Republic of the Philippines

HUMAN SE'ITLEMENTS ADJUDICATION COMMISSION

Regional Adjudication Branch VII
Unit 704, 7/F Club Ultima Tower II
Osmefia Boulevard, Cebu City

JEZAH MAE 0. SULLA,

Complainant,

-versus- RVII-REM-210406-0017

PRIMA CASA LAND AND

HOUSES INC.,
Respondent.
X-=--------/

DECISION

This is a complaint for violation of PD 957 and for refund,

moral damages, exemplary damages, attorney's fees, and cost of
litigation predicated on the failure of the developer to deliver the
purchased housing unit on the agreed date.

The Complainant in the present case is JEZAH MAE 0.

SULLA, who is of legal age, Filipino citizen, with residence
address at Tangke 2, City of Naga, Cebu.

On the other hand, the Respondent is PRIMA CASA LAND

& HOUSES INC., formerly Lumina Homes Inc., with principal
office at Lumina Homes, A.S. Fortuna St., Mandaue City.

Complainant alleged that sometime on 2015, she purchased

from the Respondent a subdivision unit located at Lot No. 9,
Block No. 3 of Lumina Phase 2 at Lumina Carcar Subdivision for
the total contract price of One Million Eighty-Seven Thousand
Pesos (P1,087,ooo.00)1, upon the wishes of her mother, who is an
Overseas Contract Worker (OCW) in Hongkong.

Complainant alleged that through the representations and

promises made by the Respondent that the subdivision unit
will be delivered within six (6) months, or on October 2017, after
full
1
See Reservation Agreement dated 22 July 2015, Annex"A" of the Complaint.

17E
payment of the downpayment of Three Hundred Thirty-Four
Thousand Pesos (P334,ooo.oo), with the remaining balance paid
through Pag-IBIG Financing, Complainant signed the
reservation agreement and paid a reservation fee of Five
Thousand Pesos (P5,ooo.0 0)2 • Complainant could not recall
signing a contract to sell and had been requesting the
Respondent to provide such document.

Complainant further alleged that after the total agreed

downpayment has been paid on April 2017, no tum-over was made
on October 2017 and that it was only on October 2018, one year
after the alleged agreed date of tum-over, that the unit was erected
but was half-finished and incomplete. To add, when she visited the
housing unit on December 2018, the unit was hastily built and in
low quality.

Notwithstanding the foregoing, Complainant continued to pay

the monthly amortizations without any contract from 22 July 2015
to 31 December 2018 based on the sample pricelist3, or a total of
Five Hundred Fifteen Thousand and Nine Hundred Twenty Pesos
and 37/100 (P515,920.37)4, alleging she was made to believe that
she can no longer recover her payments and it was for her best
interest to continue with the transaction.

Complainant claims that Respondent was engaged in the

illegal transaction of selling without license as she recently
discovered from the Department of Human Settlements and Urban
Development that the Certificate of Registration and License to
Sell for Lumina Carcar Phase 2 was issued only on 24 March 2017,
for Economic Housing, and 17 April 2017, for Socialized Housing.
Thus, Respondent cannot deliver the housing unit within the
promised period and that the processing of loan application,
transfer of accounts, etc. were only a scheme to further the delay to
conceal their failures.

Complainant decided to withdraw from the transaction but

the Respondent failed to refund the cash surrender value.

2
Ibid.
3 Ibid. Sample Pricelist attached to the Reservation Agreement.
4 See Remittances and Statement of Payments, respectively Annexes "B-B20"
and "C", of the Complaint.

2 174
 Complainant requested assistance to facilitate refund of
payments from the Housing and Land Use Regulatory Board
(HLURB), through a letter addressed to the Regional Officer on 04
March 2019s. Complainants alleged that when she reached out to
the Respondent, she was told that only less than half of the amount
paid can be recovered. On 04 September 2019, Complainant
received a letter from the Public Assistance Center of HLURB
advising her to file a formal complaint or explore amicable
settlement; hence, the Complaint 6•
Thus, Complainant prays that judgment be rendered ordering
the Respondent to: (a) refund the amount of P515,920.37; Cb) pay
moral damages of P50,ooo.oo; exemplary damages of
P50,ooo.oo; and attorney's fees of P35,ooo.oo; and (c) pay the
costs of litigation.

