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PREFACE

One cold night sometime in the year 2008, I had the idea of finally realizing a longtime dream of writing a book that will be published and be read by everyone. Since I got exposed to the Housing and Land Use Regulatory Board (HLURB) cases, I knew I had to write a book which focuses on the procedures, laws and jurisprudence relating thereto. With the available jurisprudence with me, I started to research and compile cases, laws and other write ups concerning the real estate industry. Little did I know that this collection of cases was so vast and it consumed me in my pursuit of writing the book.

With a simple twist of fate, during the height of one of the cases I was handling, my laptop was stolen in front of the Supreme Court, and the manuscript I started writing on was gone forever. Desperate, puzzled, dazed and perplexed, the passion of continuing the book had subsided, and the long and unexpected hiatus left me in a dark oblivion asking myself whether I will continue writing the book.

But with a bucket full of perseverance and patience, although back to square one, I was finally again burning the midnight oil for writing the book. Conversely, putting back into pieces the first few chapters was like searching a missing gold watch in the middle of the unchartered sea. Nevertheless, as soon as my zealousness, passion and enthusiasm fueled me back from this apparent cold hibernation, there was no turning back. After all, Alexandre Dumas Père1 once said, “All human wisdom is summed up in two words – wait and hope.”

1Alexandre Dumas (pronounced: [a.l3k.sã ̃dʁ dy.ma], born Dumas Davy de la Pailleterie, [dy.ma da.vi dE pa.jEt.ʁi], 24 July 1802 – 5 December 1870) was a French writer, best known for his historical novels of high adventure which have made him one of the most widely read French authors in the world. Many of his novels, including The Count of Monte Cristo, The Three Musketeers, Twenty Years After, and The Vicomte de Bragelonne were originally serialized. He also wrote plays and magazine articles and was a prolificcorrespondent. (http://en.wikipedia.org/wiki/Alexandre_Dumas_père)

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I have written this book primarily to focus more on the intricacies of the laws and jurisprudence relative to the HLURB. Though this book may not be as complete as one would expect, nevertheless, this will be helpful to law practitioners, law students, and real estate practitioners who are dealing with matters concerning the real estate industry.

With this endeavor, it is fervently hoped that this book shall be useful and helpful to everyone who will get a copy, particularly to those who are engaged in the business of real estate and all other matters collateral thereto. On the brighter side, let this book be an inspiration to those who are lurking for sometime in their quest of equally writing a book despite the existence adversaries.

Let me end by extending my warmest thanks to those who were instrumental in writing this book: to my family, who has been so patient in listening to me every time I update them; to Atty. Marino Torres of the HLURB, who has provided me with the materials and other Supreme Court decisions; to Atty. Rodolfo Tagapan, whose suggestion of the title was perfect for this book; to Atty. Aristotle Q. Sarmiento, who has introduced me to the world and intricacies of the HLURB cases; to Judge Ed Vincent Albano, who became an instrumentl in the publication of this book; and to REX Bookstore who made the publication of this book a reality.

EDINBURGH P. TUMURAN

Cainta, Rizal, July 30, 2012

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CONTENTS

Chapter I: INTRODUCTION ................................................ 1

Chapter II: THE HUMBLE INCEPTION OF THE HLURB ............................................................ 12

I. Executive Order No. 419 ............................................ 13 II. Presidential Decree No. 933 ....................................... 13 III. Presidential Decree No. 957 ....................................... 13 IV. Presidential Decree No. 1344 ..................................... 14 V. Presidential Decree No. 1396 ..................................... 14 VI. Executive Order No. 648 ............................................ 14 VII. Executive Order No. 85 .............................................. 15

Realty Exchange Venture Corporation, et al. v. Lucina S. Sendino, et al. ...................................... 16

VIII. Executive Order No. 90 .............................................. 17 IX. R.A. No. 8763, “Home Guaranty Corporation Act of 2000” ................................................................. 18 X. R.A. No. 9904 .............................................................. 19

Chapter III: THE HLURB AS AN ADMINISTRATIVE AGENCY .................................................................. 21

I. The doctrine of primary administrative jurisdiction ............................................................ 22

a. Pambujan Sur United Mine Workers v. Samar Mining Co., Inc. ............................. 22b. Dulos Realty and Development Corporation v. Hon. Court of Appeals and Vicenta Peleas ......................................................... 23

II. The statutory powers conferred to the HLURB, as an administrative agency, must always be construed according to their legislative intent .......... 24 III. The HLURB has the power and authority to promulgate implementing rules and regulations ................................................................... 24

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IV. Some of the sources of the HLURB’s rule making authority ........................................................ 25 V. The quantum of proof required in administrative cases and elements of administrative due process .................................................................. 27 VI. Exhaustion of administrative remedies ..................... 29

a. General rule ........................................................ 29 Josefina Teotico (also known as Baby Santana) v. Rosario D. Baer ...................... 29b. Exception to the general rule ............................ 31 Sps. Leonardo and Milagros Chua v. Hon. Jacinto G. Ang, et al. ................................. 31

VII. Final and executor judgment of the HLURB may no longer be modified .......................................... 36

Felisa L. Peña v. Government Service Insurance System (GSIS) ...................................................... 37

