[ G.R. No.

220042, September 05, 2018 ]

CASA MILAN HOMEOWNERS ASSOCIATION, INC., PETITIONER, VS. THE ROMAN
CATHOLIC ARCHBISHOP OF MANILA AND REGISTER OF DEEDS OF QUEZON CITY,
RESPONDENTS.

DECISION
CARPIO, J.:
The Case

This is a petition for review under Rule 45 of the Rules of Court to reverse the Decision[1] dated
20 January 2015 and the Resolution[2] dated 10 August 2015 of the Court of Appeals in CA-G.R.
CV No. 98325. The Court of Appeals affirmed the Order[3] of the Regional Trial Court of Quezon
City, Branch 100, granting the Motion to Dismiss filed by respondent The Roman Catholic
Archbishop of Manila (RCAM) on the ground of failure to state a cause of action.

The Facts

B.C. Regalado & Co., Inc. (Regalado) is the owner of the lots of Casa Milan Subdivision in North
Fairview, Quezon City. The approved subdivision plan of Casa Milan designated Lot 34, Block
143, consisting of 6,083 square meters, as an open space or park/playground under Transfer
Certificate of Title (TCT) No. RT-78112 in the name of Regalado.

In 1995, RCAM started constructing a church on a portion of Lot 34, Block 143. According to
petitioner, in June 1995, RCAM applied with the Housing and Land Use Regulatory Board
(HLURB) for the segregation of a 4,000-square meter portion of Lot 34, Block 143 to be used as
a parish church in Casa Milan.

The HLURB, through its Executive Brief,[4] stated that the party requesting for the
segregation/conversion of the lot was not RCAM, but New North Fairview Realty and
Development, Inc. (developer). The Executive Brief further stated that the request was
supported by a letter from the residents. The letter requested that the said lot be apportioned for
the construction of a multipurpose center. The request was recommended for approval. The
Executive Brief and request were accompanied by a letter from the residents and not a written
permission from the homeowners association because the petitioner, Casa Milan Homeowners
Association, Inc., was only incorporated in 1999, as shown by the Articles of
Incorporation[5] attached to the complaint. The application for the segregation and the letter from
the residents were sent in 1995.

Notwithstanding such fact and petitioner's omission to state the date of its incorporation,
petitioner alleged that the HLURB's approval was "suspicious, to say the least" because the
request was purportedly without the written consent of the then non-existent homeowners
association or of a majority of the residents of Casa Milan.

On 29 October 2002, during the pendency of the petition for conversion, Regalado executed a
Deed of Donation[6] over the 4,000-square meter portion of Lot 34, Block 143 in favor of RCAM.

On 5 March 2007, the application for the segregation was approved in a Resolution[7] by the City
Council of Quezon City, signed by then Vice-Mayor Herbert Bautista. The Resolution also
authorized the partial alteration and subsequent conversion of the lot into a multipurpose center.
The 4,000-square meter lot is covered by TCT No. N-305323.[8] The remaining 2,083-square
meter portion, issued in favor of Regalado, is covered by TCT No. N-305324.[9]

On 3 December 2009, petitioner filed a complaint[10] against RCAM, Regalado, the developer,

and the Register of Deeds of Quezon City. The complaint had two main allegations: (1) the
Deed of Donation covering a part of the open space is invalid because it was done without
petitioner's written consent; and (2) RCAM was in bad faith when it built a parish church on the
property without color of title. It prayed for the following reliefs:
(1) [T]he [petition] be given due course and a temporary restraining order and/or writ of
 
preliminary injunction issue ex parte:
 
(a) restraining respondent RCAM and all those acting under it from continuing with
the construction of the church on the open space in Casa Milan and prohibiting  
the latter from conducting any activity in its premises;
 
(b) restraining respondent RD Quezon City from disposing and or annotating on the
 
title of the open space;
 
(2) [That] judgment be rendered:  

 
(a) ordering the cancellation of TCT Nos. 305323 and 305324 and restoring the
 
original TCT No. RT-7 8112;
 
(b) ordering respondent RCAM to turn over the peaceful possession of the entire
open space to petitioner and demolish the improvements it introduced therein at  
its own expense;
 
(c) making permanent the temporary restraining order or preliminary injunction
 
prohibiting respondent RCAM from further constructing the church;
 
[11]
(d) ordering respondents to pay the cost[s] of suit.

RCAM filed a Motion to Dismiss,[12] dated 17 December 2009, based on the following grounds:
(1) The filing of the instant complaint violates the rule on forum shopping;

(2) There is another action pending between the petitioner and herein respondent for the same
cause;

(3) The cause of action is barred by prior judgment; and

(4) The complaint states no cause of action against herein respondent.[13]

The Ruling of the Regional Trial Court

In its Order,[14] the Regional Trial Court, Branch 100 of Quezon City, resolved the Motion to
Dismiss in favor of respondents for petitioner's failure to state a cause of action. The dispositive
portion reads:
WHEREFORE, premises considered, the Motion to Dismiss dated 17 December 2009 filed by
defendant The Roman Catholic Archbishop of Manila is granted. Accordingly, the Complaint in
the case at bar is dismissed for lack of cause of action.

SO ORDERED.[15]
The trial court denied petitioner's Motion for Reconsideration[16] in its Order[17] dated 2
September 2011. The dispositive portion reads:
WHEREFORE, finding no persuasive argument to warrant a reversal or modification of this
court's findings in the challenged Order x x x, the petitioner's Motion for Reconsideration dated
25 February 2011 is hereby denied for lack of merit.

SO ORDERED.[18]
The Ruling of the Court of Appeals

In its Decision[19] dated 20 January 2015, the Court of Appeals found no merit in petitioner's
appeal. It held that:
Indeed, nowhere in the Complaint does it appear that the Association ever acquired a legal right
over the subject open space as would obligate defendants to secure its written consent to the
construction of the subject parish church and to the donation by Regalado of the 4,000-square
meter portion to the RCAM. As the trial court correctly ruled, the Association had no cause of
action and failed to state a cause of action in the case, thus compelling the dismissal of its
complaint.

WHEREFORE, the decision appealed from is AFFIRMED in toto.

SO ORDERED.[20]
The subsequent Motion for Reconsideration[21] filed by petitioner was denied by the Court of
Appeals. Hence, this petition for review.

The Issues

(1) Whether the Court of Appeals committed grave reversible error in affirming the dismissal of
the complaint for failure to state a cause of action;

(2) Whether the Court of Appeals committed grave reversible error in ruling that the action is
barred by prior judgment; and

(3) Whether the Court of Appeals committed grave reversible error in ruling that the action is
barred by litis pendentia.

The Ruling of this Court

Complaint states no cause of action.

Under Section 1(g), Rule 16 of the Rules of Court,[22] a motion to dismiss may be made on the
ground that the pleading states no cause of action.

The case of Zuñiga-Santos v. Santos-Gran[23] explains that:

A complaint states a cause of action if it sufficiently avers the existence of the three (3) essential
elements of a cause of action, namely: (a) a right in favor of the plaintiff by whatever means and
under whatever law it arises or is created; (b) an obligation on the part of the named defendant
to respect or not to violate such right; and (c) an act or omission on the part of the named
defendant violative of the right of the plaintiff or constituting a breach of the obligation of
defendant to the plaintiff for which the latter may maintain an action for recovery of damages. If
the allegations of the complaint do not state the concurrence of these elements, the complaint
becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.
In its complaint, petitioner alleged the following causes of action: (1) the Deed of Donation
covering a part of the open space is invalid; and (2) RCAM was in bad faith when it built a parish
church on the property without color of title.

Despite these causes of action, however, petitioner failed to allege legal and factual bases of its
asserted right over the open space.

It is established that the title over the subject land was initially in the name of Regalado.
Subsequently, on 29 October 2002, Regalado donated the subject land to RCAM; thus, a new
title was issued in RCAM's name. Petitioner alleged that the Deed of Donation executed by
Regalado in favor of RCAM is null and void, and did not produce any legal effect because the
subject land, denominated as an "open space" under Presidential Decree No. (P.D.) 1216,[24] is
inalienable. Petitioner cited a whereas clause of P.D. No. 1216 in defining an "open space" as
"beyond the commerce of men."[25] It states:
WHEREAS, such open spaces, roads, alleys and sidewalks in residential subdivision are for
public use and are, therefore, beyond the commerce of men.
We disagree. Petitioner's mere reliance on a whereas clause of P.D. No. 1216 to nullify a
donation is unacceptable. Section 31 of P.D. No. 957,[26] as amended by Section 2 of P.D. No.
1216, is the basis for the definition of "open spaces" in residential subdivisions:
Section 2. Section 31 of Presidential Decree No. 957 is hereby amended to read as follows:
Section 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 the 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:

xxxx

These areas reserved for parks, playgrounds and recreational use shall be non-alienable public
lands, and non-buildable. The plans of the subdivision project shall include tree planting on such
parts of the subdivision as may be designated by the Authority.

Upon their completion as certified to by the Authority, the roads, alleys, sidewalks and
playgrounds shall be donated by the owner or developer to the city or municipality and it shall
be mandatory for the local governments to accept provided, however, that the parks and
playgrounds may be donated to the Homeowners Association of the project with the consent of
the city or municipality concerned. No portion of the parks and playgrounds donated thereafter
shall be converted to any other purpose or purposes.
In the recent case of Republic v. Spouses Llamas,[27] this Court explained the definition of "open
spaces" in accordance with Section 31 of P.D. No. 957, as amended, by differentiating the 1991
case of White Plains Association, Inc. v. Legaspi[28] from the 1998 landmark case of White
Plains Homeowners Association, Inc. v. Court of Appeals.[29]
In the 1991 White Plains case, this Court held that subdivision owners and developers
are compelled to donate, among others, the subdivision's open spaces to the local
government or to the homeowners association, in accordance with Section 31.

However, this Court overturned the 1991 White Plains Decision and held in the subsequent
1998 White Plains Decision that open spaces belong to the subdivision owners and developers
primarily, meaning they have the freedom to retain or dispose of the open space in whatever
manner they desire. The Spouses Llamas case explained it clearly:
The 1998 White Plains Decision unequivocally repudiated the 1991 White Plains Decision's
allusion to a compulsion on subdivision developers to cede subdivision road lots to government,
so much that it characterized such compulsion as an "illegal taking." It did away with any
preference for government's capacity to compel cession, and instead, emphasized the
primacy of subdivision owners' and developers' freedom in retaining or disposing of
spaces developed as roads. In making its characterization of an "illegal taking," this Court
quoted with approval the statement of the Court of Appeals:
Only after a subdivision owner has developed a road may it be donated to the local
government, if it so desires. On the other hand, a subdivision owner may even opt to
retain ownership of private subdivision roads, as in fact is the usual practice of exclusive
residential subdivisions for example those in Makati City.[30] (Emphasis supplied)
This Court went on further:
The last paragraph of Section 31 requires - note the use of the word "shall" - subdivision
developers to donate to the city or municipality with territorial jurisdiction over the subdivision
project all such roads, alleys, sidewalks, and open spaces. It also imposes upon cities and
municipalities the concomitant obligation or compulsion to accept such donations.

xxxx

The last paragraph of Section 31 is oxymoronic. One cannot speak of a donation and a
compulsion in the same breath.

xxxx

Section 31's compulsion to donate (and concomitant compulsion to accept) cannot be

sustained as valid. Not only does it run afoul of basic legal concepts; it also fails to withstand
the more elementary test of logic and common sense. As opposed to this, the position that not
only is more reasonable and logical, but also maintains harmony between our laws, is that
which maintains subdivision owner's or developer's freedom to donate or not to donate.
This is the position of the 1998 White Plains Decision. Moreover, as this 1998 Decision has
emphasized, to force this donation and to preclude any compensation, is to suffer an illegal
taking.[31] (Emphasis supplied)
In this case, petitioner's allegation that the Deed of Donation is invalid must have been based
on the confusing wording of Section 31. However, jurisprudential law is clear. The transfer of
ownership from the subdivision owner or developer to the local government is not automatic, but
requires a positive act from the owner or developer before the city, municipality, or homeowners
association can acquire dominion over the subdivision open spaces.[32] Therefore, the donation
made by Regalado in favor of RCAM is valid and legal because no positive act of donation has
yet been made in favor of the local government or the homeowners association. The title to the
open space is validly registered in the name of RCAM; thus, the disputed lot remains privately-
owned by RCAM. RCAM was not in bad faith when it built a parish church on the open space
because of its valid title over the subject property.
Despite this established fact, however, Regalado and the developer still obtained a letter from
the residents of the subdivision to satisfy the requirement under Section 22 of P.D. No. 957.
Section 22 states:
Section 22. Alteration of Plans. No owner or developer shall change or alter the roads, open
spaces, infrastructures, facilities for public use and/or other form of subdivision development as
contained in the approved subdivision plan and/or represented in its advertisements, without the
permission of the [National Housing] Authority [now HLURB] and the written conformity or
consent of the duly organized homeowners association, or in the absence of the latter, by the
majority of the lot buyers in the subdivision.
Only a letter from the residents was obtained at that time because petitioner Casa Milan
Homeowners Association, Inc. was incorporated only in 1999, four years after the HLURB's
Resolution to accept and approve the residents' petition for conversion of the open space into a
parish church. Thus, petitioner could not have consented to the developer's request in 1995
because the association was still inexistent. The Executive Brief of the HLURB is clear:
xxxx

In support [of] their request, the developer submitted [a] letter from the
resident[s] address[ed] to the Honorable Mayor of Quezon City thru Comm. Ernesto C.
Mendiola petitioning for the use of said lot into a parish church.

Evaluation made on the plans on file with this Office shows that the proposed conversion does
not affect the open space allocation and requirements of the above project[,] particularly the
3.5% requirements for Parks and Playground.

With the above findings, x x x the approval of their request for conversion [is hereby
recommended].[33] (Emphasis supplied)
This Court agrees with the Regional Trial Court and Court of Appeals in holding that "nowhere in
the complaint does it appear that [petitioner] Association ever acquired a legal right over the
subject open space as would obligate defendants to secure its written consent to the
construction of the subject parish church and to the donation by Regalado of the 4,000-square
meter portion to the RCAM."[34] The Court of Appeals did not commit grave reversible error in
affirming the dismissal of the complaint for failure to state a cause of action.

The action is barred by prior judgment.

Petitioner contends that the prior judgment in LRC Case No. 07-61570 approving the Deed of
Donation executed by Regalado in favor of RCAM does not bar the petition to restrain the
construction of the church in the subdivision, and consequently, to cancel TCT Nos. 305323 and
305324 issued in favor of RCAM, and to restore TCT No. RT-78112. Petitioner contends that
not all the elements of res judicata were present; there was no identity of parties and no identity
in the causes of action.

We disagree. The two cases, although involving different parties and different causes of action,
have the same underlying issue, that is, whether or not RCAM validly owns the subject property.

