Amoguis v. Ballado
Amoguis v. Ballado
Amoguis v. Ballado
DECISION
LEONEN, J : p
The Amoguis Brothers argued that the Regional Trial Court should have
considered valid the rescission or cancellation of the contract to sell, and
that they should not have been declared as buyers in bad faith. They
contended that the evidence presented by the Ballado Spouses should not
have been considered as it was not formally offered. They averred that in
case there was no valid rescission or cancellation of contract, St. Joseph
Realty should have been ordered to pay them the cost of their
improvements, attorney's fees, litigation expense, and moral and exemplary
damages. 39 They did not raise the Regional Trial Court's lack of jurisdiction.
On September 26, 2008, the Court of Appeals rendered its Decision, 40
affirming the Regional Trial Court February 28, 2001 Decision 41 with
modification:
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WHEREFORE, premises foregoing, the appealed decision is
hereby AFFIRMED with modification. We uphold the findings of the
court a quo nullifying the certificates of title issued to the Amoguises.
The award of P50,000.00 as moral damages, P20,000.00 as
exemplary damages and P30,000.00 as attorney's fees plus cost of
the suit in favor of the Ballados is likewise affirmed with the
modification that such should be paid solely by St. Joseph and the
Ballados are likewise ordered to execute an absolute deed of sale
upon full payment by the Ballados of the deficiency in the purchase
price of the subdivision lots. The amount adjudged to be paid by St.
Joseph to the Amoguises should however, be modified as the same
should only be P108,930.00. The Amoguises' other monetary claims
are denied for want of basis.
SO ORDERED. 42
Though not raised, the Court of Appeals discussed at the outset the
issue of jurisdiction. Since the Ballado Spouses wanted St. Joseph Realty to
comply with the provisions of the contracts to sell, the Complaint was for
specific performance. The subject matter of the case involved subdivision
lots. Therefore, jurisdiction was lodged with the Housing and Land Use
Regulatory Board:
Such being the case, the court a quo should not have taken
cognizance of the case as it is the Housing and Land Use Regulatory
Board (HLURB, for brevity) which exercises exclusive original
jurisdiction over such matters pursuant to Section 3 of Presidential
Decree No. 957 entitled "Regulating the sale of Subdivision Lots and
Condominiums, providing penalties for violations thereof." The
provision states:
SECTION 3. National Housing Authority. — The
National Housing Authority shall have exclusive
jurisdiction to regulate the real estate trade and
business in accordance with the provisions of this
Decree.
This jurisdiction was later delineated and clarified by
Presidential Decree No. 1344 which provides: AScHCD
The Court of Appeals ruled, however, that since neither St. Joseph
Realty nor the Amoguis Brothers raised the issue of jurisdiction before the
Regional Trial Court, they must be considered estopped from raising it on
appeal. 44
On the issue that the Ballado Spouses did not formally offer their
evidence, the Court of Appeals cited Vda. De Oñate v. Court of Appeals. 45
That case ruled that evidence not formally offered may still be appreciated
by a trial court provided that "first, [it] must have been duly identified by
testimony duly recorded and, second, [it] must have been incorporated in
the records of the case." 46 The Court of Appeals cited People of the
Philippines v. Alicante , 47 where this Court ruled that when a party fails to
offer the purpose of a witness' testimony, the opposing party has the duty to
immediately object "at the time when the victim was called to the witness
stand, without proper explanation thereof or at anytime before the
prosecution rested its case." 48 In this case, St. Joseph Realty and the
Amoguis Brothers failed to timely enter their objection.