VIII. Splitting causes of action is disfavored in the HLURB cases; hence, all causes of action must be alleged in the complaint ........................................ 42 IX. A memorandum decision is allowed in administrative proceedings authorized under Section 40 of B.P. Blg. 129, also known as “The Judiciary Reorganization Act of 1980.” . .................................... 43 X. It is settled that Rules of Procedure, as a matter of course, should be construed liberally in proceedings before administrative bodies (which includes the HLURB). ................................................ 49

Realty Exchange Venture Corporation, et al. v. Lucina S. Sendino, et al. .................................. 49

XI. Exception to the general rule that factual findings of administrative agencies is given greater respect ............................................................ 51 XII. The New HLURB Rules speed up complaints disposition ................................................................... 51 XIII. A brief analysis of the Rules of Procedure being followed on cases filed with the HLURB under Resolution No. 871. ..................................................... 53

1. Coverage ............................................................. 54 2. Complaint ........................................................... 55 3. Service of Summons, Notices, Resolutions, Orders and Decision: In General .............. 55

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4. Verified Answer or Responsive Pleading .......... 55 5. Effect of Failure to File a Verified Answer or Responsive Pleading ............................. 55 6. Mandatory Conference ....................................... 56 7. Mediation Proceedings ....................................... 56 8. Confidentiality of Mediation Proceedings ......... 56 9. Effect of Failure to Appear in the Mediation Proceedings ................................................ 5710. Termination of Mediation Proceedings ............. 5711. Position Papers and Draft Decisions ................. 5712. Ocular Inspection and/or Clarificatory Hearings ..................................................... 5713. Judgment ............................................................ 5714. Jurisdiction of the Board of Commissioners ..... 5815. Appeal Memorandum ......................................... 5816. Appeal Bond ....................................................... 5817. Counter-Memorandum....................................... 5818. Admissibility of New Evidence on Appeal ........ 5919. Dismissal of the Appeal ..................................... 5920. Judgment of the Board of Commissioners ........ 5921. Finality of Judgment .......................................... 5922. Execution of Judgments ..................................... 6023. Execution Pending Appeal ................................. 6024. Coverage ............................................................. 6025. Creation of a Management Committee ............. 6126. Grounds for the Creation of the Management Committee ........................... 6127. Cease and Desist Order ..................................... 6228. Grounds for the Issuance of Cease and Desist Order ............................................... 6229. Petition for Inspection of Books and Records ... 6230. Election Contest; Definition ............................... 6331. Filing of Election Contest .................................. 6332. Answer ................................................................ 63

XIV. Board of Commissioners of the HLURB .................... 64 XV. Certain functions of the HLURB were devolved to the Local Government Units .................................. 65 XVI. The HLURB has the power and authority to regulate the development of Memorial Parks, Cemeteries and Columbarium Projects ..................... 65

Chapter IV: THE JURISDICTION OF THE HLURB ... 67

I. Jurisdiction in General ............................................... 67

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a. Definition of Jurisdiction ................................... 67b. Jurisdiction is also defined as follows ............... 68c. The inevitability of jurisdiction ......................... 69

II. The reasons and justification on the jurisdiction of the HLURB ............................................................. 69 III. The provisions of P.D. No. 957 are intended to encompass all questions relating to subdivisions ..... 70 IV. P.D. No. 1344 enumerated the jurisdiction of the HLURB ............................................................. 70

a. Example of “unsound real estate business practices” under Section 1 of P.D. No. 1344 ............................................. 72

a.1 Union Bank of the Philippines v. HLURB 72a.2 The HLURB, not the RTC, has jurisdiction on the developer’s act of using different descriptions of the condominium project . 73

Tri-Corp Land & Development Inc. v. Court of Appeals and Greystone Corporation ............. 73

V. It must be noted that the allegations in the complaint determines the jurisdiction of the court .................... 75

a. The allegations in the complaint do not show that the HLURB has jurisdiction ............. 77b. The allegations in the complaint indubitably show that the HLURB has no jurisdiction ................................................. 78c. The HLURB jurisdiction when there is conflict between the title of the case and the allegations in the complaint ...................... 80

Spouses William Genato and Rebecca Genato v. Rita Viola ............................................... 80d. The RTC, not the HLURB, has jurisdiction on complaint for Action Publiciana .......... 84

VI. The HLURB has power and jurisdiction to award damages ........................................................... 84

a. The authority and jurisdiction of the HLURB to award damages either in favor of the complainant or of the defendant ............... 85b. The HLURB has no jurisdiction in a complaint filed by the buyer against the developer for the payment of moral, actual and exemplary damages ................................... 86

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Ridgewood Estate, Inc. (erroneously sued as Camella Homes) v. Expedito Belaos .................... 86

VII. The HLURB has jurisdiction over complaints for specific performance with damages under the Civil Code .............................................................. 89

C.T. Torres Enterprises, Inc. v. Hon. Romeo J. Hibionada .............................................................. 90

VIII. The awards of damages and attorney’s fees may not be given when the same were not specifically prayed for in the complaint ........................................ 91

