GR 182201; (November, 2016) (Digest)
G.R. No. 182201 & G.R. No. 185815 November 14, 2016
Universal International Investment (BVI) Limited vs. Ray Burton Development Corporation
FACTS
Petitioner Universal International Investment (BVI) Limited (Universal) entered into Contracts to Sell with respondent Ray Burton Development Corporation (RBDC) for the purchase of condominium units and parking slots. Universal paid the full purchase price in February 1999. RBDC failed to deliver the properties and their titles. Universal later discovered that the mother title of the property had been mortgaged to China Banking Corporation, which subsequently foreclosed on the mortgage. Universal filed a complaint with the HLURB for specific performance or rescission and damages, and secured a writ of preliminary attachment against RBDC’s properties. The HLURB ruled in favor of Universal, ordering rescission and a refund. However, the HLURB Board of Commissioners also allowed the discharge of one of RBDC’s attached properties (a Lapu-Lapu City lot) after RBDC posted a counterbond. The Office of the President affirmed the rescission and refund but upheld the property discharge. Universal appealed both the denial of its damage claims and the discharge of the attached property to the Court of Appeals.
ISSUE
The primary issues were: (1) whether Universal is entitled to damages beyond the stipulated penalty interest for RBDC’s breach, and (2) whether the HLURB committed grave abuse of discretion in ordering the discharge of the attached Lapu-Lapu City property.
RULING
The Supreme Court partially granted the petitions. On the first issue, the Court ruled that Universal is entitled to the stipulated penalty interest of 1.5% per month from the date of demand until full payment, as a valid liquidated damages clause. However, the Court denied the claim for actual and temperate damages, as these were not sufficiently proven. The Court also awarded exemplary damages and attorney’s fees. The award of exemplary damages was justified because RBDC acted in a wanton, fraudulent, and oppressive manner by selling properties that were already mortgaged without the required HLURB approval and without informing the buyer, violating Presidential Decree No. 957. Attorney’s fees were recoverable as an exception under the Civil Code since exemplary damages were awarded.
On the second issue, the Court upheld the discharge of the attached property. The HLURB did not commit grave abuse of discretion. The governing rule for preliminary attachment in HLURB cases is the Rules of Court. Under Rule 57, Section 12, a judge may order the discharge of an attachment if the party whose property is attached posts a counterbond sufficient to secure the applicant’s claim. RBDC’s posting of a counterbond was a valid ground for the discharge. The purpose of attachment is merely to secure the outcome of the case, not to give the attaching party a lien superior to other creditors. The discharge did not prejudice Universal’s claim, as it was merely substituted with a security bond.