In response, Respondent contends that the complaint be

dismissed on the following grounds: (1) the complaint states no
cause of action or fails to state a cause of action; (2) the alleged
issue of delay has been rendered moot and academic by the
completion of the construction of Complainant's housing unit

Respondent argued that there was no cause of action to file the

instant complaint since there was no delay in the construction of
the housing unit, albeit the same was not turned over since the
Complainant failed to submit the necessary documents for loan
application and to get a loan take out, which are conditions prior to
unit turnover.

Respondent contends that the subject unit was completed

sometime in the middle of 2017, with the utilities in place
sometime in 20187. With the completion of the housing unit,
paired with the continued payment of the monthly amortization
and the lack of demand for refund or suspension of payment,
before and after the completion of the housing unit, by

s See Letter Request addressed to Atty. Dunstan T, San Vicente,

Regional Officer of HLURB, dated 04 March 2019, "Annex E" of the
Complaint.
6 See Letter-Reply of Chasenmae P. De Padua-Espehon, Head of Public

Assistance Center of HLURB, dated 04 September 2019, "Annex D" of the

Complaint.
7 See Affidavit of Melody Guma-od, Annex "3" of Position Paper for the
Respondent.
,;,
3 17 u
•

Complainant, there is no longer any issue of delay and if any, is

already moot and academic and Complainant is in estoppel.

Further, Respondent alleged that when it started processing of

loan applications for Phase 2 buyer/client accounts, it learned that ·
the Complainant was unemployed at that time. Knowing that Pag
IBIG would not grant her loan application, Respondent suggested
that Complainant's account be transferred to her mother's name
but none was made. That sometime on early 2019, a follow-up was
made on the documentary requirements but instead of submitting
the same, Complainant moved to discontinue her account and
demanded for a full refund.8

Respondent contends that it cannot turn over the housing unit

since Complainant failed to present an approved loan application
and a loan take out, which is a requirement prior to turnover or
move-in, as stated in the Reservation Agreement9 and in the
Interview Sheet10 •

Moreover, Respondent disagreed with Complainant's claim

that the subject unit was hastily built and of low quality.

Further, Respondent contends that Complainant is not

entitled to a complete refund and, at most, only fifty percent
(50%) refund by virtue of the Maceda Law, since Respondent
was able to deliver its obligation to completely construct the
housing unit and Complainant is delinquent when it failed to
provide the necessary documents to the Respondent.

Thus, Respondent prays that the instant complaint be

dismissed for utter lack of merit.

Moreover, by way of counterclaim, Respondent prays that

Complainant be ordered to pay the amount of P50,ooo.oo by way
of exemplazy damages, and as well as P100,ooo.oo by way of
attorney's fees and litigation expenses.

Tersely, the parties submit the following issues for resolution:

8 See Affidavit of Melody Guma-od, supra note 7.

9 See Reservation Agreement. supra note1.
10
Ibid, Interview Sheet attached to Reservation Agreement.
172·
4
 (1) WHETHER OR NOT THE COMPLAINANT IS
ENTITLED TO A FULL REFUND WITH LEGAL INTEREST;

(2) WHETHER OR NOT THE COMPLAINANT IS

ENTITLED TO DAMAGES, ATTORNEYS FEES AND COST OF
LITIGATION; and

(3) WHETHER OR NOT THE RESPONDENT IS EN'ITILED

TO ITS COUNTERCLAIMS.

The complaint is·dearth of merit.

In this case, the Complainant is seeking for full refund from

the Respondent on the ground of misrepresentation and breach of
specific contractual obligations and undertaking to deliver and
turnover the subject unit after the payment of the agreed down
payment or equity, for selling without license and for failure to
.refund the cash surrender value upon demand.

It is not disputed that the subject unit was already completed.

In fact, during the 07 July 2021 conference, the Complainant
through her legal counsel stipulates, in order to dispense with the
ocular inspection, that the subject unit is already completed and
that the cancellation is sought on the ground of delay in the
delivery thereof. Obviously, Section 23 of Presidential Decree
No. 957 is not applicable to this case since the said provision
applies only to non-development or incomplete development of
the subdivision and/or condominium project.