The doctrine of res judicata is embodied in Section 47, Rule 39 of the Rules of Court:
Section 47. Effect of judgments or final orders. - The effect of a judgment or final order rendered
by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may
be as follows:

xxxx
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or
as to any other matter that could have been raised in relation thereto, conclusive between the
parties and their successors in interest by title subsequent to the commencement of the action
or special proceeding, litigating for the same thing and under the same title and in the same
capacity; and

(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon its face
to have been so adjudged, or which was actually and necessarily included therein or necessary
thereto.
The doctrine of res judicata has two aspects. The first aspect is the effect of a judgment as a bar
to the prosecution of a second action upon the same claim, demand, or cause of action. The
second aspect precludes the relitigation of a particular fact or issue in another action between
the same parties or their successors in interest, on a different claim or cause of action.[35] The
second aspect extends to questions "necessarily involved in an issue, and necessarily
adjudicated, or necessarily implied in the final judgment, although no specific finding may have
been made in reference thereto, and although such matters were directly referred to in the
pleadings and were not actually or formally presented. Under this rule, if the record of the former
trial shows that the judgment could not have been rendered without deciding the particular
matter, it will be considered as having settled that matter as to all future actions between the
parties, and if a judgment necessarily presupposes certain premises, they are as conclusive as
the judgment itself x x x."[36]

In the case at bar, the second aspect applies. The determination of RCAM's right over the
subject open space and RCAM's right to construct a parish church on the subject open space
hinges on the validity of the Deed of Donation executed by Regalado to RCAM. Since the issue
of ownership had been resolved in the case for the approval of the Deed of Donation, it cannot
again be litigated in the instant case without virtually impeaching the correctness of the decision
in the former case. Hence, RCAM, as the lawful owner of the subject open space by virtue of
the Deed of Donation executed by Regalado, has a better right to possess and own the lot in
question as against petitioner whose claim of ownership has been rejected with finality in LRC
Case No. 07-61570.

The action is barred by litis pendentia.

Petitioner alleges that the reliefs prayed for in this petition are different from the reliefs prayed
for by RCAM, this time, in another case docketed as S.C.A. No. Q-09-65019. Thus, the action is
not barred by litis pendentia. In its petition for review, petitioner contends that:
RCAM simply prayed that it be allowed to enter and to construct in Casa Milan Subdivision. On
the other hand, petitioner prays for the cancellation of TCT Nos. 305323 and 305324, and
restoring the original TCT No. RT-78112 on the basis of: (a) lack of written consent of petitioner
or the majority of the homeowners of Casa Milan Subdivision, in the alteration of the Subject
Property; and (b) the nullity of the Deed of Donation in favor of RCAM covering an Open Space.
The prayers are distinct.[37]
Litis pendentia, "a pending suit," is interposed as a ground for the dismissal of a civil action
pending in court. For litis pendentia to be invoked, the concurrence of the following requisites is
necessary: (a) identity of parties or at least such as represent the same interest in both actions;
(b) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts;
and (c) the identity in the two cases should be such that the judgment rendered in one would,
regardless of which party is successful, amount to res judicata in the other.[38]
Contrary to petitioner's contention and similar to this Court's ruling above regarding res judicata,
there is identity in the reliefs prayed for and the facts upon which these reliefs were based. A
perusal of both petitions reveals that both parties similarly pray to be recognized as the legal
owner of the subject lot and to be allowed to conduct activities on the lot. In the former case
docketed as S.C.A. No. Q-09-65019, RCAM's prayer reads:
Wherefore, premises considered, it is most respectfully prayed that, after hearing, this
Honorable Court issue a Writ of Mandamus, commanding the respondents:

A. To respect the rights of the petitioner [RCAM] over the property in question;

B. To allow the entry of vehicles delivering construction materials to the site;

C. To allow construction personnel to enter and to proceed with the construction;

xxxx

Pending further proceedings, it is most respectfully prayed that this Honorable Court forthwith
issue a Writ of Preliminary Injunction ordering the respondents, individually and collectively, not
to enforce their Memo dated May 07, 2009 in so far as delivery of construction materials for the
church edifice is concerned and not to interfere with or prevent the continuation of the
construction.

x x x x[39]
In contrast, the reliefs prayed for in the petition subject of the appeal read:
WHEREFORE, it is respectfully prayed that -
1. Upon filing of this Petition, the same be given due course and a temporary restraining
order and/or writ of preliminary injunction issue exparte;

a. Restraining respondent RCAM and all those acting under it from continuing with the
construction of the church on the open space in Casa Milan and prohibiting the latter from
conducting any activity in its premises;

xxxx

2. After due proceedings, judgment be rendered:

a. Ordering the cancellation of TCT Nos. 305323 and 305324, and restoring the original TCT
No. RT-78112;

b. Ordering respondent RCAM to turn over the peaceful possession of the entire open space
to petitioner and demolish the improvements it introduced therein at its own expense;

c. Making permanent the temporary restraining order or preliminary injunction prohibiting

respondent RCAM from further constructing the church;

d. Ordering respondents to pay the cost[s] of suit.

Other reliefs are likewise prayed for.[40]
It is hornbook rule that identity of causes of action does not mean absolute identity; otherwise, a
party could easily escape the operation of res judicata by changing the form of the action or
relief sought. One test in ascertaining whether two suits relate to a single or common cause of
action is whether the same facts or evidence would sustain both actions in that the judgment in
the first case is a bar to the subsequent action.[41]

This Court takes note of the fact that a prior judgment, LRC Case No. 07-61570, had already
approved the Deed of Donation executed by Regalado in favor of RCAM. Thus, the issues in
the pending action, S.C.A. No. Q-09-65019, could easily be resolved in favor of RCAM by
presenting as evidence the decision approving Regalado's Deed of Donation. Subsequently, the
issues in the present petition will only be resolved by using the same evidence, that is, the
decision approving Regalado's Deed of Donation in favor of RCAM. Thus, the judgment in the
first case, S.C.A. No. Q-09-65019, would be a bar to this petition before us.

WHEREFORE, the petition is DENIED and the assailed Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 98325 are AFFIRMED.

SO ORDERED.

Perlas-Bernabe, Caguioa, A. Reyes, Jr., and J. Reyes, Jr.,* JJ., concur.

*
 Designated additional member per Special Order No. 2587 dated 28 August 2018.
[1]
 Rollo, pp. 41-A-48. Penned by Associate Justice Ricardo R. Rosario, with Associate Justices
Remedios A. Salazar-Fernando and Edwin D. Sorongon concurring.
[2]
 Id. at 51.
[3]
 Id. at 176-182.
[4]
 Id. at 106.
[5]
 Id. at 99-101.
[6]
 Id. at 108, 113-115.
[7]
 Id. at 111-112.
[8]
 Id. at 131.
[9]
 Id. at 103.
[10]
 Id. at 84-97. Captioned as a petition.
[11]
 Id. at 95.
[12]
 Id. at 117-124.
[13]
 Id. at 117-118.
[14]
 Id. at 176-182.
[15]
 Id. at 182.
[16]
 Id. at 184-190.
[17]
 Id. at 192-193.
[18]
 Id. at 193.
[19]
 Id. at 41-A-48.
[20]
 Id. at 47.
[21]
 Id. at 55-63.
[22]
 Section 1(g), Rule 16 of the Rules of Court states:

SECTION 1. Grounds. - Within the time for but before filing the answer to the complaint or
pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:
xxxx

(g) That the pleading asserting the claim states no cause of action;

xxxx
[23]
 745 Phil. 171, 180 (2014), citing Balo v. Court of Appeals, 508 Phil. 224, 232 (2005) and
Macaslang v. Spouses Zamora, 664 Phil. 337, 353-354 (2011).
[24]
 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 (1977).
[25]
 Rollo, pp. 15, 90.
[26]
 The Subdivision and Condominium Buyers' Protective Decree (1976).
[27]
 G.R. No. 194190, 25 January 2017, 815 SCRA 531.
[28]
 271 Phil. 806 (1991).
[29]
 358 Phil. 184 (1998).
[30]
 Supra note 27, at 542.
[31]
 Supra note 27, at 543-545.
[32]
 Woodridge School, Inc. v. ARB Construction Co., Inc., 545 Phil. 83, 89 (2007).
[33]
 Rollo, p. 106.
[34]
 Id. at 47.
[35]
 Spouses Barretto v. Court of Appeals, 381 Phil. 580, 589 (2000).
[36]
 Prudential Bank v. Mauricio, 679 Phil. 369, 389 (2012), citing Lopez v. Reyes, 166 Phil. 641,
650 (1977).
[37]
 Rollo, p. 34.
[38]
 Feliciano v. Court of Appeals, 350 Phil. 499, 505-506 (1998).
[39]
 Rollo, p. 32.
[40]
 Id. at 33-34.
[41]
 Yap v. Chua, 687 Phil. 392, 402 (2012).

G.R. No. 194190

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS

AND HIGHWAYS (DPWH), Petitioner
vs.
SPOUSES FRANCISCO R. LLAMAS and CARMELITA C. LLAMAS, Respondents

DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari1 praying that the assailed October 14, 2010
Decision2 of the Fifth Division of the Court of Appeals in CA-G.R. SP No. 104178 be reversed
and set aside, and that in lieu of it, the Orders dated October 8, 20073 and May 19, 20084 of
Branch 257 of the Regional Trial Court of Parañaque City be reinstated.

The Regional Trial Court's October 8, 2007 Order required the Department of Public Works and
Highways to pay respondents Francisco and Carmelita Llamas (the Llamas Spouses)
₱12,000.00 per square meter as compensation for the expropriated 41-square-meter portion of
a lot that they owned.5 The same Order denied the Llamas Spouses' prayer that they be
similarly compensated for two (2) expropriated road lots.6 The Regional Trial Court's May 19,
2008 Order denied the Llamas Spouses' Motion for Reconsideration.7

In its assailed Decision, the Court of Appeals set aside the Regional Trial Court's October 8,
2007 and May 19, 2008 Orders and required the Department of Public Works and Highways to
similarly compensate the Llamas Spouses for the two (2) road lots at ₱12,000.00 per square
meter.8

On April 23, 1990, the Department of Public Works and Highways initiated an action for
expropriation for the widening of Dr. A. Santos Ave. (also known as Sucat Road) in what was
then the Municipality of Parafiaque, Metro Manila.9 This action was brought against 26
defendants, none of whom are respondents in this case. 10

On November 2, 1993, the Commissioners appointed by the Regional Trial Court in the
expropriation case submitted a resolution recommending that just compensation for the
expropriated areas be set to ₱12,000.00 per square meter. 11
On January 27, 1994, the Llamas Spouses filed before the Regional Trial Court a "Most Urgent
and Respectful Motion for Leave to be Allowed Intervention as Defendants-Intervenors-
Oppositors." 12 They claimed that they were excluded from the expropriation case despite
having properties affected by the road widening project. After a hearing on this Motion, the
Regional Trial Court allowed the Llamas Spouses to file their Answer-in-Intervention.13

The Llamas Spouses filed their Answer-in-Intervention on March 21, 1994. 14 In it, they claimed
that a total area of 298 square meters was taken from them during the road widening project:

(1) 102 square meters from a parcel of land identified as Lot 4, Block 3, covered by Transfer
Certificate of Title (TCT) No. 217167;

(2) 84 square meters from a parcel of land identified as Lot 1, covered by TCT No. 179165; and

(3) 112 square meters from a parcel of land identified as Lot 2, also covered byTCTNo.
179165.15

On August 2, 1994, the Llamas Spouses filed a "Most Urgent Motion for the Issuance of [a]n
Order Directing the Immediate Payment of 40% of Zonal Value of Expropriated Land and
Improvements."16 On December 9, 1994, the Department of Public Works and Highways filed its
Comment/Opposition to the Llamas Spouses' August 2, 1994 Motion.17 It noted that, from its
verification with the project engineer, only 41 square meters in the parcel of land covered by
TCT No. 179165 was affected by the road widening project. Thus, it emphasized that the
Llamas Spouses were entitled to just compensation only to the extent of those 41 square
meters. It added that the Llamas Spouses failed to adduce evidence of any improvements on
the affected area. It interposed no objection to the ₱12,000.00 per square meter as valuation of
just compensation. 18

On May 29, 1996, the Regional Trial Court issued the Order19 directing the payment of the value
of the lots of the defendants in the expropriation case. The lots subject of the Llamas Spouses'
intervention were not included in this Order.20

After years of not obtaining a favorable ruling, the Llamas Spouses filed a "Motion for Issuance
of an Order to Pay and/or Writ of Execution dated May 14, 2002."21 In this Motion, the Llamas
Spouses faulted the Department of Public Works and Highways for what was supposedly its
deliberate failure to comply with the Regional Trial Court's previous Orders and even with its
own undertaking to facilitate the payment of just compensation to the Llamas Spouses.22 In
response, the Department of Public Works and Highways filed a Comment dated October 25,
2002.23

On November 28, 2002, the Department of Public Works and Highways and the Llamas
Spouses filed a Joint Manifestation and Motion seeking to suspend the Llamas Spouses'
pending Motions.24 This Joint Motion stated that the Department of Public Works and Highways
and the Llamas Spouses had an understanding that the resolution of the latter's claims required
the submission of: (1) certified true copies of the TCTs covering the lots; and (2) certified true
copies of the tax declarations, tax clearances, and tax receipts over the lots.25 It added that the
Llamas Spouses had undertaken to submit these documents as soon as possible.26

In an August 8, 2005 hearing, the Department of Public Works and Highways manifested that
the non-payment of the Llamas Spouses' claims was due to their continued failure to comply
with their undertaking.27 On the same date, the Llamas Spouses filed a Manifestation seeking
the payment of their claims.28

The Department of Public Works and Highways then filed a Comment/Opposition asserting that,
from its inquiries with the City Assessor's Office and the Parafiaque City Registry of Deeds, the
documents the Llamas Spouses submitted "did not originate from the concerned offices."29

On October 8, 2007, the Regional Trial Court issued the Order30 directing the payment to the
Llamas Spouses of just compensation at ₱12,000.00 per square meter for 41 square meters for
the lot covered by TCT No. 217267. It denied payment for areas covered by TCT No. 179165
and noted that these were subdivision road lots, which the Llamas Spouses "no longer
owned"31 and which "belong[ed] to the community for whom they were made."32 In the Order
dated May 19, 2008, the Regional Trial Court denied the Llamas Spouses' Motion for
Reconsideration.33

The Llamas Spouses then filed before the Court of Appeals a Petition for Certiorari.

In its assailed October 14, 2010 Decision,34 the Court of Appeals reversed and set aside the
assailed Orders of the Regional Trial Court and ordered the Department of Public Works and
Highways to pay the Llamas Spouses P12,000.00 per square meter as just compensation for a
total of 237 square meters across three (3) lots, inclusive of the portions excluded by the
Regional Trial Court.35 The Court of Appeals added that the amount due to the Llamas Spouses
was subject to 12% interest per annum from the time of

the taking. 36

The Court of Appeals reasoned that the disputed area (covered by TCT No. 179165) did not
lose its private character, the easement of right of way over it notwithstanding. 37 Further, it
anchored its ruling on interest liability on Rule 67, Section 10 of the 1997 Rules of Civil
Procedure.38 For resolution is the issue of whether just compensation must be paid to
respondents Francisco and Carmelita Llamas for the subdivision road lots covered by TCT No.
179165.

The Department of Public Works and Highways insists that the road lots are not compensable
since they have "already been withdrawn from the commerce of man."39 It relies chiefly on this
Court's 1991 Decision in White Plains Association, Inc. v. Legaspi,40 which pertained to "the
widening of the Katipunan Road in the White Plains Subdivision in Quezon City."41 More
specifically, it capitalizes on the following statement in the 1991 White Plains Decision that
shows a compulsion for subdivision owners to set aside open spaces for public use, such as
roads, and for which they need not be compensated by government:

Subdivision owners are mandated to set aside such open spaces before their proposed
subdivision plans may be approved by the government authorities, and that such open spaces
shall be devoted exclusively for the use of the general public and the subdivision owner need
not be compensated for the same. A subdivision owner must comply with such requirement
before the subdivision plan is approved and the authority to sell is issued.42
Under this compulsion, the dispositive portion of the 1991 White Plains Decision proceeds to
state:

WHEREFORE, the petition is GRANTED. The questioned orders of respondent judge dated
July 10, 1990 and September 26, 1990 are hereby reversed and set aside. Respondent QCDFC
is hereby directed to execute a deed of donation of the remaining undeveloped portion of Road
Lot 1 consisting of about 18 meters wide in favor of the Quezon City government, otherwise, the
Register of Deeds of Quezon City is hereby directed to cancel the registration of said Road Lot
1 in the name of respondent QCDFC under TCT No. 112637 and to issue a new title covering
said property in the name of the Quezon City government. Costs against respondent QCDFC.

