REPUBLIC OF THE PHILIPPINES

Office of the President

HOUSING AND LAND USE REGULATORY BOARD
HLURB Office, NHA Compound, Kalayaan Avenue
corner Mayaman Street, Diliman, Quezon City

C E L I A E. L E U T E R I O,
Complainant,

-versus- HLURB Case No. REM 091203-12439

AIC MANAGEMENT & MARKETING

CORPORATION
Respondent.
x------------------------------------x

POSITION PAPER

COMPLAINANT CELIA E. LEUTERIO, represented by the undersigned Law

Offices, unto this Honorable Board, most respectfully submits the instant Position Paper and

in support thereof, alleges: That---

NATURE OF THE COMPLAINT

This case is a complaint filed by Celia E. Leuterio for the reimbursement of the

amount of PhP9,574,132.66, plus interest, representing the full payment she made for the

purchase of an office condominium unit, with two (2) parking slots, in a condominium project

denominated as AIC Empire Tower located at ADB Avenue corner Sapphire and Garnet

Streets, Ortigas Center, Pasig City, Metro Manila, and for damages, attorney's fees and cost of

the suit.

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 PARTIES

1. Complainant Celia E. Leuterio (hereinafter referred to as “complainant”) is of

legal age, Filipino and resides at No. 1289 Pablo Ocampo Sr. corner Lemery Streets, Manila.

2. Respondent AIC Management & Marketing Corporation (hereinafter referred to as

“respondent”) is a private domestic corporation duly organized and existing under and by virtue of the laws of

the Republic of the Philippines with principal office address located at AIC Realty Corporation Building, Garnet

Road, Ortigas Center, Pasig City, Metro Manila.

STATEMENT OF FACTS

3. Sometime in early 1995, complainant purchased on a “pre-selling” scheme, an

office condominium unit and two (2) parking slots in one of respondent’s condominium

projects denominated as AIC Empire Tower (hereinafter referred to as the “condominium

unit”) to be built at ADB Avenue corner Sapphire and Garnet Streets, Ortigas Center, Pasig

City, Metro Manila.

4. A Reservation Agreement dated 28 June 1995 was signed by and between

complainant and respondent’s Vice-President for Finance, Val John E. Perez, wherein the

complainant paid a downpayment and reservation deposit of PhP744,305.10 and

PhP200,000.00, respectively. The Reservation Agreement stipulated that the remaining

balance of PhP6,654,440.66 shall be paid by complainant via a monthly amortization of

PhP120,615.01 for forty-two (42) months and the remaining amount of PhP2,684,908.60 shall

be paid upon turnover of the condominium unit. A copy of the said Reservation Agreement is

attached hereto as Annex “A” to form an integral part hereof.

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 5. Around the same time, complainant purchased two (2) other units from AIC

Realty Corporation, also on a pre-selling basis, to wit: Unit 611 at AIC Gold Tower located at

Garnet Road, Ortigas Center, Pasig City, for turnover in 1998, and one (1) unit at Waldorf

Towers supposed to have been built along Roxas Boulevard near the U.S. Embassy and for

turnover in 1998.

6. AIC Gold Tower suffered delays but was finally turned-over in May 1999. AIC

Waldorf Tower did not get off the ground inspite of the fact that complainant had already paid

PhP4,111,946.00.

7. Sometime in 1995 or 1996, complainant received unofficial information that

construction works on AIC Waldorf Tower had been stopped indefinitely which respondent

initially denied but later on confirmed.

8. At around this time, the AIC Empire Tower project had also slowed down and

no firm commitment on the turnover date of the condominium unit was ever given to

complainant.

9. Complainant therefore requested respondent to return all her payments on AIC

Waldorf. Respondent, on its part, suggested that these payments be applied in full to the

scheduled amortization on the condominium project at AIC Empire Tower and the final

balance on AIC Gold Tower. Respondent further reassured complainant that work on AIC

Empire Tower was already speeding up.