V.V. Soliven Realty Corp. v. Luis Kung Beng T. Ong .......................................................... 91

IX. Questions relating to non-compliance with the requisites for conversion of subdivision lots fall within the jurisdiction of HLURB .............................. 95

Cristobal v. Court of Appeals ..................................... 95

X. The enforcement of one’s statutory and contractual rights against the subdivision owners, being a specific performance case, falls under the HLURB’s exclusive jurisdiction .................................................. 97

Oscar R. Badillo v. Court of Appeals, et al. ............... 97

XI. The HLURB has no jurisdiction over the issue of ownership, possession or interest in the disputed condominium unit, under Section 1 of P.D. No. 1344 .............................................................. 100

Sps. Carlos J. Suntay and Rosario R. Suntay v. Eugenia D. Gocolay and Dunstan T. San Vicente ........................................................... 101

XII. Not every controversy involving a subdivision or condominium unit falls under the competence of the HLURB ............................................................. 105

Lacson Hermanas, Inc. v. Heirs of Cenon Ignacio ................................................................... 105

XIII. The HLURB, not the RTC, has jurisdiction over claims for refund of reservation fees for the purchase of a subdivisions property .......................... 108

Atty. Enriqueto F. Tejada v. Homestead Property Corporation, et al .................................. 108

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XIV. The RTC, not the HLURB, has jurisdiction over the complaint for cancellation of the contract to sell of a subdivision house and lot .................................... 110

XV. The HLURB has jurisdiction in cases over an action to compel a land developer to deliver a promised title over one-fourth a subdivision lot ....... 111

Spouses Ernesto Lim and Zenaida Lim v. Ruby Shelter Builders and Realty Development Corporation .................................... 111

XVI. The HLURB has jurisdiction in cases which involve a mortgage entered into by the real estate developer ..................................................................... 114

Home Bankers Savings & Trust Co. v. The Honorable Court of Appeals ....................................... 114

XVII. Principles of estoppel and laches to raise the issue on jurisdiction .................................................... 116

a. As to the Principle of Estoppel ............................ 116 b. As to the Principle of Laches ............................... 121

XVIII. The Supreme Court ruled that a party who files a suit before a court that lacks jurisdiction is not necessarily estopped from raising the issue of jurisdiction .............................................. 123 XIX. The jurisdiction on receivership filed by the homeowner is with the HLURB and not with the Securities and Exchange Commission .......... 124

a. Receivership, defined ......................................... 124b. Supreme Court sustained the jurisdiction of the HLURB to try and hear a case involving receivership ............................... 126

Jesus Lim Arranza, et al. v. B.F. Homes, Inc. ........... 126

XX. The HLURB has jurisdiction to resolve the issue of development of subdivision .............................. 132 XXI. The HLURB has jurisdiction to determine the rights and Obligations of the parties in a sale of real estate and to compel the developer to comply with its undertaking ................................ 132 XXII. In a complaint for reformation of contract, the RTC, and not the HLURB, has jurisdiction over the same ........................................................ 133

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Frabelle Fishing Corporation v. The Philippine American Life Insurance Company, et al. .......... 133

XXIII. Finding of facts by administrative agencies (which includes the HLURB) is generally accorded respect ................................................... 136 XXIV. There are hundreds of administrative bodies now performing this function by virtue of laws enacted by congress. This quasi-judicial function is exercised by them as an incident of the principal power entrusted to them or regulating certain activities falling under their particular expertise ..................................... 136 XXV. The HLURB has no jurisdiction on cases filed by the land owner or developer against the buyer .. 137

a. The original jurisprudence: The HLURB has jurisdiction on cases filed by owner/ developer of subdivision against buyer .... 137

Francel Realty Corporation v. Court of Appeals and Francisco T. Sycip .............................. 138

b. The recent jurisprudence: the HLURB has no jurisdiction on cases filed by the owner/developer of subdivision against the buyer ....................................... 141c. The HLURB has no jurisdiction on a case filed by the developer or the owner of a subdivision .......................................... 145

Leta Dela Cruz v. Court of Appeals .................. 145

d. The RTC, and not the HLURB, has jurisdiction in cases filed by the owner and developer of real estate ............................................... 148

Jin-Jin Delos Santos v. Spouses Sarmiento, et al. ............................................................ 148

e. Exception to the general rule where the developer/owner can file a case against the buyer with the HLURB is when the cause of action of the owner or developer is instituted in the compulsory counterclaim .............................................. 153

Jin-Jin Delos Santos v. Spouses Sarmiento.............. 153

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XXVI. HLURB jurisdiction over issues involving disputes amongst and between homeowners association ............................................................. 154

Edna Eugenio v. Sta. Monica Riverside Homeowners Association ..................................... 154

a. The HLURB has jurisdiction over the case involving dispute between homeowners’ association .................................................. 158

Maria Luisa Park Association, Inc. v. Samantha Marie T. Almendras, et al. ........................ 158

b. If the allegations in the complaint state that there is no intra-corporate dispute amongst members of the homeowners association, the RTC, not the HLURB, has jurisdiction over the complaint for damages on an alleged violation of their right of access through the subdivision and on the alleged embarrasment and humiliation suffered by them .................... 163