SO ORDERED.43 (Emphasis supplied)

The Department of Public Works and Highways is in grave error.

Petitioner's reliance on the 1991 White Plains Decision is misplaced. The same 1991 Decision
was not the end of litigation relating to the widening of Katipunan Road. The owner and
developer of White Plains Subdivision, Quezon City Development and Financing Corporation
(QCDFC), went on to file motions for reconsideration. The second of these motions was granted
in this Court's July 27, 1994 Resolution. 44 This Resolution expressly discarded the compulsion
underscored by the Department of Public Works and Highways, and the dispositive portion of
the 1991 White Plains Decision was modified accordingly. As this Court recounted in its 1998
Decision in White Plains Homeowners Association, Inc. v. Court of Appeals:45

[T]he dictum in G.R. No. 95522, White Plains Association, Inc. vs. Legaspi[,] that the developer
can be compelled to execute a deed of donation of the undeveloped strip of Road Lot 1 and, in
the event QCDFC refuses to donate the land, that the Register of Deeds of Quezon City may be
ordered to cancel its old title and issue a new one in the name of the city was questioned by the
respondent QCDFC as contrary to law. We agree with QCDFC that the final judgment in G.R.
No. 95522 is not what appears in the published on February 7, 1991 decision in White
Plains Association, Inc. vs. Legaspi. [Rather, it] is the following resolution issued three (3)
years later, on July 27, 1991 [sic], which states, inter alia:

" ... (T)he Court is constrained to grant the Instant Motion for Reconsideration but only insofar
as the motion seeks to delete from the dispositive portion of the decision of 07 February 1991
the order of this Court requiring the execution of the deed of donation in question and directing
the Register of Deeds of Quezon City, in the event that such deed is not executed, to cancel the
title of QCDFC and to issue a new one in the name of the Quezon City government. It may well
be that the public respondents would not be aversed [sic] to such modification of the Court's
decision since they shall in effect have everything to gain and nothing to lose.

WHEREFORE the second motion for reconsideration is hereby partly granted by MODIFYING
the dispositive portion of this Court's decision of 07 February 1991 and to now read as follows:

'WHEREFORE the petition is GRANTED. The questioned orders of respondent judge dated July
10, 1990 and September 25 1990 are hereby reversed and set aside. . . . Costs against
respondent QCDFC.

SO ORDERED. "'46 (Emphasis supplied)

The 1998 White Plains Decision unequivocally repudiated the 1991 White Plains Decision's
allusion to a

compulsion on subdivision developers to cede subdivision road lots to government, so much

that it characterized such compulsion as an "illegal taking."47 It did away with any preference for
government's capacity to compel cession and, instead, emphasized the primacy of subdivision
owners' and developers' freedom in retaining or disposing of spaces developed as roads. In
making its characterization of an "illegal taking," this Court quoted with approval the statement
of the Court of Appeals:

Only after a subdivision owner has developed a road may it be donated to the local government,
if it so desires. On the other hand, a subdivision owner may even opt to retain ownership of
private subdivision roads, as in fact is the usual practice of exclusive residential subdivisions for
example those in Makati City. 48

II

In insisting on a compulsion on subdivision owners and developers to cede open spaces to

government, the Department of Public Works and Highways references Presidential Decree No.
957, as amended by Presidential Decree No. 1216, otherwise known as the Subdivision and
Condominium Buyer's Protective Decree.

The first paragraph of Section 31 of Presidential Decree No. 957 spells out the minimum area
requirement for roads and other open spaces in subdivision projects. Its second paragraph
spells out taxonomic or classification parameters for areas reserved for parks, playgrounds, and
for recreational use. It also requires the planting of trees. The last paragraph of Section 31
requires-note the use of the word "shall"-subdivision developers to donate to the city or
municipality with territorial jurisdiction over the subdivision project all such roads, alleys,
sidewalks, and open spaces. It also imposes upon cities and municipalities the concomitant
obligation or compulsion to accept such donations:

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 lot per gross hectare).

b. 7% of gross area for medium-density or economic housing (21 to 65 family lot per gross
hectare).

c. 3.5 % of gross area 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 of the subdivision project shall include tree planting on such
parts of the subdivision as may be designated by the Authority.
Upon their completion as certified to by the Authority, the roads, alleys, sidewalks and
playgrounds shall be donated by the owner or developer to the city or municipality and it shall
be mandatory for the local governments to accept; provided, however, that the parks and
playgrounds may be donated to the Homeowners Association of the project with the consent of
the city or municipality concerned. No portion of the parks and playgrounds donated thereafter
shall be converted to any other purpose or purposes. (Emphasis supplied)

The last paragraph of Section 31 is oxymoronic. One cannot speak of j a donation and
compulsion in the same breath.

A donation is, by definition, "an act of liberality." Article 725 of the Civil Code provides:

Article 725. Donation is an act of liberality whereby a person disposes gratuitously of a thing or
right in favor of another, who accepts it.

To be considered a donation, an act of conveyance must necessarily proceed freely from the
donor's own, unrestrained volition. A donation cannot be forced: it cannot arise from
compulsion, be borne by a requirement, or otherwise be impelled by a mandate imposed upon
the donor by forces that are external to him or her. Article 726 of the Civil Code reflects this
commonsensical wisdom when it specifically states that conveyances made in view of a
"demandable debt" cannot be considered true or valid donations.49

In jurisprudence, animus donandi (that is, the intent to do an act of liberality) is an indispensable

element of a valid donation, along with the reduction of the donor's patrimony and the
corresponding increase in the donee’s patrimony.50

Section 31 's compulsion to donate (and concomitant compulsion to accept) cannot be

sustained as valid. Not only does it run afoul of basic legal concepts; it also fails to withstand the
more elementary test of logic and common sense. As opposed to this, the position that not only
is more reasonable and logical, but also maintains harmony between our laws, is that which
maintains the subdivision owner's or developer's freedom to donate or not to donate. This is the
position of the 1998 White Plains Decision. Moreover, as this 1998 Decision has emphasized, to
force this donation and to preclude any compensation-is to suffer an illegal taking.

III

The Court of Appeals correctly stated that a "positive act"51 must first be made by the "owner-
developer before the city or municipality can acquire dominion over the subdivision roads."52 As
there is no such thing as an automatic cession to government of subdivision road lots, an actual
transfer must first be effected by the subdivision owner: "subdivision streets belonged to the
owner until donated to the government or until expropriated upon payment of just
compensation."53 Stated otherwise, "the local

government should first acquire them by donation, purchase, or expropriation, if they are to be
utilized as a public road."54

This Court's 2014 Decision in Republic v. Ortigas55 succinctly captures all that we have
previously stated:
Delineated roads and streets, whether part of a subdivision or segregated for public use, remain
private and will remain as such until conveyed to the government by donation or through
expropriation proceedings. An owner may not be forced to donate his or her property even if it
has been delineated as road lots because that would partake of an illegal taking. He or she may
even choose to retain said properties. 56

The Department of Public Works and Highways makes no claim here that the road lots covered
by TCT No. 179165 have actually been donated to the government or that their transfer has
otherwise been consummated by respondents. It only theorizes that they have been
automatically transferred. Neither has expropriation ever been fully effected. Precisely, we are
resolving this expropriation controversy only now.

Respondents have not made any positive act enabling the City Government of Parafiaque to
acquire dominion over the disputed road lots. Therefore, they retain their private character
(albeit all parties acknowledge them to be subject to an easement of right of way). Accordingly,
just compensation must be paid to respondents as the government takes the road lots in the
course of a road widening project.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed October 14, 2010
Decision of the Fifth Division of the Court of Appeals in CA-G.R. SP No. 104178 is AFFIRMED.

SO ORDERED.

THIRD DIVISION

[ G.R. No. 211353, June 10, 2019 ]

WILLIAM G. KWONG MANAGEMENT, INC. AND WILLIAM G. KWONG, PETITIONERS, VS.

DIAMOND HOMEOWNERS & RESIDENTS ASSOCIATION, RESPONDENT.

DECISION

LEONEN, J.:
A homeowners' association may regulate passage into a subdivision for the safety and security
of its residents, even if its roads have already been donated to the local government. It has the
right to set goals for the promotion of safety and security, peace, comfort, and the general
welfare of its residents.[1]

This Court resolves the Petition for Review on Certiorari[2] assailing the Court of Appeals' July 5,
2013 Decision[3] and February 12, 2014 Resolution[4] in CA-G.R. SP No. 115198. The Court of
Appeals set aside the Office of the President's March 24, 2010 Decision[5] and found the "No
Sticker, No ID, No Entry" Policy valid and issued within the authority of the homeowners'
association.

Diamond Subdivision is a residential subdivision in Balibago, Angeles City, Pampanga with

several commercial establishments operating within it. These establishments include beer
houses, karaoke bars, night clubs, and other drinking joints.[6]

Because of these, patrons, customers, and many other people freely come in and out of
Diamond Subdivision. Such unrestricted access to the subdivision, however, also exposed its
residents to incidents of robbery, akyat-bahay, prostitution, rape, loud music, and noise that
would last until the wee hours of the morning.[7]

Diamond Homeowners & Resident Association (Diamond Homeowners), the legitimate

homeowners' association of Diamond Subdivision, sought to address the residents' peace and
security issues by raising their concerns to the City Council of Angeles City (Angeles City
Council).[8]

On February 24, 2003, the Angeles City Council issued Ordinance No. 132,[9] series of 2003,
reclassifying Diamond Subdivision as exclusively residential and prohibited the further
establishment and operation of any business except for those already existing.[10] The Ordinance
states:

Whereas, legitimate homeowners of the Diamond Subdivision have presented to the City
Council their serious concern on what is presently occurring in their subdivision;

Whereas, with the present classification of Diamond Subdivision constant problems of peace
and order have confronted the homeowners and residents affecting their lives, property and
security;

Whereas, the introduction of business establishments in an uncontrolled manner have likewise

proliferated due to the current classification of the subdivision;

Whereas, due to the R-2 classification of Diamond Subdivision the value of property have not
increase[d], despite its strategic location;

Whereas, there is an urgent need to address all the concern[s] of the homeowners and
residents of Diamond Subdivision;

Whereas, the appropriate and immediate solution to the present concerns is the reclassification
of Diamond Subdivision from Residential 2 to Residential 1 Classification.

Now therefore foregoing considered, the City Council of Angeles City in session assembled
hereby resolved to ordain:

Section 1. An Ordinance reclassifying Diamond Subdivision located in Balibago, Angeles City

from Residential 2 to Residential 1 Classification status, be as it is hereby, approved.
Section 2. Arayat and S.L. Orosa Streets and the service road of Diamond Subdivision are
exempted from this new classification.

Section 3. That existing and legitimate business establishments operating within the territorial
boundaries of the said Diamond Subdivision as of approval of the ordinance shall remain and
continue to operate and no commercial establishment of any kind shall be allowed thereafter.

Section 4. Unless by hereditary succession no business establishment rights shall be

transferred to any individual or entity after approval of this ordinance.

Section 5. This Ordinance shall take effect upon its approval.[11]

However, this Ordinance was not complied with as more beer gardens and nightclubs were still
put up. The peace, order, and security situation in the subdivision did not improve.[12]

Among those affected was William G. Kwong (Kwong). A resident of Diamond Subdivision for
more than 38 years, he runs three (3) motels[13] in the subdivision under his company, William G.
Kwong Management, Inc.[14]

Seeking to address his security concerns, Kwong proposed to his neighbors that guard posts
with telephone lines be set up at the entry and exit points on the street where he resides to
screen all incoming and outgoing visitors.[15] In an August 3, 2006 Letter, Kwong wrote:

TO THE RESIDENTS OF EMMANUEL STREET

Diamond Subdivision, Balibago
Angeles City

Dear MR/MS _______,

In direct response to a sharp increase in criminal activities in our subdivision, a number of which
have remained unreported, I would like to ask your approval and cooperation on a number of
proposals, which I outlined below, for our own protection and safety:

1. To put up security gates on both entry/exit points of Emmanuel Street.

2. To permanently seal off the proposed gate at Emmanuel Street corner V.Y. Orosa Street.

3. To engage the services of two security guards to man the gate 24 hours a day at Emmanuel
Street comer Marlim Avenue.

4. To install a telephone line at the guard's booth to screen all incoming and outgoing visitors
and outsiders. The guard will have to call the residents for approval before he lets anyone in.
With regard to the costs of this project, I am willing to shoulder the cost of the two security gates
and one-half (1/2) of the monthly security and telephone fees, which amounts to approximately
Nine Thousand Pesos (PhP9,000.00). In support of this project, I would like to request the
residents to shoulder the remaining one-half (1/2) of the monthly costs of security and telephone
fees, which also amounts to approximately Nine Thousand Pesos (PhP9,000.0[0]) for 15
household or Six Hundred Pesos (PhP600.00) a month per household.

It is with the sense of cooperation and solidarity that I ask you to consider this project for the
security and safety of our family.

Thank you for most (sic) kind attention and understanding.[16]

However, the other residents of Diamond Subdivision also wanted their security concerns
addressed. Thus, to safeguard the whole subdivision, Diamond Homeowners proposed the "No
Sticker, No ID, No Entry" Policy (the Policy).[17]

Under the Policy, visitors on vehicles who sought to enter the premises must leave with the
subdivision guards their identification cards, which they may reclaim upon leaving the
subdivision. Visitors on foot were not required to surrender theirs. Meanwhile, residents with
vehicles may obtain stickers to identify themselves so that they did not need to surrender any
identification card.[18]

After consultations and meetings, the Policy was approved in December 2006. Diamond
Homeowners later issued a Memorandum to inform residents that the Policy would be
implemented by March 15, 2007.[19]

Kwong, however, contested the Policy.