10. On 28 April 1999, complainant therefore agreed that the payments she already

made for the condominium unit in AIC Waldorf Towers amounting to PhP4,111,946.00 be

apportioned and applied as payment for the other condominium units she purchased, to wit:

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(a) PhP433,963.25 as first payment for Unit 611 of AIC Gold Tower Condominium; (b)

PhP1,362,072.64 for the condominium unit to update its monthly amortization. As to the

remaining amount of PhP2,315,911.06, respondent requested that the same be refunded to her.

A copy of the letter dated 28 April 1999 containing the aforesaid request is attached hereto as

Annex “B” to form an integral part hereof.

11. Respondent, on its part, proposed that all payments made for the condominium

unit at AIC Waldorf Towers would be apportioned and applied to the unpaid amortization for

the condominium unit and Unit 611 of Gold Tower Condominium.

12. Thereafter, series of negotiations were held between complainant and

respondent as to how the payments made for the condominium unit at AIC Waldorf Towers

would be applied to the aforementioned condominium units.

13. Finally, complainant agreed to the proposal of respondent that all payments be

applied to the outstanding account of the former in the condominium unit as stated in the

latter’s letter dated 16 August 2000 to complainant. A copy of the said letter is attached hereto

as Annex “C” to form an integral part hereof.

14. For more than eight (8) agonizing years, complainant waited for respondent to

deliver the condominium unit to her. In fact, complainant made several requests for an update

of the status of the condominium project because she noticed that no major development had

been introduced therein since she signed the Reservation Agreement. Copies of complainant’s

letters to respondent dated 27 February 2002 and 30 May 2002 are attached hereto as

Annexes “D” and “E”, respectively, to form integral parts hereof.

15. Respondent, on the other hand, gave the complainant the same response that

construction works in the condominium project is on-going but it cannot give a specific date

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as to when the same will be completed.

16. On 23 May 2002, respondent issued a Certification stating therein that since 30

August 2000, complainant had already paid, in full, the purchase price of the condominium

unit. A copy of the said Certification is attached hereto as Annex “F” to form an integral part

hereof.

17. Fed up with the lame excuses of respondent, complainant finally decided to

demand for the return of all the payments she had made, including interest.

18. This constrained complainant to refer the matter to the undersigned Law

Offices and a letter dated 16 June 2003 was sent to the respondent, personally and via

registered mail, demanding for the return of all payments made by the former in the aggregate

amount of PESOS: NINE MILLION FIVE HUNDRED SEVENTY-FOUR THOUSAND

ONE HUNDRED THIRTY-TWO & 66/100 (PhP9,574,132.66) within ten (10) calendar

days from receipt of the said letter. Copies of the registry receipt and aforesaid letter are

attached hereto as Annexes "G" and "H", respectively, to form integral parts hereof.

19. Respondent’s Senior Vice-President, Ramon S. Untalan, met with

complainant’s counsel and assured the latter that he would send a written proposal for the

settlement of the claims of complainant.

20. Several weeks later, the undersigned Law Offices received a letter dated 10

July 2003 from Mr. Untalan stating therein respondent’s proposal. A copy of the said letter is

appended herewith as Annex “I” to form an integral part hereof.

21. After conducting an ocular inspection of the condominium units that are being

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offered by respondent as settlement for her demands and deliberating on the latter’s proposal,

complainant decided to reject the same and demanded for the complete refund of all payments

she had made.

22. On 15 August 2003, a letter dated 08 August 2003 was sent by the undersigned

Law Offices to respondent, via DHL courier, stating therein complainant’s decision and gave

the former five (5) calendar from receipt of the said letter to refund all payments made by

complainant. Copies of the said letter and receipt issued by DHL courier are appended

herewith as Annexes “J” and “K”, respectively, to form integral parts hereof.

23. The grace period stated in the aforesaid letter had lapsed but respondent failed to abide with

the lawful demand of complainant.

24. This constrained the complainant to lodge a Complaint dated 25 August 2003

against respondent before this Honorable Office for the refund of PhP9,574,132.66, plus

interest, as actual damages; PhP200,000.00 as moral damages; PhP200,000.00 as exemplary

damages; PhP50,000.00 as attorney's fees plus the total amount of appearance fees incurred;

and cost of the suit.

