Marina Properties Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Marina Properties Corporation (MARINA) and H.L. Carlos Construction, Inc. (H.L. CARLOS) entered into a Contract to Purchase and to Sell for a condominium unit in MARINA's project. H.L. CARLOS made substantial payments towards the unit's purchase price. MARINA subsequently attempted to cancel the contract, citing H.L. CARLOS' alleged abandonment of construction work on Phase III of the project and the filing of lawsuits. H.L. CARLOS contended that MARINA's cancellation was without basis and done in bad faith, demanding the delivery of the unit and execution of the sale. Procedural History: H.L. CARLOS initially filed a complaint for damages against MARINA with the Regional Trial Court of Makati. Subsequently, H.L. CARLOS filed a complaint for specific performance with damages against MARINA with the Housing and Land Use Regulatory Board (HLURB). The HLURB Arbiter ruled in favor of H.L. CARLOS, declaring the cancellation of the contract void and ordering MARINA to deliver the unit, accept payments, and pay damages and attorney's fees. This decision was affirmed by the HLURB Board of Commissioners and later by the Office of the President. MARINA's motion for reconsideration was denied. MARINA then filed a petition for review with the Court of Appeals, which affirmed the Office of the President's decision but deleted the award of actual damages. The Petition: Two separate petitions were filed with the Supreme Court. In G.R. No. 125447, MARINA argued that the Court of Appeals erred in ordering the turnover of the unit and in not dismissing the case on grounds of litis pendentia, forum-shopping, and splitting of a cause of action. In G.R. No. 125475, H.L. CARLOS contended that the Court of Appeals erred in deleting the award of actual damages, in not dismissing MARINA's petition for review for being out of time and defective, and in not dismissing MARINA's appeal on its merits. The Supreme Court consolidated both cases and denied both petitions, affirming the Court of Appeals' decision.
Issue(s)
Whether MARINA's motion for reconsideration before the Office of the President was pro forma, thus not tolling the period to appeal. Whether MARINA's petition for review before the Court of Appeals was filed out of time and fatally defective for lack of verification and certification. Whether the award of actual damages for unearned monthly rentals was supported by evidence. Whether H.L. CARLOS was guilty of forum shopping, litis pendentia, or splitting a cause of action. Whether MARINA's cancellation of the Contract to Purchase and Sell was legal.
Ruling
The Supreme Court denied both petitions, affirming the decision of the Court of Appeals. The Court held that MARINA's motion for reconsideration was not pro forma, but found that the award of actual damages for unearned monthly rentals was unsubstantiated. The Court also ruled that H.L. CARLOS was not guilty of forum shopping, litis pendentia, or splitting a cause of action, and that MARINA's cancellation of the contract was illegal.
Ratio Decidendi
On the nature of MARINA's motion for reconsideration: The Court held that MARINA's motion for reconsideration before the Office of the President was not pro forma. A motion for reconsideration is not pro forma if it adequately points out the conclusions regarded as erroneous and contrary to law, and refers to findings not supported by evidence or jurisprudence. The Court emphasized that a motion for reconsideration is intended to convince the court that its ruling is erroneous, and reiterating issues already passed upon does not automatically make it pro forma if it complies with the rules. The Court noted that MARINA's motion raised issues of litis pendentia, forum-shopping, splitting of cause of action, and unliquidated damages, which were sufficiently addressed. On the timeliness and defects of MARINA's petition before the Court of Appeals: The Court found the charge of a lack of verification or certification in MARINA's petition to be baseless, as these were present in the records. The Court also clarified that since MARINA's motion for reconsideration was not pro forma, it did interrupt the period to appeal, and thus the petition was timely filed. On the award of actual damages: The Court agreed with the Court of Appeals that the award of P30,000.00 as actual damages for unearned monthly rental income was arbitrary. The Court reiterated that actual damages must be proven with a reasonable degree of certainty and cannot be based on speculation or conjecture. Since H.L. CARLOS failed to present evidence to substantiate this claim, the deletion of the award by the CA was deemed appropriate. On litis pendentia, forum shopping, and splitting of cause of action: The Court found no merit in MARINA's claims. It explained that litis pendentia requires identity of parties, rights asserted, and the potential for res judicata, which were absent as the two cases involved distinct causes of action. Civil Case No. 89-5870 was for collection of unpaid billings under a Construction Contract, while the HLURB case was for specific performance of a Contract to Purchase and Sell. Forum shopping was also dismissed, as H.L. CARLOS' complaint was not a duplication of the civil case but rather a distinct action based on a different cause. Similarly, there was no splitting of a cause of action because the two complaints arose from separate contractual breaches. On the legality of MARINA's cancellation of the contract: The Court upheld the finding that MARINA's cancellation was illegal. Under Section 24 of P.D. 957 and Republic Act No. 6552, a notarial cancellation is required for installment contracts of condominium units when the buyer has paid more than 50% of the contract price. H.L. CARLOS had paid P1,810,330.70 (over 50%) and had paid more than 24 monthly installments. Absent the required notarial cancellation, MARINA's unilateral rescission was void. The Court affirmed that cases involving specific performance of contractual and statutory obligations for subdivision lots or condominium units fall under the jurisdiction of the HLURB.
Main Doctrine
The cancellation of a contract to sell a condominium unit, where the buyer has paid more than 50% of the contract price, is illegal and void if not done in accordance with the notarial cancellation procedure mandated by Republic Act No. 6552 (Realty Installment Buyers Protection Act).