SECOND DIVISION January 25, 2017 G.R. No. 194190 meters in the parcel of land covered by TCT No.

of land covered by TCT No. 179165 was affected by The Court of Appeals reasoned that the disputed area (covered by TCT
the road widening project. Thus, it emphasized that the Llamas Spouses No. 179165) did not lose its private character, the easement of right of
REPUBLIC OF THE PHILIPPINES, represented by the
were entitled to just compensation only to the extent of those 41 square way over it notwithstanding. 37 Further, it anchored its ruling on interest
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
meters. It added that the Llamas Spouses failed to adduce evidence of liability on Rule 67, Section 10 of the 1997 Rules of Civil Procedure.38 For
(DPWH), Petitioner vs. SPOUSES FRANCISCO R. LLAMAS and
any improvements on the affected area. It interposed no objection to the resolution is the issue of whether just compensation must be paid to
CARMELITA C. LLAMAS, Respondents
₱12,000.00 per square meter as valuation of just compensation. 18 respondents Francisco and Carmelita Llamas for the subdivision road
DECISION lots covered by TCT No. 179165.
On May 29, 1996, the Regional Trial Court issued the Order19 directing
LEONEN, J.: the payment of the value of the lots of the defendants in the I
expropriation case. The lots subject of the Llamas Spouses' intervention
1
This resolves a Petition for Review on Certiorari praying that the were not included in this Order.20 The Department of Public Works and Highways insists that the road lots
2
assailed October 14, 2010 Decision of the Fifth Division of the Court of are not compensable since they have "already been withdrawn from the
Appeals in CA-G.R. SP No. 104178 be reversed and set aside, and that After years of not obtaining a favorable ruling, the Llamas Spouses filed commerce of man."39 It relies chiefly on this Court's 1991 Decision
in lieu of it, the Orders dated October 8, 20073 and May 19, 20084 of a "Motion for Issuance of an Order to Pay and/or Writ of Execution dated in White Plains Association, Inc. v. Legaspi,40 which pertained to "the
Branch 257 of the Regional Trial Court of Parañaque City be reinstated. May 14, 2002."21 In this Motion, the Llamas Spouses faulted the widening of the Katipunan Road in the White Plains Subdivision in
Department of Public Works and Highways for what was supposedly its Quezon City."41 More specifically, it capitalizes on the following
The Regional Trial Court's October 8, 2007 Order required the deliberate failure to comply with the Regional Trial Court's previous statement in the 1991 White Plains Decision that shows a compulsion for
Department of Public Works and Highways to pay respondents Orders and even with its own undertaking to facilitate the payment of subdivision owners to set aside open spaces for public use, such as
Francisco and Carmelita Llamas (the Llamas Spouses) ₱12,000.00 per just compensation to the Llamas Spouses.22 In response, the Department roads, and for which they need not be compensated by government:
square meter as compensation for the expropriated 41-square-meter of Public Works and Highways filed a Comment dated October 25,
portion of a lot that they owned.5 The same Order denied the Llamas 2002.23 Subdivision owners are mandated to set aside such open spaces before
Spouses' prayer that they be similarly compensated for two (2) their proposed subdivision plans may be approved by the government
expropriated road lots.6 The Regional Trial Court's May 19, 2008 Order On November 28, 2002, the Department of Public Works and Highways authorities, and that such open spaces shall be devoted exclusively for
denied the Llamas Spouses' Motion for Reconsideration.7 and the Llamas Spouses filed a Joint Manifestation and Motion seeking the use of the general public and the subdivision owner need not be
to suspend the Llamas Spouses' pending Motions.24 This Joint Motion compensated for the same. A subdivision owner must comply with such
In its assailed Decision, the Court of Appeals set aside the Regional Trial stated that the Department of Public Works and Highways and the requirement before the subdivision plan is approved and the authority
Court's October 8, 2007 and May 19, 2008 Orders and required the Llamas Spouses had an understanding that the resolution of the latter's to sell is issued.42
Department of Public Works and Highways to similarly compensate the claims required the submission of: (1) certified true copies of the TCTs
Llamas Spouses for the two (2) road lots at ₱12,000.00 per square meter.8 covering the lots; and (2) certified true copies of the tax declarations, Under this compulsion, the dispositive portion of the 1991 White Plains
25 Decision proceeds to state:
On April 23, 1990, the Department of Public Works and Highways tax clearances, and tax receipts over the lots. It added that the Llamas
initiated an action for expropriation for the widening of Dr. A. Santos Spouses had undertaken to submit these documents as soon as WHEREFORE, the petition is GRANTED. The questioned orders of
26
Ave. (also known as Sucat Road) in what was then the Municipality of possible. respondent judge dated July 10, 1990 and September 26, 1990 are
Parafiaque, Metro Manila.9 This action was brought against 26 In an August 8, 2005 hearing, the Department of Public Works and hereby reversed and set aside. Respondent QCDFC is hereby directed
defendants, none of whom are respondents in this case. 10 to execute a deed of donation of the remaining undeveloped portion of
Highways manifested that the non-payment of the Llamas Spouses'
Road Lot 1 consisting of about 18 meters wide in favor of the Quezon
On November 2, 1993, the Commissioners appointed by the Regional claims was due to their continued failure to comply with their
City government, otherwise, the Register of Deeds of Quezon City is
Trial Court in the expropriation case submitted a resolution undertaking.27 On the same date, the Llamas Spouses filed a
hereby directed to cancel the registration of said Road Lot 1 in the name
recommending that just compensation for the expropriated areas be set Manifestation seeking the payment of their claims.28
of respondent QCDFC under TCT No. 112637 and to issue a new title
to ₱12,000.00 per square meter. 11 The Department of Public Works and Highways then filed a covering said property in the name of the Quezon City government.
On January 27, 1994, the Llamas Spouses filed before the Regional Trial Comment/Opposition asserting that, from its inquiries with the City Costs against respondent QCDFC.
Court a "Most Urgent and Respectful Motion for Leave to be Allowed Assessor's Office and the Parafiaque City Registry of Deeds, the
SO ORDERED.43 (Emphasis supplied)
Intervention as Defendants-Intervenors-Oppositors." 12 They claimed documents the Llamas Spouses submitted "did not originate from the
that they were excluded from the expropriation case despite having concerned offices."29 The Department of Public Works and Highways is in grave error.
properties affected by the road widening project. After a hearing on this On October 8, 2007, the Regional Trial Court issued the Petitioner's reliance on the 1991 White Plains Decision is misplaced. The
Motion, the Regional Trial Court allowed the Llamas Spouses to file their Order30 directing the payment to the Llamas Spouses of just same 1991 Decision was not the end of litigation relating to the widening
Answer-in-Intervention.13 compensation at ₱12,000.00 per square meter for 41 square meters for of Katipunan Road. The owner and developer of White Plains
The Llamas Spouses filed their Answer-in-Intervention on March 21, the lot covered by TCT No. 217267. It denied payment for areas covered Subdivision, Quezon City Development and Financing Corporation
1994. 14 In it, they claimed that a total area of 298 square meters was by TCT No. 179165 and noted that these were subdivision road lots, (QCDFC), went on to file motions for reconsideration. The second of
taken from them during the road widening project: which the Llamas Spouses "no longer owned"31 and which "belong[ed] these motions was granted in this Court's July 27, 1994 Resolution. 44 This
to the community for whom they were made."32 In the Order dated May Resolution expressly discarded the compulsion underscored by the
(1) 102 square meters from a parcel of land identified as Lot 4, Block 3, 19, 2008, the Regional Trial Court denied the Llamas Spouses' Motion for Department of Public Works and Highways, and the dispositive portion
covered by Transfer Certificate of Title (TCT) No. 217167; Reconsideration.33 of the 1991 White Plains Decision was modified accordingly. As this
(2) 84 square meters from a parcel of land identified as Lot 1, covered The Llamas Spouses then filed before the Court of Appeals a Petition Court recounted in its 1998 Decision in White Plains Homeowners
by TCT No. 179165; and Association, Inc. v. Court of Appeals:45
for Certiorari.
