Dela Luna vs. Swire Realty and Development Corporation

An appeal must be perfected within the reglementary period and in the manner prescribed by law; failure to do so renders the judgment final and executory and immutable, and the negligence of counsel binds the client absent gross or reckless negligence amounting to deprivation of due process. On the merits, a reservation agreement may be a valid contract of sale despite its denomination, and failure to issue official receipts is not a breach or ground for rescission under Article 1191.

Joseph Dela Luna, as buyer, and Swire Realty and Development Corporation, as seller, executed a Reservation Agreement covering Unit 2302 of the Makati Palace Hotel, under which Dela Luna would pay the purchase price in installments. The dispute was governed by the 2004 Rules of Procedure of the Housing and Land Use Regulatory Board, which set the period and formal requirements for appealing a Regional Office decision to the Board of Commissioners. The case eventually reached the Office of the President and the Court of Appeals after the HLURB Board of Commissioners and its First Division issued conflicting rulings.

On September 14, 2002, Joseph Dela Luna and Swire Realty and Development Corporation entered into a Reservation Agreement involving Unit 2302 in Makati Palace Hotel for the purchase price of P4,800,000.00. Dela Luna paid a reservation fee of P100,000.00, which would form part of the down payment, and issued postdated checks to cover the remaining down payment of P1,340,000.00 and monthly amortizations totaling P3,360,000.00.

Dela Luna paid the down payment of P1,440,000.00 on January 20, 2003, and also paid monthly amortizations for February, March, April, and May 2003. He alleged that he repeatedly requested Swire Realty to issue official receipts for his payments, but Swire Realty failed to comply. Later, Swire Realty sent him a memorandum of agreement, but it contained a typographical error in the unit number. Dela Luna refused to sign the document and asked for its revision.

On May 16, 2003, Dela Luna received the revised memorandum of agreement and a contract to sell. He asked Swire Realty to first issue official receipts for his payments, but it did not. He reiterated the request a month later and advised Swire Realty not to deposit his checks until the matter was settled. Swire Realty did not deliver official receipts; instead, it deposited the check dated June 20, 2003 against his advice.

Dela Luna then sent a demand letter through counsel, informing Swire Realty of his intention to rescind the contract due to its refusal to issue official receipts and asking for a refund of P1,812,000.00 within ten days from receipt. Swire Realty replied that Dela Luna had already received provisional receipts for his check payments, that he failed to meet his obligation by refusing to sign the memorandum of agreement, and that he was trying to renege on his monthly amortization. On August 6, 2003, Dela Luna sent another letter repeating his demand for rescission and refund. Swire Realty countered that the grounds were insufficient, that it had the right to rescind for his failure to pay the remaining monthly amortizations, and demanded the return of the signed memorandum of agreement within five days at the risk of breaching the agreement and forfeiting previous payments; it also offered settlement. Dela Luna accepted the offer to settle, but received no reply, prompting him to file a Complaint for Rescission of the Reservation Agreement with the HLURB.

The records contained no evidence that Swire Realty repeatedly refused to issue official receipts; Swire Realty informed Dela Luna that the receipts requested were ready for pick up at its office. Dela Luna stopped paying his monthly amortizations and failed to pay the balance of the purchase price.

• Late Appeal and Counsel's Negligence: Petitioner argued that the Court of Appeals committed grave error when it dismissed his Petition due to the late filing of his appeal with the HLURB; he claimed that his previous lawyer's negligence caused his failure to file the appeal within the reglementary period, that despite his repeated requests for an update the lawyer failed to respond, and that he discovered the decision only when he went to the HLURB office directly.
• Substantive Right to Refund: Petitioner argued that the Court of Appeals erred when it did not consider his substantive right to the refund and that the reservation agreements were the only ones subsisting between him and Swire Realty; he alleged that respondent had no right to retain the down payment without a signed contract of sale.
• Relaxation of Procedural Rules: In his Reply, petitioner maintained that respondent's claim that the Petition raised purely questions of fact was misplaced because his main argument on the Court of Appeals' failure to apply the principle of relaxation of procedural rules was a question of law; he reiterated that relaxation was proper in the interest of substantial justice and that his case involved gross negligence on the part of his previous lawyer, so the rule that mistakes of counsel bind the client could not apply.

