

PREMISES CONSIDERED, the judgment of the Court of Appeals is hereby affirmed, with costs
against petitioners also in this instance.
 CONVENTIONAL REDEMPTION

MISTERIO v CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY

FACTS:
Asuncion sold to Sudlon Agricultural High School(SAHS) a parcel of land, reserving the right to
repurchase the same in case (1) the school ceases to exist, or (2) the school transfers location. She
had her right annotated. She died. By virtue of BP 412, SAHS was merged with the Cebu State
College, effective June1983. In 1990, the heirs of Asuncion sought to exercise their right to redeem,
claiming that school has ceased to exist.

ISSUE:
W/N the heirs of Asuncion may still exercise their right to redeem the property

HELD:
NO. Their right has already prescribed.Considering that no period for redemption was agreed
upon, the law imposes a 4-year limitation. This means that from the time the school was merged to
Cebu State College, they had 4 years, or until June 1987 to redeem the property. However, they
failed to do so within the period. Failure to redeem automatically consolidates ownership in favor
of the vendee. The fact that the right to redeem was annotated does not make it imprescriptible, it
only serves to notify third persons.
 LEGAL REDEMPTION

BASA vs. AGUILAR

117 SCRA 128

FACTS:
The seven (7) petitioners are owners co-pro-indiviso of an undivided ONE-HALF (1/2) share of a
parcel of land located in Barrio San Mateo, Arayat, Pampanga, with an area of 32,383 square meters,
more or less. Private respondents Genaro Puyat and Brigida Mesina were the owners of the other
undivided half of the same parcel of land.

On March 6, 1964, Genaro Puyat, with the marital consent of Brigida Mesina, sold his ONE-HALF
(1/2) share of the parcel of land in question for the price of ONE THOUSAND (P1,000.00) PESOS in
favor of private respondents Primo Tiongson and Macaria Puyat. Primo Tiongson is a son-in-law of
Genaro Puyat who is married to Macaria Puyat, a daughter of Genaro Puyat.

Seven (7) days later, on or March 13, 1964, the herein petitioners filed Civil Case No. 2513, praying
that they be allowed to exercise the right of redemption under Article 1620 of the Civil Code, for
which purpose they deposited with the court the sum of ONE THOUSAND PESOS (P1,000.00) as
redemption money. The trial court issued an order dismissing the case. It ruled that the petitioners
are not entitled to exercise the right of redemption under Article 1620 of the Civil Code.

ISSUE:
W/N the petitioners can exercise their right of legal redemption.

HELD:
Yes. Legal redemption is in the nature of a privilege created by law partly for reasons of public
policy and partly for the benefit and convenience of the redemptioner, to afford him a way out of
what might be a disagreeable or inconvenient association into which he has been thrust. (10
Manresa, 4th Ed., 317.) It is intended to minimized co-ownership. The law grants a co-owner the
exercise of the said right of redemption when the shares of the of her owners are sold to "a third
person." A third person, within the meaning of this Article, is anyone who is not a co-owner.

Private respondent Primo Tiongson is definitely not a co-owner of the land in question. He is not
even an heir of private respondents Genaro Puyat and Brigida Mesina, nor included in the "family
relations" of the said spouses as defined in Article 217 of the Civil Code. The circumstance that he is
married to Macaria Puyat, a daughter of Genaro Puyat and Brigida Mesina, is of no moment. The
conveyance to the Tiongson spouses was by onerous title, made during the lifetime of Genaro Puyat
and Brigida Mesina. The alleged inchoate right of succession from Genaro Puyat and Brigida Mesina,
which pertained only to Macaria Puyat. is thus out of the question. To deny to the petitioners the
right of redemption recognized in Article 1620 of the Civil Code is to defeat the purpose of
minimizing co-ownership and to contravene the public policy in this regard. Moreover, it would
result in disallowing the petitioners a way out of what, in the words of Manresa, " might be a
disagreeable or inconvenient association into which they have been thrust."