(3) 112 square meters from a parcel of land identified as Lot 2, also In its assailed October 14, 2010 Decision,34 the Court of Appeals [T]he dictum in G.R. No. 95522, White Plains Association, Inc. vs.
covered byTCTNo. 179165.15 Legaspi[,] that the developer can be compelled to execute a deed of
reversed and set aside the assailed Orders of the Regional Trial Court
donation of the undeveloped strip of Road Lot 1 and, in the event
On August 2, 1994, the Llamas Spouses filed a "Most Urgent Motion for and ordered the Department of Public Works and Highways to pay the QCDFC refuses to donate the land, that the Register of Deeds of Quezon
the Issuance of [a]n Order Directing the Immediate Payment of 40% of Llamas Spouses P12,000.00 per square meter as just compensation for a City may be ordered to cancel its old title and issue a new one in the
Zonal Value of Expropriated Land and Improvements."16 On December total of 237 square meters across three (3) lots, inclusive of the portions name of the city was questioned by the respondent QCDFC as contrary
35
9, 1994, the Department of Public Works and Highways filed its excluded by the Regional Trial Court. The Court of Appeals added that to law. We agree with QCDFC that the final judgment in G.R. No. 95522
Comment/Opposition to the Llamas Spouses' August 2, 1994 Motion.17 It the amount due to the Llamas Spouses was subject to 12% interest per is not what appears in the published on February 7, 1991 decision in
36
noted that, from its verification with the project engineer, only 41 square annum from the time of the taking.
REAL ESTATE (Oct. 12) Page 1 of 8
White Plains Association, Inc. vs. Legaspi. [Rather, it] is the following a. 9% of gross area for high density or social housing (66 to 100 family This Court's 2014 Decision in Republic v. Ortigas55 succinctly captures
resolution issued three (3) years later, on July 27, 1991 [sic], which lot per gross hectare). all that we have previously stated:
states, inter alia:
b. 7% of gross area for medium-density or economic housing (21 to 65 Delineated roads and streets, whether part of a subdivision or
" ... (T)he Court is constrained to grant the Instant Motion for family lot per gross hectare). segregated for public use, remain private and will remain as such until
Reconsideration but only insofar as the motion seeks to delete from the conveyed to the government by donation or through expropriation
c. 3.5 % of gross area low-density or open market housing (20 family
dispositive portion of the decision of 07 February 1991 the order of this proceedings. An owner may not be forced to donate his or her property
lots and below per gross hectare).
Court requiring the execution of the deed of donation in question and even if it has been delineated as road lots because that would partake
directing the Register of Deeds of Quezon City, in the event that such These areas reserved for parks, playgrounds and recreational use shall of an illegal taking. He or she may even choose to retain said
deed is not executed, to cancel the title of QCDFC and to issue a new be non-alienable public lands, and non-buildable. The plans of the properties. 56
one in the name of the Quezon City government. It may well be that the subdivision project shall include tree planting on such parts of the
The Department of Public Works and Highways makes no claim here
public respondents would not be aversed [sic] to such modification of subdivision as may be designated by the Authority.
that the road lots covered by TCT No. 179165 have actually been
the Court's decision since they shall in effect have everything to gain
Upon their completion as certified to by the Authority, the roads, alleys, donated to the government or that their transfer has otherwise been
and nothing to lose.
sidewalks and playgrounds shall be donated by the owner or developer consummated by respondents. It only theorizes that they have been
WHEREFORE the second motion for reconsideration is hereby partly to the city or municipality and it shall be mandatory for the local automatically transferred. Neither has expropriation ever been fully
granted by MODIFYING the dispositive portion of this Court's decision governments to accept; provided, however, that the parks and effected. Precisely, we are resolving this expropriation controversy
of 07 February 1991 and to now read as follows: playgrounds may be donated to the Homeowners Association of the only now.
project with the consent of the city or municipality concerned. No
'WHEREFORE the petition is GRANTED. The questioned orders of Respondents have not made any positive act enabling the City
portion of the parks and playgrounds donated thereafter shall be
respondent judge dated July 10, 1990 and September 25 1990 are Government of Parafiaque to acquire dominion over the disputed road
converted to any other purpose or purposes. (Emphasis supplied)
hereby reversed and set aside. . . . Costs against respondent QCDFC. lots. Therefore, they retain their private character (albeit all parties
The last paragraph of Section 31 is oxymoronic. One cannot speak of j a acknowledge them to be subject to an easement of right of way).
SO ORDERED. "'46 (Emphasis supplied)
donation and compulsion in the same breath. Accordingly, just compensation must be paid to respondents as the
The 1998 White Plains Decision unequivocally repudiated the 1991 government takes the road lots in the course of a road widening project.
A donation is, by definition, "an act of liberality." Article 725 of the Civil
White Plains Decision's allusion to a compulsion on subdivision WHEREFORE, the Petition for Review on Certiorari is DENIED. The
Code provides:
developers to cede subdivision road lots to government, so much that it
assailed October 14, 2010 Decision of the Fifth Division of the Court of
characterized such compulsion as an "illegal taking."47 It did away with Article 725. Donation is an act of liberality whereby a person disposes Appeals in CA-G.R. SP No. 104178 is AFFIRMED.
any preference for government's capacity to compel cession and, gratuitously of a thing or right in favor of another, who accepts it.
instead, emphasized the primacy of subdivision owners' and SO ORDERED.
developers' freedom in retaining or disposing of spaces developed as To be considered a donation, an act of conveyance must necessarily
roads. In making its characterization of an "illegal taking," this Court proceed freely from the donor's own, unrestrained volition. A donation
quoted with approval the statement of the Court of Appeals: cannot be forced: it cannot arise from compulsion, be borne by a THIRD DIVISION G.R. No. 97882 August 28, 1996
requirement, or otherwise be impelled by a mandate imposed upon the
Only after a subdivision owner has developed a road may it be donated donor by forces that are external to him or her. Article 726 of the Civil THE CITY OF ANGELES, Hon. ANTONIO ABAD SANTOS, in his
to the local government, if it so desires. On the other hand, a subdivision Code reflects this commonsensical wisdom when it specifically states capacity as MAYOR of Angeles City, and the SANGGUNIANG
owner may even opt to retain ownership of private subdivision roads, that conveyances made in view of a "demandable debt" cannot be PANLUNGSOD OF THE CITY OF ANGELES, petitioners, vs. COURT
as in fact is the usual practice of exclusive residential subdivisions for considered true or valid donations.49 OF APPEALS and TIMOG SILANGAN DEVELOPMENT
example those in Makati City. 48 CORPORATION, respondents.
In jurisprudence, animus donandi (that is, the intent to do an act of
II liberality) is an indispensable element of a valid donation, along with
the reduction of the donor's patrimony and the corresponding increase
In insisting on a compulsion on subdivision owners and developers to PANGANIBAN, J.:p
in the donee’s patrimony.50
cede open spaces to government, the Department of Public Works and
Highways references Presidential Decree No. 957, as amended by Section 31 's compulsion to donate (and concomitant compulsion to In resolving this petition, the Court addressed the questions of whether
Presidential Decree No. 1216, otherwise known as the Subdivision and accept) cannot be sustained as valid. Not only does it run afoul of basic a donor of open spaces in a residential subdivision can validly impose
Condominium Buyer's Protective Decree. conditions on the said donation; whether the city government as donee
legal concepts; it also fails to withstand the more elementary test of logic
can build and operate a drug rehabilitation center on the donated land
and common sense. As opposed to this, the position that not only is more
The first paragraph of Section 31 of Presidential Decree No. 957 spells intended for open space; and whether the said donation may be validly
reasonable and logical, but also maintains harmony between our laws,
out the minimum area requirement for roads and other open spaces in rescinded by the donor.
is that which maintains the subdivision owner's or developer's freedom
subdivision projects. Its second paragraph spells out taxonomic or
to donate or not to donate. This is the position of the 1998 White Plains Petitioners claim they have the right to construct and operate a drug
classification parameters for areas reserved for parks, playgrounds,
Decision. Moreover, as this 1998 Decision has emphasized, to force this rehabilitation center on the donated land in question, contrary to the
and for recreational use. It also requires the planting of trees. The last
donation and to preclude any compensation-is to suffer an illegal taking. provisions stated in the amended Deed of Donation.
paragraph of Section 31 requires-note the use of the word "shall"-
subdivision developers to donate to the city or municipality with III On the other hand, private respondent, owner/developer of the Timog
territorial jurisdiction over the subdivision project all such roads, alleys, 51 Park residential subdivision in Angeles City, opposed the construction
sidewalks, and open spaces. It also imposes upon cities and The Court of Appeals correctly stated that a "positive act" must first be and now, the operation of the said center on the donated land, which is
municipalities the concomitant obligation or compulsion to accept such made by the "owner-developer before the city or municipality can
located within said residential subdivision.