Sta. Clara Howeowners’ Association v. Victor Ma. Gaston and Lydia Gaston ....... 163

XXVII. A Regional Trial Court judge cannot issue a Temporary Restraining Order and Writ of Preliminary Injunction against the HLURB’s Writ of Execution considering that both are co-equal bodies ............................................... 171

Russel Esteva Coronado v. Judge Eddie R. Rojas /Alfredo S. Capisin, et al. Judge Eddie R. Rojas ....................................... 171

XXVIII. The RTC has no power and authority to restrain or issue Temporary Restraining Order against the HLURB on cases involving questions on subdivisions and condominiums under P.D. No. 957 ............................................... 174

Romulo R. Peralta v. Hon. Raul E. De Leon ....... 174

XXIX. The Office of the Prosecutor and not the HLURB has jurisdiction to determine the existence of probable cause as a prelude for the filing of

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a criminal information for the violation of P.D. No. 957 ...................................................... 179

Sps. Leonardo and Milagros Chua v. Hon. Jacinto G. Ang, Dennis R. Pastrana, et al ...... 179

XXX. The HLURB, not the DENR, is the sole regulatory body for housing and land development which is tasked for the responsibility of monitoring housing and land development projects ................................... 183

Ignacia Balicas v. Fact-Finding & Intelligence Bureau (FFIB), Office of the Ombudsman .......... 184

XXXI. Under P.D. No. 957, the civil and criminal actions are independent of each other, and there exist no prejudicial question in the former over the latter ............................................................... 187 XXXII. The HLURB has jurisdiction to determine the question on whether there is a perfected contract of sale between a condominium buyer and developer ............................................................... 187

Spouses Cesar and Elvira Raet, et al. v. Court of Appeals ............................................... 187

Chapter V: PRESIDENTIAL DECREE NO. 957 ............... 192

Presidential Decree No. 957: Regulating the Sale of Subdivision Lots and Condominiums, Providing Penalties for Violations Thereof ....................................... 192

I. Government agencies that play major role in shaping the face of the real estate industry ........ 194

a. National Home Mortgage Finance Corporation (NHMFC) .............................. 194b. National Housing Authority (NHA) .................. 194c. Home Development Mutual Fund (HDMF) ...... 194d. Housing and Urban Development Coordinating Council (HUDCC) ............... 194e. Hoem Guaranty Corporation (HGC) ................. 195

II. The distinctive intention of P.D. No. 957 is for the ultimate protection of innocent lot buyers against the seemingly manipulative and scheming subdivision developers ......................... 197

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Florencio Eugenio v. Executive Secretary Franklin M. Drilon, Housing and Land Use Regulatory Board (HLURB) and Prospero Palmiano ............ 200

III. The Supreme Court used the statute’s preamble or the introductory or preparatory clause that ultimately expounds the reasons for its being enacted and for its interpretation ....................... 203

Marjorie B. Cadimas, et al. v. Marites Carrion and Gemma Hugo ................................................. 203

Title I: TITLE AND DEFINITIONS ........................................ 205

Jacobus Bernhard Hulst v. PR Builders, Inc. .................. 208

Title II: REGISTRATION AND LICENSE TO SELL ............. 214

Ruben S. Sia and Josephine Sia v. People of the Philippines and Teresita Lee ............................... 220

I. The total absence of certificate of registration and license to sell does not ipso facto render the contract null and void .................................... 225

Spouses Howard T. Co Chien and Susan Y.Co Chien v. Sta. Lucia Realty & Development, Inc., and Alsons Land Corporation ...................... 225

II. The lack of Certificate of Registration/License to Sell merely subjects the developer to administrative sanctions ...................................... 228

G.G. Sportswear Mfg. Corp. v. World Class Properties .............................................................. 228

III. The absence of license to sell does not affect the validity of an already perfected contract of sale between buyer and owner or developer ....... 235

Vicenta Cantemprate, et al. v. CRS Realty Development Corporation, et al. .......................... 235

IV. Checklist of requirements for Certificate of Registration and License to Sell .......................... 238

I. Two ways wherein the license to sell may be suspended ............................................................... 245

a. Through a verified petition ................................ 245b. By the HLURB motu proprio or upon its own initiative ............................................. 246

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II. How can the suspension order be lifted ..................... 246 III. Confidentiality nature of the Suspension Order ....... 247

Title III: Dealers, Brokers and Salesmen ................................. 249

Title IV: Procedure for Revocation of Registration Certificate ............................................................. 254

I. Resolution No. 871 of the HLURB ............................. 256 Land Bank of the Philippines v. Severino Listana, Sr. ........................................................... 259

Rule 22 – CONTEMPT .............................................................. 260

Sec. 80. Direct Contempt ........................................................... 260Sec. 81. Indirect Contempt ........................................................ 260Sec. 15. Decision ......................................................................... 261

I. The doctrine of finality of judgment ........................... 262 II. Manner of execution not in accord with the tenor and terms of judgment ................................................ 262 III. The doctrine of immutability of judgment ................. 263

Sec. 16. Cease and Desist Order ............................................... 263Sec. 17. Registration .................................................................. 265