Complainant claims that a certain Mirza Daytia, a broker

agent, and a certain guy from Lumina represented that the subject
unit will be delivered within 6 months after payment of the
P334,ooo.oo down payment or equity despite repeated demands 11,
that Respondent employed fraud by deceiving Complainant and
the public in general that they have the authority to sell
subdivision lots from 2015 to 2017, and that Respondent
misrepresented and deceived the Complainant to believe that she
can no longer withdraw from the transaction.

11 See paragraphs 4, 5 and 7 of the Judicial Affidavit of Complainant attached

as Annex "H" of the Position Paper for the Complainant.
171
5
.. .

However, other than bare claims, no scintilla of evidence has

been presented to prove the same. The basic rule is that mere
allegation is not evidence and is not equivalent to proof.12 Thus,
the party alleging a disputed fact must prove the same by the
standard of evidence prescribed by law. Unfortunately, the
Complainant failed to do so.

In this case, the Complainant executed and signed a

Reservation. Agreement containing the terms and conditions for
the reservation or conveyance of the subject unit.

It is worth stressing that when the terms of an agreement

have been reduced to writing, it is considered as containing all

•
the terms agreed upon. In fact, the Reservation Agreement
expressly provides that any representation and/or warranty
made by the agent who facilitated the sale shall not be binding
on the developer unless reduced into writing and confirmed by
the President or such other officer duly authorized by the
developer13 and that any representation, promises, oral or
otherwise, not contained therein shall not bind the developer14.

The Reservation Agreement does not provide a turnover date,

obviously because the buyer still has to comply with certain
conditions and/or requirements before a Contract to Sell shall be
executed by the parties. Specifically, the Complainant undertakes
to secure and submit the entire documentary requirements for

• housing loan enumerated in Annex "B" of the Reservation

Agreement within 30 days from date of execution. The failure of
Complainant to submit the required information and documents
shall be sufficient ground for the Respondent to cancel the
Reservation Agreement and/or the purchase and sale of the
reserved propertyl5.

Moreover, the interview sheet appended to the Reservation

Agreement and duly signed by the Complainant provides that the
buyer must comply with the following conditions for house
construction and move-in, to wit: (a) submission of all required

12
Llna Calilap-Asmeron vs. Development Bank of the Philippines, et al., G.R.
No.157330, November 23, 2011.
13 See paragraph 12 of the Reservation Agreement.
14 See paragraph 20 of the Reservation Agreement.

15 See paragraph 7 of the Reservation Agreement.

6
·-

documents; (b) take out of Pag-IBIG loan; (c) submission of post

dated checks for loan difference, if necessary; and (d) payment of
HOAdues.
However, Complainant failed to comply with the
documentary requirements and, thus, she is not qualified for a
housing loan with Pag-IBIG and/or any banking or financial
institution. It is not disputed that Complainant is unemployed,
which is the reason why she could not comply with the
documentary requirements for a housing loan. Yet, Complainant's
predicament in not being able to comply with the documentary
requirements does not relieve her from her contractual
obligations.
Further, the Reservation Agreement expressly provides that
A the plans and specifications of the Project are not yet finally
determined and are pending by the Housing and Land Use
Regulatory Board, among other government offices, which clearly
belies Complainant's allegation that Respondent employed fraud
and deceived the Complainant and the public in general by
representing that it has authority to sell subdivision lots from 2015
and 2017, although the same is a blatant violation of Section 5 16 of
Presidential Decree No. 957.
However, the absence of a license to sell subdivision lots
does not render the sale thereof void but only subjects the
subdivision developer to the penalties under Sections 38 17 and 39
18 of

16
Section 5. License to sell. Such owner or dealer to whom has been issued a
registration certificate shall not, however, be authorized to sell any
subdivision lot or condominium unit in the registered project unless he
shall have f"rrst obtained a license to sell the project within two weeks
from the registration of such project. ·

The Authority, upon proper application therefor, shall issue to such

owner or dealer of a registered project a license to sell the project if, after
an examination of the registration statement filed by said owner or dealer
and all the pertinent documents attached thereto, he is convinced that the
owner or dealer is of good repute, that his business is financially stable,
and that the proposed sale of the subdivision lots or condominium units
to the public would not be fraudulent.
17 Section 38. Administrative Fines.The Authority may prescribe and impose

fines not exceeding ten thousand pesos for violations of the provisions of
this Decree or of any rule or regulation thereunder. Fines shall be payable
to the Authority and enforceable through writs of execution in accordance
with the provisions of the Rules of Court.
7
169'
..