25. The respondent filed its Answer dated 29 September 2003 and denied

complainant’s claim for reimbursement for lack of basis because the Reservation Agreement

appended to the latter’s Complaint was not allegedly signed by any of the representatives of

respondent. Therefore, according to the respondent, there is no contract to speak of.

26. The claim for damages was also denied by respondent on the ground that

complainant allegedly failed to prove the factual basis for the same.

27. Lastly, respondent foisted that complainant is not entitled to attorney’s fee
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because according to the former, the same “is only granted in exceptional cases”.

28. The instant case was set for preliminary conference on 30 October 2003.

Unfortunately, the possibility of reaching an amicable settlement had failed and both parties

were required to submit their respective position papers and draft decisions.

29. Thus, the instant position paper for the complainant.

ISSUES:

I.

WHETHER OR NOT COMPLAINANT IS

ENTITLED TO HER CLAIM FOR
REIMBURSEMENT PURSUANT TO
SECTION 23 OF P. D. NO. 957.

II.

WHETHER OR NOT COMPLAINANT IS

ENTITLED TO HER CLAIM FOR
DAMAGES, ATTORNEY'S FEES AND
COST OF SUIT.

ARGUMENTS/DISCUSSION:

In re: First Issue

Complainant is entitled to be reimbursed

of all payments she made, plus interests,
pursuant to Section 23 of P. D. 957.
--------------------------------------------

Section 23 of Presidential Decree No. 957, otherwise known as "The Subdivision

and Condominium Buyer's Protective Decree", mandates:

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 "Section 23. Non-Forfeiture of Payments. - No
installment payment made by a buyer in a subdivision or
condominium project for the lot or unit he contracted to buy
shall be forfeited in favor of the owner or developer when the
buyer, after due notice to the owner or developer, desists from
further payment due to the failure of the owner or developer
to develop the subdivision or condominium project according
to the approved plans and within the time limit for complying
with the same. Such buyer may, at his option, be reimbursed
the total amount paid including amortization interests but
excluding delinquency interest with interest thereon at the
legal rate."

The afore-quoted provision is clear and casts no doubt for ambiguous interpretation.

After due notice, the condominium unit buyer may desist from remitting further payments to

the owner or developer for failure of the latter to develop the condominium project according

to the approved plans and within the time limit for complying with the same. The buyer, at his

option, may ask for a reimbursement for all payments made with legal interest.

Applying the afore-quoted provision in the instant case, complainant has more reason

to demand a return of all payments she made considering that she had already paid, in full, the

purchase price of the condominium unit. Unfortunately, respondent failed to live up with its

end of the deal by failing to construct the condominium project.

Complainant waited for more than eight (8) agonizing years in order for the

respondent to deliver what was agreed upon. In fact, complainant made several requests for an

update of the status of the condominium project because she noticed that no major

development had been introduced therein since she signed the Reservation Agreement.

Complainant’s letters to respondent dated 27 February 2002 and 30 May 2002 (attached

hereto as Annexes “D” and “E”) speak for themselves.

Without a doubt, complainant has every right, as sanctioned by Section 23 of P.D.

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957, to demand reimbursement on the ground that respondent failed to develop the

condominium project according to the approved plans and within reasonable time.

As eloquently held in the case of Casa Filipina Realty Corporation vs. Office of the

President (241 SCRA 165; February 7, 1995), "private respondents' refusal to continue

paying the amortization is thus based on two principal grounds: non-development of the

subdivision and encumbrance of the property subject of the sale which became apparent to

the buyer only after conducting his own investigation. As such, the case falls squarely

within the purview of both Secs. 23 and 24 of P. D. 957."

It is also clear form the wordings of Section 23 of P. D. No. 957, that the law vests

upon the buyer the option to demand reimbursement of the total amount paid or to wait for

further development of the subdivision or unit (Relucio vs. Brillante-Garfin, 187 SCRA

405; July 13, 1990)

The law explicitly provides that the reason why P. D. 957 was enacted is precisely for

the protection of the buyers from "fraudulent manipulations perpetrated by unscrupulous

subdivision and condominium sellers and operators…" (P. D. No. 957; Casa Filipina

Realty Corporation case, supra). Hence, without a doubt, the complainant is entitled to be

protected under this law as her case falls squarely within the ambit of P. D. No. 957.

