Swire Realty Development Corporation vs. Yu

The period to appeal decisions of the HLURB Board of Commissioners to the Office of the President is strictly 15 days from receipt under Section 15 of PD 957 and Section 2 of PD 1344, which special laws prevail over the 30-day period prescribed in Administrative Order No. 18; the filing of a motion for reconsideration suspends but does not reset this period, and the time during which the motion is pending is deducted from the total 15 days. Rescission of a contract to sell a condominium unit is proper under Article 1191 of the Civil Code when the developer fails to deliver the unit within the stipulated period and fails to provide agreed amenities, constituting substantial breach that defeats the object of the parties.

Swire Realty Development Corporation entered into a Contract to Sell with Jayne Yu on July 25, 1995, covering Unit 3007 of the Palace of Makati condominium and a parking slot. The unit, with a contract price of P7,519,371.80, was to be paid in monthly installments until September 24, 1997. Despite Yu's full payment on September 24, 1997, Swire failed to complete and deliver the unit by the agreed completion date of November 1998, as extended to December 1999 under its License to Sell.

• The Contract: On July 25, 1995, respondent Jayne Yu and petitioner Swire Realty Development Corporation executed a Contract to Sell for Unit 3007 of the Palace of Makati, located at the corner of P. Burgos and Caceres Streets, Makati City. The unit measured 137.30 square meters with a total contract price of P7,519,371.80, payable in equal monthly installments until September 24, 1997. Respondent also purchased a parking slot for P600,000.00.
• Payment and Default: Respondent paid the full purchase price for the unit on September 24, 1997, and made a P20,000.00 down payment for the parking slot. Notwithstanding full payment, petitioner failed to complete and deliver the unit by the stipulated completion period of November 1998, as extended to December 1999 under License to Sell No. 99-05-3401.
• Ocular Inspection Findings: An ocular inspection conducted on May 3, 2002, revealed that the unit remained incomplete: kitchen cabinets and fixtures were not installed; the flooring was high-density fiber instead of narra wood parquet; baseboards were installed instead of pink porrino granite borders; a square column replaced the planned round column; and the master bedroom door showed poor workmanship. Additionally, amenities such as the swimming pool, change rooms, health spa, massage room, restaurant, and entertainment hall were not yet provided as of the inspection date. The unit had not been delivered to respondent as of August 28, 2002.
• Administrative Proceedings: Respondent filed a complaint for rescission with the HLURB ENCRFO, which dismissed the complaint and ordered petitioner merely to complete the unit and pay minor damages. The HLURB Board of Commissioners reversed this on appeal, finding substantial breach and ordering rescission, refund, and administrative fines.

• Timeliness of Appeal: Petitioner argued that technical rules are not binding upon administrative agencies and that the appeal to the Office of the President was filed within the prescribed period, contending that the filing of a motion for reconsideration should have opened a fresh period for appeal.
• Substantial Breach: Petitioner maintained that rescission should not be permitted for slight or casual breach of contract, but only for such breaches as are substantial and fundamental as to defeat the object of the parties in entering into the agreement, asserting that the defects in the unit were minor and reparable.

• Procedural Timeliness: Respondent countered that the appeal to the Office of the President was filed out of time, having been submitted eleven days beyond the allowable period after accounting for the interruption caused by the motion for reconsideration.
• Substantial Breach Justifying Rescission: Respondent argued that the failure to deliver the unit more than two years beyond the extended completion date, coupled with the non-provision of agreed amenities and incomplete fixtures, constituted substantial and fundamental breach of both statutory and contractual obligations warranting rescission under Article 1191 of the Civil Code.

• Appeal Period from HLURB to Office of the President: Whether the appeal to the Office of the President from the HLURB Board of Commissioners' decision was filed within the reglementary period.
• Proper Standard for Rescission: Whether rescission of the Contract to Sell is proper given the nature of petitioner's breach.

