GR 162895; (August, 2006) (Digest)
G.R. No. 162895, August 16, 2006
MA. ELIZABETH KING AND MARY ANN KING, Petitioners, vs. MEGAWORLD PROPERTIES AND HOLDINGS, INC., Respondent.
FACTS
Petitioners purchased a townhouse unit from respondent Megaworld. A year later, cracks and leaks appeared in the perimeter fence. Respondent conducted repairs, but the defects reappeared. Petitioners alleged that rainwater seepage and insect proliferation resulted from the faulty fence. They filed a complaint with the HLURB, seeking revocation of Megaworld’s license to sell, damages, and repairs. The HLURB Arbiter found the cracks were caused by soft soil movement in an adjacent lot and were aggravated by petitioners’ unauthorized conversion of their lanai. The Arbiter noted the defects were superficial and did not compromise the main structure’s integrity, especially since soil stabilization was completed. Thus, he only ordered repairs and attorney’s fees, denying moral damages for lack of proven bad faith. The HLURB Board of Commissioners later reversed this, ordering a refund and moral damages. However, the Office of the President reinstated the Arbiter’s decision, a ruling affirmed by the Court of Appeals.
ISSUE
The issues are: (1) whether the perimeter fence defects affected the townhouse’s structural integrity to justify a refund of payments, and (2) whether petitioners are entitled to moral and exemplary damages.
RULING
The Supreme Court denied the petition, affirming the Court of Appeals. On the first issue, the Court upheld the factual findings of the HLURB Arbiter and the Office of the President, as affirmed by the Court of Appeals, which are binding absent a showing of arbitrariness. The perimeter fence was not part of the original townhouse plan; its attachment resulted from petitioners’ unauthorized renovation. Evidence, including an engineer’s affidavit, established that the cracks were superficial and did not affect the main structure’s stability. Petitioners failed to present sufficient proof, such as expert testimony, to demonstrate that the townhouse foundation was structurally unsound. Mere pictures of the fence were inadequate to overcome the presumption of regularity in the building plan’s approval. Therefore, a refund was not warranted.
On the second issue, the Court ruled that moral and exemplary damages require proof of bad faith or fraud. Petitioners failed to substantiate their allegations of negligence or ill intent on respondent’s part. The presumption of good faith stands unchallenged. Consequently, no damages could be awarded. The Court emphasized that the burden of proof lies with the party making the allegations, which petitioners did not satisfy.