donations: acquire dominion over the subdivision roads."52 As there is no such
thing as an automatic cession to government of subdivision road lots, an Before us is a petition for review on certiorari assailing the Decision1 of
SEC. 31. Roads, Alleys, Sidewalks and Open Spaces. - The owner as actual transfer must first be effected by the subdivision owner: the Court of Appeals 2 dated October 31, 1990, which affirmed the
developer of a subdivision shall provide adequate roads, alleys and "subdivision streets belonged to the owner until donated to the decision 3 of the Regional Trial Court of Angeles City Branch 56, 4 dated
sidewalks. For subdivision projects one (1) hectare or more, the owner government or until expropriated upon payment of just February 15, 1989.
or developer shall reserve thirty percent (30%) of the gross area for compensation."53 Stated otherwise, "the local government should first
open space. Such open space shall have the following standards acquire them by donation, purchase, or expropriation, if they are to be The Antecedents
allocated exclusively for parks, playgrounds and recreational use: utilized as a public road."54
REAL ESTATE (Oct. 12) Page 2 of 8
In a Deed of Donation dated March 9, 1984, subsequently superseded
by a Deed of Donation dated September 27, 1984, which in turn was
superseded by an Amended Deed of Donation dated November 26,
1984, private respondent donated to the City of Angeles, 51 parcels of
land situated in Barrio Pampang, City of Angeles, with an aggregate
area of 50,676 square meters, more or less, part of a bigger area also
belonging to private respondent. The amended deed 5 provided,
among others, that:
2. The properties donated shall be devoted and utilized solely for
the site of the Angeles City Sports Center (which excludes
cockfighting) pursuant to the plans to be submitted within six (6)
months by the DONEE to the DONOR for the latter's approval, which
approval shall not be unreasonably withheld as long as entire
properties donated are developed as a Sports Complex. Any
change or modification in the basic design or concept of said Sports
Center must have the prior written consent of the DONOR.
3. No commercial building, commercial complex, market or any position was untenable.
other similar complex, mass or tenament (sic) housing/building(s)
shall be constructed in the properties donated nor shall The petitioners opposed, contending that they had a meritorious
cockfighting, be allowed in the premises.
4. The construction of the Sports Center shall commence within a the purpose remains for public use; and (2) the cause of action of the
period of one (1) year from March 9, 1984 and shall be completed private respondent became moot and academic when the Angeles City
within a period of five (5) years from March 9, 1984.
xxx xxx xxx
6. The properties donated (which is more than five (5) percent of the youth center" in order to conform with the sports complex project
total land area of the DONOR's subdivision) shall constitute the constructed on the donated land.
entire open space for DONOR's subdivision and all other lands or
areas previously reserved or designated, including Lot 1 and Lot 2A
of Block 72 and the whole Block 29 are dispensed with, and
rendered free, as open spaces, and the DONEE hereby agrees to
execute and deliver all necessary consents, approvals,
endorsements, and authorizations to effect the foregoing.
7. The properties donated are devoted and described as "open
spaces" of the DONOR's subdivision, and to this effect, the DONEE,
upon acceptance of this donation, releases the DONOR and/or
assumes any and all obligations and liabilities appertaining to the
properties donated.
8. Any substantial breach of the foregoing provisos shall entitle the
DONOR to revoke or rescind this Deed of Donation, and in such
eventuality, the DONEE agrees to vacate and return the premises,
together with all improvements, to the DONOR peacefully without
necessity of judicial action.
On July 19, 1988, petitioners started the construction of a drug
rehabilitation center on a portion of the donated land. Upon learning
thereof, private respondent protested such action for being violative of
the terms and conditions of the amended deed and prejudicial to its
interest and to those of its clients and residents. Private respondent also
offered another site for the rehabilitation center. However, petitioners
ignored the protest, maintaining that the construction was not violative
of the terms of the donation. The alternative site was rejected because,
according to petitioners, the site was too isolated and had no electric
and water facilities.
On August 8, 1988, private respondent filed a complaint with the
Regional Trial Court, Branch 56, in Angeles City against the petitioners,
alleging breach of the conditions imposed in the amended deed of
donation and seeking the revocation of the donation and damages, with
REAL ESTATE (Oct. 12)
preliminary injunction and/or temporary restraining order to halt the
construction of the said center.
On August 10, 1988, the trial court issued a temporary restraining order
to enjoin the petitioners from further proceeding with the construction
of the center, which at that time was already 40% complete. The dispositive portion of the RTC decision reads:
However, the trial court denied the prayer for preliminary injunction
based on the prohibition in Presidential Decree No. 1818.
In their Answer with counterclaim, petitioners admitted the
commencement of the construction but alleged inter aliathat the
conditions imposed in the amended deed were contrary to Municipal
Ordinance No. 1, Series of 1962, otherwise known as the Subdivision
Ordinance of the Municipality of Angeles.6
On October 15, 1988, private respondent filed a Motion for Partial
Summary Judgment on the ground that the main defense of the
petitioners was anchored on a pure question of law and that their legal
defense as (1) private respondents had no right to dictate upon
petitioners what to do with the donated land and how to do it so long as
Council repealed the resolution providing for the construction of said
drug rehabilitation center and adopted a new resolution changing
the purpose and usage of said center to a "sports development and
On February 15, 1989, the trial court rendered its decision, in relevant
part reading as follows:
. . . the Court finds no inconsistency between the conditions
imposed in the Deeds of Donation and the provision of the
Subdivision Ordinance of the City of Angeles requiring subdivisions
in Angeles City to reserve at least one (1) hectare in the subdivision
as suitable sites known as open spaces for parks, playgrounds,
playlots and/or other areas to be rededicated to public use. On the
contrary, the condition requiring the defendant city of Angeles to
devote and utilize the properties donated to it by the plaintiff for the
site of the Angeles City Sports Center conforms with the
requirement in the Subdivision Ordinance that the subdivision of
the plaintiff shall be provided with a playground or playlot, among
others.
On the other hand the term "public use'" in the Subdivision
Ordinance should not be construed to include a Drug Rehabilitation
Center as that would be contrary to the primary purpose of the
Subdivision Ordinance requiring the setting aside of a portion
known as "Open Space" for park, playground and playlots, since
these are intended primarily for the benefit of the residents of the
subdivision. While laudable to the general public, a Drug
Rehabilitation Center in a subdivision will be a cause of concern and
constant worry to its residents.
As to the third issue in paragraph (3), the passage of the Ordinance
changing the purpose of the building constructed in the donated
properties from a Drug Rehabilitation Center to a Sports Center
comes too late. It should have been passed upon the demand of the
plaintiff to the defendant City of Angeles to stop the construction of
the Drug Rehabilitation Center, not after the complaint was filed.
Besides, in seeking the revocation of the Amended Deed of
Donation, plaintiff also relies on the failure of the defendant City of
Angeles to submit the plan of the proposed Sports Center within six
(6) months and construction of the same within five years from
March 9, 1984, which are substantial violations of the conditions
imposed in the Amended Deed of Donation.
WHEREFORE, judgment is hereby rendered:
(1) Enjoining defendants, its officers, employees and all persons
acting on their behalf to perpetually cease and desist from
constructing a Drug Rehabilitation Center or any other building or
improvement on the Donated Land.
(2) Declaring the amended Deed of Donation revoked and
rescinded and ordering defendants to peacefully vacate and return
the Donated Land to plaintiff, together with all the improvements
existing thereon. And,
(3) Denying the award of compensatory or actual and exemplary
damages including attorney's fees.
NO PRONOUNCEMENT AS TO COST.
In March 1989, petitioners fried their Notice of Appeal. On April 15, 1989
while the appeal was pending, petitioners inaugurated the Drug
Rehabilitation Center. 7
On April 26, 1991, the respondent Court rendered the assailed Decision
affirming the ruling of the trial court. Subsequently, the petitioners
motion for re-consideration was also denied for lack of merit.
Consequently, this Petition for Review.
The Issues
The key issues 8 raised by petitioners may be restated as follows:
I. Whether a subdivision owner/developer is legally bound under
Presidential Decree No. 1216 to donate to the city or municipality
the "open space" allocated exclusively for parks, playground and
recreational use.
