PROPERTY

DIGESTS (2013 2014)

ATTY. VIVENCIO ABANO

G.R. No. 145156-57 July 29, 2005 SOLID HOMES v. TAN Plaintiffs: SOLID HOMES INC. Defendant: SPOUSES ANCHETA K. TAN AND CORAZON DE JESUS TAN CASE: Solid Homes sold a subdivision lot in Loyola Grand Villas to spouses Uy, who in turn sold it to spouses Tan. However, spouses Tan found that the property was not developed and was occupied with squatters. They then demanded that Solid Homes fulfill their obligation to develop the property, or to provide them with another lot of the same size. Upon reaching the Court of Appeals, it ruled that in the event that Solid Homes fails to provide another lot to respondents, it should pay them the current market value of the property. The Supreme Court upheld the CAs ruling saying that to allow petitioners to pay only the purchase price would be unjust enrichment because the value of the property has escalated, and so petitioners could resell it at a higher price today. DOCTRINE: A cause of action arises when that which should have been done is not done, or that which should not have been done is done. In this case, the cause of action arose when Solid Homes delayed in complying with their obligation to develop the property as advertised after demand from spouses Tan to do so. BACKGROUND: April 7, 1980 Solid Homes Inc. sold to spouses Joe and Myrna Uy a subdivision lot in Loyola Grand Villas Subdivision, Quezon City. The title was then registered in their name. February 1985 The spouses Uy sold the same lot to spouses Ancheta and Corazon Tan. The title was transferred as thus.

When spouses Tan visited the property they found that there had been no development at all: No infrastructure, utility systems for water, sewerage, electricity and telephone, as announced in the approved plans and advertisements of the subdivision. o Also, squatters occupy their lot and surrounding areas. December 18, 1995 Spouses Tan demanded that Solid Homes provide the needed utility systems and clear the area of squatters to allow lot owners in the area a full access to and peaceful possession of their respective lots, in conformity with P.D. No. 957 which requires an owner or developer of a subdivision project to develop the same within one year from the issuance of its license. Spouses Tan filed with the Field Office of the Housing and Land Use Regulatory Board (HLURB) a complain for performance and damages after petitioner failure to comply with their demands. September 17, 1996 HLURB Arbiter ordered petitioner to perform its obligation, or in the alternative, to replace it with a lot of similar size and available facilities within the subdivision. April 16, 1997 HLURB Board of Commissioners affirmed the Arbiters ruling. June 3, 1999 The Office of the President affirmed the decision, but modified the alternative such that in the event that Solid Homes fails to replace the subject lot with another (because it had already sold or transferred all of its properties in the subdivision to others), it should pay spouses Tan the total amount which they paid as purchase price with legal interest. May 23, 2000 The Court of Appeals affirmed the decision of the HLURB Board of Commissioners, and instead ordered Solid Homes to pay spouses Tan with the current market value of the lot in the event that it cannot be replaced with another.

ISSUES TO BE RESOLVED: 1. Whether or not respondents right to bring the instant case against petitioner has already prescribed.

RACHELLE ANNE GUTIERREZ

PROPERTY DIGESTS (2013 2014)

ATTY. VIVENCIO ABANO

2. Whether the petitioner should pay them merely the purchase price with legal interest or the current market value thereof. RESOLUTIONS AND ARGUMENTS ISSUE 1 Whether or not respondents right to bring the instant case against petitioner has already prescribed NO. Prescription began to run only on December 18, 1995 when spouses Tan demanded that Solid Homes fulfill their obligation. Major Point 1: Article 1144, Civil Code provides that an action for specific performance upon a written contract prescribes 10 years from the time the right of action accrues, and such action accrues only upon the concurrence of the three requisites: The main contention here is WHEN the 10 years began: April 7, 1980 (the date spouses Uy bought the lot from Solid Homes) or February 1985 (the date when spouses Tan bought the lot). 3 Requisites for a cause of action to exist: o A right in favor of the plaintiff by whatever means and under whatever law it arises or is created o An obligation on the part on the defendant to respect such right o An act or omission on the part of such defendant violative of the right of the plaintiff. Banco Filipino Savings and Mortgage Bank v. CA And a cause of action arises when that which should have been done is not done, or that which should not have been done is done. o In short, when the 3rd requisite happens, thats when the action accrues. Social Security System vs. Moonwalk Development and Housing Corporation, et al. an obligor violates his obligation to the obligee from the time the latter made a demand for performance, which demand also marks the point of time when the former incurs mora or delay.

The prescriptive period within which the oblige may bring an action against the obligor does not commence to run until a demand is made. Respondents made their written demand upon petitioner to perform what is incumbent upon it only on December 18, 1995, it was only from that date when the 10-year prescriptive period under Article 1144 commenced to run. And since respondents complaint for specific performance was filed with the Field Office of the HLURB only on April 1, 1996, or less than four (4) months after the date of their demand, petitioners reliance on prescription of action is simply without any leg to stand on.

ISSUE 2 Whether the petitioner should pay them merely the purchase price with legal interest or the current market value thereof. Petitioner should pay the market value of the lot, NOT the purchase price, in light of increase in its value through the years. Major Point 1: The Court refused a literal application of Article 1385, Civil Code which provides that Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interests; consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore. Were we to follow the letter of Article 1385, we will in effect be paving the way to an absurd situation whereby subdivision developers who have reneged on their contractual and legal obligation to provide utility systems and facilities for the use of subdivision lot owners may themselves profit from their very own wrongs and shortcomings. It is definite that the value of the subject property already escalated after almost two decades from the time spouse Tan paid for it. Equity and justice dictate that the injured party should be paid the market value of the lot, otherwise, respondents Solid Homes, Inc. would enrich themselves at the

RACHELLE ANNE GUTIERREZ

PROPERTY DIGESTS (2013 2014)

ATTY. VIVENCIO ABANO

expense of herein lot owners when they sell the same lot at the present market value. FINAL VERDICT: The Court affirmed the CAs ruling and in the interest of equity and to prevent unjust enrichment ordered Solid Homes to pay spouses Tan the market value of the property if they fail to replace it with another. NO SEPARATE OPINIONS

RACHELLE ANNE GUTIERREZ