As to the admissibility of documentary evidence over which no formal
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offer of evidence was made, the Court of Appeals reviewed the transcript of
stenographic notes and noted that of the documents which Concepcion
identified, only the contracts to sell were attached. The Regional Trial Court
should have considered only these documents as documentary evidence for
the Ballado Spouses. 49
As to the rescission of contracts to sell, the Court of Appeals sustained
that it was improperly and unlawfully done by St. Joseph Realty. It cited
Palay, Inc. v. Clave, 50 where this Court ruled that while the suspensive
condition of full payment of purchase price has not been complied with,
there must, at the very least, be a notice to the defaulting buyer of the
rescission. With the passage of Republic Act No. 6552, also known as the
Maceda Law, the manner to rescind or cancel a contract to sell or a contract
of sale has been codified. Rescission or cancellation shall take place 30 days
from receipt of the buyer of a notarized notice of cancellation or demand for
rescission. 51 The buyer must also be paid the full cash surrender value. 52
The Court of Appeals likewise cited Siska Development Corporation v. Office
of the President, 53 which provided that the Maceda Law shall apply to
contracts entered into before its effectivity. Thus, even if the Maceda Law
was passed close to three (3) years after the contracts to sell were executed,
it still must apply to them. 54
The Court of Appeals affirmed the factual findings of the Regional Trial
Court. St. Joseph Realty presented a notarized demand of rescission during
trial. However, the Ballado Spouses had always insisted that they never
received any notice of rescission from St. Joseph Realty. Furthermore, St.
Joseph Realty did not offer to pay the cash surrender value of the payments
they had made. Thus, the requirements for a valid rescission under the
Maceda Law were not met. 55
The Court of Appeals stated that since St. Joseph Realty did not validly
rescind the contracts to sell, it had no legal basis to sell the properties to the
Amoguis Brothers. It should make a refund of the purchase price to them,
with a 6% per annum interest rate reckoned from February 1988 until fully
paid. 56 TAIaHE
Petitioners argue that lack of jurisdiction over the subject matter was
timely raised by St. Joseph Realty in its Answer with Counterclaims. Even
assuming that it was never raised, jurisdiction is a question of law that
cannot be lost through waiver or estoppel, and may be raised at any time,
even during appeal. Further, if there was a remedy under the law, that
remedy must be exhausted first before the parties come to court. The
administrative remedy should have been sought before the Housing and
Land Use and Regulatory Board, and then appealed to the Office of the
President. 60 The Ballado Spouses counter that St. Joseph Realty never
moved that its affirmative defense of lack of jurisdiction be heard; instead, it
actively participated in the proceedings together with the Amoguis Brothers.
61 cDHAES
In between the approval of Presidential Decree Nos. 957 and 1344, the
Maceda Law was approved. 64
Subject matter jurisdiction is a court's or tribunal's power to hear and
determine cases of a general class or type relating to specific subject
matters. 65 This jurisdiction is conferred by law. 66 To determine a court's or
an administrative body's jurisdiction over a subject matter, allegations in the
complaint must be examined. 67 The nature of the action, as reflected in the
allegations in the complaint, and the reliefs sought determine jurisdiction
over the subject matter. 68 It is immaterial whether the claimant has a right
to the relief sought. 69
Presidential Decree No. 957 was approved on July 12, 1976, 11 years
before the Ballado Spouses filed their complaint. This means that the law
mandating the jurisdiction of the National Housing Authority, which later on
became the House and Land Use Regulatory Board, 70 had long been in
effect when petitioners filed their Answer and participated in trial court
proceedings. It behooved them to raise the issue of jurisdiction then,
especially since St. Joseph Realty, their co-respondent, raised it in its Answer
albeit superficially and without any discussion.
In their Complaint, the Ballado Spouses alleged that the properties
already sold to them by St. Joseph Realty were sold to the Amoguis Brothers
for a better price. They sought the cancellation of the titles issued to
petitioners as a result of their subsisting contracts to sell, which were neither
rescinded nor annulled. They argued that when St. Joseph Realty received
their check for P30,000.00, they had fully paid the purchase price. As against
St. Joseph Realty, they sought damages and specific performance. They
based their claim of full payment when St. Joseph Realty accepted the check
for P30,000.00. Upon St. Joseph Realty's acceptance, the Ballado Spouses
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were able to fully comply with the terms of the contracts to sell. Without any
valid rescission, St. Joseph Realty was bound to carry out its obligations
under the contracts. As against petitioners, the Ballado Spouses sought
injunction and the cancellation of titles issued under their names. The
Amoguis Brothers were beneficiaries of St. Joseph Realty's breach of the
contracts to sell. They had no authority under the law to occupy the
properties and have them titled under their names.