II. Whether the percentage of the "open space" allocated
exclusively for parks, playgrounds and recreational use is to be
based on the "gross area" of the subdivision or on the total area
reserved for "open space".
III. Whether private respondent as subdivision owner/developer
may validly impose conditions in the Amended Deed of Donation
regarding the use of the "open space" allocated exclusively for
parks and playgrounds..
IV. Whether or not the construction of the Drug Rehabilitation
Center on the donated "open space" may be enjoined.
V. Whether the donation by respondents subdivision
owner/developer of the "open space" of its subdivision in favor of
petitioner City of Angeles may be revoked for alleged violation of
the Amended Deed of Donation.
Central to this entire controversy is the question of whether the donation
of the open space may be revoked at all.
First Issue: Developer Legally Bound to Donate Open Space
The law involved in the instant case is Presidential Decree No. 1216,
dated October 14, 1977, 9 which reads:
PRESIDENTIAL DECREE NO. 1216
Page 3 of 8
Defining "Open Space" In Residential Subdivisions And Amending
Section 31 Of Presidential Decree No. 957 Requiring Subdivision
Owners To Provide Roads, Alleys, Sidewalks And Reserve Open
Space For Parks Or Recreational Use.
WHEREAS, there is a compelling need to create and maintain a
healthy environment in human settlements by providing open
spaces, roads, alleys and sidewalks as may be deemed suitable to
enhance the quality of life of the residents therein;
WHEREAS, such open spaces, roads, alleys and sidewalks in
residential subdivisions are for public use and are, therefore,
beyond the commerce of men;
WHEREAS, pursuant to Presidential Decree No. 953 at least thirty
percent (30%) of the total area of a subdivision must be reserved,
developed and maintained as open space for parks and recreational
areas, the cost of which will ultimately be borne by the lot buyers
which thereby increase the acquisition price of subdivision lots
beyond the reach of the common mass;
WHEREAS, thirty percent (30%) required open space can be This can be clearly established by referring to the original provision of
reduced to a level that will make the subdivision industry viable and Sec. 31 of P.D. 957, which reads as follows:
the price of residential lots within the means of the low income
group at the same time preserve the environmental and ecological
balance through rational control of land use and proper design of
space and facilities;
WHEREAS, pursuant to Presidential Decree No. 757, government
efforts in housing, including resources, functions and activities to
maximize results have been concentrated into one single agency,
namely, the National Housing Authority;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the
Constitution, do hereby order and decree:
Sec. 1. For purposes of this Decree, the term "open apace" shall
mean an area reserved exclusively for parks, playgrounds,
recreational uses, schools, roads, places of worship, hospitals,
health centers, barangay centers and other similar facilities and
amenities.
Sec. 2. Section 31 of Presidential Decree No. 957 is hereby amended
to read as follows:
Sec. 31. Roads, Alleys, Sidewalks and Open Spaces — The owner
as developer of a subdivision shall provide adequate roads,
alleys and sidewalks. For subdivision projects one (1) hectare or
more, the owner or developer shall reserve thirty percent (30%)
of the gross area for open space. Such open space shall have the
following standards allocated exclusively for parks, playgrounds
and recreational use:
a. 9% of gross area for high density or social housing (66 to 100
family lots per gross hectare).
b. 7% of gross area for medium-density or economic housing (21
to 65 family lots per gross hectare).
c. 3.5% of gross area for low-density or open market housing (20
family lots and below per gross hectare).
These areas reserved for parks, playgrounds and recreational use
shall be non-alienable public lands, and non-buildable. The plans Second Issue: Percentage of Area for Parks and Playgrounds
of the subdivision project shall include tree planting on such parts
of the subdivision as may be designated by the Authority.
REAL ESTATE (Oct. 12)
Upon their completion certified to by the Authority, the roads, of the entire subdivision, and not merely on the area of the open space
alleys, sidewalks and playgrounds shall be donated by the owner alone, as contended by private respondent and as decided by the
or developer to the city or municipality and it shall be mandatory respondent Court. 10
for the local governments to accept provided, however, that the
The petitioners are correct. The language of Section 31 of P.D. 957 as
parks and playgrounds maybe donated to the Homeowners
amended by Section 2 of P.D. 1216 is wanting in clarity and exactitude,
Association of the project with the consent of the city or municipality
but it can be easily inferred that the phrase "gross area" refers to the
concerned. No portion of the parks and playgrounds donated
entire subdivision area. The said phrase was used four times in the same
thereafter shall be converted to any other purpose or purposes.
section in two sentences, the first of which reads:
Sec. Sections 2 and 5 of Presidential Decree No. 953 are hereby
. . . For subdivision projects one (1) hectare or more, the owner or
repealed and other laws, decrees, executive orders, institutions,
more, the owner or developer shall reserve thirty percent (30%) of
rules and regulations or parts thereof inconsistent with these
the gross area for open space, . . .
provisions are also repealed or amended accordingly.
Here, the phrase "30% of the gross area" refers to the total area of the
Sec. 4. This Decree shall take effect immediately.
subdivision, not of the open space. Otherwise, the definition of "open
Pursuant to the wording of Sec. 31 of P.D. 957 as above amended by the space" would be circular. Thus, logic dictates that the same basis be
aforequoted P.D. No. 1216, private respondent is under legal obligation applied in the succeeding instances where the phrase "open space" is
to donate the open space exclusively allocated for parks, playgrounds used, i.e., "9% of gross area... 7% of gross area... 3.5% of gross area..."
and recreational use to the petitioner. Moreover, we agree with petitioners that construing the 3.5% to 9% as
applying to the totality of the open space would result in far too small an
area being devoted for parks, playgrounds, etc., thus rendering
meaningless and defeating the purpose of the statute. This becomes
Sec. 31. Donation of roads and open spaces to local government — clear when viewed in the light of the original requirement of P.D. 953
The registered owner developer of the subdivision or condominium ("Requiring the Planting of Trees in Certain Places, etc."), section 2 of
project, upon completion of the development of said project may, which reads:
at his option, convey by way of donation the roads and open spaces
Sec. 2. Every owner of land subdivided into
found within the project to the city or municipality wherein the
commerce/residential/industrial lots after the effectivity of this
project is located. Upon acceptance of he donation by the city or
Decree shall reserve, develop and maintain not less than thirty
municipality concerned, no portion of the area donated shall
percent (30%) of the total area of the subdivision, exclusive of
thereafter be converted to any other purpose or purposes unless
roads, service streets and alleys, as open space for parks and
after hearing, the proposed conversion is approved by the
recreational areas.
Authority. (Emphasis supplied)
No plan for a subdivision shall be approved by the Land Registration
It will be noted that under the aforequoted original provision, it
Commission or any office or agency of the government unless at
was optional on the part of the owner or developer to donate the roads
least thirty percent (30%) of the total area of the subdivision,
and spaces found within the project to the city or municipality where the
exclusive, of roads, service streets and alleys, is reserved as open
project is located. Elsewise stated, there was no legal obligation to
space for parks and recreational areas . . .
make the donation.
To our mind, it is clear that P.D. 1216 was an attempt to achieve a happy
However, said Sec. 31 as amended now states in its last paragraph:
compromise and a realistic balance between the imperatives of
Upon their completion . . ., the roads, alleys, sidewalks and environmental planning and the need to maintain economic feasibility
playgrounds shall be donated by the owner or developer to the in subdivision and housing development, by reducing the required area
city or municipality and it shall be mandatory for the local for parks, playgrounds and recreational uses from thirty percent (30%)
government to accept; provided, however, that the parks and to only 3.5% — 9% of the entire area of the subdivision.
playgrounds may be donated to the Homeowners Association of
Third Issue: Imposition of Conditions in Donation of Open Space
the project with the consent of the city or must concerned. . . .
Petitioners argue that since the private respondent is required by law to
It is clear from the aforequoted amendment that it is no longer
donate the parks and playgrounds, it has no right to impose the
optional on the part of the subdivision owner/developer to donate
condition in the Amended Deed of Donation that "the properties
the grounds; rather there is now a legal obligation to donate the
donated shall be devoted and utilized solely for the site of the Angeles
same. Although there is a proviso a proviso that the donation of the
City Sports Center." It cannot prescribe any condition as to the use of
parks and playgrounds may be made to the homeowners
the area donated because the use of the open spaces already governed
association of the project with the consent of the city of municipality,
by P.D. 1216. In other words, the donation should be absolute.
concerned, nonetheless, the owner/developer is still obligated
Consequently, the conditions in the amended deed which were
under the law to donate. Such option does not change the mandatory
allegedly violated are deemed not written. Such being the case,
hectare of the provision. The donation has to be made regardless of
petitioners cannot be considered to have committed any violation of the
which donee is picked by the owner/developer. The consent
terms and conditions of the said amended deed, as the donation is
requirement before the same can be donated to the homeowners"
deemed unconditional, and it follows that there is no basis for
association emphasizes this point.
revocation of the donation.