When Diamond Homeowners did not heed his objection, Kwong filed before the Housing and
Land Use Regulatory Board Regional Office a Complaint for the issuance of a cease and desist
order with application for a temporary restraining order. He argued that the Policy was invalid
because the subdivision roads have been donated to the City of Angeles in 1974 and were,
thus, public roads that must be open for public use. Likewise, he contended that the screening
of visitors would be cumbersome for his customers, affecting his businesses.[20]

Ruling in Kwong's favor, the Housing and Land Use Regulatory Board Regional Office issued a
Cease and Desist Order and a Temporary Restraining Order. The records were later forwarded
to the Housing and Land Use Regulatory Board Arbiter for final disposition.[21]

In his August 10, 2007 Decision,[22] the Housing and Land Use Regulatory Board Arbiter lifted
the Cease and Desist Order and dismissed Kwong's Complaint. He ruled that the Policy's
alleged damage to Kwong's business was "imaginary, unsubstantiated[,] and hypothetical[.]"[23]

The Arbiter further held that the protection and security of Diamond Subdivision's residents were
the primary and utmost concern, and must be prioritized over the convenience of motel patrons.
[24]
 He ruled that the Policy's objective to protect the community at large was far greater than
Kwong's business concerns.[25]

Upholding the Policy's validity, the Arbiter found that it neither prohibited nor impaired the use of
the roads. Neither did it change the classification of the roads nor usurp the government's
authority. Moreover, the roads were still for public use, and the public was still allowed to pass
as long as they presented identification cards. The Arbiter noted that there was no evidence
showing that persons were being refused access or asked to pay for its use.[26]

On appeal before the Board of Commissioners of the Housing and Land Use Regulatory Board,
the Arbiter's ruling was reversed. In its September 12, 2008 Decision,[27] the Board of
Commissioners found merit in Kwong's appeal and declared the Policy void for being
"unjustifiable and without legal basis."[28]

In subjecting the subdivision roads to the Policy, the Board of Commissioners found that they
were turned into private roads-inaccessible, not open to the public, and under the control of
Diamond Homeowners. It also ruled that Kwong and William G. Kwong Management, Inc. have
already acquired a vested right to unrestricted passage through the subdivision roads since
1974 because they owned the subdivision lots and because the public use of the roads is
guaranteed by law. It found that to limit or impose pecuniary conditions for their enjoyment over
the roads violates the roads' public character.[29]

The Board of Commissioners also ruled that the Policy must be justified by an issue so serious
and overwhelming that it is prioritized over the lot owners' rights. Diamond Homeowners, it
fmmd, failed to present evidence of peace and security issues within the subdivision.[30]

The Office of the President, in its March 24, 2010 Decision,[31] affirmed the Board of
Commissioners' Decision in toto. It noted that the factual findings of the Housing and Land Use
Regulatory Board, as the administrative agency with the technical expertise on the matter, were
entitled to great respect.[32]

Hence, Diamond Homeowners elevated the case to the Court of Appeals via a Petition for
Review.[33]

In its July 5, 2013 Decision,[34] the Court of Appeals granted Diamond Homeowners' Petition and
set aside the Office of the President's Decision.[35] It found that Diamond Homeowners was
authorized in enacting the Policy.[36]

The Court of Appeals ruled that while the local government acquires ownership rights, these
rights should be harmonized with the interests of homeowners who invested life savings in
exchange for special amenities, comfort, and tighter security, which non-subdivisions did not
offer.[37]

The Court of Appeals found that the State recognized this interest in Presidential Decree No.
957, as amended by Presidential Decree No. 1216, and recently in Republic Act No. 9904, or
the Magna Carta for Homeowners and Homeowners' Associations.[38]

The Court of Appeals noted that Presidential Decree No. 957, as amended by Presidential
Decree No. 1216, required the donation of subdivision roads to the local government. While the
issuance was silent on regulating access to subdivision roads, it found that the requirement was
imposed to benefit homeowners, amid subdivision developers who tended to fail in maintaining
the upkeep of subdivision roads, alleys, and sidewalks.[39] It cited Albon. v. Fernando,[40] which
explained that subdivision owners or developers were relieved of maintaining roads and open
spaces once they have been donated to the local government.[41]

Likewise, the Court of Appeals noted the Magna Carta for Homeowners and Homeowners'
Associations, under which homeowners were given the: right to organize to protect and promote
their mutual benefits and the power to create rules necessary to regulate and operate the
subdivision facilities.[42] Section 10(d) provided homeowners' associations the right to regulate
access to and passage through the subdivision roads to preserve privacy, tranquility, internal
security, safety, and traffic order.[43]

The Court of Appeals further noted that the law did not distinguish between roads donated to
the local government and those retained by the subdivision owners or developers. This showed
that while the local government had ownership of subdivision roads, homeowners' associations
maintained their enjoyment, possession, and management.[44]

Likewise, the Court of Appeals held that the Policy was reasonably exercised.[45] It ruled that
Ordinance No. 132 was sufficient to show that Diamond Subdivision was encountering peace,
order, and security problems, as it explicitly stated that the subdivision was confronted with such
issues affecting the residents and homeowners. As a public document, it is prima facie evidence
of facts stated in it.[46] The Court of Appeals further found that the City of Angeles would not
have approved Ordinance No. 132 had it not been substantiated by these facts.[47]

Moreover, the Court of Appeals held the Policy reasonable because its purpose was to secure
and ensure the peace, safety, and security of homeowners and residents. It found that not only
was the Policy supported by 314 Diamond Homeowners members, but that only Kwong
opposed it, and he himself recognized the security concerns when he had proposed to set up
gates at the entry and exit points on the street where he resides.[48]

The Court of Appeals further found that even if Kwong's proprietary rights may be affected, it is
still his duty as a Diamond Homeowners member to support and participate in the association's
projects. Likewise, it held that his personal interests may be limited for the promotion of the
association's goals for the community at large.[49]

The dispositive portion of the Decision read:

WHEREFORE, premises considered, the instant petition is GRANTED. The Decision of the
Office of the President dated March 24, 2010 and its Order dated June 10, 2010 are
hereby SET ASIDE. Accordingly, the complaint for the issuance of a cease and desist order
plus damages with application for temporary restraining order filed before the House (sic) and
Land Use Regulatory Board Region III is hereby DISMISSED.

SO ORDERED.[50] (Emphasis in the original)

The Court of Appeals denied Kwong's Motion for Reconsideration in its February 12, 2014
Resolution.[51]

Hence, Kwong and William G. Kwong Management, Inc. filed this Petition.[52]
Diamond Homeowners filed a Comment[53] and, in turn, petitioners filed their Reply.[54]

The parties later submitted their respective Memoranda.[55]

Petitioners insist that the Policy is invalid.

They assert that the subdivision roads are public roads for public use, and outside the
commerce of man, having been donated to the Angeles City government since 1974.[56] They
maintain that access to and use of Diamond Subdivision roads should be open to the general
public, not limited to privileged individuals.[57] They point out that these roads cannot be
alienated, leased, be the subject of contracts, be acquired by prescription, be subjected to
attachment and execution, be burdened by any voluntary easement, or be under the control of
private persons or entities, including homeowners' associations.[58]

Petitioners further argue that the Policy is an unauthorized restriction on the use of public roads
as it unduly converts them to private roads, hinders their accessibility from the public, and
subjects them under the exclusive control of Diamond Homeowners.[59]

Petitioners insist that it is the City of Angeles that has the power to control and regulate the use
of roads.[60] As such, they argue that Diamond Homeowners should have had the city
government address its concerns.[61]

Petitioners contend that the Local Government Code has conferred local government units with
the authority to regulate the use of public roads and ensure protection and promotion of public
welfare,[62] well before the Magna Carta for Homeowners and Homeowners' Associations was
enacted.[63]

Petitioners claim that the local governments' power to regulate roads cannot be exercised by a
private entity. To do so would be a usurpation of the local government's authority, and an illegal
abdication of power on the part of the latter. Thus, they posit that, to their and the public's
prejudice, the Policy disregards the primary right, power, and authority of the City of Angeles to
regulate the use of the public roads.[64]

Petitioners further insist that nothing in Presidential Decree Nos. 957 and 1216 or in Albon,
which the Court of Appeals relied on, gives homeowners' associations the authority to regulate
the use of subdivision roads that have already been donated to the local government.[65]

Petitioners also contend that since the Policy was issued before the Magna Carta for
Homeowners and Homeowners' Associations, it should not apply retroactively.[66] In any case,
they assert that the law did not give homeowners' associations absolute and unbridled power to
regulate the use of subdivision roads. They cite Section 10(d), which lists the requisites that limit
a homeowners' association's rights and powers,[67] showing that its power is merely delegated
and conditional. A homeowners' association cannot arrogate unto itself the power to issue the
Policy or limit or prevent the free use of public roads without complying with the law's requisites,
as it would be ultra vires.[68]
Petitioners point out that because respondent failed to comply with the requisites under Section
10(d),[69] it violated the law.[70] They claim that the required public consultations must include the
general public who use the public road, and should not be limited to the subdivision residents or
the homeowners' association members. They argue that it should be done the same way public
hearings are conducted by the Sangguniang Panlungsod before the enactment of an ordinance
or resolution.[71]

Petitioners further allege that no authority from or memorandum of agreement with the City of
Angeles was obtained. They maintain that Ordinance No. 132 cannot be treated as the required
memorandum of agreement because it made no mention of the Policy. They argue that a
separate ordinance is necessary to comply with the requirements.[72]

Petitioners further allege that while Ordinance No. 132 reclassified Diamond Subdivision as
exclusively residential, it still expressly exempted Arayat and S.L. Orosa Streets and the service
road from the classification. The ordinance, they point out, also recognized that the existing
businesses have acquired a vested right to operate within the subdivision as it allowed them to
continue their operations.[73]

Petitioners also cite Sections 2 and 18 of the Magna Carta for Homeowners and Homeowners'
Associations, which provide that homeowners' associations are encouraged to actively
cooperate with the local government unit to pursue common goals and provide vital and basic
services. They claim that to perform this mandate, the homeowners' association should not
disregard the law that gives them the power to regulate roads.[74]

Petitioners contend that if the provisions of the Local Government Code and the Magna Carta
for Homeowners and Homeowners' Associations were to be harmonized, it is the local
government unit that has the primary right and power to regulate the use of the public roads.
Homeowners' associations only have limited, delegated power, which may only be exercised
upon compliance with the conditions in the law.[75]

Moreover, petitioners deny that there are security concerns within the subdivision. They claim
that the Policy was enacted based on a speculative, conjectural, and negative exaggeration of
the actual situation, as there is no single evidence of an actual crime committed.[76] Likewise,
they submit that Ordinance No. 132 cannot be considered as competent evidence of the alleged
criminality in the subdivision.[77]

Finally, petitioners argue that the Housing and Land Use Regulatory Board has the technical
expertise and special competence on matters involving the business of developing subdivisions
and condominiums. Thus, its factual findings should be respected.[78]

On the other hand, respondent insists that the Policy is valid.

In its Memorandum, respondent asserts it has the right and authority to issue the Policy under
Section 10(d) of the Magna Carta for Homeowners and Homeowners' Associations. It insists
that it issued the Policy to preserve "privacy, tranqui[l]ity, internal security[,] safety[,] and traffic
order."[79]
Respondent further cites Section 30 of Presidential Decree No. 957, which mandates
subdivision associations to promote and protect the mutual interests of homeowners, and
Section 5 of the Rules on Registration and Supervision of Homeowners Association, which
empowers homeowners' associations to adopt rules and regulations, and to exercise other
powers necessary to govern and operate the association. It argues that this right and authority
applies even if the subdivision roads have been donated to the local government.[80]

Respondent points out that it issued the Policy to only regulate the use of roads and streets
inside Diamond Subdivision. It neither recategorized them as private property nor exercised acts
of private ownership over them. It emphasizes that the roads are still public roads, open for
public use.[81]

Respondent claims that subdivision owners were required to donate their roads to the local
government primarily to protect and benefit the residents themselves, as some developers
would lose interest in maintaining the subdivision's upkeep.[82] They claim that no law puts the
exclusive authority to control, dispose, and enjoy the roads to local government units, to the
exclusion of the homeowners, especially since the donation was intended for the latter's benefit.
Moreover, no law denies associations their right to regulate open spaces and roads within their
subdivisions.[83]

Respondent argues that the Court of Appeals correctly ruled that while the local government
units own the lots, their enjoyment, possession, and management are retained by the
homeowners and their association.[84]

Respondent further asserts that there was a valid reason for the Policy's adoption.[85] It was not
a whimsical exercise of authority to exclude the public from using the roads, but an effort to
attain peace and order within the subdivision.[86]

Respondent emphasizes that the Policy was applied because the public's uncontrolled and
unrestricted passage into the subdivision has made crimes rampant within it. It asserts that the
situation has caused its residents fear, discomfort, and disquiet.[87]

Respondent argues that while the Angeles City Council recognized issues of peace and order in
Ordinance No. 132,[88] its intervention was not sufficient to abate the recurring crimes.[89]

Respondent narrates that after the residents of the subdivision clamored for action, it studied
and sought advice from other subdivisions in Angeles City that implemented the same Policy, as
they had minimal security problems within their subdivision. Respondent alleges that when the
Policy was approved by 314 legitimate residents[90] and implemented, the crimes decreased as it
was able to deter lawless elements.[91] Thus, the Policy has improved the peace and order of the
subdivision.[92]

Respondent points out that only petitioner Kwong questioned the policy, even if he recognized
the crime and disorder issue himself. It points out that prior to the Policy, he was willing to
shoulder the cost of putting up security gates on both the entry and exit points of the street
where he resides to prohibit by-passers.[93] He even sought to block those who do not live on his
street, whether or not the person was a Diamond Subdivision resident.[94] It is, therefore,
contradictory for him to oppose the more reasonable solution of implementing the Policy in the
entire subdivision.[95]

Respondent further argues that under the Magna Carta for Homeowners and Homeowners'
Associations, subdivision residents are duty bound to support and participate in the
association's projects and activities, especially if the project is supported by 314 members, with
petitioner Kwong as the only opposition.[96]

Respondent further maintains that every person's right to life, property, and security is
constitutionally protected. The Policy, thus, is a reasonable means to ensure that these rights
are guarded, especially since the local police were unable to stop the threats to it.[97]

Respondent further posits that petitioner Kwong's ownership and personal or business interests
may be limited for the interests of the community at large. Such interests cannot defeat the
association's right to regulate and administer the use of the roads inside the subdivision, in
accordance with existing laws and regulations, and for the welfare of the homeowners and
residents of Diamond Subdivision.[98]

Respondent asserts that entry to the subdivision was not confined to privileged individuals, and
that it exercised no discrimination in the Policy's implementation.[99] The regulations, it alleges,
were not so rigid as to make it difficult for the riding public to comply with.[100] It further points out
that the roads within Diamond Subdivision are not the main entry and exit points to the highway
or main roads of Angeles City.[101]

Respondent, thus, claims that it is actually working hand in hand with the City of Angeles in
protecting the lives, property, and security of its residents from lawless elements.[102]

Lastly, respondent denies that the Court of Appeals disregarded the special competence of the
lower administrative bodies. It points out that the Housing and Land Use Regulatory Board
Arbiter even ruled in its favor and found the Policy to be justified.[103]

This Court resolves the following issues:

First, whether or not the factual findings of the Housing and Land Use Regulatory Board are
entitled to respect;

Second, whether or not the security concerns within Diamond Subdivision were established;
and

Finally, whether or not respondent Diamond Homeowners & Residents Association was
authorized in issuing the "No Sticker, No ID, No Entry" Policy despite the roads having been
donated to the local government.

This Court denies the Petition.

 I

Petitioners argue that the factual findings of the Housing and Land Use Regulatory Board
should be respected as it is the agency with the technical know-how on matters involving the
development of subdivisions.[104] Respondent, however, denies that the agency's special
competence was disregarded, pointing out that even the Housing and Land Use Regulatory
Board Regional Office found that the Policy was justified.[105]

Petitioners are correct that the factual findings of administrative agencies with special
competence should be respected if supported by substantial evidence.[106] However, this Court
finds that the Housing and Land Use Regulatory Board's findings were not disregarded.

To begin with, the proper procedure was followed. The matter was brought before the Housing
and Land Use Regulatory Board, which exercised jurisdiction and ruled on the merits of the
case. The appellate process then took place from the Housing and Land Use Regulatory Board
Arbiter to the Board of Commissioners, to the Office of the President, to the Court of Appeals,
and now, to this Court.

However, because the factual findings of the Housing and Land Use Regulatory Board Arbiter
and the Board of Commissioners are conflicting, they cannot be deemed conclusive as to
preclude any examination on appeal.