WHEREFORE, the judgment appealed from is hereby REVERSED, and in lieu thereof, a new one is
rendered declaring the petitioners to be entitled to exercise the right of legal redemption under
Article 1620 of the Civil Code with respect to the ONE-HALF (1/2) share sold by private respondent
Genaro Puyat and Brigida Mesina in favor of their corespondents Primo Tiongson and Macaria
Puyat. The private respondents shall pay the costs.
 LEGAL REDEMPTION

AVILA VS BARABAT
485 SCRA 8

FACTS:
The subject of this controversy is a portion of a 433-square meter parcel of land located in
Poblacion, Toledo City, Cebu. The entire property is designated as cadastral lot no. 348 registered in
the name of Anunciacion Bahena vda. de Nemeo. Upon her death, ownership of the lot was
transferred by operation of law to her five children, petitioners Narcisa Avila, Natividad Macapaz,
Francisca Adlawan, Leon Nemeo and Jose Bahena. These heirs built their respective houses on the
lot.

In 1964, respondent Benjamin Barabat leased a portion of the house owned by Avila. His co-
respondent, Jovita Barabat, moved in with him in 1969 when they got married.

Avila subsequently relocated to Cagayan de Oro City. She came back to Toledo City in July 1979 to
sell her house and share in the lot to her siblings but no one showed interest in it. She then offered
it to respondents who agreed to buy it. Their agreement was evidenced by a private document
dated July 17, 1979.
Respondents stopped paying rentals to Avila and took possession of the property as owners. They
also assumed the payment of realty taxes on it.

Sometime in early 1982, respondents were confronted by petitioner Januario Adlawan who
informed them that they had until March 1982 only to stay in Avilas place because he was buying
the property. Respondents replied that the property had already been sold to them by Avila. They
showed Adlawan the July 17, 1979 document executed by Avila.

On January 6, 1983, respondents received a letter from Atty. Joselito Alo informing them that Avila
had sold her house and share in lot no. 348 to his clients, the spouses Januario and Nanette
Adlawan. Considering the sale to the spouses Adlawan as prejudicial to their title and peaceful
possession of the property, they demanded that Avila execute a public document evidencing the
sale of the property to them but Avila refused.

Respondents filed a complaint for quieting of title with the Regional Trial Court (RTC) of Toledo
City, Branch 29.3 Docketed as Civil Case No. T-53, the complaint was subsequently amended to
include annulment of the deed of sale to the spouses Adlawan, specific performance, partition and
damages as additional causes of action. Respondents anchored their claim over the property to the
July 17, 1979 private document which they presented as Exhibit "A."

Avila denied having offered to sell her property to respondents. She claimed that respondents gave
her an P8,000 loan conditioned on her signing a document constituting her house and share in lot
no. 348 as security for its payment. She alleged that she innocently affixed her signature on Exhibit
"A" which was prepared by respondents and which they now claim as a private deed of sale
transferring ownership to them.

ISSUE:
W/N the petitioners can exercise their right of legal redemption.

HELD:
No. Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within
thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may
be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an
affidavit of the vendor that he has given written notice thereof to all possible redemptioners.

The right of redemption of co-owners excludes that of adjoining owners.

Petitioners right to redeem would have existed only had there been co-ownership among
petitioners-siblings. But there was none. For this right to be exercised, co-ownership must exist at
the time the conveyance is made by a co-owner and the redemption is demanded by the other co-
owner or co-owner(s).7 However, by their own admission, petitioners were no longer co-owners
when the property was sold to respondents in 1979. The co-ownership had already been
extinguished by partition.

The regime of co-ownership exists when the ownership of an undivided thing or right belongs to
different persons.8 By the nature of co-ownership, a co-owner cannot point to any specific portion
of the property owned in common as his own because his share in it remains intangible and ideal.

The purpose of partition is to separate, divide and assign a thing held in common among those to
whom it belongs.14 By their own admission, petitioners already segregated and took possession of
their respective shares in the lot. Their respective shares were therefore physically determined,
clearly identifiable and no longer ideal. Thus, the co-ownership had been legally dissolved. With
that, petitioners right to redeem any part of the property from any of their former co-owners was
already extinguished. As legal redemption is intended to minimize co-ownership,15 once a
property is subdivided and distributed among the co-owners, the community ceases to exist and
there is no more reason to sustain any right of legal redemption.