However, the general law on donations does not prohibit the imposition
Petitioners contend that the 3.5% to 9% allotted by Sec. 31 for parks, of conditions on a donation so long as the conditions are not illegal or
playgrounds and recreational uses should be based on the gross area impossible. 11
Page 4 of 8
In regard to donations of open spaces, P.D. 1216 itself requires among
other things that the recreational areas to be donated be based, as
aforementioned, on a percentage (3.5% 7%, or 9%) of the total area of
the subdivision depending on whether the division is low —, medium
—, or high-density. It further declares that such open space devoted to
parks, playgrounds and recreational areas are non-alienable public
land and non-buildable. However, there is no prohibition in either P.D.
957 or P.D. 1216 against imposing conditions on such donation.
We hold that any condition may be imposed in the donation, so long as
the same is not contrary to law, morals, good customs, public order or
public policy. The contention of petitioners that the donation should be
unconditional because it is mandatory has no basis in law. P.D. 1216
does not provide that the donation the open space for parks and
playgrounds should be unconditional. To rule that it should be so is
tantamount to unlawfully expanding, the provisions of the decree. 12
In the case at bar, one of the conditions imposed in the Amended Deed
of Donation is that the donee should build a sports complex on the
donated land. Since P.D. 1216 clearly requires that the 3.5% to 9% of the
gross area alloted for parks and playgrounds is "non-buildable", then
the obvious question arises whether or not such condition was validly
imposed and is binding on the donee. It is clear that the "non-buildable"
character applies only to the 3.5% to 9% area set by law. If there is any
excess land over and above the 3.5% to 9% required by the decree,
which is also used or allocated for parks, playgrounds and recreational
purposes, it is obvious that such excess area is not covered by the non-
buildability restriction. In the instant case, if there be an excess, then
the donee would not be barred from developing and operating a sports
complex thereon, and the condition in the amended deed would then
be considered valid and binding.
To determine if the over 50,000 square meter area donated pursuant to
the amended deed would yield an excess over the area required by the
decree, it is necessary to determine under which density category the
Timog Park subdivision falls.
If the subdivision falls under the low density or open market housing
category, with 20 family lots or below per gross hectare, the developer
will need to allot only 3.5% of gross area for parks and playgrounds,
and since the donated land constitutes "more than five (5) percent of the
total land area of the subdivision 13 there would therefore be an excess
of over 1.5% of gross area which would not be non-buildable.
Petitioners, on the other hand, alleged (and private respondent did not
controvert) that the subdivision in question is a "medium-density or
economic housing" subdivision based on the sizes of the family lots
donated in the amended deed, 14 for which category the decree
mandates that not less than 7% of gross area be set aside. Since the
donated land constitutes only a little more than 5% of the gross area of
the subdivision, which is less than the area required to be allocated for
non-buildable open space, therefore there is no "excess land" to speak
of. This then means that the condition to build a sports complex on the
donated land is contrary to law and should be considered as not
imposed.
Fourth Issue: Injunction vs. Construction of the Drug
Rehabilitation Center
Petitioners argue that the court cannot enjoin the construction of the
drug rehabilitation center because the decision of the court came only
after the construction of the center was completed and, based on
jurisprudence, there can be no injunction unction of events that have
already transpired. 15
Private respondent, on the other hand, counters that the operation of the
center is a continuing act which would clearly cause injury to private
REAL ESTATE (Oct. 12)
respondent, its clients, and residents of the subdivision, and thus, a petitioners publicly flaunted their disregard thereof with the
proper subject of injunction. 16 Equity should move in to granting of the subsequent inauguration of the center on August 15, 1989. The
injunctive relief if persistent repetition of the wrong is threatened. operation of the center, after inauguration, is even more censurable
In light of Sec. 31 of P.D. 957, as amended, declaring the open space for Fifth Issue: Revocation of a Mandatory Donation Because of Non-
parks, playgrounds and recreational area as non-buildable, it appears compliance With an Illegal Condition
indubitable that the construction and operation of a drug rehabilitation
The private respondent contends that the building of said drug
center on the land in question is a continuing violation of the law and
rehabilitation center is violative of the Amended Deed of Donation.
thus should be enjoined.
Therefore, under Article 764 of the New Civil Code and stipulation no.
Furthermore, the factual background of this case warrants that this Court 8 of the amended deed, private respondent is empowered to revoke the
rule against petitioners on this issue. We agree with and affirm the donation when the donee has failed to comply with any of the conditions
Court's finding that petitioners committed acts mocking the judicial imposed in the deed.
system. 18
We disagree. Article 1412 of the Civil Code which provides that:
. . . When a writ of preliminary injunction was sought for by the
If the act in which the unlawful or forbidden cause consists does
appellee (private respondent) to enjoin the appellants [petitioners
not constitute a criminal offense, the following rules shall be
herein] from further continuing with the construction of the
observed:
appellants the said center, the latter resisted and took refuge under
the provisions of Presidential Decree No. 1818 (which prohibits (1) When the fault is on the part of both contracting parties,
writs of preliminary injunction) to continue with the construction of neither may recover what he has given by virtue of the contract,
the building. Yet, the appellants also presented "City Council or demand the performance of the other's undertaking;
Resolution No. 227 which allegedly repealed the previous
comes into play here. Both petitioners and private respondents are
Resolution authorizing the City Government to construct a Drug
in violation of P.D. 957 as amended, for donating and accepting a
Rehabilitation Center on the donated property, by "changing the
donation of open space less than that required by law, and for
purpose and usage of the Drug Rehabilitation Center to Sports
agreeing to build and operate a sports complex on the non-
Development and Youth Center to make it conform to the Sports
buildable open space so donated; and petitioners, for constructing
Complex Project therein". Under this Resolution No. 227, the
a drug rehabilitation center on the same non-buildable area.
appellants claimed that they have abandoned all plans for the
construction of the Drug Rehabilitation Nonetheless, when Moreover, since the condition to construct a sport complex on the
judgment was finally rendered on February 15, 1989, the appellants donated land has previously been shown to be contrary to law,
were quick to state that they have not after all abandoned their plans therefore, stipulation no. 8 of the amended deed cannot be
for the center as they have in fact inaugurated the same April 15, implemented because (1) no validstipulation of the amended deed had
1989. In plain and simple terms, this act is a mockery of our judicial been breached, and (2) it is highly improbable that the decree would
system perpetrated by the appellants. For them to argue that the have allowed the return of the donated land for open space under any
court deal on their Drug Rehabilitation Center is not only circumstance, considering the non-alienable character of such open
preposterous but also ridiculous. space, in the light of the second Whereas clause of P.D. 1216 which
It is interesting to observe that under the appealed decision the declares that . . . such open spaces, roads, alleys and sidewalks in
appellants and their officers, employees and all other persons residential subdivisions are for public use and are, therefore, beyond
acting on their behalf were perpetually enjoined to cease and desist the commerce of men.
from constructing a Drug Rehabilitation Center on the donated Further, as a matter of public policy, private respondent cannot be
property. Under Section 4 of Rule 39 of the Rules of Court, it is allowed to evade its statutory obligation to donate the required open
provided that: space through the expediency of invoking petitioners breach of the
Sec. 4 A judgment in an action for injunction shall not be stayed aforesaid condition. It is a familiar principle that the courts will not aid
after its rendition and before an appeal is taken or during the either party to enforce an illegal contract, but will leave them both
where they find them. Neither party can recover damages from the
tendency of an appeal .
other arising from the act contrary to law, or plead the same as a cause
Accordingly, a judgment restraining a party from doing a certain act of action or as a defense. Each must bear the consequences of his own
is enforceable and shall remain in full force and effect appeal. In the acts. 19
case at bar, the cease and desist order therefore still stands.