• Question of Fact: Respondent urged the Court to dismiss the Petition for raising questions of fact settled by the Court of Appeals.
• Final and Executory Decision: Respondent argued that the Decision of the HLURB could no longer be set aside, it having become final and executory.
• No Proof of Counsel Negligence: Respondent stated that petitioner failed to show proof of his previous lawyer's negligence and only presented self-serving statements.
• Unjust Enrichment Inapplicable: Respondent refuted petitioner's claim for refund, stating that the principle of unjust enrichment was inapplicable in the case.

• Procedural Issue — Late Appeal and Finality: Whether the Court of Appeals committed grave error when it reversed the Decision of the Office of the President for petitioner's failure to file his appeal within the reglementary period.
• Substantive Issue — Right to Refund: Whether petitioner has the right to refund of his monthly amortizations.

• Procedural Issue — Late Appeal and Finality: No. The Court of Appeals correctly reversed the Office of the President; the appeal to the HLURB Board of Commissioners was filed 11 months after the reglementary period and failed to comply with the required affidavit of service, verified certification, and appeal bond, so the Regional Office Decision had become final and executory and immutable.
• Substantive Issue — Right to Refund: No. Petitioner has no right to refund; the Reservation Agreement is a valid contract of sale, the failure to issue official receipts is not a breach or ground for rescission under Article 1191, petitioner breached by stopping payments, and no unjust enrichment exists because Swire Realty's retention rests on a valid claim.

• Procedural Issue — Late Appeal and Finality: The right to appeal is a statutory privilege, not a natural right or component of due process, and must be exercised in accordance with the governing rules. Under the 2004 Rules of Procedure of the HLURB, an aggrieved party must appeal to the Board of Commissioners within 30 days from receipt of the Regional Office Decision. The Regional Office Decision was issued on November 8, 2006; the Makati Central Post Office certified that petitioner's counsel, Atty. Gladys P. Garcia, received it on November 21, 2006, giving petitioner until December 21, 2006 to appeal. Petitioner filed his memorandum of appeal only on November 19, 2007, 11 months after the reglementary period expired. He also failed to comply with all three formal requirements for perfecting an appeal under Rule XVI, section 2: the affidavit of service jointly executed by appellant and counsel, the verified certification jointly executed by appellant and counsel, and the appeal bond equivalent to the amount of the award prayed for. Without these, the appeal was not perfected. The negligence of counsel generally binds the client; the exception applies only when counsel's negligence is so gross or reckless as to amount to deprivation of due process, requiring a clear and convincing showing that the client was maliciously deprived of information and could not have acted to protect their interests. Petitioner presented only self-serving statements that he repeatedly asked his former lawyer for updates; no evidence or affidavits supported this. His counsel's aloofness should have prompted him to personally monitor the case, which had been pending before the HLURB since September 2003 and submitted for decision in February 2004; he took over two years to visit the office personally. The cases he invoked were not on all fours: Ramos vs. Bagasao excused a four-day delay due to counsel's death; Negros Slashers Inc. vs. Teng allowed a motion for reconsideration filed one day late; and Heirs of Villagracia vs. Equitable Banking Corporation reversed a denial of an extension filed three days late in a complex case involving four parcels of land and six volumes of records. Petitioner's delay was almost one year after finality, and he failed to comply with the formal requisites, rendering his memorandum a mere scrap of paper. Under Malixi vs. Baltazar, perfection of an appeal in the manner and within the period prescribed by law is jurisdictional, and failure to perfect it renders the judgment final and executory. The Regional Office Decision thus became final, executory, and immutable, and could not be reversed even by the highest court, much less by the Office of the President.
• Substantive Issue — Right to Refund: Even if the procedural lapses were disregarded, the substantive arguments fail. Petitioner admitted the reservation agreement was valid and subsisting but claimed it was not a contract of sale because it was not denominated as such. A valid contract of sale has three essential elements: consent, subject matter, and consideration. Consent is present when the parties agree as to the subject and cost of the contract. The Reservation Agreement satisfied all three: the parties agreed to the sale of Unit 2302 of the Makati Palace Hotel for P4,800,000.00. The meeting of minds appeared in clauses 3 and 4 of the agreement, which set the purchase price and payment scheme. By signing, Swire Realty obligated itself to transfer ownership of the unit and petitioner obligated himself to pay the purchase price, a reciprocal obligation consistent with a contract of sale. The agreement had also been partially executed when petitioner paid the P100,000.00 reservation fee and the P1,440,000.00 down payment. Petitioner demanded rescission and return of down payments due to Swire Realty's alleged refusal to issue official receipts, but no evidence showed repeated refusal; Swire Realty informed petitioner that the receipts were ready for pick up, and petitioner lost interest in them when he insisted on rescission. Failure to issue official receipts is neither a breach of an obligation nor a ground for rescission. Article 1191 allows rescission for breach of reciprocal obligations, and under Spouses Velarde vs. Court of Appeals, the right is predicated on a breach of faith that violates reciprocity; the breach contemplated is the obligor's failure to comply with an existing obligation. The issuance of official receipts was not a condition in the Reservation Agreement and was not essential to the transaction, but merely proof of payment. Thus, no basis existed for rescission. Conversely, petitioner breached the contract by stopping payment of monthly amortizations and failing to pay the balance of the purchase price. His claim for refund to prevent unjust enrichment also fails. Under Article 22, unjust enrichment requires (1) that one benefits without a valid or legal justification and (2) that the benefit is derived from another's damage or expense. There is no unjust enrichment when the benefit arises from a valid claim. Swire Realty had a legal right to the amortization payments under a valid and subsisting contract voluntarily executed by the parties. Petitioner's prayer for rescission and refund therefore had no basis.