According to Presidential Decree No. 1344, exclusive original
jurisdiction for specific performance of contractual and statutory obligations
filed by buyers of subdivision lots or condominium units against the owner,
developer, dealer, broker or salesman is lodged with the National Housing
Authority.
In Antipolo Realty v. National Housing Authority, 71 this Court ruled that
the National Housing Authority, and not the regular courts, have initial
jurisdiction to determine the rights and obligations of the subdivision
developer and of the buyer under a contract to sell.
Solid Homes v. Payawal 72 stressed that the jurisdiction of National
Housing Authority excluded that of the regular courts even in a concurrent
capacity. The respondent in that case, Teresita Payawal, argued that regular
courts had jurisdiction based on Batas Pambansa Blg. 129, 73 a law passed
after Presidential Decree No. 1344. This Court ruled otherwise:
The language of [Section 1, Presidential Decree 1344],
especially the italicized portions, leaves no room for doubt that
"exclusive jurisdiction" over the case between the petitioner and the
private respondent is vested not in the Regional Trial Court but in the
National Housing Authority. ITAaHc
In the years that followed, this Court tackled the issue of whether the
Housing and Land Use and Regulatory Board's jurisdiction included the
cancellation of land titles issued to third parties due to the subdivision
developer's or owner's unsound business practices. Fajardo v. Hon. Bautista
76 ruled that it did. Apart from unsound business practices, the cancellation
of titles issued to third parties also involved claims for specific performance
against subdivision developers and owners. In Fajardo, the claimants sought
that the developer perform its obligations under the contract to sell, and the
cancellation of titles were but incidental.
These doctrines have been observed by this Court even in recent
cases. Presently, jurisprudence still dictates that when a buyer wants to
compel a developer to conform with the terms of the contract it executed,
jurisdiction lies with the Housing and Land Use and Regulatory Board. 77
The Ballado Spouses' rights and interests lie not just as buyers of any
property, but buyers of subdivision lots from a subdivision developer. From
the circumstances between St. Joseph Realty and the Ballado Spouses, there
is no doubt that the then National Housing Authority had jurisdiction to
determine the parties' obligations under the contracts to sell and the
damages that may have arisen from their breach. The Ballado Spouses'
Complaint should have been filed before it. The National Housing Authority
also had jurisdiction over the injunction and annulment of titles sought
against petitioners as these were incidental to St. Joseph Realty's unsound
business practices.
Where there is no jurisdiction over a subject matter, the judgment is
rendered null and void. A void judgment has absolutely no legal effect, "by
which no rights are divested, from which no rights can be obtained, which
neither binds nor bars any one, and under which all acts performed and all
claims flowing out of are void." 78 Because there is in effect no judgment, res
judicata does not apply to commencing another action despite previous
adjudications already made. 79 CHTAIc
II
However, this Court has discussed with great nuance the legal principle
enunciated in Tijam. Estoppel by laches bars a party from invoking lack of
jurisdiction in an unjustly belated manner especially when it actively
participated during trial.
Estoppel by laches has its origins in equity. It prevents a party from
presenting his or her claim "when, by reason of abandonment and
negligence, he [or she] allowed a long time to elapse without presenting
[it]." 80 It is further elaborated by this Court in Regalado v. Go, 81 thus:
Laches is defined as the "failure or neglect for an unreasonable
and unexplained length of time, to do that which, by exercising due
diligence, could or should have been done earlier, it is negligence or
omission to assert a right within a reasonable length of time,
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warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it." 82 (Citation omitted)
In estoppel by laches, a claimant has a right that he or she could
otherwise exercise if not for his or her delay in asserting it. This delay in the
exercise of the right unjustly misleads the court and the opposing party of its
waiver. Thus, to claim it belatedly given the specific circumstances of the
case would be unjust.