Appellants persistence and continued construction and, There is therefore no legal basis whatsoever to revoke the donation of
subsequent, operation of the Drug Rehabilitation Center violate the the subject open space and to return the donated land to private
express terms of the writ of injunction lawfully issued by the lower respondent. The donated land should remain with the donee as the law
court. clearly intended such open spaces to be perpetually part of the public
domain, non-alienable and permanently devoted to public use as such
This Court finds no cogent reason to reverse the above mentioned parks, playgrounds or recreation areas.
findings of the respondent court. The allegation of the petitioners that
Removal/Demolition of Drug Rehabilitation Center
the construction of the center was finished before the judgment of the
trial court was rendered deserves scant consideration because it is self- Inasmuch as the construction and operation of the drug rehabilitation
serving and is completely unsupported by other evidence. center has been established to law, the said center should be removed
The fact remains that the trial court rendered judgment enjoining the or demolished. At this juncture, we hasten to add that this Court is and
construction of the drug rehabilitation center, revoking the donation has always been four-square behind the government's efforts to
eradicate the drug scourge in this country. But the end never justifies
and ordering the return of the donated land. In spite of such injunction,
Page 5 of 8
the means, and however laudable the purpose of the construction in and Resolution2 dated January 25, 2008 in CA-G.R. CV No. 86614. The as of November 30, 2002, which again, was attributed by defendant
question, this Court cannot and will not countenance an outright and assailed decision reversed and set aside the September 9, 2005 [MPMCC] to defendant Meridien. x x x;
continuing violation of the laws of the land, especially when committed Order3 of the Regional Trial Court (RTC) of Makati, Branch 58 in Civil
11. Due to the seriousness of the matter, and the feeling that
by public officials. Case No. 03-1018; while the assailed resolution denied the separate
defendant Meridien made false representations considering that it
motions for reconsideration filed by petitioner Medical Plaza Makati
In theory, the cost of such demolition, and the reimbursement of the fully warranted to plaintiff that condominium unit 1201 is free and
Condominium Corporation (MPMCC) and Meridien Land Holding, Inc.
public funds expended in the construction thereof, should be borne by clear from all liens and encumbrances, the matter was referred to
(MLHI).
the officials of the City Angeles who ordered and directed such counsel, who accordingly sent a letter to defendant Meridien, to
construction. This Court has time and again ruled that public officials The factual and procedural antecedents are as follows: demand for the payment of said unpaid association dues and other
are not immune from damages in their personal capacities arising from assessments imposed on the condominium unit and being claimed
Respondent Robert H. Cullen purchased from MLHI condominium Unit
acts done in bad faith. Otherwise stated, a public official may be liable by defendant [MPMCC]. x x x;
No. 1201 of the Medical Plaza Makati covered by Condominium
in his personal capacity for whatever damage he may have caused by
Certificate of Title No. 45808 of the Register of Deeds of Makati. Said title 12. x x x defendant Meridien claimed however, that the obligation
his act done with malice and in bad faith or beyond the scope of his
was later cancelled and Condominium Certificate of Title No. 64218 was does not exist considering that the matter was already settled and
authority or jurisdiction. 20 In the instant case, the public officials
issued in the name of respondent. paid by defendant Meridien to defendant [MPMCC]. x x x;
concerned deliberately violated the law and persisted in their
violations, going so far as attempting to deceive the courts by their On September 19, 2002, petitioner, through its corporate secretary, Dr. 13. Plaintiff thus caused to be sent a letter to defendant [MPMCC] x
pretended change of purpose and usage for the enter, and "making a Jose Giovanni E. Dimayuga, demanded from respondent payment for x x. The said letter x x x sought an explanation on the fact that, as
mockery of the judicial system". Indisputably, said public officials acted alleged unpaid association dues and assessments amounting to per the letter of defendant Meridien, the delinquency of unit 1201
beyond the scope of their authority and jurisdiction and with evident ₱145,567.42. Respondent disputed this demand claiming that he had was already fully paid and settled, contrary to the claim of defendant
bad faith. However, as noted by the trial court 21, the petitioners mayor been religiously paying his dues shown by the fact that he was [MPMCC]. x x x;
and members of the Sangguniang Panlungsod of Angeles City were previously elected president and director of petitioner.4 Petitioner, on
sued only in their official capacities, hence, they could not be held the other hand, claimed that respondent’s obligation was a carry-over 14. Despite receipt of said letter on April 24, 2003, and to date
personally liable without first giving them their day in court. Prevailing of that of MLHI.5 Consequently, respondent was prevented from however, no explanation was given by defendant [MPMCC], to the
jurisprudence 22 holding that public officials are personally liable for exercising his right to vote and be voted for during the 2002 election of damage and prejudice of plaintiff who is again obviously being
damages arising from illegal acts done in bad faith are premised on said petitioner’s Board of Directors.6 Respondent thus clarified from MLHI barred from voting/participating in the election of members of the
officials having been sued both in their official and personal capacities. the veracity of petitioner’s claim, but MLHI allegedly claimed that the board of directors for the year 2003;
same had already been settled.7 This prompted respondent to demand 15. Clearly, defendant [MPMCC] acted maliciously by insisting that
After due consideration of the circumstances, we believe that the fairest
from petitioner an explanation why he was considered a delinquent plaintiff is a delinquent member when in fact, defendant Meridien
and most equitable solution is to have the City of Angeles, donee of the
payer despite the settlement of the obligation. Petitioner failed to make had already paid the said delinquency, if any. The branding of
subject open space and, ostensibly, the main beneficiary of the
such explanation. Hence, the Complaint for Damages8 filed by plaintiff as delinquent member was willfully and deceitfully
construction and operation of the proposed drug rehabilitation center,
respondent against petitioner and MLHI, the pertinent portions of which employed so as to prevent plaintiff from exercising his right to vote
undertake the demolition and removal of said center, and if feasible,
read: or be voted as director of the condominium corporation; 16.
recover the cost thereof from the city officials concerned.
Defendant [MPMCC]’s ominous silence when confronted with claim
xxxx
WHEREFORE, the assailed Decision of the Court of appeals hereby of payment made by defendant Meridien is tantamount to admission
MODIFIED as follows: 6. Thereafter, plaintiff occupied the said condominium unit no. 1201 that indeed, plaintiff is not really a delinquent member;
and religiously paid all the corresponding monthly
(1) Petitioners are hereby ENJOINED perpetually from operating the 17. Accordingly, as a direct and proximate result of the said acts of
contributions/association dues and other assessments imposed on
drug rehabilitation center or any other such facility on the donated open defendant [MPMCC], plaintiff experienced/suffered from mental
the same. For the years 2000 and 2001, plaintiff served as President
space. anguish, moral shock, and serious anxiety. Plaintiff, being a doctor
and Director of the Medical Plaza Makati Condominium
of medicine and respected in the community further suffered from
(2) Petitioner City of Angeles is ORDERED to undertake and removal of Corporation;
social humiliation and besmirched reputation thereby warranting
said drug rehabilitation center within a period of three (3) months from
7. Nonetheless, on September 19, 2002, plaintiff was the grant of moral damages in the amount of ₱500,000.00 and for
finality of this Decision, and thereafter, to devote public use as a park,
shocked/surprised to receive a letter from the incumbent which defendant [MPMCC] should be held liable;
playground or other recreational use.
Corporate Secretary of the defendant Medical Plaza Makati,
18. By way of example or correction for the public good, and as a
(3) The Amended Deed of Donation dated November 26, 1984 is hereby demanding payment of alleged unpaid association dues and
stern warning to all similarly situated, defendant [MPMCC] should
declared valid and subsisting, except that the stipulations or conditions assessments arising from plaintiff’s condominium unit no. 1201. The
be ordered to pay plaintiff exemplary damages in the amount of
therein concerning the construction of the Sports Center or Complex said letter further stressed that plaintiff is considered a delinquent
₱200,000.00;
are hereby declared void and as if not imposed, and therefore of no member of the defendant Medical Plaza Makati.
force and effect. 19. As a consequence, and so as to protect his rights and interests,
x x x;
plaintiff was constrained to hire the services of counsel, for an
No Costs.