I. Allocation of open space to be used as park and playground ........................................................... 266

Spouses Claudio M. Anonuevo and Carmelita Anonuevo v. Court of Appeals, et al. ......................... 266

II. Seller is duty bound to register the Contract to Sell and/or Deed of Assignment ...................... 271Sec. 18 . Mortgages ..................................................................... 274

Sec. 1. Complaint in action for closure ..................................... 275

I. Declaration of nullity of real estate mortgage ........... 277 II. Provision enacted on July 1976 applied to a mortgage executed on December 1975 ............. 278

Philippine National Bank v. Office of the President, et al. ..................................................... 278

III. Declaration of nullity of Real Estate Mortgage ......... 283

Metropolitan Bank and Trust Company Inc. v. SLGT Holdings, Inc., et al/United Coconut Planters Bank SLGT Holdings, Inc. et al. .......... 283

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IV. Acts committed contrary to Section 18 of P.D. No. 957 are void. ........................................... 289 V. Failure of the bank to inquire about prior written approval of the HLURB before the property was used as collateral ........................... 290

Home Bankers Savings and Trust Co. v. Court of Appeals .............................................................. 291

Sec. 19. Advertisement .............................................................. 294

I. Failure of the developer to provide buyer the features indicated in their brochure .................... 296

Bank of the Philippine Islands v. ALS Management & Development Corp. .................... 296

Sec. 20 . Time of Completion ...................................................... 299

I. Non-compliance of the owner or developer to complete the project within a period of one year from the date of the issuance of the license ............................................................. 300

Zamora Realty, et al. v. Office of the President of the Philippines and Edilberto C. Gallardo ...... 300

Sec. 20 . Time of Completion ...................................................... 301Sec. 23. Non-forfeiture of Payments ......................................... 301

II. Two remedies in case of incomplete development of the subdivision project ..................................... 304

Sec. 21. Sales Prior to Decree .................................................... 304

I. Section 20, in relation to Section 21, requires owner or developer to construct facilities, improvements and infrastructures indicated in the approved subdivision or condominium plans, brochures and any form of advertisement .......................................... 305

Jose Antonio Mapa v. Hon. Joker Arroyo, et al. ........ 306

I. Alteration envisioned under Section 22 of P.D. 957 must be made with the written conformity or consent of the duly organized homeowners association or the majority of the lot buyers .................................................... 310

G.O.A.L. Inc. v. Court of Appeals, et al. .................... 310

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Sec. 23. Non-forfeiture of Payments ......................................... 312

I. Action to be taken of the buyer upon failure of the developer to cause the development of the subdivision lot or condominium unit ............ 313

G.G. Sportswear Mfg. Corp. v. World Class Properties, Inc. ..................................................... 313

II. Buyers are entitled to reimbursement of the amount paid, plus interest thereon ..................... 314

Fil-Estate Properties, Inc. v. Spouses Gonzalo and Consuelo Go ................................................... 314

III. Failure to develop a subdivision does not constitute a legal justification for the non-payment of amortizations by a buyer ..................................... 319

Florencio Eugenio v. Executive Secretary Franklin M. Drilon, HLURB and Prospero Palmiano ....... 319

Sec. 20. Time of Completion ...................................................... 320Sec. 21. Sales Prior to Decree .................................................... 321Sec. 23. Non-forfeiture of Payments ......................................... 321

IV. Securing a clearance from the HLURB is not needed to lawfully withhold monthly payments .............................................................. 323

Francel Realty Corporation v. Ricardo T. Sycip ........ 323

Sec. 23. Non-forfeiture of Payments ......................................... 323 V. Subsequent dishonor of the check without valid cause ............................................................ 325

Francisco T. Sycip, Jr. v. Court of Appeals ......... 326

VI. The HLURB properly applied Section 23 of P.D. No. 957 and ordered the suspension of payment valid ................................................... 328

Sec. 23. Non-forfeiture of Payments ......................................... 328Sec. 24. Failure to Pay Installments ......................................... 330

I. R.A. No. 6552 makes no distinction between “option” and “sale” ................................................ 332

Realty Exchange Venture Corporation and/or Magdiwang Realty Corporation v. Lucina S. Sendino, et al. ....................................................... 332

Sec. 24. Failure to Pay Installments ......................................... 333

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Sec. 25. Issuance of Title ........................................................... 335

I. The justification that squatters entered the property after the developer has incurred delay is not a valid reason for non-delivery of title .................................................................... 336 II. The owner or developer loses all its rights and interests to the unit upon full payment of the buyer ........................................................... 336

G.O.A.L. Inc., v. Court of Appeals, et al. ................... 336

Sec. III. (Contract to Sell).– Title and Ownership of Unit ....... 337Sec. 25, P.D. 957 – Issuance of Title ......................................... 338

III. Administrator of the estate of the developer cannot be held criminally liable if non-delivery of title was due to the pendency of a probate proceedings in Court ............................................ 338

Tomas Trinidad v. The Court of Appeals .................. 339

Sec. 26. Realty Tax ..................................................................... 343

