TL;DR

In the case of Lefebre v. A Brown Company, Inc., the Supreme Court ruled that a property buyer, Gina Lefebre, was entitled to a full refund of her payments plus interest from the developer, A Brown Company, Inc., due to the developer’s failure to deliver a promised golf course amenity. Crucially, the Court emphasized that the developer improperly bypassed administrative procedures by directly appealing to the Court of Appeals instead of exhausting remedies within the Housing and Land Use Regulatory Board (HLURB) and the Office of the President. This decision reinforces the importance of following proper legal channels and protects buyers’ rights when developers fail to fulfill their promises in real estate contracts.

Bypassing Protocol, Missing Fair Play: The Case of the Undelivered Golf Course

Imagine purchasing a property with the allure of a championship golf course, only to find the promise unfulfilled. This was the predicament Gina Lefebre faced when A Brown Company, Inc. failed to develop the advertised golf course in their Xavier Estates project. Lefebre, seeking recourse, filed a complaint with the HLURB. The HLURB Board of Commissioners (BOC) sided with Lefebre, ordering a full refund. However, A Brown Company skipped a crucial step – appealing to the Office of the President – and directly went to the Court of Appeals (CA). This procedural misstep became the central issue before the Supreme Court: Was the CA right in reversing the HLURB-BOC decision, despite the developer’s failure to exhaust administrative remedies?

The Supreme Court firmly said no. Justice Perlas-Bernabe, writing for the Second Division, underscored the bedrock legal principle of the exhaustion of administrative remedies. This doctrine mandates that parties must pursue all available remedies within administrative agencies before resorting to court action. In the context of HLURB decisions, the proper hierarchy is clear: from the HLU Arbiter to the HLURB Board of Commissioners, then to the Office of the President, before seeking judicial intervention. A Brown Company blatantly disregarded this established procedure by directly filing a petition for certiorari with the CA after the HLURB-BOC ruling.

The Court cited the HLURB Rules of Procedure and Resolution No. 765, Series of 2004, which explicitly outline the appeal process. Section 60(b), Rule 17 of the HLURB Rules states that decisions of the BOC become final after 15 days unless an appeal is filed. Furthermore, Section 2, Rule XXI of HLURB Resolution No. 765 specifies that appeals from the HLURB-BOC should be directed to the Office of the President. A Brown Company’s direct recourse to the CA was a clear procedural misstep, rendering their petition premature and improper. The Supreme Court reiterated the importance of respecting administrative processes, quoting Teotico v. Baer, which emphasized that the HLURB is the primary regulatory body for housing and land development, and its established procedures must be followed.

While the CA initially dismissed A Brown Company’s petition for failure to exhaust administrative remedies, it later reversed course, invoking equity jurisdiction and citing exceptions to the exhaustion doctrine. However, the Supreme Court found this reversal erroneous. The Court clarified that while exceptions to the exhaustion doctrine exist, they are narrowly construed and require compelling reasons for bypassing administrative channels. A mere invocation of equity jurisdiction, without demonstrating substantive injustice or providing a valid excuse for procedural non-compliance, is insufficient. Moreover, the Court highlighted that A Brown Company failed to adequately explain its procedural lapse, nor did it present persuasive reasons to warrant a relaxation of the rules.

Beyond the procedural lapse, the Supreme Court also affirmed the HLURB-BOC’s substantive ruling in favor of Lefebre. The Court reiterated the protection afforded to real estate buyers under Republic Act No. 6552, the Realty Installment Buyer Protection Act, also known as the Maceda Law. Section 3(b) of RA 6552 mandates that for contracts to sell cancelled due to buyer default, the seller must refund the cash surrender value to the buyer, and crucially, actual cancellation only occurs upon full payment of this cash surrender value. In Lefebre’s case, A Brown Company failed to tender the cash surrender value, rendering the contract to sell still valid and subsisting.

Furthermore, the Court invoked Presidential Decree No. 957, the Subdivision and Condominium Buyers’ Protective Decree. Sections 20 and 23 of PD 957 obligate developers to deliver promised amenities and provide buyers with remedies if they fail to do so. Section 23 specifically allows buyers to desist from further payments and demand reimbursement if the developer fails to develop the project as advertised. Since A Brown Company admitted the non-development of the golf course, and this amenity was a clear inducement for Lefebre’s purchase, she was entitled to a full refund under PD 957. The Court emphasized that A Brown Company could not validly cancel the contract due to Lefebre’s payment delays while simultaneously failing to deliver on their promise of the golf course.

The Supreme Court also pointed out another procedural error by A Brown Company: they filed a certiorari petition instead of a Rule 43 appeal before the CA. This further underscored their disregard for proper procedure. The Court reiterated that the mode and period for appeal are jurisdictional, and failure to comply defeats the right to appeal. Certiorari is not a substitute for a lost appeal. Ultimately, the Supreme Court reversed the CA decision and reinstated the HLURB-BOC ruling, solidifying Lefebre’s right to a full refund and reinforcing the importance of procedural regularity and buyer protection in real estate transactions.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Lefebre v. A Brown Company, Inc., G.R. No. 224973, September 27, 2017