Case Digest: GG Sportswear Mfg. Corp. vs World Class Properties, Inc. 614 SCRA 75 (2010)

GG Sportswear Mfg. Corp. vs World Class Properties, Inc. 614 SCRA 75 (2010)

Subject: Obligations and Contracts

 

FACTS

GG Sportswear Manufacturing Corporation entered into a Reservation Agreement with World Class Properties Inc. for the purchase of a penthouse unit and parking slots in a condominium project called the World Class Tower. The Reservation Agreement provided that the Contract to Sell would be executed upon payment of 30% of the total purchase price.

GG Sportswear paid the reservation fee and made a down payment of 21% of the total purchase price. However, World Class Properties failed to complete the project within the agreed-upon time of December 1999.

GG Sportswear filed a complaint with the Housing and Land Use Regulatory Board (HLURB) seeking a refund of its payments and the rescission of the Reservation Agreement. The HLURB ruled in favor of GG Sportswear and ordered World Class Properties to refund the payments and rescind the Reservation Agreement.

ISSUE

Whether or not the absence of Certificate of Registration and License to sell by the Housing and Land Use Regulatory Board (HLURB) automatically render a contract otherwise validly entered void.

RULING

No, the absence of CR/LS by HLURB does not automatically render a contract otherwise validly entered void.

Under Article 1390, contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.

In this case, a review of the relevant provisions of P.D. 957 reveals that while the law penalizes the selling of subdivision lots and condominium units without prior issuance of a Certificate of Registration and License to Sell by the HLURB, it does not provide that the absence thereof will automatically render a contract, otherwise validly entered, void. The penalty imposed by the decree is the general penalty provided for the violation of any of its provisions. It is well-settled in this jurisdiction that the clear language of the law shall prevail. This principle particularly enjoins strict compliance with provisions of law which are penal in nature, or when a penalty is provided for the violation thereof. With regard to P.D. 957, nothing therein provides for the nullification of a contract to sell in the event that the seller, at the time the contract was entered into, did not possess a certificate of registration and license to sell. Absent any specific sanction pertaining to the violation of the questioned provisions (Sections 4 and 5), the general penalties provided in the law shall be applied. The general penalties for the violation of any provisions in P.D. 957 are provided for in Sections 38 and 39. As can clearly be seen in the cited provisions, the same do not include the nullification of contracts that are otherwise validly entered.