• Appeal Period from HLURB to Office of the President: The appeal was filed out of time. The period to appeal decisions of the HLURB Board of Commissioners to the Office of the President is strictly 15 days from receipt pursuant to Section 15 of PD 957 and Section 2 of PD 1344, which special laws prevail over the general 30-day period in Administrative Order No. 18. Petitioner received the HLURB decision on April 17, 2006, and had until May 2, 2006 to appeal. Instead, it filed a motion for reconsideration on April 28, 2006, which merely suspended the running of the 15-day period. Having received the denial of the motion on July 23, 2007, petitioner had only four days remaining (15 days minus the 11 days already elapsed from April 17 to April 28) until July 27, 2007, within which to file its appeal. The filing on August 7, 2007 was therefore eleven days late. The right to appeal is a statutory privilege, not a natural right or part of due process, and must be exercised strictly in accordance with the provisions of law; liberal construction does not justify disregard of procedural rules.
• Proper Standard for Rescission: Rescission is proper. Under Article 1191 of the Civil Code, the power to rescind is implied in reciprocal obligations when one obligor fails to comply with what is incumbent upon it. The breach contemplated is the failure to comply with an existing obligation. Petitioner's failure to complete and deliver the unit within the stipulated period (extended to December 1999) and its failure to provide the agreed amenities as of May 2002 and August 2002 constitute substantial and fundamental breaches of statutory and contractual obligations that defeat the object of the parties. The delay in completion and delivery entitles respondent to rescind the contract, demand refund with interest, and recover damages.

• Strict 15-Day Appeal Period from HLURB: Decisions of the HLURB Board of Commissioners must be appealed to the Office of the President within 15 days from receipt under Section 15 of PD 957 and Section 2 of PD 1344, not 30 days under Administrative Order No. 18. Special laws providing specific periods prevail over general administrative rules.
• Effect of Motion for Reconsideration on Appeal Period: The filing of a motion for reconsideration suspends the running of the appeal period; the time during which the motion is pending is deducted from the total reglementary period. The pendency of the motion does not open a fresh period for appeal upon its denial.
• Nature of Right to Appeal: The right to appeal is a statutory privilege that must be exercised in the manner and in accordance with the provisions of law. It is neither a natural right nor part of due process, and procedural rules governing appeals are not mere technicalities to be disregarded at will.
• Substantial Breach Justifying Rescission: Under Article 1191 of the Civil Code, rescission is available when the obligor fails to comply with an existing obligation. In contracts for the sale of real estate, failure to deliver the subject property within the stipulated period and failure to provide agreed amenities constitute substantial breach that defeats the object of the contract, justifying rescission, refund, and damages.

• "The right to appeal is merely a statutory privilege which may be exercised only in the manner and in accordance with the provisions of the law."
• "While there may be exceptions for the relaxation of technical rules principally geared to attain the ends of justice, petitioner’s fatuous belief that it had a fresh 15-day period to elevate an appeal with the OP is not the kind of exceptional circumstance that merits relaxation."
• "The delay in the completion of the project as well as of the delay in the delivery of the unit are breaches of statutory and contractual obligations which entitle respondent to rescind the contract, demand a refund and payment of damages."

• SGMC Realty Corporation v. Office of the President, 393 Phil. 697 (2000) — Controlling precedent establishing that the 15-day period under PD 957 and PD 1344 prevails over the 30-day period in Administrative Order No. 18 for appeals from HLURB to the Office of the President.
• Maxima Realty Management and Development Corporation v. Parkway Real Estate Development Corporation, 467 Phil. 190 (2004) — Followed; reiterated the 15-day appeal period rule.
• United Overseas Bank Philippines, Inc. v. Ching, 521 Phil. 146 (2006) — Followed; applied the deduction rule for motions for reconsideration pending during the appeal period.
• Spouses Velarde v. Court of Appeals, 413 Phil. 360 (2001) — Cited for the principle that rescission under Article 1191 is predicated on breach of faith and failure to comply with an existing obligation.

• Section 15, Presidential Decree No. 957 (Subdivision and Condominium Buyers' Protective Decree) — Provides that HLURB decisions become final after 15 days from receipt.
• Section 2, Presidential Decree No. 1344 — Provides that NHA (now HLURB) decisions become final after 15 days from receipt and are appealable only to the President.
• Article 1191, Civil Code of the Philippines — Governs the power to rescind reciprocal obligations in case of non-compliance.
• Administrative Order No. 18, Series of 1987 — General rule providing 30-day appeal period to the Office of the President, subject to special laws.

Presbitero J. Velasco, Jr. (Chairperson), Martin S. Villarama, Jr., Bienvenido L. Reyes, and Francis H. Jardeleza.