I. Non-payment of taxes and other assessments are not grounds for the non-delivery of title ....... 344

Sec. 27. Other Charges ............................................................. 344 I. Powers of the homeowners association emphasized under Section 12 of R.A. No. 9904 ........................................................ 345

Sec. 28. Access to Public Offices in the Subdivisions .............. 345Sec. 29. Right of Way to Public Road ....................................... 346

I. Section 29 of P.D. No. 957 applies only to the owner or developer of a subdivision without access to a public highway ................................... 346

Concordio Abellana, et al. v. Hon. Court of Appeals, et al. ....................................................... 346

Sec. 29. Right of Way to Public Road ........................................ 347

II. The owner/developer of a subdivision cannot demand a compulsory easement of right of way over the existing roads of an adjacent subdivision ............................................................ 348

Simeon Floro v. Orlando A. Llenado, et al. ............... 348

Sec. 30. Organization of Homeowners Association .................. 351

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Sec. 31. Donations of roads and open spaces to local government ........................................................................ 352

I. The provisions of. P.D. No. 1216 cannot be given retroactive effect. .................................................. 354

Gloria Santos Dueñas v. Santos Subdivisions Homeowners Association ..................................... 354

II. P.D. No. 957 provides that it is the registered owner or developer of a subdivision has the responsibility for the maintenance, repair and improvement of a subdivision roads ............ 356

Aniano A. Albon v. Bayani F. Fernando, et al. .......... 356

III. A subdivision owner/developer is legally bound under P.D. No. 1216 to donate to the city or municipality the “open space” allocated exclusively recreational use ................................. 359

The City of Angeles v. Court of Appeals .................... 360

Sec. 31. Donation of roads and open spaces to local government ........................................................................ 362Sec. 32. Phases of Subdivisions ................................................ 365Sec. 34. Visitorial powers .......................................................... 366Sec. 35. Take-over Development .............................................. 368Sec. 36. Rules and Regulations ................................................ 368

I. The HLURB’s power and authorization to promulgate implementing rules and regulation was upheld by the Supreme Court .... 369

Sec. 37. Deputization of law enforcement agencies ................. 370Sec. 38. Administrative Fines .................................................. 370

I. Ignorance of P.D. No. 957 is not a ground to be excused from administrative fines and penalties ................................................................ 371

Sec. 39. Penalties ...................................................................... 371

I. The penal provision .................................................... 371 II. The civil action pending with the HLURB is not a ground to suspend a criminal action .......... 372

Rule 111 – PROSECUTION OF CIVIL ACTION .................... 372

Sec. 6. Suspension by reason of prejudicial question .............. 372Sec. 7. Elements of prejudicial question .................................. 372

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III. Department Circular No. 27 of the Department of Justice ............................................................... 373

Department Circular No. 27 ....................................... 374

IV. The subsequent issuance of a license to sell will not extinguish the liability of the developer for violation of Section 5 of P.D. No. 957 ............. 375

Victoria P.Cabral v. Jacinto Uy, et al. ....................... 375

V. The City of Prosecutors’ Office of Naga City has the authority to file the criminal information for violations of P.D. No. 957 ............................... 378

Ruben S. Sia and Josephine Sia v. People of the Philippines and Teresita Lee ............................... 378

Sec. 40. Liability of controlling persons ................................... 382Sec. 41. Other remedies ............................................................ 382Sec. 42. Repealing clause .......................................................... 383Sec. 43. Effectivity ...................................................................... 384

Chapter VI: REPUBLIC ACT 6552 ...................................... 385

Republic Act No. 6552: An Act to Provide Protection to Buyers of Real Estate on Installment Payments............. 385

Sec. 1. Realty Installment Buyer Act ........................................ 385Sec. 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions ...................... 386Sec. 3. ....................................................................................... 387 I. R.A. No. 6552 cannot be applied if the buyer did not buy the property by installments ................. 389

Lagandon v. Court of Appeals .................................... 390

II. No valid rescission of contract pursuant to R.A. No. 6552 if demand letter was furnished, not a notarial cancellation ................. 392

Olympia Housing, Inc. v. Panasiatic Travel Corporation, et al. ................................................. 392

III. R.A. No. 6552 finds no application in contracts that does not involve a subdivision owner or developer but only between two couples ......... 395

Dela Cruz v. Court of Appeals .................................... 396

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IV. Cancellation envisioned by R.A. No. 6552 pertains only to extrajudicial cancellation .......... 399

Heirs of Paulino Atienza v. Domingo P. Espidol ....... 400

V. The rescission contemplated by R.A. No. 6552 is a notarial cancellation ...................................... 401

Manuel C. Pagtalunan v. Rufina Dela Cruz vda. De Manzano .......................................................... 401

Sec. 4 ....................................................................................... 404

I. The cancellation of a contract with its two-step process ................................................................... 405 II. The absence of a notarial cancellation pursuant to R.A. No. 6552 does not bar the filing of a complaint for judicial cancellation ...................... 405 III. How to compute the cash surrender of fifty percent of the total payments made with respect to the two-year monthly installments paid ........................................................................ 406

Jestra Development and Management Corporation v. Daniel Ponce Pacifico .................. 406

