GR 185798; (January, 2014) (Digest)
G.R. No. 185798 ; January 13, 2014
FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK INC., Petitioners, vs. SPOUSES CONRADO AND MARIA VICTORIA RONQUILLO, Respondents.
FACTS
Petitioners are the developer and marketing agent of the Central Park Place Tower condominium. Respondents purchased a unit, paying a reservation fee, full downpayment, and subsequent monthly amortizations until September 1998. Upon discovering that construction had ceased, respondents stopped payments and demanded a full refund of their total payments of ₱2,198,949.96. Petitioners ignored the demand, prompting respondents to file a complaint for refund and damages with the Housing and Land Use Regulatory Board (HLURB). The HLURB Arbiter ruled in favor of respondents, ordering a refund with interest, moral damages, attorney’s fees, and an administrative fine. This decision was affirmed by the HLURB Board of Commissioners, the Office of the President, and the Court of Appeals.
ISSUE
Whether the HLURB and the appellate courts correctly ordered petitioners to refund respondents’ payments with damages and an administrative fine.
RULING
The Supreme Court affirmed the rulings with modification on the interest rate. Petitioners committed a substantial breach of their contractual and statutory obligations under Presidential Decree No. 957 by failing to develop the condominium project. The Court rejected petitioners’ defense that the 1997 Asian financial crisis constituted a fortuitous event excusing performance, as economic hardship does not equate to a legally recognized fortuitous event. The refund was justified under Section 20 in relation to Section 23 of P.D. 957, which allows buyers to seek reimbursement for undeveloped units. The award of moral damages was upheld due to petitioners’ bad faith, demonstrated by their breach of contract, failure to address grievances, and unjustified refusal to refund. The administrative fine was validly imposed under Section 38 of P.D. 957. However, following established jurisprudence, the legal interest on the refundable amount was modified to six percent (6%) per annum from the date of demand, October 8, 1998, until full payment.