I n Tijam, the spouses Serafin Tijam and Felicitas Tagalog (the Ti jam
Spouses) filed a collection case against the spouses Magdaleno Sibonghanoy
and Lucia Baguio (the Sibonghanoy Spouses). The Court of First Instance of
Cebu issued a writ of attachment over the Sibonghanoy Spouses' properties.
It was dissolved afterwards as the Sibonghanoy Spouses and the Manila
Surety and Fidelity Co., Inc. (Manila Surety), their surety, filed a
counterbond. The decision on the collection case became final and
executory. As collection could not be made against the Sibongh anoy
Spouses, the Tijam Spouses tried to satisfy the judgment against the surety's
bond. Manila Surety opposed and argued that no demand was made on it.
The Court of First Instance ruled in the surety's favor. However, demand on
the surety was eventually made, and the Court of First Instance issued a writ
of execution. Again, Manila Surety opposed and tried to quash the writ of
execution. It argued that a summary hearing was required before the writ
should issue. Upon the Court of First Instance's denial to quash, Manila
Surety appealed to the Court of Appeals. It assigned errors committed by the
Court of First Instance in the issuance of the writ of execution but did not
raise the issue of jurisdiction. The Court of Appeals affirmed the Court of First
Instance's orders to execute. After Manila Surety received a copy of the
Court of Appeals decision, it asked for additional time to file its motion for
reconsideration. The Court of Appeals granted an extension. Instead of filing
a motion for reconsideration, the surety filed a motion to dismiss raising, for
the first time, the Court of First Instance's lack of jurisdiction over the subject
matter of the case. As the amount involved was only P1,908.00, inferior
courts, and not the Court of First Instance, had exclusive original jurisdiction
over the collection case. This was mandated by Republic Act No. 296, the
Judiciary Act of 1948, which came into effect a month after the Tijam
Spouses filed their complaint before the Court of First Instance. 83 EATCcI
This Court ruled that the surety could no longer question the Court of
First Instance's jurisdiction over the subject matter due to estoppel by
laches. It premised that since Manila Surety actively participated during trial
and prevailed; invoking the Court of First Instance's lack of jurisdiction was a
last ditch effort to absolve itself from the effects of an unfavorable judgment
on appeal. On the 15-year delay before the issue on jurisdiction was raised,
this Court ruled that it could have and should have been raised earlier. The
surety's failure to do so was negligence on its part, "warranting a
presumption that the party entitled to assert it either has abandoned it or
declined to assert it." 84 Tijam set a precedent to stop legal machinations
where jurisdiction was raised at the very last minute when the parties have
already gone through long years of litigation. It was not so much an issue of
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time than it was an issue of fairness. Though conferred by law, fairness and
equity must temper the parties' bravado to raise jurisdiction when they have
participated in proceedings in the lower courts or when an unfavorable
judgment against them has been rendered.
The following circumstances were present in Tijam: first, there was a
statutory right in favor of the claimant. Manila Surety had the right to
question the Court of First Instance's jurisdiction because it was the inferior
courts that had authority to try cases that involved the amount claimed.
Second, the statutory right was not invoked. Manila Surety participated in
the trial and execution stages. It even sought relief from the Court of
Appeals without questioning the Court of First Instance's jurisdiction. Third,
an unreasonable length of time had lapsed before the claimant raised the
issue of jurisdiction. It was only after the Court of Appeals affirmed the Court
of First Instance's order of execution did Manila Surety pursue the issue of
jurisdiction. Jurisdiction over collections for the amount involved was already
determined by law a month before the case was filed. Fifteen years had
lapsed before the surety pointed this out. Fourth, the claimant actively
participated in the case and sought affirmative relief from the court without
jurisdiction. The unreasonable length of time was, therefore, inexcusable as
the claimant was apprised of the prevailing law, as well as all stages of the
proceeding.