IV. The contract to sell cannot be considered abandoned without notarial cancellation ............ 408

Solid Homes, Inc. v. Evelina Laserna ........................ 408

V. R.A. No. 6552 is applicable in rescission of contract to sell ...................................................... 410 a. Emiliano Rillo v. Court of Appeals and Corb Realty Investment, Corp. ................................. 410

b. Active Realty & Development Corporation v. Necita G. Daroya .......................................... 414

Chapter VII: REPUBLIC ACT NO. 9904 ........................... 420

I. What is the Declaration of Policy of R.A. No. 9904? ...................................................... 424 II. What is an association? .............................................. 424 III. What is an association member? ................................ 424 IV. What is the basic community services and facilities? ........................................................ 425 V. What is the board? ...................................................... 425 VI. What is a governing document? ................................. 425 VII. What is a homeowner? ................................................ 425

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VIII. What is a simple majority? ......................................... 426 IX. What is a socialized housing? ..................................... 426 X. What is a subdivision/village? .................................... 426 XI. Is there a need for the registration of every association of homeowners with the HLURB? .... 426 XII. What are the rights and duties of every homeowner? .......................................................... 427 XIII. What are the qualifications of the members? ............ 427 XIV. What are the rights of a member? ............................. 427 XV. What are the duties of a member? ............................. 428 XVI. How will the delinquent members be sanctioned by the homeowners association? ........................................................... 428 XVII. What are the rights and powers of the association? ........................................................... 428 XVIII. What are the duties and responsibilities of the board? ......................................................... 431 XIX. In what instances wherein the board of directors are not allowed in behalf of the association? ..................................................... 432 XX. How can a director or trustee be removed from office? ............................................................ 432 XXI. Once a director is removed from office, how is the vacancy filled? ............................................. 432 XXII. How can the board be dissolved? ............................... 432 XXIII. Once the board is dissolved, who then can call for the elections of new board of directors? ......... 433 XXIV. During the interim of the dissolution of the former board and until the new set of board shall have been elected, who shall manage the association? ..................................................... 433 XXV. How is the bylaws of the association adopted? ......... 433 XXVI. What are the contents of the bylaws of the association? ........................................................... 433 XXVII. How can a proxy voting be made? .............................. 435 XXVIII. What are the obligations of the incumbent officers respect to the financial and other records of the homeowners? ................................. 435 XXIX. What are the duties of the homeowners’ associations with respect to the LGUs in providing vital services to their members and help implement local government policies, programs, ordinances, and rules? ........................ 436

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XXX. In return, what shall the LGU do to reciprocate the homeowners association? ............................... 436 XXXI. What are the duties of the associations with respect to the national members and help implement the national government policies and programs? ...................................................... 437 XXXII. What are the duties and responsibilities of the HLURB with respect to the homeowners? .......... 437XXXIII. What are the prohibited acts for homeowners and homeowners’ associations? ........................... 439 XXXIV. What are the penalties and sanctions in the event that there is violation of the provisions of R.A. No. 9904? .................................................. 439 XXXV. What is the limitation as to the implementations of the Rules and Regulations of R.A. No. 9904? ...................................................... 440 XXXVI. What actions should the existing homeowners association have to do with respect to its by-laws after the effectivity of under R.A. No. 9904 ........................................................ 440 XXXVII. What is an election contest? ....................................... 440 XXXVIII. What is the period for filing an election contest? ................................................................. 441 XXXIX. What is the duty of the arbiter upon filing of the complaint? .................................................. 442 XL. What is the period for the respondent to answer the complaint? ......................................... 442 XLI. What is the effect of failure to answer? ..................... 443 XLII. What is the period to call for a clarificatory Conference and what is the scope thereof? ......... 443 XLIII. What shall be the basis of the decision of the arbiter? ....................................................... 443 XLIV. Is the decision of the arbiter immediately executor? ............................................................... 443 XLV. What is the procedure in the event that there is a failure of election? .......................................... 443 XLVI. In the event that a regular or special election is not held, what are the requirements that the association will submit with the Regional Office of the HLURB? ........................................... 444 XLVII. What is the remedy of the event that the reasons stated in the affidavit of non-holding of election are found to be without merit? ........... 444

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XLVIII. How can the incumbent homeowners association officers assume their respective office in a hold-over capacity? ............................................ 445 XLIX. What is the procedure in Election Contests? ............ 445 L. When did R.A. No. 9904 take effect? .......................... 446

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Chapter I

INTRODUCTION

“The family should be a closely knit group. The home should be a self-contained shelter of security; a kind of school where life’s basic lessons are

taught; and a kind of church where God is honored; a place where wholesome recreation and simple pleasures are enjoyed.”

– Billy Graham1

The vast and abundant wealth found in the wilderness, the endless horizon seen on the open ocean, the countless pebbles

scattered along the sea shore, the perpetual wideness displayed by the vast blue sky and the limitless supply of fresh air every minute we breathe are only a few things that we can enjoy seemingly in infinite fashion without fear of restrictions from other forces. This may be true when times we seek to enjoy the gifts of nature in the adventurous side of our lives and in a gratuitous manner. But not all good things in life are free and we cannot get something for gratis or conquer success out of nothing.