On one hand, the Arbiter found that the Policy did not prohibit or impair the use of the roads.
[107]
 He noted that there was no evidence showing that persons were being refused access or
asked to pay for its use.[108] He also found no evidence of any damage to petitioners' business.
He lent credence to respondent's allegation that there was a need for the protection and
security of its residents, which must be prioritized over the convenience of motel patrons.
[109]
 These findings were affirmed by the Court of Appeals.

On the other hand, the Board of Commissioners and the Office of the President ruled that there
was no evidence of peace and security issues within Diamond Subdivision. It held that
subjecting the subdivision roads to the Policy converts them to private roads, which are
inaccessible, not open to the public, and under respondent's control.[110]

Since the factual findings are conflicting, they cannot be deemed conclusive as to preclude any
examination on appeal and, therefore, cannot bind this Court. As such, this Court may
determine what is more consistent with the evidence on record. While only questions of law may
be raised in Rule 45 petitions, this rule is not without exceptions. In Spouses Miano v. Manila
Electric Company:[111]

The Rules of Court states that a review of appeals filed before this Court is "not a matter of
right, but of sound judicial discretion." The Rules of Court further requires that only questions of
law should be raised in petitions filed under Rule 45 since factual questions are not the proper
subject of an appeal by certiorari. It is not this Court's function to once again analyze or weigh
evidence that has already been considered in the lower courts.
....

However, the general rule for petitions filed under Rule 45 admits exceptions. Medina v. Mayor
Asistio, Jr. lists down the recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a
grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee:, (7) The findings of the Court of Appeals are contrary to those of the trial
court; (8) When the findings of fact are conclusions without citation of specific evidence on
which they are based; (9) When the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondents; and (10) The finding of fact of the
Court of Appeals is premised on the supposed absence of evidence and is contradicted by the
evidence on record.
These exceptions similarly apply in petitions for review filed before this Court involving civil,
labor, tax, or criminal cases.[112] (Emphasis supplied, citations omitted)
Since the findings of the lower tribunals are cont1icting as to whether there were security
concerns within Diamond Subdivision that would warrant the issuance of the Policy, this Court
may exercise its discretion to resolve this factual issue.

II

The case records reveal that Diamond Subdivision was experiencing security concerns.

In Ordinance No. 132, the Angeles City Council acknowledged that Diamond Subdivision had
been having security problems that seriously affected the homeowners and residents. The
whereas clauses state:

Whereas, legitimate homeowners of the Diamond Subdivision have presented to the City
Council their serious concern on what is presently occurring in their subdivision;

Whereas, with the present classification of Diamond Subdivision constant problems of peace

and order have confronted the homeowners and residents affecting their lives, property and
security;

Whereas, the introduction of business establishments in an uncontrolled manner have likewise

proliferated due to the current classification of the subdivision;

Whereas, due to the R-2 classification of Diamond Subdivision the value of property have not
increase[d], despite its strategic location;
Whereas, there is an urgent need to address all the concern[s] of the homeowners and
residents of Diamond Subdivision[.][113] (Emphasis supplied)
Ordinance No. 132 explicitly states that "with the present classification of Diamond
Subdivision[,] constant problems of peace and order have confronted the homeowners and
residents affecting their lives, property[,] and security."[114]

Ordinan4e No. 132 is a public document. Under Rule 132, Section 19(a) of the Rules of Court,
written official acts of the sovereign authority, official bodies and tribunals, and public officers of
the Philippines are public documents. The provision states:

SECTION 19. Classes of documents. - For the purpose of their presentation in evidence,

documents are either public or private.

Public documents are:

(a) The written official acts, or records of the official acts of the sovereign authority, official
bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country;

(b) Documents acknowledged before a notary public except last wills and testaments; and

(c) Public records, kept in the Philippines, of private documents required by law to be entered
therein.

All other writings are private.

Public documents are prima facie evidence of the facts stated m them.[115] Rule 132, Section 23
of the Rules of Court provides:

SECTION 23. Public documents as evidence. - Documents consisting of entries in public

records made in the performance of a duty by a public officer are prima facie evidence of the
facts therein stated. All other public documents are evidence, even against a third person, of the
fact which gave rise to their execution and of the date of the latter.
Thus, there is prima facie evidence of the security and safety issues within Diamond
Subdivision.

Besides, these security concerns were affirmed by petitioner Kwong himself. In his August 3,
2006 Letter, he acknowledged that there was a "sharp increase in criminal activities" in
Diamond Subdivision, "a number of which remain[ed] unreported."[116] He also proposed to
shoulder the costs of putting up security gates on both entry and exit points of the street where
he resides, and the hiring of security guards to screen incoming and outgoing visitors.[117] These
constitute admissions, or declarations "as to a relevant fact that may be given in evidence
against him."[118]

Petitioner Kwong presented no evidence to counter these documents. Thus, this Court affirms
that Diamond Subdivision was experiencing security concerns.

III

Diamond Subdivision was, likewise, authorized m enacting the Policy.

There is no question that the subdivision roads have been donated to the City of Angeles.
[119]
 Therefore, they are public property, for public use.

According to the Deed of Donation,[120] the donation was done in compliance with Resolution No.
162, series of 1974, of the Municipal Board of Angeles City.[121]

This donation is consistent with Section 31 of Presidential Decree No. 957, or the Subdivision
and Condominium Buyers' Protection Decree. The provision states:

SECTION 31. Donation of Roads and Open Spaces to Local Government. -The registered
owner or developer of the subdivision or condominium project, upon completion of the
development of said project may, at his option, convey by way of donation the roads and open
spaces found within the project to the city or municipality wherein the project is located. Upon
acceptance of the donation by the city or municipality concerned, no portion of the area donated
shall thereafter be converted to any other purpose or purposes unless after hearing, the
proposed conversion is approved by the Authority.
On October 14, 1977, Presidential Decree No. 957 was amended by Presidential Decree No.
1216, which made the donation to the local government unit mandatory:

SECTION 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. . . .

....

Upon their completion as certified to by the Authority, the roads, alleys, sidewalks and
playgrounds shall be donated by the owner or developer to the city or municipality and it shall
be mandatory for the local governments to accept; provided, however, that the parks and
playgrounds may be donated to the Homeowners Association of the project with the consent of
the city or municipality concerned. No portion of the parks and playgrounds donated thereafter
shall be converted to any other purpose or purposes. (Emphasis supplied)
The whereas clauses of Presidential Decree No. 1216 explicitly state that roads, alleys, and
sidewalks in subdivisions are for public use, and are beyond the commerce of men:

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 subdivision are for
public use and are, therefore, beyond the commerce of men[.] (Emphasis supplied)
Moreover, both parties admit that the subdivision roads are public. Thus, there is no issue on
the roads' ownership: it belongs to the Angeles City government.

However, both Presidential Decree Nos. 957 and 1216 are silent on the right of homeowners'
associations to issue regulations on using the roads to ensure the residents' safety and security.

This silence was addressed in 2010 when Republic Act No. 9904, or the Magna Carta for
Homeowners and Homeowners' Associations, was enacted. Section 10(d) states:

SECTION 10. Rights and Powers of the Association. - An association shall have the following
rights and shall exercise the following powers:

. . . . 
 
Regulate access to, or passage through the subdivision/village roads for purposes of
preserving privacy, tranquility, internal security, safety and traffic order: Provided, That: (1)
(d) public consultations are held; (2) existing laws and regulations are met; (3) the authority of
the concerned government agencies or units are obtained; and (4) the appropriate and
necessary memoranda of agreement are executed among the concerned parties[.]
Section 10(d) gives homeowners' associations the right to "[r]egulate access to, or passage
through the subdivision/village roads for purposes of preserving privacy, tranquility, internal
security, safety[,] and traffic order" as long as they complied with the requisites. The law does
not distinguish whether the roads have been donated to the local government or not.[122]

Petitioners argue that the Magna Carta for Homeowners and Homeowners' Associations does
not apply because it was not yet in effect when the Policy was issued. Assuming that it applies,
they assert that respondent failed to comply with the stated requisites.[123]

Petitioners are correct. The Policy was approved in 2006, way before the law was enacted in
2010. Diamond Homeowners, then, could not have yet complied with the conditions provided. It
would, thus, be unjustified if the Policy were to be invalidated on the ground that these
conditions were not followed.

Laws are not retroactive. Article 4 of the Civil Code states that "laws shall have no retroactive
effect, unless the contrary is provided." Lex prospicit, non respicit; the law looks forward, not
backward. This is due to the unconstitutional result of retroacting a law's application: it divests
rights that have already become vested or impairs obligations of contract.[124] In Espiritu v.
Cipriano:[125]

Likewise the claim of private respondent that the act is remedial and may, therefore, be given
retroactive effect is untenable. A close study of the provisions discloses that far from being
remedial, the statute affects substantive rights and hence a strict and prospective construction
thereof is in order. Article 4 of the New Civil Code ordains that laws shall have no retroactive
effect unless the contrary is provided and that where the law is clear, Our duty is equally plain.
We must apply it to the facts as found. . . . The said law did not, by its express terms, purport to
give a retroactive operation. It is a well-established rule of statutory construction that
"Expressium facit cessare tacitum" and, therefore, no reasonable implication that the Legislature
ever intended to give the law in question a retroactive effect may be accorded to the same. . . .

....

. . . Well-settled is the principle that while the Legislature has the power to pass retroactive laws
which do not impair the obligation of contracts, or affect injuriously vested rights, it is equally
true that statutes are not to be construed as intended to have a retroactive effect so as to affect
pending proceedings, unless such intent is expressly declared or clearly and necessarily implied
from the language of the enactment.[126] (Citations. omitted)
The Magna Carta for Homeowners and Homeowners' Associations does not state that it has a
retroactive effect. Thus, it cannot be applied to the Policy. This Court must rule on the Policy's
validity based on the laws, rules, and court doctrines in force at the time of its issuance.

Under Section 16 of the Local Government Code, local governments have the power to govern
the welfare of those within its territorial jurisdiction:

SECTION 16. General Welfare. - Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial jurisdictions,
local government units shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the people to a balanced
ecology, encourage and support the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
This includes the power to close and open roads, whether permanently or temporarily:

SECTION 21. Closure and Opening of Roads. - (a) A local government unit may, pursuant to an
ordinance, permanently or temporarily close or open any local road, alley, park, or square falling
within its jurisdiction: Provided, however, That in case of permanent closure, such ordinance
must be approved by at least two-thirds (2/3) of all the members of the sanggunian, and when
necessary, an adequate substitute for the public facility that is subject to closure is provided.

(b) No such way or place or any part thereof shall be permanently closed without making
provisions for the maintenance of public safety therein. A property thus permanently withdrawn
from public use may be used or conveyed for any purpose for which other real property
belonging to the local government unit concerned may be lawfully used or conveyed: Provided,
however, That no freedom park shall be closed permanently without provision for its transfer or
relocation to a new site.

(c) Any national or local road, alley, park, or square may be temporarily closed during an actual
emergency, or fiesta celebrations, public rallies, agricultural or industrial fairs, or an undertaking
of public works and highways, telecommunications, and waterworks projects, the duration of
which shall be specified by the local chief executive concerned in a written order: Provided,
however, That no national or local road, alley, park, or square shall be temporarily closed for
athletic, cultural, or civic activities not officially sponsored, recognized, or approved by the local
government unit concerned.

(d) Any city, municipality, or barangay may, by a duly enacted ordinance, temporarily close and
regulate the use of any local street, road, thoroughfare, or any other public place where
shopping malls, Sunday, flea or night markets, or shopping areas may be established and
where goods, merchandise, foodstuffs, commodities, or articles of commerce may be sold and
dispensed to the general public.
More relevantly, local governments may also enact ordinances to regulate and control the use
of the roads:

SECTION 458. Powers, Duties, Functions and Compensation. - (a) The sangguniang

panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the city and its inhabitants pursuant to Section 16 of
this Code and in the proper exercise of the corporate powers of the city as provided for under
Section 22 of this Code, and shall:

....

(5) Approve ordinances which shall ensure the efficient and effective delivery of the basic
services and facilities as provided for under Section 17 of this Code, and in addition to said
services and facilities, shall:

....

(v) Regulate the use of streets, avenues, alleys, sidewalks, bridges, parks and other public
places and approve the construction, improvement, repair and maintenance of the same[.]
In Albon, this Court upheld the City of Marikina's right to enact an ordinance to widen, clear, and
repair the existing sidewalks of Marikina Greenheights Subdivision that have been donated to it:
Like all LGUs, the City of Marikina is empowered to enact ordinances for the purposes set forth
in the Local Government Code (RA 7160). It is expressly vested with police powers delegated to
LGUs under the general welfare clause of R.A. 7160. With this power, LGUs may prescribe
reasonable regulations to protect the lives, health, and property of their constituents and
maintain peace and order within their respective territorial jurisdictions.

Cities and municipalities also have the power to exercise such powers and discharge such
functions and responsibilities as may be necessary, appropriate or incidental to efficient and
effective provisions of the basic services and facilities, including infrastructure facilities intended
primarily to service the needs of their residents and which are financed by their own funds.
These infrastructure facilities include municipal or city roads and bridges and similar facilities.

There is no question about the public nature and use of the sidewalks in the Marikina
Greenheights Subdivision. One of the "whereas clauses" of P.D. 1216 (which amended P.D.
957) declares that open spaces, roads, alleys and sidewalks in a residential subdivision are for
public use and beyond the commerce of man. In conjunction herewith, P.D. 957, as amended
by P.D. 1216, mandates subdivision owners to set aside open spaces which shall be devoted
exclusively for the use of the general public.

....

Moreover, the implementing rules of P.D. 957, as amended by P.D. 1216, provide that it is the
registered owner or developer of a subdivision who has the responsibility for the maintenance,
repair and improvement of road lots and open spaces of the subdivision prior to their donation to
the concerned LGU. The owner or developer shall be deemed relieved of the responsibility of
maintaining the road lots and open space only upon securing a certificate of completion and
executing a deed of donation of these road lots and open spaces to the LGU.[127] (Citations
omitted)
Nonetheless, homeowners' associations are not entirely powerless in protecting the interests of
homeowners and residents. Section 31 of Presidential Decree No. 957 recognizes the need for
a homeowners' association to promote and protect their mutual interest and assist in community
development:

SECTION 30. Organization of Homeowners Association. - The owner or developer of a

subdivision project or condominium project shall initiate the organization of a homeowners
association among the buyers and residents of the projects for the purpose of promoting and
protecting their mutual interest and assist in their community development.
Moreover, the Housing and Land Use Regulatory Board issued Resolutions that provided the
powers and rights of homeowners' associations. Its Resolution No. R-771-04, or the Rules on
the Registration and Supervision of Homeowners Associations, states:

SECTION 5. Powers and Attributes of a Homeowners Association. - The powers and attributes
of the Homeowners Association are those stated in its by-laws, which shall include the following:
a. To adopt and amend by-laws, rules and regulations;

b. To adopt an annual program of activities and the corresponding budget therefor, subject to
the limitations and conditions imposed under the by-laws;

c. To impose and collect reasonable fees on members and nonmember residents who avail of
or benefit from the facilities and services of the association, to defray necessary operational
expenses, subject to the limitations and conditions imposed under e law, regulations of the
Board and the association by-laws;

d. To sue and be sued in its name;

e. To enter into contracts for basic and necessary services for the general welfare of the
association and its members;

f. To acquire, hold, encumber and convey in its own name any right, title or interest to any
property;

g. To impose reasonable sanctions upon its members for violations and/or non-compliance with
the association by laws; and upon non-member residents by reason of any act and/or omission
prejudicial to the interest of the association or its members; and

h. To exercise other powers necessary for the governance and operation of the association.
Housing and Land Use Regulatory Board Resolution No. 770-04, or the Framework for
Governance of Homeowners Associations, states that associations are expected to promote the
security of residents in their living environment:

WHEREAS, there is a need to highlight the basic roles, powers and responsibilities of a
homeowners association and its officers and members under existing laws and regulations;

WHEREAS, there is also a need to promote and operationalize the best practices and norms of
good governance in the management of a homeowners association:

WHEREAS, the active and enlightened management of the affairs of a homeowners association
will enhance the delivery of basic services to and promote the general welfare of its members;

....