• Finality and Immutability of Judgments — Once a judgment becomes final and executory, it cannot be reviewed, changed, altered, or reversed even by the highest court, much less by an administrative body such as the Office of the President. The Court applied this because the HLURB Regional Office Decision became final after Dela Luna failed to perfect a timely appeal.
• Perfection of Appeal as Jurisdictional — The perfection of an appeal in the manner and within the period prescribed by law is jurisdictional; failure to perfect it renders the judgment final and executory. The Court applied this to Dela Luna's appeal, which was filed 11 months late and without the required affidavit of service, verified certification, and appeal bond.
• Right to Appeal as Statutory Privilege — The right to appeal is neither a natural right nor a component of due process; it is a statutory privilege that must be exercised in accordance with law. The Court applied this to reject the plea for liberal relaxation of the HLURB appeal rules.
• Negligence of Counsel Binds the Client — Generally, the negligence of counsel binds the client; the exception is when counsel's negligence is so gross or reckless that it amounts to deprivation of due process, requiring a clear and convincing showing that the client was maliciously deprived of information and could not have acted to protect their interests. The Court applied this because Dela Luna failed to prove his counsel's negligence and was himself negligent in monitoring his case.
• Contract of Sale: Essential Elements — A valid contract of sale has three essential elements: consent, subject matter, and consideration; its denomination does not control. The Court applied this to hold that the Reservation Agreement was a valid contract of sale because the parties agreed on the sale of Unit 2302 for P4,800,000.00, and it had been partially executed.
• Rescission under Article 1191 — Rescission of reciprocal obligations is predicated on a breach of faith by the other party who violates the reciprocity between them; the breach contemplated is the obligor's failure to comply with an existing obligation. The Court applied this to hold that Swire Realty's failure to issue official receipts was not a breach or ground for rescission, especially since it was not a condition in the Reservation Agreement.
• Unjust Enrichment under Article 22 — Unjust enrichment requires (1) that one benefits without a valid or legal justification and (2) that the benefit is derived from another's damage or expense; there is no unjust enrichment when the benefit arises from a valid claim. The Court applied this because Swire Realty had a legal right to the amortization payments under a valid and subsisting contract.