Succinctly put, one should burn the midnight oil to earn a modest and clean living for him to ultimately and unquestionably achieve his dreams and triumphantly reach his goals and aspirations in life. And in everything we undertake in life, whether extremely monumental or simply trivial, there is a price to pay. Like in a family,

1William Franklin “Billy” Graham, Jr. American evangelical Christian reverend/evangelist. As of April 25, 2010, when he met with Barack Obama, Graham has spent personal time with twelve United States presidents going back to Harry S. Truman, and is number seven on Gallup’s list of admired people for the 20th century. He is a Southern Baptist. He rose to celebrity status as his sermons were broadcast on radio and television. It is said that Graham has preached in person to more people around the world than any other preacher in history. According to his staff, as of 1993 more than 2.5 million people have “stepped forward at his crusades to accept Jesus Christ as their personal Savior,” many to the altar call song “Just As I Am.” As of 2008, Graham’s lifetime audience, including radio and television broadcasts, topped 2.2 billion. (http://en.wikipedia.org/wiki/Billy_Graham [as of January 19, 2011])

THE HLURB’S JURISDICTION2

owning a house they can call their home, regardless of its gargantuan size or diminutive existence is a significant accomplishment that one will always find pride, joy and blissfulness in his heart.

A nation is built on a strong foundation of a family that serves as a single unit composed of its household that plays a major role in the nation’s development, growth and success. It is always a dream of every Filipino family to own a decent house they can call their home for them to foster stronger family ties and everlasting bonding. This is likewise a comfort zone for the head of the family to rear his children in a more conducive place to live in. A dream that every family desires to achieve. As Lord Edward Coke Lord2 once wrote, to wit:

“The house of every one is to him as his castle and fortress, as well for his defence against injury and violence, as for his repose.”

2Sir Edward Coke (pronounced “Cook”) (February 1, 1552 – September 3, 1634) was a seventeenth-century English jurist and Member of Parliament whose writings on the common law were the definitive legal texts for nearly 150 years. Born into a family of minor Norfolk gentry, Coke travelled to London as a young man to make his living as a barrister. There he rapidly gained prominence as one of the leading attorneys of his time, eventually being appointed Solicitor General and then Attorney General by Queen Elizabeth. As Attorney General, Coke famously prosecuted Sir Walter Raleigh and the Gunpowder Plot conspirators for treason. In 1606, Coke was made Chief Justice of the Court of Common Pleas, later being elevated, in 1613, to Lord Chief Justice of England. As a judge, Coke delivered numerous important decisions, and he gained a reputation as the greatest jurist of his age. Nonetheless, his unwillingness to compromise in the face of challenges to the supremacy of the common law made him increasingly unpopular with James I, and he was eventually removed as Lord Chief Justice in 1616. Despite his dismissal from the bench and his already advanced age, Coke remained an influential political figure, leading parliamentary opposition to the Crown in the 1620s. His career in parliament culminated in 1628 when he acted as one of the primary authors of the Petition of Right. This document reaffirmed the rights of Englishmen and prevented the Crown from infringing them.

Coke’s enduring fame and importance rests principally on his immensely influential legal writings and on his staunch defence of the rule of law in the face of royal absolutism. His legal texts formed the basis for the modern common law, with lawyers in both England and America learning their law from his Institutes and Reports until the end of the eighteenth century. As a judge and Member of Parliament, Coke supported individual liberty against arbitrary government and sought to ensure that the king’s authority was circumscribed by law. In later times, both English reformers and American Patriots, such as John Lilburne, ames Otis, and John Adams, used Coke’s writings to support. (found at http://en.wikipedia.org/wiki/Edward_Coke as of January 21, 2011.)

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One will always see that shelter is one of the basic needs of every individual to live normally. Although, most Filipino families are striving to acquire real properties, either a house and lot or a lot only, they are not equipped with the necessary financial capacity, either because they do not have enough incomes to acquire the same, or the current prices of real estate properties are too expensive and can only be afforded by those who are earning substantial incomes. We rather spend our hard earned money on basic needs, such as food, clothing, education, to name a few, and save a considerable amount for our future needs. This is a nagging reality, and an endless cycle that we are all facing everyday in our lives.

No less than the 1987 Constitution so provides that, “The State recognizes the sanctity of family life and shall protect and strengthen the family as a basic autonomous social institution. x x x.3” This is a testimony that the family is so essential to the growth of a nation. Another provision of the 1987 Constitution that is worth reckoning with is Section 9, Article XIII of Social Justice and Human Rights Urban Land Reform and Housing which provides that:

“Sec. 9. The State shall, by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing which will make available at affordable cost, decent hous-ing and basic services to under-privileged and homeless citizens in urban centers and resettlement areas. It shall also promote adequate employment opportunities to such citizens. In the implementation of such program the State shall respect the rights of small property owners.”

Moreover, Section 7 of Article XII of the 1987 Constitution reserves only the ownership of real estate properties to Filipino citizens:

Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. (Emphasis supplied).

3First sentence of Section 12, Article II (Declaration of Principles and State Policies Principles) of the 1987 Constitution.

CHAPTER IINTRODUCTION