CASA FILIPINA REALTY CORP. vs.
OFFICE OF THE PRESIDENT and Casa Filipina underscores the holding of the Office of the President (OP) that
SPOUSES DENNIS and REBECCASEVILLA
J. Romero | February 7, 1995
TOPIC: Sale of Immovables; PD 957, Secs. 17-18, 23-24
(PD 957 = Subdivision and Condominium Buyer’s Protective Decree)
FACTS
In May or June 1984, spouses Sevilla agreed to buy from Casa Filipina a
parcel of land (264 SQM) in a subdivision in Parañaque. The parties agreed
that the price of P150,480 would be paid on installment basis with P36,115
as DP and P3,560 as monthly installment for 5 years at 28% amortization
interest per year. The agreement was placed in a contract to sell executed on
Nov. 15, 1984.
Spouses Sevilla failed to pay the amortizations on time. The last installments
they paid on September 1985 were for April-July 1985.
Later, Dennis Sevilla requested a refund of all installments made upon
finding out the absence of any improvement in the subdivision and that the
mother title of the subdivision was under lis pendens and mortgage to
ComSavings Bank.
On Nov. 19, 1985, spouses Sevilla sued Casa Filipina with the Human
Settlements Regulatory Commission (HSRC). They prayed for a refund of
P70,431 plus legal interest thereon plus damages. The HSRC found Casa
Filipina to be without license to sell the subdivision involved. The HSRC held
that even if Casa Filipina had a license to sell, it would still be liable for
violation of Sec. 20 of PD 957 as it had failed to develop the subdivision.
Hence, HSRC ordered Casa Filipina to refund the P70,431 with interest and
damages.
The HSRC was affirmed by the Housing and Land Use Regulatory Board
(HLURB) only that it reduced the 28% interest to 6%. The Office of the
President affirmed the HLURB.
As such, Casa Filipina filed this petition. Casa Filipina argues that the
petition should not have been dismissed as it involves the interpretation of
provisions of law as the court has to determine whether it is Sec. 23 or 24 of
PD 957 which should be applied in this case. Casa Filipina argues that since
the spouses Sevilla desisted from paying the installments, they should have
notified Casa Filipina of such desistance in accordance with Sec. 23. More
so, since Spouses Sevilla’s desistance from paying was due to litis pendentia
and the mortgage of the mother title of the subdivision, Sec. 24 should have
also been applied.
Sec. 23 “does not require that a notice be given first before a demand for
refund can be made” as the notice and demand “can be made in the same
letter of communication” which was exactly what spouses Sevilla did.
While Casa Filipina agrees that the notice and demand for reimbursement
may be made in one communication, it avers that Sec. 23 clearly provides
that there can be NO forfeiture of payments made by a buyer ONLY IF such
buyer has first given notice to the developer that he will not pay the
installments anymore on the ground that the subdivision has not been
developed.
ISSUE WON the installments already paid by spouses Sevilla should be
refunded in pursuance to Sec. 23 of PD 957? YES.
Casa Filipina’s contention is premised such that spouses Sevilla’s desistance
from further payment of installment was based merely on the notice of lis
pendens and the mortgage on the mother title or on “reasons other than non-
development.” This is belied by the letter sent to Casa Filipina itself.
Under the letter, spouses Sevilla’s refusal to continue paying is based on 2
principal grounds: (1) non-development of the subdivision; and (2) the
encumbrance of the property. As such, the case falls squarely within the
purview of both Secs. 23 and 24 of PD 957.
Considering the peculiar circumstances of this case, the SC agrees with the
OSG that the requirements of Sec. 23 have been complied with by spouses
Sevilla such that Sec. 23 does not require that a notice be given first before
demand of refund can be made. The notice and demand can be made in the
same letter, and this is what spouses Sevilla did.
Casa Filipina would insist that when spouses Sevilla demand a
refund, they were already in default and that their demand had the
sound of belated attempt to cover up their default. This contention
is untenable.
The general rule under Article 1169 is that an obligor incurs in delay
or default only after a demand, judicial or extrajudicial, has been
made from him for the fulfillment of the obligation. Here, there was no
such demand by Casa Filipina. The letters it sent to spouses Sevilla
were the usual reminders that are ordinarily sent by creditors to late-
paying debtors. They are not the demand contemplated by law.
Being in accord with the spirit behind PD 957, OP’s conclusions are hereby
affirmed.
Discussion of PD 957 which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be avoided. Technicality should not be
The decree was issued in the wake of numerous reports that many real allowed to stand in the way of equitably and completely resolving the rights
estate subdivision owners, developers, operators and / or sellers "have and obligations of the parties.
reneged on their representations and obligations to provide and maintain
properly subdivision roads, drainage, sewerage, water systems, lighting DISPOSITIVE Decision of the OP is AFFIRMED.
systems and other basic requirements" for the health and safety of home and
lot buyer's. It was designed to stem the tide of "fraudulent manipulations
perpetrated by unscrupulous subdivision and condominium sellers and
operators, such as failure to deliver titles to buyers or titles free from liens
and encumbrances."

Should the notice requirement provided for in Sec. 23 be construed as

required to be given before a buyer desists from further paying amortizations
as in this case, the intent of the law to protect subdivision lot buyers, such as
private respondents, will tend to be defeated.

Application in this case

Here, Casa Filipina did not only fail to develop the subdivision it was selling
but had also encumbered it prior to selling the same. The inscription of acts
and transactions relating to the ownership and other rights over immovables,
even as it serves as a constructive notice to the world, is intended to protect
the person in whose favor the entry is made and the public in general against
any possible undue prejudice due to ignorance on the status of the property.

The rule on constructive notice is not designed to allow a person to escape

from a lawfully incurred liability. Thus, a vendor of a real estate whereon an
adverse claim is validly annotated cannot invoke such registration to avoid
his own obligation to make a full disclosure to the vendee of adverse claims
affecting the property. The registration protects the adverse claimant
because of the rule on constructive notice but not the person making the
conveyance. It behoves such real estate developer and dealers to make
proper arrangements with the financial institutions to allow the release of
titles to buyers upon their full payment of the purchase price.

More so, the HLURB found that Casa Filipina had not secured a license prior
to the sale of the lot which is a requirement under Sec. 5 of PD 957.

Application on the issue of interest payment

On the issue of delinquency interest which Sec. 23 of P.D. No. 957 explicitly
excludes from the amount to be reimbursed to lot buyers, the Solicitor
General avers that since the matter has been belatedly raised, the same
should be deemed waived. However, since rules of procedure are mere tools
designed to facilitate the attainment of justice, their strict and rigid application