Lefebre v. Brown Company
REITERATIONFacts
The Antecedents: Petitioner Gina Lefebre (Lefebre) entered into a Contract to Sell with respondent A Brown Company, Inc. (A Brown) for a residential lot, based on A Brown's representation that a golf course would be developed. Lefebre made a down payment and agreed to pay the balance in installments. However, the golf course was not developed. Lefebre failed to pay the remaining balance, which she offered to settle over six months. A Brown cancelled the Contract to Sell. Procedural History: Lefebre filed a complaint before the Housing and Land Use Regulatory Board (HLURB) for misleading advertisement, annulment of rescission, and damages. The HLURB Arbiter ruled in favor of A Brown regarding the misleading advertisement claim but ordered the refund of the cash surrender value. The HLURB Board of Commissioners (BOC) set aside the Arbiter's decision, ruling that the contract was not validly cancelled due to the failure to tender the cash surrender value and ordered a full refund with interest. A Brown filed a petition for certiorari before the Court of Appeals (CA). The Petition: The CA reinstated the HLU Arbiter's decision, holding that the rescission was not invalid per se and that Lefebre was estopped from claiming misrepresentation. The CA ruled that Lefebre was only entitled to the cash surrender value. The instant petition for review on certiorari assails the CA's decision.
Issue(s)
Whether the Court of Appeals erred in reinstating the HLU Arbiter's Decision despite respondent's direct filing of a petition for certiorari before the CA. Whether the Contract to Sell remained valid and subsisting due to the respondent's failure to comply with the mandatory requirements for cancellation under Republic Act No. 6552. Whether petitioner Lefebre is entitled to a full refund of payments made or only to the cash surrender value.
Ruling
The petition is meritorious. The Supreme Court reversed and set aside the Decision and Resolution of the Court of Appeals, and reinstated the Decision of the Housing and Land Use Regulatory Board - Board of Commissioners.
Ratio Decidendi
On the issue of the Court of Appeals' reinstatement of the HLU Arbiter's Decision despite respondent's direct filing of a petition for certiorari: The Court held that the respondent clearly violated the doctrine of exhaustion of administrative remedies by failing to appeal the HLURB-BOC's decision to the Office of the President. Instead, it directly filed a petition for certiorari before the CA. The Court emphasized that the perfection of an appeal in the manner and within the period laid down by law is not only mandatory but also jurisdictional. The failure to perfect an appeal has the effect of defeating the right to appeal and precluding the appellate court from acquiring jurisdiction. Certiorari cannot be allowed when a party fails to appeal a judgment despite the availability of that remedy; it is not a substitute for a lost appeal. The CA erred in considering exceptions to the doctrine of exhaustion of administrative remedies without adequate explanation from the respondent. On the issue of the validity of the Contract to Sell due to the respondent's failure to comply with cancellation requirements: The Court affirmed the HLURB-BOC's ruling that the Contract to Sell remained valid and subsisting because the respondent failed to observe the proper procedure for cancellation under Section 3(b) of Republic Act No. 6552 (Realty Installment Buyer Protection Act). This section mandates that actual cancellation of the contract shall take place only after thirty days from receipt by the buyer of the notice of cancellation or demand for rescission by a notarial act, and upon full payment of the cash surrender value to the buyer. The failure to comply with these mandatory requirements renders the cancellation invalid, and the contract continues to be in effect. The Court cited Active Realty & Development Corp. v. Daroya and Leano v. CA in support of this principle. On the issue of petitioner Lefebre's entitlement to a full refund or only the cash surrender value: Given that the Contract to Sell remained valid and subsisting, the Court held that petitioner Lefebre could invoke Section 20, in relation to Section 23, of Presidential Decree No. 957 (The Subdivision And Condominium Buyers' Protective Decree). Section 20 mandates developers to construct promised facilities within a specified time, and Section 23 provides that no installment payment shall be forfeited if the buyer desists from further payment due to the developer's failure to develop the project. In such cases, the buyer has the option to demand reimbursement of the total amount paid, with interest. The Court found that both the HLU Arbiter and HLURB-BOC observed that the respondent could no longer deliver on its promise to develop the golf course. Therefore, Lefebre, as the buyer, could exercise her option to be reimbursed for the total amount paid, less penalties or surcharges, as per PD 957. The Court also clarified that Lefebre was not estopped from invoking the ground of misrepresentation, as the non-development of the golf course was the motivation behind the purchase and the developer's obligation was continuing.
Main Doctrine
A contract to sell, in cases involving real estate installment payments, remains valid and subsisting if the seller fails to comply with the mandatory requirements of notice of cancellation and payment of the cash surrender value to the buyer as prescribed by Republic Act No. 6552. Furthermore, a petition for certiorari before the Court of Appeals is not a substitute for a lost appeal, and the failure to exhaust administrative remedies before resorting to judicial action generally warrants dismissal, absent compelling exceptions.