SOLID HOMES, INC.

vs.
SPOUSES ANCHETA TAN and CORAZON de JESUS-TAN

G.R. Nos. 145156-57

July 29, 2005
FACTS
In April 7, 1980, petitioner Solid Homes, Inc. sold to spouses Joe Uy
and Myrna Uy a subdivision lot located at petitioner’s Loyola Grand Villas
Subdivision, Quezon City. The lot was registered in their names. Thereafter, the
spouses Uy sold the same lot to the spouses Ancheta Tan and Corazon de Jesus-
Tan. The former title was cancelled and replaced by a new one in respondent’s
name.
FACTS
Respondents Tan visited their property a number of times only to
discover that there was no infrastructure and utility services as announced in the
approved plans and advertisements. Worse, squatters occupy their lot and its
surrounding areas.

Spouses Tan demanded on petitioner to provide utility systems and

clear the squatters. Having received no reply, they filled with the office of the
Housing and Land Use Regulatory Board (HLURB) a complaint for specific
performance and damages praying that the petitioner be ordered to provide the
needed facilities and rid the same of squatters or to replace their lot with another.

HLURB Arbiter ruled in favor of the respondents.

FACTS
On appeal, HLURB Board of Commissioners affirmed that of the Arbiter and modified that
failure to replace subject lot, it shall pay the spouses the purchase price.

In June 3, 1999, The Office of the President affirmed the decision, but modified the alternative
such that in the event that Solid Homes, Inc. fails to replace the subject lo with another, it should pay the
spouses Tan the total amount which they paid as purchase price with legal interest.

The respondents then filed a motion for partial reconsideration of the aforementioned decision,
praying for the deletion of that portion thereof giving the petitioner the option of merely paying them the
purchase price with interest and argued that it would be more in accord with equity and fair play if they
will be played the fair market value of the lot in question and not merely its purchase price. The Office of
the President denied respondent’s motion that it be paid the lot’s fair market value. The Court of Appeals,
reversed on May 23, 2000
Petitioner’s motion for reconsideration was denied on September 12, 2000. Hence, this petition.
ISSUES
1. Whether or not respondent’s right to bring the
instance case against petitioner has already prescribed.

2. In the event respondents opt to rescind the contract,

should petitioner pay them merely the purchase price plus
interest or the current market value thereof.
RULING
1. NO. As provided in Article 1144, the prescriptive period for bringing action for
specific performance prescribes in 10 years from the time the right of action
accrues:
(1) Upon a written contract
(2) Upon an obligation created by law
(3) Upon a judgment
In law, a cause of action exists when the following requisite concur:
(1) A right in favor of the plaintiff by whatever means and under whatever law it
arises or is created;
(2) and obligation on the part of the defendant to respect such right; and
(3) an act or omission on the part of such defendant violative of the right of the
plaintiff.
 In the case at bar, it was only on December 18, 1995 when respondents
made a written demand upon the petitioner to construct subdivision roads, put
up facilities and rid the premises of squatters, obligations which are obligated
to do. A party who is under an obligation to do something incurs delay from
the time that the oblige demands, either judicially or extrajudicially, for the
fulfillment of the obligation.

Hence, it was only from December 18, 1995 from which the prescriptive
period commenced to run. And since respondent’s complaint for specific
performance was filed with the HLURB on April 1996, petitioner’s reliance on
prescriptions of actions should fail.
RULING
2. The petitioner should pay the market value of the lot, and NOT the purchase price, in
light of increase in its value through the years.

The court refused a literal application of Article 1385, Civil Code which provides
that “Rescission creates the obligation to return thins which were the object of contract,
together with their fruits, and the price with its interest; consequently, it can be carried out
only when he who demands rescission can return whatever he may obliged to restore.”
 If the courts were to follow the letter of Article 1385, they will in effect be paving
the way to an absurd situation whereby subdivision developers who have reneged on their
contractual an legal obligation to provide utility systems and facilities for the use of
subdivision lot owners may themselves profit from their very own wrongs and shortcomings.

It is definite that the value of the subject property already escalated after almost
two decades from the time spouse Tan paid for it. Equity and justice dictate that the injured
party should be paid the market value of the lot, otherwise, Solid Homes, Inc. would enrich
themselves at the expense of herein lot owners when they sell the same lot at the present
market value.
STATUTORY CONSTRUCTION PRINCIPLES
1. A literal application of any part of a statute is to be rejected if it will operate unjustly, lead to
absurd results, or contradict the evident meaning of the statute taken as a whole.

2. Statutes should receive a sensible construction, such as will give effect to the legislative
intention and so as to avoid an unjust or an absurd conclusion.