Calimlim v. Hon. Ramirez 85 unequivocally ruled that it is only when the
exceptional instances in Tijam are present should estoppel by laches apply
over delayed claims:
A rule that had been settled by unquestioned acceptance and
upheld in decisions so numerous to cite is that the jurisdiction of a
court over the subject-matter of the action is a matter of law and may
not be conferred by consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the proceedings,
even on appeal. This doctrine has been qualified by recent
pronouncements which stemmed principally from the ruling in the
cited case of Sibonghanoy. It is to be regretted, however, that the
holding in said case had been applied to situations which were
obviously not contemplated therein. The exceptional circumstance
involved in Sibonghanoy which justified the departure from the
accepted concept of non-waivability of objection to jurisdiction has
been ignored and, instead a blanket doctrine had been repeatedly
upheld that rendered the supposed ruling in Sibonghanoy not as the
exception, but rather the general rule, virtually overthrowing
altogether the time-honored principle that the issue of jurisdiction is
not lost by waiver or by estoppel. 86 DHITCc
III
IV
A buyer in good faith is one who purchases and pays fair price for a
property without notice that another has an interest over or right to it. 107 If
a land is registered and is covered by a certificate of title, any person may
rely on the correctness of the certificate of title, and he or she is not obliged
to go beyond the four (4) corners of the certificate to determine the
condition of the property. 108 This rule does not apply, however,
when the party has actual knowledge of facts and circumstances that
would impel a reasonably cautious man to make such inquiry or when
the purchaser has knowledge of a defect or the lack of title in his
vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. 109
(Citation omitted)
The Regional Trial Court ruled that petitioners were in bad faith
because they did not deny Francisco's testimony that he had informed them
of his ownership when they occupied the properties. Despite this, petitioners
continued to make improvements on the lands. 110 The Court of Appeals, on
the other hand, made a conflicting finding. It ruled that it was St. Joseph
Realty that made representations to the Amoguis Brothers and assured them
that the previous buyers had abandoned their purchase of the properties. It
appreciated that the Amoguis Brothers found out about the Ballado Spouses'
claim only after they had bought them. 111 Due to these conflicting findings,
this Court is compelled to review whether respondents were bad faith
purchasers. 112
It is incumbent upon a buyer to prove good faith should he or she
assert this status. This burden cannot be discharged by merely invoking the
legal presumption of good faith. 113 This Court rules that based on the
evidence on record, petitioners failed to discharge this burden. Though they
were informed by Francisco on his claim to the properties only after their
purchase, it is undisputed from the records that mango and chico trees were
planted on the properties, and that they were cordoned off by barbed wires.
St. Joseph Realty also informed them that there were previous buyers, who
allegedly abandoned their purchase. To merely claim that they were buyers
in good faith, absent any proof, does not make the case for them.
The Regional Trial Court found that petitioners were in bad faith.
However, it did not order their solidary liability with St. Joseph Realty. It
ordered damages, attorney's fees, and the cost of suit to be borne by St.
Joseph Realty alone. The modification in this regard made by the Court of
Appeals was, therefore, superfluous.
WHEREFORE, the Petition for Review is DENIED. The Court of
Appeals' September 26, 2008 Decision and August 7, 2009 Resolution in CA-
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G.R. CV No. 73758-MIN are hereby AFFIRMED. IDSEAH
SO ORDERED.
Leonardo-de Castro, Bersamin, A.B. Reyes, Jr. and Gesmundo, JJ.,
concur.
Footnotes
1. Magno v. People of the Philippines, 662 Phil. 726, 735 (2011) [Per J. Brion, Third
Division], citing Machado v. Gatdula, 626 Phil. 457 (2010) [Per J. Brion,
Second Division].
3. Magno v. People of the Philippines, 662 Phil. 726, 735 (2011) [Per J. Brion, Third
Division], citing Machado v. Gatdula, 626 Phil. 457 (2010) [Per J. Brion,
Second Division].
4. See Republic v. Bantigue Development Corporation, 684 Phil. 192 (2012) [Per J.
Sereno, Second Division]; Frianela v. Banayad, Jr., 611 Phil. 765 (2009) [Per J.
Nachura, Third Division].