SECTION 3. General Principles. - An Association should-

a. endeavor to serve the interest of its members through equity of access in the decision-making
process, transparency and accountability, and the promotion of security in their living
environment;

b. establish its vision, define and periodically assess its mission, policies, and objectives and the
means to attain the same; and
c. without abandoning its non-partisan character:

i. actively cooperate with local government units and national government agencies, in
furtherance of its common goals and activities for the benefit of the residents inside and outside
of the subdivision; and

ii. complement, support and strengthen local government units and national government
agencies in providing vital services to its members and in helping implement local government
policies, programs, ordinances, and rules.
This Court has also acknowledged the right of homeowners' associations to set goals for the
promotion of safety and security, peace, comfort, and the general welfare of their residents.
[128]
 In Bel Air Village Association, Inc. v. Dionisio:[129]

The petitioner also objects to the assessment on the ground that it is unreasonable, arbitrary,
discriminatory, oppressive and confiscatory. According to him the assessment is oppressive
because the amount assessed is not based on benefits but on the size of the area of the lot,
discriminatory and unreasonable because only the owners of the lots are required to pay the
questioned assessment and not the residents who are only renting inside the village; and
confiscatory because under the by-laws of the respondent association, the latter holds a lien on
the property assessed if the amount is not paid.

We agree with the lower court's findings, to wit:

....

The second question has reference to the reasonableness of the resolution assessing the
monthly dues in question upon the defendant. The exhibits annexed to the stipulation of facts
describe the purpose or goals for which these monthly dues assessed upon the members of the
plaintiff including the defendant are to be disbursed. They are intended for garbage collection,
salary of security guards, cleaning and maintenance of streets, establishment of parks,
etc. Living in this modern, complex society has raised complex problems of security, sanitation,
communitarian comfort and convenience and it is now a recognized necessity that members of
the community must organize themselves for the successful solution of these problems. Goals
intended for the promotion of their safety and security, peace, comfort, and general welfare
cannot be categorized as unreasonable. Indeed, the essence of community life is association
and cooperation for without these such broader welfare goals cannot be attained. It is for these
reasons that modern subdivisions are imposing encumbrance upon titles of prospective lot
buyers a limitation upon ownership of the said buyers that they automatically become members
of homeowners' association living within the community of the subdivision.[130] (Emphasis
supplied)
In Spouses Anonuevo v. Court of Appeals,[131] this Court, quoting the Court of Appeals Decision,
affirmed that ownership of public spaces is with the local government, while enjoyment,
possession, and control are with the residents and homeowners:
It appears that reliance was placed by the lower court upon the fact that TCT No. 37527
covering Lot II, Block 6 did not contain an annotation as to the open space character of said
piece of land. But the argument does not find justification with applicable jurisprudence. When
the lot in question had been allotted as an open space by Carmel Corporation, it had become
the property of the Quezon City government and/or the Republic of the Philippines held under
the management, control and enjoyment of the residents and homeowners of Carmel II-A
Subdivision. . . .

....

Therefore, with the approval of the subdivision plan of Carmel II A followed with it the exclusion
of the land from the commerce of man. It would not be too presumptuous to conclude that the
sale by Carmel Corporation which resulted in the subsequent private dealings involving this
public property is void ab initio. And the mere fact that Carmel Corporation did not consider Lot
II, Block 6 as the designated open space would not give it licentious freedom to sell such public
property "under the nose"! so to speak, of the Quezon City government, the Republic of the
Philippines, and the homeowners who are the direct beneficiaries thereof. While the afore-
enumerated entities do not hold the owners' duplicate title over the open space, hence, could
not properly forewarned of any prejudicial act of conveyance or encumbrance perpetrated by
the subdivision owner/developer, they should not be faulted for taking a belated attempt to
question these conveyances affecting the open space which are made manifest only during the
actual disruptions accompanying the exercise of ownership and possession by the ultimate
vendee.[132] (Emphasis in the original, citation omitted)
From all these, we hold that the Policy is valid. In De Guzman v. Commission on Audit:[133]

It is a basic principle in statutory construction that when faced with apparently irreconcilable
inconsistencies between two laws, the first step is to attempt to harmonize the seemingly
inconsistent laws. In other words, courts must first exhaust all efforts to harmonize seemingly
conflicting laws and only resort to choosing which law to apply when harmonization is
impossible.[134] (Citations omitted)
The Policy maintains the public nature of the subdivision roads. It neither prohibits nor impairs
the use of the roads. It does not prevent the public from using the roads, as all are entitled to
enter, exit, and pass through them. One must only surrender an identification card to ensure the
security of the residents. As stated, the residents and homeowners, including petitioner Kwong,
have valid security concerns amid a sharp increase in criminal activities within the subdivision.

The Policy, likewise, neither denies nor impairs any of the local government's rights of
ownership. Respondent does not assert that it owns the subdivision roads or claims any private
right over them. Even with the Policy, the State still has the jus possidendi (right to possess), jus
utendi (right to use), just fruendi (right to its fruits), jus abutendi (right to consume), and jus
disponendi (right to dispose) of the subdivision roads. It still has the power to temporarily close,
permanently open, or generally regulate the subdivision roads.

It must be pointed out that this case is not even between a homeowners' association and the
local government, but a homeowners' association and a resident who disagrees with the Policy.
Respondent, therefore, is not asserting any right against any local government act on the
subdivision roads. Neither is the local government claiming that its right to regulate the roads is
being impinged upon.

Furthe1more, Section 31 of Presidential Decree No. 957, as amended, on the donation of

subdivision roads to the local government, "was [enacted] to remedy the situation prevalent at
that time where owners/developers fail to keep up with their obligation of providing and
maintaining the subdivision roads, alleys[,] and sidewalks."[135] The whereas clauses of
Presidential Decree No. 957 reveal the legislative intent:

WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent
human settlement and to provide them with ample opportunities for improving their quality of
life;

WHEREAS, numerous reports reveal that many real estate subdivision owners, developers,
operators, and/or sellers have reneged on their representations and obligations to provide and
maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and
other similar basic requirements, thus endangering the health and safety of home and lot
buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators,
such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to
pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value;

WHEREAS, these acts not only undermine the land and housing program of the government but
also defeat the objectives of the New Society, particularly the promotion of peace and order and
the enhancement of the economic, social and moral condition of the Filipino people;

WHEREAS, this state of affairs has rendered it imperative that the real estate subdivision and
condominium businesses be closely supervised and regulated, and that penalties be imposed
on fraudulent practices and manipulations committed in connection therewith. (Emphasis
supplied)
Evidently, here, the donation was for the benefit of the subdivision's homeowners, lot buyers,
and residents. This must be taken into consideration in interpreting the provision for the
donation:

In the construction or interpretation of a legislative measure a presidential decree in these cases

- the primary rule is to search for and determine the intent and spirit of the law. Legislative intent
is the controlling factor, for in the words of this Court in Hidalgo v. Hidalgo, per Mr. Justice
Claudio Teehankee, whatever is within the spirit of a statute is within the statute, and this has to
be so if strict adherence to the letter would result in absurdity, injustice and contradictions.
[136]
 (Emphasis in the original, citation omitted)
In Spouses Belo v. Philippine National Bank:[137]

It is well settled that courts are not to give a statute a meaning that would lead to absurdities. If
the words of a statute are susceptible of more than one meaning, the absurdity of the result of
one construction is a strong argument against its adoption, and in favor of such sensible
interpretation. We test a law by its result. A law should not be interpreted so as not to cause an
injustice. There are laws which are generally valid but may seem arbitrary when applied in a
particular case because of its peculiar circumstances. We are not bound to apply them in
slavish obedience to their language.[138] (Citations omitted)
Thus, the donation of the roads to the local government should not be interpreted in a way
contrary to the legislative intent of benefiting the residents. Conversely, residents should not be
disempowered from taking measures for the proper maintenance of their residential area. Under
Section 30 of Presidential Decree No. 957, they may protect their mutual interests. Here, the
Policy was not inconsistent with this purpose. To rule against it would be contrary to the
intention of the law to protect their rights.

This Court further notes that the Deed of Donation recognizes the Diamond Subdivision's power
to monitor the security within the subdivision. The Deed of Donation between the developer of
Diamond Subdivision and the City of Angeles states:

That it is a condition of this donation, that the Severina Realty Corporation will have the
exclusive right to appoint and to enter into a contract with any duly licensed security guard
agency for the security guard services of the Diamond Subdivision, Angeles City.[139]
Thus, the subdivision is still empowered to determine how best to maintain the security and
safety within the subdivision.

Moreover, it is common knowledge that when homeowners purchase their properties from
subdivisions, they pay a more valuable consideration in exchange for better facilities, safer
security, and a higher degree of peace, order, and privacy. Some may also have purchased
their properties in contemplation of their right to organize and to take measures to protect these
interests. It would be an injustice if these were not taken into consideration in determining the
validity of the Policy.

Here, the Policy was enacted to ensure the safety and security of Diamond Subdivision
residents who have found themselves exposed to heightened crimes and lawlessness. The
Policy was approved by 314 members of the homeowners' association, with only petitioner
Kwong protesting the solution. His protest is ultimately rooted in the damage that the Policy has
allegedly caused to his businesses. However, he failed to present any evidence of this damage.

It is established that he who alleges a fact has the burden of proving it. In Republic v. Estate of
Hans Menzi:[140]

It is procedurally required for each party in a case to prove his own affirmative allegations by the
degree of evidence required by law. In civil cases such as this one, the degree of evidence
required of a party in order to support his claim is preponderance of evidence, or that evidence
adduced by one party which is more conclusive and credible than that of the other party. It is
therefore incumbent upon the plaintiff who is claiming a right to prove his case. Corollarily, the
defendant must likewise prove its own allegations to buttress its claim that it is not liable.

The party who alleges a fact has the burden of proving it. The burden of proof may be on the
plaintiff or the defendant. It is on the defendant if he alleges an affirmative defense which is not
a denial of an essential ingredient in the plaintiff's cause of action, but is one which, if
established, will be a good defense - i.e., an "avoidance" of the claim.[141] (Citations omitted)
Since petitioner Kwong presented no evidence of the damage caused to him, this Court cannot
rule in his favor.

In any case, the community's welfare should prevail over the convenience of subdivision visitors
who seek to patronize petitioners' businesses. Article XII, Section 6 of the Constitution provides
that the use of property bears a social function, and economic enterprises of persons are still
subject to the promotion of distributive justice and state intervention for the common good:

SECTION 6. The use of property bears a social function, and all economic agents shall
contribute to the common good. Individuals and private groups, including corporations,
cooperatives, and similar collective organizations, shall have the right to own, establish, and
operate economic enterprises, subject to the duty of the State to promote distributive justice and
to intervene when the common good so demands.
Article XIII, Section 1 of the Constitution states that the State may regulate the use of property
and its increments for the common good:

SECTION 1. The Congress shall give highest priority to the enactment of measures that protect
and enhance the right of all the people to human dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by equitably diffusing wealth and political power for
the common good.

To this end, the State shall regulate the acquisition, ownership, use, and disposition of property
and its increments.
These provisions reveal that the property ownership and the rights that come with it are not
without restrictions, but rather come with the consideration and mindfulness for the welfare of
others in society. The Constitution still emphasizes and prioritizes the people's needs as a
whole. Such is the case here: even if petitioner Kwong's rights are subordinated to the rights of
the many, the Policy improves his own wellbeing and quality of life. In Bel Air Village
Association, Inc.:

Even assuming that defendant's ownership and enjoyment of the lot covered by TCT No. 81136
is limited because of the burden of being a member of plaintiff association the goals and
objectives of the association are far greater because they apply to and affect the community at
large. It can be justified on legal grounds that a person's enjoyment of ownership may be
restricted and limited if to do so the welfare of the community of which he is a member is
promoted and attained. These benefits in which the defendant participates more than offset the
burden and inconvenience that he may suffer.[142] (Emphasis supplied)
WHEREFORE, this Court AFFIRMS the Court of Appeals' July 5, 2013 Decision and February
12, 2014 Resolution in CA-G.R. SP No. 115198. This Court finds that Diamond Homeowners &
Residents Association's "No Sticker, No ID, No Entry" Policy is valid and consistent with law and
jurisprudence.

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr., Hernando, and Inting, JJ., concur.

[G.R. NO. 165724 : November 2, 2006]

ZAMORA REALTY and DEVELOPMENT CORPORATION and/or ERNESTO

ZAMORA, Petitioners, v. OFFICE OF THE PRESIDENT OF THE PHILIPPINES and
EDILBERTO C. GALLARDO, Respondents.

DECISION

CALLEJO, SR., J.:

This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-
G.R. SP No. 78319 and its Resolution2 denying the motion for reconsideration thereof.

On October 8, 1985, respondent Edilberto C. Gallardo entered into a contract to sell with Amlac
Development Corporation (Amlac). The property subject of the contract is Lot 1, Block 3 of
Amlac-Ville Subdivision. Under the contract, Gallardo was to pay a downpayment
of P26,058.00, upon execution, the balance to be paid in installments of P1,987.50 until full
settlement of the purchase price of P130,290.00. Gallardo delivered the downpayment upon the
signing of the contract, and several months later, on March 11, 1987,3 the initial installment.
Gallardo later informed the owner/developer of his intention to stop further payments due to the
latter's non-compliance with its obligation to complete the development of the subdivision
project. The owner/developer nevertheless made several demands for him to pay the monthly
amortizations, which the latter ignored, insisting that he would suspend payment until the
completion of the subdivision project.

Thereafter, Zamora Realty and Development Corporation (Zamora Realty) sent a letter4 dated
January 22, 1990, addressed to Jaime dela Rosa, copy furnished to all Amlac-Ville Subdivision
buyers, advising them to defer payment of monthly amortization due to a pending case between
it and Amlac. On November 5, 1991, Gallardo sent a letter5 to the Amlac-Ville Subdivision
reiterating his stand to suspend the amortization payments. The realty firm still made demands
on Gallardo to pay his back arrears which, per its second notice dated January 28, 1992,
amounted to P147,075.00. A final notice of demand was also sent to Gallardo, stating that his
arrears already amounted to P153,037.50.6 Finally, on May 14, 1992, Amlac/Zamora Realty
sent Gallardo a notarial notice of cancellation of the contract.7

On June 3, 1992, Gallardo filed a complaint with the Housing and Land Use Regulatory Board
(HLURB) against Zamora Realty and Development Corporation and/or Ernesto Zamora,
assailing the notarial rescission of the contract to sell.8 In his complaint, he averred that his
suspension of the amortization payment was justified by the non-development of the subdivision
project.