8. As a consequence, plaintiff was not allowed to file his certificate acceptance fee of ₱100,000.00 plus ₱2,500.00 per every court
SO ORDERED. of candidacy as director. Being considered a delinquent, plaintiff hearing attended by counsel;
was also barred from exercising his right to vote in the election of
20. In the event that the claim of defendant [MPMCC] turned out to
new members of the Board of Directors x x x;
be true, however, the herein defendant Meridien should be held
THIRD DIVISION G.R. No. 181416 November 11, 2013
9. x x x Again, prior to the said election date, x x x counsel for the liable instead, by ordering the same to pay the said delinquency of
MEDICAL PLAZA MAKATI CONDOMINIUM defendant [MPMCC] sent a demand letter to plaintiff, anent the said condominium unit 1201 in the amount of ₱145,567.42 as of
CORPORATION, Petitioner, vs. ROBERT H. CULLEN, Respondent. delinquency, explaining that the said unpaid amount is a carry-over November 30, 2002 as well as the above damages, considering that
from the obligation of defendant Meridien. x x x; the non-payment thereof would be the proximate cause of the
DECISION damages suffered by plaintiff;9
10. Verification with the defendant [MPMCC] resulted to the
PERALTA, J.:
issuance of a certification stating that Condominium Unit 1201 has Petitioner and MLHI filed their separate motions to dismiss the
This is a petition for review on certiorari under Rule 45 of the Rules of an outstanding unpaid obligation in the total amount of ₱145,567.42 complaint on the ground of lack of jurisdiction.10MLHI claims that it is
Court assailing the Court of Appeals (CA) Decision1 dated July 10, 2007 the Housing and Land Use Regulatory Board (HLURB) which is vested
REAL ESTATE (Oct. 12) Page 6 of 8
with the exclusive jurisdiction to hear and decide the case. Petitioner,
on the other hand, raises the following specific grounds for the dismissal
of the complaint: (1) estoppel as respondent himself approved the
assessment when he was the president; (2) lack of jurisdiction as the
case involves an intra-corporate controversy; (3) prematurity for failure
of respondent to exhaust all intra-corporate remedies; and (4) the case
is already moot and academic, the obligation having been settled
between petitioner and MLHI.11
On September 9, 2005, the RTC rendered a Decision granting
petitioner’s and MLHI’s motions to dismiss and, consequently,
dismissing respondent’s complaint.
The trial court agreed with MLHI that the action for specific performance
filed by respondent clearly falls within the exclusive jurisdiction of the
HLURB.12 As to petitioner, the court held that the complaint states no
cause of action, considering that respondent’s obligation had already
been settled by MLHI. It, likewise, ruled that the issues raised are intra-
corporate between the corporation and member.13
On appeal, the CA reversed and set aside the trial court’s decision and
remanded the case to the RTC for further proceedings. Contrary to the
RTC conclusion, the CA held that the controversy is an ordinary civil
action for damages which falls within the jurisdiction of regular
courts.14 It explained that the case hinged on petitioner’s refusal to
confirm MLHI’s claim that the subject obligation had already been
settled as early as 1998 causing damage to respondent.15 Petitioner’s
and MLHI’s motions for reconsideration had also been denied.16
Aggrieved, petitioner comes before the Court based on the following
grounds:
I. THE COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE, NOT relations between the parties, and the questions involved pertain to
THERETOFORE DETERMINED BY THE SUPREME COURT, OR HAS their rights and obligations under the Corporation Code and matters
DECIDED IT IN A WAY NOT IN ACCORD WITH LAW OR WITH THE relating to the regulation of the corporation.26
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
DECLARED THE INSTANT CASE AN ORDINARY ACTION FOR
DAMAGES INSTEAD OF AN INTRA-CORPORATE CONTROVERSY
COGNIZABLE BY A SPECIAL COMMERCIAL COURT.
II. THE COURT A QUO HAS DECIDED THE INSTANT CASE IN A WAY the condominium corporation. Clearly, there is an intra-corporate
NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS relationship between the corporation and a stockholder/member.
OF THE SUPREME COURT WHEN IT TOOK COGNIZANCE OF THE
APPEAL WHILE RAISING ONLY PURE QUESTIONS OF LAW.17
The petition is meritorious.
It is a settled rule that jurisdiction over the subject matter is determined
by the allegations in the complaint. It is not affected by the pleas or the
theories set up by the defendant in an answer or a motion to dismiss.
Otherwise, jurisdiction would become dependent almost entirely upon
18
the whims of the defendant. Also illuminating is the Court’s
pronouncement in Go v. Distinction Properties Development and
Construction, Inc.:19
Basic as a hornbook principle is that jurisdiction over the subject matter
of a case is conferred by law and determined by the allegations in the
complaint which comprise a concise statement of the ultimate facts
constituting the plaintiff’s cause of action. The nature of an action, as well
as which court or body has jurisdiction over it, is determined based on
the allegations contained in the complaint of the plaintiff, irrespective of
whether or not the plaintiff is entitled to recover upon all or some of the
claims asserted therein. The averments in the complaint and the
character of the relief sought are the ones to be consulted. Once vested
by the allegations in the complaint, jurisdiction also remains vested
REAL ESTATE (Oct. 12)
irrespective of whether or not the plaintiff is entitled to recover upon all respondent and is thus within the exclusive jurisdiction of the RTC
or some of the claims asserted therein. x x x20 sitting as a special commercial court. More so in this case as respondent
repeatedly questioned his characterization as a delinquent member
Based on the allegations made by respondent in his complaint, does the
and, consequently, petitioner’s decision to bar him from exercising his
controversy involve intra-corporate issues as would fall within the
rights to vote and be voted for. These issues are clearly corporate and
jurisdiction of the RTC sitting as a special commercial court or an
the demand for damages is just incidental. Being corporate in nature,
ordinary action for damages within the jurisdiction of regular courts?
the issues should be threshed out before the RTC sitting as a special
In determining whether a dispute constitutes an intra-corporate commercial court. The issues on damages can still be resolved in the
controversy, the Court uses two tests, namely, the relationship test and same special commercial court just like a regular RTC which is still
the nature of the controversy test.21 competent to tackle civil law issues incidental to intra-corporate
disputes filed before it.28
An intra-corporate controversy is one which pertains to any of the
following relationships: (1) between the corporation, partnership or Moreover, Presidential Decree No. 902-A enumerates the cases over
association and the public; (2) between the corporation, partnership or which the Securities and Exchange Commission (SEC) exercises
association and the State insofar as its franchise, permit or license to exclusive jurisdiction:
operate is concerned; (3) between the corporation, partnership or
xxxx
association and its stockholders, partners, members or officers; and (4)
among the stockholders, partners or associates themselves.22 Thus, b) Controversies arising out of intra-corporate or partnership
under the relationship test, the existence of any of the above intra- relations, between and among stockholders, members or associates;
corporate relations makes the case intra-corporate.23 between any or all of them and the corporation, partnership or
association of which they are stockholders, members, or associates,
Under the nature of the controversy test, "the controversy must not only
respectively; and between such corporation, partnership or
be rooted in the existence of an intra-corporate relationship, but must
association and the State insofar as it concerns their individual
as well pertain to the enforcement of the parties’ correlative rights and
franchise or right to exist as such entity; and
obligations under the Corporation Code and the internal and intra-
24
corporate regulatory rules of the corporation." In other words, c) Controversies in the election or appointment of directors, trustees,
jurisdiction should be determined by considering both the relationship officers, or managers of such corporations, partnerships, or
25
of the parties as well as the nature of the question involved. associations.29
Applying the two tests, we find and so hold that the case involves intra- To be sure, this action partakes of the nature of an intra-corporate
corporate controversy. It obviously arose from the intra-corporate controversy, the jurisdiction over which pertains to the SEC. Pursuant to
Section 5.2 of Republic Act No. 8799, otherwise known as the Securities
Regulation Code, the jurisdiction of the SEC over all cases enumerated
under Section 5 of Presidential Decree No. 902-A has been transferred
to RTCs designated by this Court as Special Commercial
Admittedly, petitioner is a condominium corporation duly organized
Courts.30 While the CA may be correct that the RTC has jurisdiction, the
and existing under Philippine laws, charged with the management of
case should have been filed not with the regular court but with the
the Medical Plaza Makati. Respondent, on the other hand, is the
branch of the RTC designated as a special commercial court.
registered owner of Unit No. 1201 and is thus a stockholder/member of
Considering that the RTC of Makati City, Branch 58 was not designated
as a special commercial court, it was not vested with jurisdiction over
cases previously cognizable by the SEC.31The CA, therefore, gravely
The nature of the action is determined by the body rather than the title erred in remanding the case to the RTC for further proceedings.