5. Rollo , pp. 92-92-A.
6. Id. at 93-93-A.
9. Id. at 93.
10. Id. at 87.
17. Id.
18. Id.
30. Id. In the trial court's decision, it noted that trial commenced "after so many
postponements by the parties."
31. Id. at 107-108. A portion of St. Joseph Realty's rescission letter stated, "If you
desire to seek reconsideration of the notice of rescission, please see us in our
office within ten days from your receipt of this letter and file your request in
writing."
39. Id.
40. Id. at 56-83. The Decision, docketed as CA-G.R. CV No. 73758-MIN, was penned
by Associate Justice Rodrigo F. Lim, Jr. and concurred in by Associate Justices
Michael P. Elbinias and Ruben C. Ayson of the Twenty-Third Division, Court of
Appeals, Cagayan de Oro City.
41. Id. at 104-115. The Decision, docketed as Civil Case No. 3687, was penned by
Pairing Judge Jose S. Majaducon of Branch 22, Regional Trial Court, General
Santos City.
(a) To pay, without additional interest, the unpaid installments due within
the total grace period earned by him, which is hereby fixed at the rate of one
month grace period for every one year of installment payments made:
Provided, That this right shall be exercised by the buyer only once in every
five years of the life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per cent
of the total payments made and, after five years of installments, an
additional five per cent every year but not to exceed ninety per cent of the
total payments made: Provided, That the actual cancellation of the contract
shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act
and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the
computation of the total number of installment payments made.
58. Id. at 84-85. The Resolution was penned by Associate Justice Rodrigo F. Lim, Jr.
and concurred in by Associate Justices Michael P. Elbinias and Ruben C.
Ayson of the Former Twenty-Third Division, Court of Appeals, Cagayan de Oro
City.
68. Fort Bonifacio Development Corporation v. Domingo, 599 Phil. 554, 561 (2009)
[Per J. Chico-Nazario, Third Division].
69. City of Dumaguete v. Philippine Ports Authority, 671 Phil. 610, 629 (2011) [Per
J. Leonardo-de Castro, First Division].
70. Exec. Order No. 648 (1981) transferred the regulatory and quasi-judicial
functions of the National Housing Authority to the Human Settlements
Regulatory Commission. Executive Order No. 90 dated December 17, 1986,
the renamed the Human Settlements Regulatory Commission to the Housing
and Land Use Regulatory Board.
71. 237 Phil. 389 (1987) [Per J. Feliciano, En Banc].
(2) In all civil actions which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the property
involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions in
Metro Manila, where such the value exceeds Fifty thousand pesos
(50,000.00) except actions for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is conferred upon
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts;
(8) In all other cases in which the demand, exclusive of interest and cost or
the value of the property in controversy, amounts to more than twenty
thousand pesos (P20,000.00). *Before amendment by Republic Act No. 7691.
74. Solid Homes v. Payawal , 257 Phil. 914, 918-920 (1989) [Per J. Cruz, First
Division].
75. Id.
76. 302 Phil. 324 (1994) [Per J. Davide, Jr., First Division].
77. See Francel Realty Corporation v. Sycip, 506 Phil. 407 (2005) [Per J.
Panganiban, Third Division]; Roxas v. Court of Appeals, 439 Phil. 966 (2002)
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[Per J. Quisumbing, Second Division].
78. Arevalo v. Benedicto, 157 Phil. 175, 181 (1974) [Per J. Antonio, Second
Division].
79. Hilado v. Chavez , 482 Phil. 104 (2004) [Per J. Callejo, Second Division].
80. International Banking Corp. v. Yared, 59 Phil. 72, 92 (1933) [Per J. Villareal, First
Division].
81. 543 Phil. 578, 598 (2007) [Per J. Chico-Nazario, Third Division].
103. Constantino v. Court of Appeals, 332 Phil. 68 (1996) [Per J. Bellosillo, First
Division].
104. Rollo , pp. 51-52.
105. Id. at 131.
113. Potenciano v. Reynoso, 449 Phil. 396, 410 (2003) [Per J. Panganiban, Third
Division].