G.R. No. 160033 – TAGAYTAY REALTY CO., INC., petitioners, vs. ARTURO G. GACUTAN, respondent.
BERSAMIN, J.
Rule Synopsis
Sec. 20 of P.D. No. 957 requires all developers, including the seller to complete their subdivision projects, including the amenities, within one year from the issuance of their licenses. This excuses the buyer from the payment of penalties in case the latter suspends payment during the pendency of the project’s completion.
Facts
Arturo Gacutan (buyer) bought a residential lot from Tagaytay Realty Co., Inc. (seller) via a Contract to Sell. The buyer suspended payment on account of delay in the construction of the amenities within the period provided in said contract. The seller did not reply and instead then sent an account to the buyer for the payment of the balance, with interest and penalty. The buyer refused to pay interest and penalty.
The buyer then filed a complaint to compel the seller to accept the payment, without interest and penalty, and to deliver to him the title of the property.
As a defense, the seller sought to be excused from its obligation on grounds that extraordinary and unforeseeable circumstances had rendered its duty to perform its obligation so onerous under Art. 1267, among others.
The HLURB and OP ruled in favor of the buyer. The CA affirmed. The SC affirmed with modification.
Issues
- Was the seller released from its obligation to construct the amenities in the Foggy Heights Subdivision?
- Was the buyer bound to pay the interest and penalties despite the delay in the construction of amenities?
Ruling and Discussion
- No. The seller was not released from its obligation to construct the amenities in the Foggy Heights Subdivision.
Under Sec. 20 of P.D. No. 957, all developers, including the seller, are mandated to complete their subdivision projects, including the amenities, within one year from the issuance of their licenses. In this case, the seller failed to comply with this legal obligation. Art. 1267 invoked by the buyer is not applicable. Mere inconvenience, unexpected impediments, or increased expenses did not suffice to relieve the debtor from a bad bargain. - Yes, the buyer was bound to pay the interest despite the delay in the construction of amenities. However, he was not bound to pay penalties.
The interest in the installment price was contractually agreed upon by the buyer and the seller. Thus, the buyer is bound to pay the same. This is also the cost to the seller/developer of having to wait for years before full payment of the property, in contrast to a straight-term payment. However, the monthly penalty could not be enforced against the buyer because the seller is deemed to have waived the same for its failure to complete the development of the subdivision within the period stipulated.
Dispositive
Judgment affirmed with modifications.