G.R. No. 264652 , November 04, 2024
DAALCO DEVELOPMENT CORPORATION, PETITIONER, VS. PALMAS DEL MAR HOMEOWNERS ASSOCIATION (PDM-HOA), REPRESENTED BY GIL FERNANDEZ, PRESIDENT, RESPONDENT.

FACTS

Palmas del Mar Homeowners Association (PDM-HOA) filed a complaint against the subdivision developer, Daalco Development Corporation, demanding the donation of all open spaces, roads, and parks of Palmas Del Mar Subdivision to Bacolod City as required under Presidential Decree (PD) No. 1216, and the turnover of the ownership and management of the subdivision’s water system to PDM-HOA under Republic Act (RA) No. 9904 (Magna Carta for Homeowners and Homeowners’ Association). PDM-HOA claimed Daalco only donated portions of the lots where the water tank and underground pipes are located. Daalco contended it had complied with the 30% open space requirement by donating a combined area of 38,335 square meters (roads and open spaces) out of the 127,142-square meter total project area, excluding the area with water facilities. Daalco argued that PD No. 1216 does not require donation of water facilities and that its rights must be considered as the water system also services the Palmas del Mar Resort Hotel. The HLURB Arbiter ordered Daalco to donate the area occupied by the water system to Bacolod City and to turn over the management of the water system to PDM-HOA. The HSAC and the Court of Appeals upheld this decision. Daalco filed a Petition for Review on Certiorari.

ISSUE

1. Whether Daalco is required to donate the properties where the subdivision’s water system is located to Bacolod City.
2. Whether Daalco can be compelled to turn over the management of the water system to PDM-HOA.

RULING

1. No, Daalco is not required to donate the properties where the water system is located. The Court ruled that the property where the water system is located is not one of the open spaces required to be donated under Section 31 of PD No. 957, as amended by PD No. 1216. While the Court in Liwag v. Happy Glen Loop Homeowners Association, Inc. considered a lot with water facilities as part of open spaces, this was clarified by Senior Associate Justice Marvic M.V.F. Leonen, who explained that the enumeration of open spaces (parks, playgrounds, schools, etc.) pertains to developments enhancing community well-being, whereas a water system is a basic utility indispensable for survival, not merely a facility that enhances quality of life. Furthermore, the donation under Section 31 requires animus donandi (donative intent) on the part of the developer. Absent such intent, the court cannot compel the donation. The 30% open space requirement is a minimum; a developer is not prohibited from allocating more, but it cannot be forced to donate specific properties beyond the minimum requirement.
2. No, Daalco cannot be compelled to turn over the management of the water system to PDM-HOA under the circumstances. The Court found that the water system was designed as a community water system to serve both the subdivision and the adjacent Palmas del Mar Resort Hotel, which predates the subdivision. The right of a homeowners association to manage a waterworks system under Section 8(g) of RA No. 9904 (and its implementing rules, Section 49(g)) presupposes that the system was developed for the exclusive use of the subdivision. Since the system also services the Resort, a distinct commercial entity, it cannot be considered exclusively for the subdivision’s use. Therefore, PDM-HOA’s right to manage under RA No. 9904 does not apply. The Court emphasized that the developer’s legitimate business interests in the water system, which supplies its Resort, must be respected. The HLURB and CA decisions were reversed and set aside.