For their part, defendants countered that the subject project was almost substantially complete;
the centralized water distribution system had been installed, and the concreting of sidewalks
had been concluded. They likewise argued that plaintiff failed to observe the provision of
Section 23 of Presidential Decree (P.D.) No. 957 before suspending payments.9

The HLURB Arbiter conducted an ocular inspection of the project and found that development of
the project was still ongoing.10 Thus, the HLURB Arbiter rendered a decision in favor of
Gallardo. The fallo reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring the complainant's suspension of payment beginning November 21, 1991, as legal
and valid;

2. As a consequence of the foregoing, holding respondent's rescission of contract over the

controverted lot as illegal; and

3. Ordering the complainant to pay the whole balance of his obligations sans penalty interest or
interest of this nature except the legal interest as stipulated in their contract conditioned upon
respondent's substantial compliance with his obligation as certified by the Board.11

Aggrieved, defendants appealed to the HLURB Board of Commissioners. On May 29, 1995, the
Board dismissed the appeal and affirmed in toto the decision of the HLURB Arbiter.12

It noted that Amlac-Ville subdivision was registered as early as 1985, and under applicable
laws, a subdivision owner/developer must complete the development of the project within one
year from the date of issuance of the license of the subdivision.13 The Board gave credence to
the ocular inspection report which stated that the development of the subject subdivision was
still ongoing as of 1992. It concluded that since there was no request for extension, the project
remained incomplete, and Gallardo was justified in withholding his payments.

Zamora Realty elevated the matter to the Office of the President (OP), which, however,
dismissed the appeal in its Resolution14 dated March 6, 2003. It then filed a motion for
reconsideration, which was likewise denied in an Order15 dated June 18, 2003.

Unsatisfied, Zamora Realty filed before the CA a Petition for Review 16 under Rule 43 of the
Revised Rules of Court. It relied on the following grounds:
1. We firmly submit to this Honorable Court that the Public Respondent OPP had grossly erred
in not finding that the herein Private Respondent clearly violated the Contract to Sell dated
October 8, 1998 (sic);

2. The same Office likewise erred in not holding that Petitioners validly and lawfully rescinded
already the said Contract to Sell dated October 8, 1998; andcralawlibrary

3. The said Public Respondent OPP also erred in not just requiring the herein Petitioners to
reimburse any payments already made therein by the herein Private Respondent plus the lawful
rate of interest thereof or in the alternative for the herein Petitioners to just give the herein
Private Respondent a similar lot that can still be transferred to the said Private Respondent
granting that the latter is entitled to affirmative relief from it.17

On May 31, 2004, the CA rendered a Decision18 dismissing the petition. It sustained the validity
of respondent Gallardo's suspension of payments, and ruled that it was in accordance with
Sections 20 and 23 of Presidential Decree (P.D.) No. 957. The CA stated that the development
of the subdivision was still ongoing as of 1992, way beyond 1985 when it was first registered,
and that such delay justified the buyer's act of suspending payment. The CA, likewise, gave
weight to Gallardo's letter19 to Amlac-Ville Subdivision, dated November 5, 1991, where he
stated that after March 11, 1987, he was stopping payment of his amortization due to non-
development of the project.

After its motion for reconsideration was denied, petitioner sought recourse to the Court via
Petition for Review on Certiorari, anchored on the following grounds:

I. THE HONORABLE COURT OF APPEALS CLEARLY ERRED IN NOT HOLDING THAT

RESPONDENT EDILBERTO C. GALLARDO VIOLATED HIS CONTRACT TO SELL WITH THE
HEREIN PETITIONER;

II. THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN NOT HOLDING THAT
RESPONDENT EDILBERTO C. GALLARDO ALREADY VIOLATED THE SAID CONTRACT TO
SELL WHEN HE OPTED TO SUSPEND HIS MONTHLY AMORTIZATION THEREIN;
andcralawlibrary

III. THE HONORABLE COURT OF APPEALS ERRED IN NOT REQUIRING INSTEAD THE
HEREIN PETITIONER TO JUST REIMBURSE [PAYMENTS OF] THE RESPONDENT
EDILBERTO C. GALLARDO OR CHANGE THE SAID LOT WITH AN EQUIVALENT ONE.20

Petitioner avers that respondent is in bad faith; by his failure to pay the monthly amortization as
agreed upon, he flagrantly violated the contract to sell.21 It likewise claims that respondent is not
an ordinary buyer of the property as he was, in fact, a broker who could not simply feign
ignorance of the stages of the development works.22 After the contract to sell was cancelled by
notarial rescission, the subject property was already sold to another person. Consequently, it
should have instead been directed to reimburse payments made by respondent, or to sell an
equivalent lot to him.23

In his Comment24 on the petition, respondent insists that he is not in bad faith because the
suspension of payment is the direct result of petitioner's failure to develop the subdivision. In
fact, it had advised all Amlac buyers to suspend amortization payments because of the issue of
non-development. He insists that there is no showing that the lot in question had already been
sold.

After petitioner submitted its Reply,25 the parties were required to submit their respective
Memoranda. Petitioner reiterated that the contract between it and respondent was a contract to
sell, and as such, ownership was reserved to it until after respondent had fully paid. In fact, even
after full payment, ownership is not automatically vested in the buyer as a Deed of Absolute
Sale is yet to be executed.26 Lastly, petitioner asserts that the belated suspension of payment by
respondent is nothing but a mere afterthought.27

The issues for determination can be summed up as follows: (a) whether respondent violated the
contract to sell by his failure to pay the monthly amortizations, and, if in the negative, whether
he was justified to suspend payment due to incomplete development of petitioner's project; and
(b) whether the CA erred in not directing petitioner either to reimburse respondent's payments,
together with interests, or require it to sell to respondent a different lot equivalent to the subject
property.

The petition is bereft of merit.

At the outset, the Court noted that the instant petition is erroneously captioned as one filed
against the "Office of the President and Edilberto Gallardo." However, as correctly pointed out
by the Office of the Solicitor General, the petition is an offshoot of respondent's complaint
against the HLURB assailing the rescission of his contract with petitioner. As such, a purely
private interest is involved. In light of the provisions of Section 6,28 Rule 43 of the Revised Rules
of Court, the agency which issued the assailed order should not have been impleaded, whether
in the petition before the CA or in this Court.

The contract entered into between petitioner and respondent is a contract to sell a subdivision
lot. It bears stressing that a contract to sell is a bilateral contract, whereby the prospective seller,
while expressly reserving the ownership of the subject property despite delivery thereof to the
prospective buyer, binds himself to sell the said property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.29 In a
contract to sell, the payment of the purchase price is a positive suspensive condition, the failure
of which is not a breach, casual or serious, but a situation that prevents the obligation of the
vendor to convey title from acquiring an obligatory force. Thus, for its non-fulfillment, there will
be no contract to speak of, the obligor having failed to perform the suspensive condition which
enforces a juridical relation.30

The subject matter of the contract being a subdivision lot, the applicable law is P.D. No. 957 or
"The Subdivision and Condominium Buyers' Protective Decree." As such, the right of the seller
to consider the contract to sell ineffectual in case of failure of the prospective buyer to pay the
amortization, is limited. Sections 20 and 23 of P.D. No. 957 read as follows:

Section 20. Time of Completion. - Every owner or developer shall construct and provide the
facilities, improvements, infrastructures and other forms of development, including water supply
and lighting facilities, which are offered and indicated in the approved subdivision or
condominium plans, brochures, prospectus, printed matters, letters or in any form of
advertisement, within one year from the date of the issuance of the license for the subdivision or
condominium project or such other period of time as may be fixed by the Authority.
Section 23. Non-forfeiture of Payments. - No installment payment made by a buyer in a
subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in
favor of the owner or developer when the buyer, after due notice to the owner or developer,
desists from further payment due to the failure of the owner or developer to develop the
subdivision or condominium project according to the approved plans and within the time limit for
complying with the same. Such buyer may, at his option, be reimbursed the total amount paid
including amortization interests but excluding delinquency interests, with interest thereon at the
legal rate.

Thus, the only requirement under the law is to give due notice to the owner or developer of the
buyer's intention to suspend payment.

It is undisputed that respondent had refused to pay the monthly amortizations on the property
after the March 11, 1987 payment. Per findings of the HLURB, as of 1992, the development of
the project was still ongoing. Since the development of the subdivision was registered as early
as 1985 and there is no showing that petitioner had been granted an extension by the HLURB,
petitioner in effect failed to complete the project within one year from the date of the issuance of
the license therefor, and as such is guilty of incomplete development of the subdivision project.
Thus, petitioner could not have validly exercised its right to cancel the contract to sell in favor of
respondent.

A careful perusal of the records also show that respondent had refused to make payment as
early as 1987, and sent a letter to Amlac-Ville Subdivision only on November 5, 1991 with the
following statement: "After paying your office last March 11, 1987, (please refer to the attached
xeroxed receipt) I said that I would suspend further payments until such time that your office
shall have complied with some of your development commitments to your lot buyers, e.g.,
centralized water system, concrete curbs and gutters, etc. because I had then planned to
construct a house on the lot I had contracted to buy from you (Lot 1 Block 3 Contract to Sell No.
017)." While the written notice of suspension of payment was belatedly given, the above-quoted
portion of the letter shows that petitioner was verbally notified of respondent's intention to
suspend payment as early as 1987.

The law does not specifically provide the form of notice to be given to the owner/developer.
Considering the purpose of the law and the evil sought to be prevented, the Court holds that a
verbal notice of the intention to suspend remittance of payment is sufficient. Such a holding is
consistent with our ruling in Francel Realty Corporation v. Sycip,31 where the requirement of an
HLURB clearance under Section 23, Rule VI of the Rules Implementing P.D. No. 957 before the
buyer of a subdivision lot or a home could lawfully withhold monthly payments was declared
void. The Court explained:

x x x [T]o require clearance from the HLURB before stopping payment would not be in keeping
with the intent of the law to protect innocent buyer of lots or homes from scheming subdivision
developers. To give full effect to such intent, it would be fitting to treat the right to stop payment
to be immediately effective upon giving due notice to the owner or developer or upon filing a
complaint before the HLURB against the erring developer.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Such course of action would be without prejudice to the subsequent determination of its
propriety and consequences, should the suspension of payment subsequently be found
improper.32
It must be stressed that P.D. No. 957 was enacted with no other end in view than to provide a
protective mantle over helpless citizens who may fall prey to the manipulations and
machinations of unscrupulous subdivision and condominium sellers.33 It was issued in the wake
of numerous reports that many real estate subdivision owners, developers, operators and/or
sellers have reneged on their representations and obligations to provide and maintain properly
subdivision roads, drainage, sewerage, water systems, lighting systems, and other basic
requirements for the health and safety of home and lot buyers.34 Such intent of the law is
nowhere expressed more clearly than in its preamble, the pertinent portion of which reads:

WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent
human settlement and to provide them with ample opportunities for improving their quality of life;

WHEREAS, numerous reports reveal that many real estate subdivision owners, developers,
operators, and/or sellers have reneged on their representations and obligations to provide and
maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and
other similar basic requirements, thus endangering the health and safety of home and lot
buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators,
such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to
pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value; x x x

Thus, respondent justly withheld the payment of amortization of the subject lot, and petitioner's
unilateral cancellation of the contract to sell cannot be sustained. Consequently, the contract to
sell between it and respondent subsists.

We note, however, that the HLURB Arbiter declared as valid the suspension of amortization
payments by private respondent beginning November 21, 1991. This finding has been affirmed
by the HLURB Board of Commissioners, the Office of the President, and the CA. Such ruling,
however, requires re-examination. The decisions below contain statements of fact to the effect
that the last payment made by respondent was on March 11, 1987. The CA, in fact,
categorically stated that respondent did not make any more payments after March 11,
1987.35 The same was later reiterated in respondent's November 1991 letter. Thus, respondent
stopped remitting the amortizations over the subject property after March 11, 1987. Since the
subdivision was registered in 1985 and the completion of the development

was still ongoing as of 1992, it follows that as of 1987, petitioner was already guilty of
incomplete development. In fine then, the validity of the suspension of payment should be
reckoned from 1987, specifically after the last payment made by respondent on March 11, 1987.
This is more in keeping with the law and the factual circumstances of the case.

As to whether or not the CA should have directed petitioner to reimburse the payments already
made by respondent, with payment of interest, or to require it to sell another lot equivalent to the
subject property, we rule in the negative.

In case the developer of a subdivision or condominium fails in its obligation under Section 20 of
P.D. No. 957, Section 23 of the law gives the buyer the option to demand reimbursement of the
total amount paid, or to wait for further development of the subdivision, and when the buyer opts
for the latter alternative, he may suspend payment of installments until such time that the owner
or developer had fulfilled its obligation to him.36

It is thus clear that the law provides two remedies in case of incomplete development of the
subdivision project: (1) reimbursement of the total amount paid, including amortization interests
but excluding delinquency interests, with interest thereon at the legal rate;37 or (2) for the buyer
to suspend amortization payments until the completion of the project. These remedies are
available to the prospective buyer to give effect to the law's intent to protect the buyers from
abusive owners/developers of subdivisions. In cases of incomplete development, it is the
developer who is the one at fault, as it would then have violated its promise to the prospective
buyers to provide the necessary facilities in the subdivision. The aggrieved party, therefore, is
the prospective buyer because of the non-fulfillment of the developer's commitment. As such, it
is but logical that the option is given to the prospective buyer, not to the developer.

Petitioner therefore cannot insist that payments made by respondent be returned to him; neither
can respondent be compelled to accept another property in lieu of the lot subject of the contract.
To reiterate, respondent, as prospective buyer, had opted to exercise his right to suspend
payment and wait for the completion of the subdivision project. He cannot therefore be forced to
accept reimbursement of his amortization payments or to accept a lot different from the subject
of the contract.

Petitioner claims that the subject property was already sold to another person after it validly and
legally cancelled the contract to sell by notarial rescission.38 It further contends that under the
situation, to still require the latter to sell the subject property to respondent would be to expose
petitioner to inevitable prosecution for estafa arising from the double sale of the same property.
As held by the CA, in default of evidentiary support from the records and on account of the
paucity of discussion thereon by the Office of the President and the HLURB, we cannot rule on
petitioner's allegation that the subject lot has already been sold.39

IN LIGHT OF ALL THE FOREGOING, the Decision of the Court of Appeals dated May 31, 2004
is AFFIRMED with MODIFICATION. Respondent Edilberto C. Gallardo is declared to have
validly exercised his right to suspend remittance of payments as of March 12, 1987, not
November 21, 1991.

SO ORDERED.

THIRD DIVISION

[G.R. NO. 154684. September 8, 2005]

FRANCEL REALTY CORPORATION, Petitioners, v. RICARDO T. SYCIP, Respondent.

DECISION

PANGANIBAN, Acting C.J.:
In general, lack of jurisdiction over the subject matter may be raised at any stage of the
proceeding, even on appeal. This defense may be determined from the factual allegations of the
complaint, regardless of the answer or even before the answer is filed.

The Case

Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing
the February 2, 2001 Decision2 and August 14, 2002 Resolution3 of the Court of Appeals in CA-
GR CV No. 55127. The CA disposed as follows:

"It is not disputed that [petitioner] filed an illegal detainer case against [respondent] docketed as
Civil Case No. 1310 before the Municipal Trial Court [MTC] of Bacoor, Cavite, which was
accordingly dismissed by the MTC (See answer, p. 28, record). The filing of the instant case is
another blatant attempt by [petitioner] to circumvent the law. For it is well-settled that where a
complaint arises from the failure of a buyer [of real property] on installment basis to pay based
on a right to stop monthly amortizations under Presidential Decree No. 957, as in the case at
bench, the determinative question is exclusively cognizable by the Housing and Land Use
Regulatory Board (HLURB) (Francel Realty Corp. v. Court of Appeals, 252 SCRA 127 [1996]).