Presidential Decree No. 957, as discussed by the Supreme Court in

the case of Moldex Realty, Inc. versus F1oraA. Saberon 19, thus:

"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
A 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 sancti()n 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."

Furthermore, there was no basis in fact and in law for the

Complainant to withdraw from the transaction as she was the one
who was not able to comply with her contractual undertaking to

18
Section 39. Penalties. Any person who shall violate any of the provisions
of this Decree and/or any rule or regulation that may be issued pursuant
to this Decree shall, upon conviction, be punished by a fine of not more
than twenty thousand (P20,ooo.oo) pesos and/or imprisonment of not
more than ten years: Provided, That in the case of corporations,
partnership, cooperatives, or associations, the President, Manager or
Administrator or the person who has charge of the administration of the
business shall be criminally responsible for any violation of this Decree
and/or the rules and regulations promulgated pursuant thereto.
1
9 G.R No.176289, 08 April 2013.

16
8
submit the necessary loan documents and secure a loan takeout,
which are conditions prior to unit turnover.

It is worth stressing that contracts are perfected by mere

consent, and from that moment the parties are bound not only to
the fulfillment of what has been expressly stipulated but also to all
the consequences which, according to their nature may be in
keeping with good faith, usage and law.20 Moreover, obligations
arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.21 By
signing the Reservation Agreement, the Complainant agreed to be
bound by the provisions thereof.

Thus, the parties are directed to comply with their respective

·obligations under the Reservation Agreement. This is, however,
without prejudice to the right of the Complainant to sell her
rights over the subject unit or assign the same to another person
pursuant to Section 52 2 of Republic Act No. 6552 and the right of
the Respondent to cancel the Reservation Agreement pursuant to
paragraph 7 thereof or pursuant to Sections 323 or 424 of
Republic Act No. 6552.
20
Article 1315 of the Civil Code.
21 Article 1159 of the Civil Code.
22
Section 5. Under Section 3 and 4, the buyer shall have the right to sell his
rights or assign the same to another person or to reinstate the contract by
updating the account during the grace period and before actual
cancellation of the contract. The deed of sale or assignment shall be done
by notarial act.
23 Section 3. In all transactions or contracts involving the sale or financing
of real estate on installment payments, including residential
condominium apartments but excluding industrial lots, commercial
buildings and sales to tenants under Republic Act Numbered Thirty-eight
hundred forty-four, as amended by Republic Act Numbered Sixty-three
hundred eighty-nine, where the buyer has paid at least two years of
installments, the buyer is entitled to the following rights in case he
defaults in the payment of succeeding installments:

(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 canceled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per

9 16
cent of the total payments made, and, after five years of installments, an

1 16
 With regards to the issue on selling without license, the
evidence on record shows that the parties' transaction took place
prior to the issuance of registration certificate and license to sell
for the Project in a violation of Section 52 5 of Presidential Decree
No.957.
In determining the appropriate amount of fine, this Office
considers the following mitigating circumstances: (1) absence of
fraud and/or deliberate and gross misrepresentation; (2) absence
of any pattern of misconduct or violation; and (3) timely good
faith effort to rectify the alleged infraction when Respondent had
applied and secured Certificate of Registration and License to Sell
for the Project. Thus, Respondent is hereby ordered to pay to this
Office an administrative fine in the amount of ONE THOUSAND
PESOS (P1,ooo.oo) per saleable lots for violation of Section 5 of

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.
24 Section 4. In case where less than two years of installments were paid,
the seller shall give the buyer a grace period of not less thansixty days
from the date the installment became due.
If the buyer fails to pay the installments due at the expiration of the grace
period, the seller may cancel the contract 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.
2
s "Section 5. License to sell.Such owner or dealer to whom has been issued
a registration certificate shall not, however, be authorized to sell any
subdivision lot or condominium unit in the registered project unless he
shall have first obtained a license to sell the project within two weeks
from the registration of such project.