Truly, respondent should not only be condemned to return all payments made by the

complainant including interests, damages and cost of instituting the instant suit, but should

likewise be reprimanded and fined by this Honorable Office for engaging in fraudulent

schemes.

The existence of a contractual relation

between complainant and respondent.

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---------------------------------------------

Respondent cannot even allege that the Reservation Agreement was not signed by any

of the representatives of respondent and therefore, there was no contract to speak of in the

first place. Such flimsy argument can be easily disputed by a simple perusal of the

Reservation Agreement itself. It can be seen therein that a representative of respondent signed

for and in behalf of the latter beside the name of Val John E. Perez, Vice-President for Finance

of respondent, and on each and every page thereof.

Nonetheless, assuming that the individual who signed for and in behalf of respondent

was not authorized to do so and for that reason the Reservation Agreement was nullified and

set aside, the same would not negate the contractual relation that exists between complainant

and respondent.

The letters and correspondence between the parties are more than sufficient to prove

the existence of the contract they entered into. In fact, there was even a Certification dated 23

May 2002 (appended as Annex “F” herein) issued by respondent attesting, in clear and

concise terms, that complainant had already paid, in full, the purchase price of the

condominium unit. The said Certification states:

“C E R T I F I C A T I O N

This is to certify that MS. CELIA LEUTERIO, purchased one (1)

office condominium unit at AIC EMPIRE TOWER described as Unit 1601
(16th floor) and two (2) parking slots at Basement 06 Slot No. 52 & 53,
located along ADB Avenue corners Garnet and Sapphire Roads, Ortigas
Center, Pasig City, with contract price of PESOS: NINE MILLION FIVE
HUNDRED SEVENTY FOUR THOUSAND ONE HUNDRED THIRTY
TWO and 66/100 (P9,574,132.66).

This is to further certify that as of August 30, 2000, the unit has
already been fully paid. (Underscoring ours)

This certification is being issued upon the request of MS. CELIA

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 LEUTERIO.

May 23, 2000, Pasig City.

(Signed)
PATERNO M. ABELLERA
President”

Respondent defaulted on its undertaking

to deliver the condominium unit.
---------------------------------------------

There is likewise no merit on the contention of respondent that there is “no

commitment on its part (the part of the respondent) as to the date of delivery of the subject

unit”.

Respondent made itself clear to complainant during and after the negotiation of the

sale of the condominium unit that the same shall be delivered to the latter sometime in the

middle of 1999. That is why the amortization of the condominium unit was spread until June

1999 in order that the full payment of the purchase price would coincide with the completion

of the said unit.

Assuming, ex gratia argumenti, that there was no period agreed upon by both parties

insofar as the delivery of the condominium unit is concerned, fixing the same is not feasible

as the same would result only into further delay and multiplicity of suits. As eloquently held

by the Honorable Supreme Court in the case of Central Philippine University vs. Court of

Appeals (246 SCRA 511):

"Hence, there is no more need to fix the duration of the term of the
obligation when such procedure would be a mere technicality and formality
and would serve no purpose than to delay or lead to an unnecessary and
expensive multiplication of suits."

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 To repeat, under pain of being redundant, the complainant had waited for more than

eight (8) years in order for the respondent to deliver the condominium unit. By anyone’s

standard, such length of time is more than enough for respondent to comply with its

obligation.

More importantly, there is already an admission on the part of the respondent that the

condominium project would no longer be constructed. The act of respondent, through its

Senior Vice-President, Ramon S. Untalan, in offering two (2) condominium units to

complainant as settlement for her claim for reimbursement is a glaring proof that respondent

had already abandoned its plan to finish the condominium project.

In view of the foregoing, fixing a period for respondent to construct the condominium

project and eventually deliver the condominium unit of complainant is not only preposterous,

but totally illogical.

In re: Second Issue

Complainant is entitled to damages,

attorney's fees and cost of the suit.
---------------------------------------------

An assiduous examination of the facts of the case will readily show that respondent

had incurred delay in the performance of its contractual obligation for its failure to construct

and complete the condominium project. As a consequence, complainant is not only entitled to

a refund of all payments she made, but she is also entitled to indemnity for the damages she

suffered as well.