of the complaint.1âwphi1 Though denominated as an action for
Indeed, Republic Act (RA) No. 9904, or the Magna Carta for
damages, an examination of the allegations made by respondent in his
Homeowners and Homeowners’ Associations, approved on January 7,
complaint shows that the case principally dwells on the propriety of the
2010 and became effective on July 10, 2010, empowers the HLURB to
assessment made by petitioner against respondent as well as the
hear and decide inter-association and/or intra-association
validity of petitioner’s act in preventing respondent from participating
controversies or conflicts concerning homeowners’ associations.
in the election of the corporation’s Board of Directors. Respondent
However, we cannot apply the same in the present case as it involves a
contested the alleged unpaid dues and assessments demanded by
controversy between a condominium unit owner and a condominium
petitioner.
corporation. While the term association as defined in the law covers
The issue is not novel. The nature of an action involving any dispute as homeowners’ associations of other residential real property which is
to the validity of the assessment of association dues has been settled by broad enough to cover a condominium corporation, it does not seem to
be the legislative intent. A thorough review of the deliberations of the
the Court in Chateau de Baie Condominium Corporation v. Moreno.27 In
bicameral conference committee would show that the lawmakers did
that case, respondents therein filed a complaint for intra-corporate
not intend to extend the coverage of the law to such kind of association.
dispute against the petitioner therein to question how it calculated the
We quote hereunder the pertinent portion of the Bicameral Conference
dues assessed against them, and to ask an accounting of association
Committee’s deliberation, to wit:
dues. Petitioner, however, moved for the dismissal of the case on the
ground of lack of jurisdiction alleging that since the complaint was
THE CHAIRMAN (SEN. ZUBIRI). Let’s go back, Mr. Chair, very quickly
against the owner/developer of a condominium whose condominium
on homeowners.
project was registered with and licensed by the HLURB, the latter has
the exclusive jurisdiction. In sustaining the denial of the motion to THE ACTING CHAIRMAN (REP. ZIALCITA). Ang sa akin lang, I think our
dismiss, the Court held that the dispute as to the validity of the views are similar, Your Honor, Senator Zubiri, the entry of the
assessments is purely an intra-corporate matter between petitioner and condominium units might just complicate the whole matters. So we’d
Page 7 of 8
like to put it on record that we’re very much concerned about the plight MR. JALANDONI. It will become complicated. There will be a lot of 2008 in CA-G.R. CV No. 86614. The Complaint before the Regional Trial
of the Condominium Unit Homeowners’ Association. But this could very conflict of laws between the two laws. Court of Makati City, Branch 58, which is not a special commercial court,
well be addressed on a separate bill that I’m willing to co-sponsor with docketed as Civil Case No. 03-1018 is ordered DISMISSED for lack of
THE ACTING CHAIRMAN (REP. ZIALCITA). Kaya nga eh. At saka, I don’t
the distinguished Senator Zubiri, to address in the Condominium Act of jurisdiction. Let the case be REMANDED to the Executive Judge of the
know. I think the --- mayroon naman silang protection sa ano eh, di ba?
the Philippines, rather than address it here because it might just create Regional Trial Court of Makati City for re-raffle purposes among the
Buyers decree doon sa Condominium Act. I’m sure there are provisions
a red herring into the entire thing and it will just complicate matters, designated special commercial courts.
there eh. Huwag na lang, huwag na lang.
hindi ba?
SO ORDERED.
MR. JALANDONI. Mr. Chairman, I think it would be best if your previous
THE CHAIRMAN (SEN. ZUBIRI). I also agree with you although I
comments that you’d be supporting an amendment.1âwphi1 I think that
sympathize with them---although we sympathize with them and we feel
would be --- Well, that would be the best course of action with all due
that many times their rights have been also violated by abusive
respect.
condominium corporations. However, there are certain things that we
have to reconcile. There are certain issues that we have to reconcile with THE ACTING CHAIRMAN (REP. ZIALCITA). Yeah. Okay. Thank you. So
this version. iyon na lang final proposal naming ‘yung catchall phrase, "With respect
to the..."32
In the Condominium Code, for example, they just raised a very peculiar
situation under the Condominium Code --- Condominium Corporation x x x x
Act. It’s five years the proxy, whereas here, it’s three years. So there
would already be violation or there will be already a problem with their THE CHAIRMAN (SEN. ZUBIRI). xxx And so, what is their final decision
version and our version. Sino ang matutupad doon? Will it be our on the definition of homeowners?
version or their version? THE ACTING CHAIRMAN (REP. ZIALCITA).
So I agree that has to be studied further. And because they have a law We stick to the original, Mr. Chairman. We’ll just open up a whole can
pertaining to the condominium housing units, I personally feel that it of worms and a whole new ball game will come into play. Besides, I am
would complicate matters if we include them. Although I agree that they not authorized, neither are you, by our counterparts to include the
should be looked after and their problems be looked into. condominium owners.
Probably we can ask our staff, Your Honor, to come up already with the THE CHAIRMAN (SEN. ZUBIRI).
bill although we have no more time. Hopefully we can tackle this again
on the 15th Congress. But I agree with the sentiments and the inputs of Basically that is correct. We are not authorized by the Senate nor –
the Honorable Chair of the House panel. because we have discussed this lengthily on the floor, actually, several
months on the floor. And we don’t have the authority as well for other
May we ask our resource persons to also probably give comments? Bicam members to add a provision to include a separate entity that has
Atty. Dayrit. already their legal or their established Republic Act tackling on that
particular issue. But we just like to put on record, we sympathize with
MR. DAYRIT. the plight of our friends in the condominium associations and we will
just guarantee them that we will work on an amendment to the
Yes I agree with you. There are many, I think, practices in their
Condominium Corporation Code. So with that – we skipped, that is
provisions in the Condominium Law that may be conflicting with this
correct, we have to go back to homeowners’ association definition, Your
version of ours.
Honor, because we had skipped it altogether. So just quickly going
For instance, in the case of, let’s say, the condominium, the so-called back to Page 7 because there are amendments to the definition of
common areas and/or maybe so called open spaces that they may have, homeowners. If it is alright with the House Panel, adopt the opening
especially common areas, they are usually owned by the condominium phrase of Subsection 7 of the Senate version as opening phrase of
corporation. Unlike a subdivision where the open spaces and/or the Subsection 10 of the reconciled version.
common areas are not necessarily owned by the association. Because
x x x x33
sometimes --- generally these are donated to the municipality or to the
city. And it is only when the city or municipality gives the approval or To be sure, RA 4726 or the Condominium Act was enacted to specifically
the conformity that this is donated to the homeowners’ association. But govern a condominium. Said law sanctions the creation of the
generally, under PD [Presidential Decree] 957, it’s donated. In the condominium corporation which is especially formed for the purpose of
Condominium Corporation, hindi. Lahat ng mga open spaces and holding title to the common area, in which the holders of separate
common areas like corridors, the function rooms and everything, are interests shall automatically be members or shareholders, to the
owned by the corporation. So that’s one main issue that can be exclusion of others, in proportion to the appurtenant interest of their
conflicting. respective units.34 The rights and obligations of the condominium unit
owners and the condominium corporation are set forth in the above Act.
THE CHAIRMAN (SEN. ZUBIRI). I’ll just ask for a one-minute suspension
so we can talk. Clearly, condominium corporations are not covered by the amendment.
Thus, the intra-corporate dispute between petitioner and respondent is
THE ACTING CHAIRMAN (REP. ZIALCITA). Unless you want to put a
still within the jurisdiction of the RTC sitting as a special commercial
catchall phrase like what we did in the Senior Citizen’s Act. Something
court and not the HLURB. The doctrine laid down by the Court in
like, to the extent --- paano ba iyon? To the extent that it is practicable
Chateau de Baie Condominium Corporation v. Moreno35 which in turn
and applicable, the rights and benefits of the homeowners, are hereby
cited Wack Wack Condominium Corporation, et al v. CA36 is still a good
extended to the --- mayroon kaming ginamit na phrase eh...to the extent
law.
that it be practicable and applicable to the unit homeoweners, is hereby
extended, something like that. It’s a catchall phrase. But then again, it WHEREFORE, we hereby GRANT the petition and REVERSE the Court of
might create a... Appeals Decision dated July 10, 2007 and Resolution dated January 25,
REAL ESTATE (Oct. 12) Page 8 of 8