Published — February 12, 2021
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
More on SUBDIVISION LOT OR CONDOMINIUM UNIT: RIGHTS OF A CONDOMINIUM UNIT OWNER
-
License to Sell is required to ensure that the buying public will be dealing with accredited or recognized subdivision or condominium developers
-
Lack of a license to sell does not result to the invalidation of the contract to sell
-
The buyer is still entitled to a 50% refund of the total payments made, if applicable
Make a customer, not a sale. – Katherine Barchetti
For a better understanding, let us take the case of Moldex Realty, Inc. vs. Flora A. Saberon, G.R. No. 176289, April 08, 2013.
In this case, Flora asked Moldex, the developer, to reserve the 180-square meter lot known as Lot 2, Block 1 of Metrogate Subdivision in Dasmariñas, Cavite in her favor as shown by a Reservation Application dated April 11, 1992. Flora then opted to pay on installment for a period of five years and began making periodical payments from 1992 to 1996.
In April, August and October 1996, Moldex sent Flora notices reminding her to update her account. In November 1996, her balance ballooned to P491, 265.91. Moldex thus suggested to Flora to execute a written authorization for the sale of the subject lot to a new buyer and a written request for refund so that she can get half of all payments she made. However, Flora never made a written request for refund.
Moldex then sent Flora a Notarized Notice of Cancellation of Reservation Application and/or Contract to Sell. Flora, on the other hand, filed before the Housing and Land Use Regulatory Board (HLURB) for the annulment of the contract to sell, recovery of all her payments with interests, damages, and the cancellation of Moldex’s license to sell.
Aside from imputing bad faith on the part of Moldex in bloating her unpaid balance, Flora alleged that the contract to sell between her and Moldex is void from its inception. According to Flora, Modex violated the law when it sold the subject lot to her on April 11, 1992 or before it was issued a license to sell on September 8, 1992.
Is the Contract to Sell between Flora and Moldex valid despite the fact that the contract was perfected before a license to sell was issued in favor of the latter?
The law says:
Yes.
In this case, Moldex argued that the absence of license at the time of the contract’s perfection does not render it void. Otherwise, a subdivision or condominium developer may use it as a convenient excuse if it wants to back out from a contract. Moldex also asserted that the purpose of law in requiring a license is to ensure that the buying public will be dealing with HLURB-recognized subdivision and condominium developers. Here, Moldex has substantially complied with the requirement of the law because at the time of the contract to sell was perfected, its application for a license was already pending and subsequently granted.
The lack of license to sell or the failure on the part of a subdivision developer (Moldex) to register the contract to sell or deed of conveyance with the Register of Deeds does not result to the nullification or invalidation of the contract to sell it entered into with the buyer (Flora). The contract to sell remains valid and subsisting. However, Flora is nevertheless entitled to a 50% refund under the Maceda Law.
It is on record that Flora had already paid more than two years of installments. It was also shown that Flora has defaulted in her succeeding payments. Thereafter, Moldex sent notices to Flora to update her account but to no avail. She could thus no longer option to pay her unpaid installments within the grace period. Besides, Moldex already sent Flora a Notarized Notice of Cancellation of Reservation Application and/or Contract to Sell. Hence, only the option whereby the seller, in this case, Moldex shall refund to the buyer, Flora, the cash surrender value of the payments on the property equivalent to 50% of the total payments made.
May a License to Sell be revoked? A related article will be posted in a few days.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
All rights reserved.
SUBSCRIBE NOW FOR MORE LEGAL UPDATES!
[email-subscribers-form id=”4″]