The law expressly provides that "those who in the performance of their obligation

are guilty of fraud or delay and those who in any manner contravene the tenor thereof, are
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liable for damages" (Article 1170 of the Civil Code; Barzaga vs. Court of Appeals, 268

SCRA 105)

It is worth stressing that complainant was able to comply with what was incumbent

upon her, i. e., payment of the purchase price. Respondent, on the other hand, has the

concomitant obligation to start developing and constructing the condominium project, and

deliver the condominium unit agreed upon within the stipulated period.

However, several years had already passed and no progress can be seen on the project

site as the condominium project remained undeveloped. As held in the case of Gutierez

Hermanos vs. Oria Hermanos (30 Phil. 491), "if one party performs, and the other does

not, the latter would be in default." The act of the respondent in abandoning the

condominium project is a clear case of non-performance of its reciprocal obligation.

In reciprocal obligations, as in the instant case, default on the part of one begins from

the moment the other party fulfills with what is incumbent upon him (Causing vs. Benser, 37

Phil. 417). Since the respondent failed to comply with its obligation, complainant has every

right to exercise her option to rescind her contractual ties with the former.

In addition to the delay incurred by the respondent, complainant is likewise entitled to

be indemnified for the damages she suffered in view of all the unnecessary anxieties and

inconveniences she has to go through as a result of the unwarranted acts of the former.

Complainant parted away more than nine (9) million pesos of hard-earned money without

any inkling that respondent has no intention of fulfilling its undertaking.

Further, "a debtor who incurs delay or default is liable for damages plus interest,

generally from extra-judicial or judicial demand in the form of interest" (Malayan

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Insurance Co., Inc. vs. Court of Appeals, G. R. No. 59919, November 25, 1986).

Complainant is entitled to attorney's

fees and cost of the suit.
--------------------------------------------

Attorney's fees may be granted based on the grounds enumerated under Article 2208

of the Civil Code, thus:

"Article 2208. In the absence of stipulation, attorney's

fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:

"x x x x

(2) Where the defendant's act or omission has

compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
"x x x x

(5) Where the defendant acted in gross and evident

bad faith in refusing to satisfy the plaintiff's plainly valid, just
and demandable claim;

x x x x"

In the instant case, complainant was forced to engage the services of the undersigned

Law Offices to seek redress and protect her interest. Complainant has to go through the

tedious process of lodging a complaint just to enforce her rightful claims. More so, it was

quite clear that respondent acted in gross and evident bad faith in its continued and unjustified

refusal to satisfy complainant's plainly valid, just and demandable claims.

With the foregoing, complainant should and ought to be paid by respondent for all

legal and litigation expenses the former incurred in lodging the instant complaint.

PRAYER
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 WHEREFORE, above premises considered, it is most respectfully prayed of this

Honorable Board that a Decision be handed down ORDERING the respondent to PAY the

complainant:

1. PhP9,574,132.66, plus interest, as actual damages;

2. PhP200,000.00 as moral damages;

3. PhP200,000.00 as exemplary damages;

4. PhP50,000.00 as attorney's fees plus the total amount of appearance fees

incurred; and

5. cost of the suit.

OTHER RELIEFS, just and equitable under the foregoing premises, are likewise

most respectfully prayed for.

RESPECTFULLY SUBMITTED. Quezon City, 24 November 2003.

SOLIVEN CASTILLO & ESCOBEDO

Law Offices

Unit 404 Tower A, The Regalia Park Towers

150 P. Tuazon Blvd., Araneta Center
Cubao, Quezon City

ANTONIO C. SOLIVEN, JR.

Roll of Attorney No. 429177
PTR No.: 40718632: 30.01.03: Q.C.
IBP No.: 572808: 07.01.03: Pampanga

ALEXIS M. ESCOBEDO
Roll of Attorney No. 46807
PTR No.: 40718643: 30.01.03: Q.C.

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 IBP No.: 576148: 01.16.03: Sorsogon

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