• "[T]he right to appeal is neither a natural right nor [is it a component] of due process[. I]t is a statutory privilege" that imposes on the appealing party its accurate execution in accordance with the provision of law. — This passage opens the Court's procedural analysis and establishes that the right to appeal is not a natural right or a due process component but a statutory privilege subject to strict compliance.
• "the perfection of an appeal in the manner and within the period prescribed by law is jurisdictional and failure to perfect an appeal as required by law renders the judgment final and executory." — Quoted from Malixi vs. Baltazar, this passage supplies the controlling rule that made the HLURB Regional Office Decision final and immutable.
• "The failure to issue official receipts is neither tantamount to a breach of an obligation nor a ground for the rescission of a contract." — This passage states the Court's substantive holding rejecting Dela Luna's claimed basis for rescinding the Reservation Agreement.
• "There is no unjust enrichment when the person's benefit arises from a valid claim." — This passage disposes of Dela Luna's refund claim by explaining that Swire Realty's retention of payments rested on a valid and subsisting contract.

• Boardwalk Business Ventures, Inc. vs. Villareal, 708 Phil. 443 (2013) — Cited for the rule that the right to appeal is a statutory privilege and not a natural right or component of due process.
• Malixi vs. Baltazar, 821 Phil. 423 (2017) — Cited for the rule that perfection of an appeal in the manner and within the period prescribed by law is jurisdictional and failure renders the judgment final and executory.
• Ong Lay Hin vs. Court of Appeals, 752 Phil. 15 (2015) — Cited for the doctrine that the negligence of counsel binds the client, subject to the exception of gross or reckless negligence amounting to deprivation of due process.
• Baya vs. Sandiganbayan, G.R. Nos. 204978-83, July 6, 2020 — Cited for the principle that hiring counsel does not relieve a litigant of the duty to monitor the status of their case.
• Spouses Velarde vs. Court of Appeals, 413 Phil. 360 (2001) — Cited for the rule that rescission under Article 1191 is predicated on a breach of faith that violates reciprocity between the parties.
• First Optima Realty Corp. vs. Securitron Security Services, Inc., 752 Phil. 326 (2015) — Cited for the three essential elements of a valid contract of sale: consent, subject matter, and consideration.
• Clemente vs. Court of Appeals, 771 Phil. 113 — Cited for the rule that consent in a contract of sale is present when the parties agree as to the subject and cost of the contract.
• Loria vs. Muñoz, Jr., 745 Phil. 506 (2014) — Cited for the two elements of unjust enrichment under Article 22.
• Ramos vs. Bagasao, 185 Phil. 276 (1980) — Distinguished; the Court excused a four-day delay due to the untimely death of appellant's counsel, unlike Dela Luna's 11-month delay.
• Negros Slashers Inc. vs. Teng, 682 Phil. 593 (2012) — Distinguished; the Court allowed a motion for reconsideration filed one day late, unlike the present case.
• Heirs of Villagracia vs. Equitable Banking Corporation, 573 Phil. 212 (2008) — Distinguished; the Court reversed denial of an extension filed three days late, considering the complexity of the case, unlike Dela Luna's prolonged delay and non-compliance.

• 2004 Rules of Procedure of the Housing and Land Use Regulatory Board, Rule XVI, sec. 1 — Provides that any party aggrieved by the decision of the Regional Officer may appeal within 30 days from receipt of the decision. Applied to Dela Luna, who received the Regional Office Decision on November 21, 2006, had until December 21, 2006 to appeal, but filed only on November 19, 2007.
• 2004 Rules of Procedure of the Housing and Land Use Regulatory Board, Rule XVI, sec. 2 — Requires an appellant to attach an affidavit of service jointly executed by the appellant and counsel, a verified certification jointly executed by the appellant and counsel, and an appeal bond equivalent to the amount of the award prayed for. Applied to Dela Luna, who failed to comply with all three requirements, preventing perfection of his appeal.
• Civil Code, Article 1191 — Provides for rescission of reciprocal obligations in case one of the obligors fails to comply with what is incumbent upon them. Applied to hold that Swire Realty's failure to issue official receipts was not a breach or ground for rescission, and that Dela Luna instead breached by stopping payments.
• Civil Code, Article 22 — Provides that every person who acquires or comes into possession of something at the expense of another without just or legal ground shall return the same. Applied to hold that Swire Realty had a legal right to the amortization payments under a valid and subsisting contract, so no unjust enrichment existed.

Carandang, Zalameda, Rosario, and Marquez, JJ., concur.