The Authority, upon proper application therefor, shall issue to such

owner or dealer of a registered project a license to sell the project if, after
an examination of the registration statement filed by said owner or dealer
and all the pertinent documents attached thereto, he is convinced that the
owner or dealer is of good repute, that his business is financially stable,
and that the proposed sale of the subdivision lots or condominium units
to the public would not be fraudulent."

10 16€
 Presidential Decree No. 957 in accordance with Section 38 of the
same law, without prejudice to further sanctions as may be
determined and criminal charges as may be filed in the regular
courts for selling subdivision units/lots without the requisite
License to Sell, in the event that no administrative fine has been
imposed by the Department of Human Settlements and Urban
Developments against the Respondent for such violation.
I

With regards to the counterclaims, this Office finds no basis

I

or cogent reason to grant the same for the reason that an adverse
decision does not ipso fact justify the award of damages,
attorney's fees and litigation cost to the prevailing party
respectively under Articles 2 2 19 26 , 2 2 3 2 27 and 2 2 0 8 28 of the Civil
Code, absent any showing of proof that such acts were
accompanied with bad faith or perpetuated in a wanton,
fraudulent, reckless, oppressive or malevolent manner. It is worth
stressing that bad faith is not presumed and as such, it has to be
established by clear and convincing evidence.

26 Art. 2219. Moral damages may be recovered in the following and

analogous cases: (1) A rriminal offense resulting in physical injuries; (2)
Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or
other lascivious acts; (4) Adultery or concubinage; (5) illegal or arbitrary
detention or arrest; (6) Illegal search; (7) Libel, slander or any other form
of defamation;
(8) Malicious prosecution; (9) Acts mentioned in Article 309; (10) Acts
and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
xxx
0 ,
27 Art. 2232. In contracts and quasi-contracts, the court may award exemplary
damages if the defendant acted in wanton, fraudulent, reckless, oppressive,
or malevolent manner.
28 Art. 2208. In the absence of stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be recovered, except: (1) When
exemplary damages are awarded; (2) When the defendant's act and
omission has compelled the plaintiff with third persons or to incur
expenses to protect his interest; (3) In criminal cases of malicious
prosecution against the plaintiff; (4) In case of a clearly unfounded civil
action or proceeding against the plaintiff; (5) Where the defendant acted
in gross and evident bad faith in refusing to satisfy plaintiffs valid, just
and demandable claim; (6) In actions for legal support; (7) In actions for
the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and
employer's liability laws; (9) In a separate civil action to recover civil
liability arising from a crime; (10) When at least double judicial costs are
awarded; (11) In any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be
11 1
recovered. In all cases, the attorney's fees and expenses of litigation must
be reasonable.

11 1
 WHEREFORE, premises considered, this Office hereby
renders judgment dismissing this case with respective litigation
costs against the parties.

The Respondent is hereby ordered to pay an administrative

fine in the amount of ONE THOUSAND PESOS (P1,ooo.oo)
per saleable lots for violation of Section 5 of Presidential
Decree No. 957 in accordance with Section 38 of the same law,
without prejudice to further sanctions as may be determined and
criminal
·charges as may be filed in the regular courts for selling
subdivision units/lots without the requisite License to Sell, in
the event that no administrative fine has been imposed by the
Department of Human Settlements and Urban Developments
against the
Respondent for such violation.
n SO ORDERED. 25 November 2021, Cebu City, Philippines.

Copy furnished:

PHILIP L. ABAD
Counsel for the Complainant
Unit 205, JE Centre Bldg., N. Bacalso Ave.
Linao, Minglanilla, Cebu 6046
RE J6q 2/ fJ -z-"2-
PRINCESs CHRISTINE C. CARLOBOS
Counsel for the Respondent
Rosero Red Marquifio Malandac and Aninang Law Offices
Camella Cebu, A.S. Fortuna St.
Mandaue City, Cebu 6014

1
1£84