"WHEREFORE, premises considered, the decision appealed from is hereby AFFIRMED in

toto."4

The assailed Resolution denied petitioner's Motion for Reconsideration.

The Facts

The CA narrated the facts as follows:

"x x x [I]n November, 1989, [petitioner] and [respondent] entered into a contract to sell a house
and lot covered by TCT No. T-281788. Upon execution of the contract to sell, [respondent]
made a down payment of P119,700.00, which was considered as monthly rentals at the rate
of P2,686.00 per month. On March 16, 1990, the townhouse subject of the contract to sell was
transferred in the name of [respondent] as evidenced by TCT No. T-281788. Despite the
transfer of the title in the name of [respondent], the latter refused to pay the balance
of P250,000.00. By applying the down payment of P119,700.00 to defendant's monthly rental
starting from December 1989, said amount has been reduced to nothing. Despite several
demands made by [petitioner] to [respondent], including the demand dated December 12, 1991
made by [petitioner's] counsel, the [respondent] refused to reconvey the subject property to
[petitioner]. The [petitioner] suffered actual damages in the form of repairs amounting to not less
than P100,000.00 as well as moral and exemplary damages, attorney's fees and litigation
expenses. x x x.

"The [respondent] filed a motion to dismiss on the ground of lack of jurisdiction but the court
below denied the motion stating that the ground relied upon by [respondent did not appear to
be] indubitable.

"Denying the material allegations of the complaint, the [respondent] again invoked the court's
lack of jurisdiction over the subject matter of the case. Further, there is a pending case between
the same parties and involving the same townhouse before the Housing and Land Use
Regulatory Board for unsound real estate business practices. Likewise, the [respondent]
justified his refusal to pay the amortizations alleging that the [petitioner] sold and delivered to
him a defective townhouse unit under Sec. 3 of Presidential Decree No. [957].

"After trial, the court below dismissed the case for lack of jurisdiction."5

Ruling of the Court of Appeals

Agreeing with the trial court, the CA held that the case involved not just reconveyance and
damages, but also a determination of the rights and obligations of the parties to a sale of real
estate under PD 957; hence, the case fell exclusively under the jurisdiction of the HLURB. The
appellate court observed that respondent and other buyers of the townhouses had notified
petitioner of their intention to stop paying amortizations because of defective structures and
materials used in the construction; they had in fact filed other cases, also before the HLURB,
against petitioner for unsound real estate business practice.

Noting that petitioner's illegal detainer case against respondent had been dismissed by the
MTC, the appellate court concluded that the filing of the instant case was another blatant
attempt to circumvent the law.

Hence this Petition.6

Issues

In its Memorandum, petitioner raises the following issues:

"A. Whether or not the lower court can dismiss, after full blown trial, Civil Case No. BCV-94-2 of
the RTC, Imus, Cavite, on the ground of lack of jurisdiction.

"B. Whether or not the lower court can dismiss this case in spite of the indisputable fact that
respondent never secured HLURB authority or clearance to stop payment of monthly rentals."7

The Court's Ruling

The Petition lacks merit.

First Issue:

Dismissal for Lack of Jurisdiction

Before going into the jurisdictional question, we must at the outset point out that, contrary to
petitioner's assignment of errors, the trial court's Decision is not the proper subject of this Rule
45 Petition. Rather, it is the Decision of the CA that is up for review by this Court. This mistake
in stating the issues could have been fatal to petitioner's case, had it not correctly restated them
in its arguments and discussion.8 That said, we now proceed to the main issues.

Petitioner argues that the CA's affirmation of the trial court's dismissal of its case was
erroneous, considering that a full-blown trial had already been conducted. In effect, it contends
that lack of jurisdiction could no longer be used as a ground for dismissal after trial had ensued
and ended.
The above argument is anchored on estoppel by laches, which has been used quite
successfully in a number of cases to thwart dismissals based on lack of jurisdiction. Tijam v.
Sibonghanoy,9 in which this doctrine was espoused, held that a party may be barred from
questioning a court's jurisdiction after being invoked to secure affirmative relief against its
opponent. In fine, laches prevents the issue of lack of jurisdiction from being raised for the first
time on appeal by a litigant whose purpose is to annul everything done in a trial in which it has
actively participated.10

Laches is defined as the "failure or neglect for an unreasonable and unexplained length of time,
to do that which, by exercising due diligence, could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time, warranting a presumption that
the party entitled to assert it either has abandoned it or declined to assert it."11

The ruling in Sibonghanoy on the matter of jurisdiction is, however, the exception rather than
the rule.12 Estoppel by laches may be invoked to bar the issue of lack of jurisdiction only in
cases in which the factual milieu is analogous to that in the cited case. In such controversies,
laches should be clearly present; that is, lack of jurisdiction must have been raised so belatedly
as to warrant the presumption that the party entitled to assert it had abandoned or declined to
assert it.13 That Sibonghanoy applies only to exceptional circumstances is clarified in Calimlim v.
Ramirez,14 which we quote:

"A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous
to cite is that the jurisdiction of a court over the subject-matter of the action is a matter of law
and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a
court may be raised at any stage of the proceedings, even on appeal. This doctrine has been
qualified by recent pronouncements which stemmed principally from the ruling in the cited case
of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to
situations which were obviously not contemplated therein. The exceptional circumstance
involved in Sibonghanoy which justified the departure from the accepted concept of non-
waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been
repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but
rather the general rule, virtually overthrowing altogether the time-honored principle that the
issue of jurisdiction is not lost by waiver or by estoppel."15

Indeed, the general rule remains: a court's lack of jurisdiction may be raised at any stage of the
proceedings, even on appeal.16 The reason is that jurisdiction is conferred by law, and lack of it
affects the very authority of the court to take cognizance of and to render judgment on the
action.17 Moreover, jurisdiction is determined by the averments of the complaint, not by the
defenses contained in the answer.18

From the very beginning, the present respondent has been challenging the jurisdiction of the
trial court and asserting that the HLURB is the entity that has proper jurisdiction over the case.
Consonant with Section 1 of Rule 16 of the Rules of Court, he had raised the issue of lack of
jurisdiction in his Motion to Dismiss. Even when the Motion was denied, he continuously invoked
lack of jurisdiction in his Answer with affirmative defenses, his subsequent pleadings, and
verbally during the trial. This consistent and continuing objection to the trial court's jurisdiction
defeats petitioner's contention that raising other grounds in a Motion to Dismiss is considered a
submission to the jurisdiction of the court.19
We stress that Rule 9 of the Rules of Court requires that all defenses and objections - - except
lack of jurisdiction over the subject matter, litis pendentia, bar by prior judgment and/or
prescription - - must be pleaded in a motion to dismiss or in an answer; otherwise, they are
deemed waived.20 As to the excepted grounds, the court may dismiss a claim or a case at any
time "when it appears from the pleadings or the evidence on record" that any of those grounds
exists.

In the present case, the trial court at first denied the Motion to Dismiss filed by respondent,
because the grounds he had relied upon did not appear to be indubitable. The ruling was made
under the pre-1997 Rules of Civil Procedure, which then provided that the court, "after hearing x
x x may deny or grant the motion or allow amendment of pleading, or may defer the hearing and
determination of the motion until the trial if the ground alleged therein does not appear to be
indubitable."21 Moreover, the factual allegations of the Complaint22 that petitioner filed below for
reconveyance and damages sufficiently conformed to the jurisdictional requisites for the
exercise of the MTC's authority. Thus, in accord with the procedures then prescribed, the court
conducted trial to allow all arguments and evidence to surface.

Significantly, petitioner has previously sued respondent's brother and co-complainant before the
HLURB over the same subdivision project. In Francel Realty v. Court of Appeals and Francisco
Sycip,23 petitioner's Complaint for unlawful detainer was premised on the failure of respondent's
brother to pay monthly amortizations on the basis of his right to stop paying them under PD 957.
In that case, the Court had ruled that the issue involved a "determinative question x x x
exclusively cognizable by the HLURB"; that is, a "determination of the rights and obligations of
parties in a sale of real estate under P.D. 957."24

Because an earlier Complaint had been filed by Sycip before the HLURB against Francel Realty
Corporation for unsound real estate business practices, the Court dismissed petitioner's cause
of action. The reason for the dismissal was that the Complaint should "instead be filed as a
counterclaim in [the] HLURB [case] in accordance with Rule 6, Section 6 of the Rules of Court x
x x."25 For the same reason, this Court has ruled that a suit to collect on a promissory note
issued by a subdivision lot buyer involves the "sales of lots in commercial subdivisions"; and
that jurisdiction over such case lies with the HLURB, not with the courts.26

Further, the rules governing counterclaims27 and the prohibition on the splitting of causes of
action (grounded on the policy against a multiplicity of suits)28 should effectively bar the
Complaint for reconveyance and damages filed by petitioner. Its Complaint came at the heels of
its unlawful detainer suit that had previously been dismissed by the MTC of Imus, Cavite, and of
the litigation filed by respondent against Francel Realty before the HLURB. Petitioner avers that
the present controversy is not cognizable by the HLURB, because it was filed by the developer
rather than by the buyer, as provided under PD No. 1344.29 Such pretension flies in the face of
the ruling of the Court in Francel Realty Corp. v. Court of Appeals and Francisco Sycip,30 which
we quote:

"x x x. In the case of Estate Developers and Investors Corporation v. Antonio Sarte and Erlinda
Sarte the developer filed a complaint to collect the balance of the price of a lot bought on
installment basis, but its complaint was dismissed by the Regional Trial Court for lack of
jurisdiction. It appealed the order to this Court. In dismissing the appeal, we held:

'The action here is not a simple action to collect on a promissory note; it is a complaint to collect
amortization payments arising from or in connection with a sale of a subdivision lot under P.D.
Nos. 957 and 1344, and accordingly falls within the exclusive original jurisdiction of the HLURB
to regulate the real estate trade and industry, and to hear and decide cases of unsound real
estate business practices. Although the case involving Antonio Sarte is still pending resolution
before the HLURB Arbiter, and there is as yet no order from the HLURB authorizing suspension
of payments on account of the failure of plaintiff developer to make good its warranties, there is
no question to Our mind that the matter of collecting amortizations for the sale of the subdivision
lot is necessarily tied up to the complaint against the plaintiff and it affects the rights and
correlative duties of the buyer of a subdivision lot as regulated by NHA pursuant to P.D. 957 as
amended. It must accordingly fall within the exclusive original jurisdiction of the said Board, and
We find that the motion to dismiss was properly granted on the ground that the regular court has
no jurisdiction to take cognizance of the complaint. '"31

Petitioner's strategy, if allowed, would open a convenient gateway for a developer to subvert
and preempt the rights of buyers by the mere expediency of filing an action against them before
the regular courts, as in this case. Fortunately, the CA saw through the ruse. Contrary to
petitioner's contention, the HLURB is not deprived of jurisdiction to hear and decide a case
merely on the basis that it has been initiated by the developer and not by the buyer.

Petitioner cites Ayala Corporation v. Ray Burton Development Corporation32 and Fajardo Jr. v.

Freedom to Build, Inc.,33 which do not further its cause either. These cases pertain to deed
restrictions and restrictive covenants in the sale of subdivision units; hence, they do not fall
under any of the cases over which the HLURB exercises exclusive jurisdiction. Naturally, there
was every reason for the courts in the said cases to assume and exercise their jurisdiction.

Second Issue:

Authority to Stop Payment

of Monthly Rentals

The next proposition relates to the absence of a clearance from the HLRUB authorizing
respondent to stop payment of his amortizations. It is petitioner's position that under Section 23
of Rule VI of the Rules implementing PD 957, clearance must first be secured from the Board
before the buyer of a subdivision lot or a home can lawfully withhold monthly payments.

This contention is also unmeritorious.

First, Section 23 of PD 957 - - the law upon which the Implementing Rule cited was based - -
requires only due notice to the owner or developer for stopping further payments by reason of
the latter's failure to develop the subdivision according to the approved plans and within the time
limit. Section 23 provides as follows:

"SECTION 23. Non-Forfeiture of Payments. - No installment payment made by a buyer in a

subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in
favor of the owner or developer when the buyer, after due notice to the owner or developer,
desists from further payment due to the failure of the owner or developer to develop the
subdivision or condominium project according to the approved plans and within the time limit for
complying with the same. Such buyer may, at his option, be reimbursed the total amount paid
including amortization interests but excluding [delinquency] interests, with interest thereon at the
legal rate." (Italics supplied)
To be valid, an administrative rule or regulation must conform, not contradict, the provisions of
the enabling law.34 An implementing rule or regulation cannot modify, expand, or subtract from
the law it is intended to implement. Any rule that is not consistent with the statute itself is null
and void.35 Thus, the Court in People v. Maceren36 explained as follows:

"Administrative regulations adopted under legislative authority by a particular department must

be in harmony with the provisions of the law, and should be for the sole purpose of carrying into
effect its general provisions. By such regulations, of course, the law itself cannot be extended. x
x x.

"The rule making power must be confined to details for regulating the mode or proceeding to
carry into effect the law as it has been enacted. The power cannot be extended to amending or
expanding the statutory requirements or to embrace matters not covered by the statute. Rules
that subvert the statute cannot be sanctioned. x x x."

Plainly, therefore, Section 23 of Rule VI of the Implementing Rules cannot rise higher than
Section 23 of PD 957, which is the source of its authority. For that matter, PD 957 would have
expressly required the written approval of the HLURB before any stoppage of amortization
payments if it so intended, in the same manner that the decree specifically mandates written
consent or approval by the NHA (now the HLURB) in Section 18.37

Section 18 has been held by the Court to be a prohibitory law; hence, "acts committed contrary
to it are void,"38 pursuant to the intent of PD 957 "to provide a protective mantle over helpless
citizens who may fall prey to the razzmatazz of what P.D. 957 termed 'unscrupulous subdivision
and condominium sellers. '"39 The Court stressed that "such construal ensures the attainment of
the purpose of the law: to protect lot buyers, so that they do not end up still homeless despite
having fully paid for their home lots with their hard-earned cash."40

Apropos, to require clearance from the HLURB before stopping payment would not be in
keeping with the intent of the law to protect innocent buyers of lots or homes from scheming
subdivision developers. To give full effect to such intent, it would be fitting to treat the right to
stop payment to be immediately effective upon giving due notice to the owner or developer or
upon filing a complaint before the HLRUB against the erring developer. Such course of action
would be without prejudice to the subsequent determination of its propriety and consequences,
should the suspension of payment subsequently be found improper.

Significantly also, the Court has upheld the reliance of a buyer on Section 23 of PD 957 when
he ordered his bank to stop payment of the checks he had issued, so that he could suspend
amortization payments until such time as the owner or developer would have fulfilled its
obligations.41 In Antipolo Realty Corporation v. National Housing Authority,42 the exercise of a
statutory right to suspend installment payments was considered a valid defense against the
purported violations of Batas Pambansa (BP) Blg. 22 by the petitioner in that case. Such right
negated the third element - the "subsequent dishonor of the check without valid cause." With
more reason, then, should the buyer's right to suspend installment payments be considered a
valid defense against the suit for reconveyance and damages.

WHEREFORE, this Petition is hereby DENIEDand the assailed Decision and Resolution

are AFFIRMED. Costs against petitioner.

SO ORDERED.
Sandoval-Gutierrez, Corona, and Garcia, JJ., concur.
Carpio Morales, J., on official business.