PROPERTY DIGESTS (2013 – 2014)
VIVENCIO ABANO
G.R. No. 145156--‐57 July 29, 2005
SOLID HOMES v. TAN
Plaintiffs: SOLID HOMES INC.
Defendant: SPOUSES ANCHETA K. TAN AND CORAZON DE JESUS TAN
CASE: Solid Homes sold a subdivision lot in Loyola Grand Villas to
spouses Uy, who in turn sold it to spouses Tan. However, spouses Tan
found that the property was not developed and was occupied with
squatters. They then demanded that Solid Homes fulfill their obligation
to develop the property, or to provide them with another lot of the
same size. Upon reaching the Court of Appeals, it ruled that in the event
that Solid Homes fails to provide another lot to respondents, it should
pay them the current market value of the property.
The Supreme Court upheld the CA’s ruling saying that to allow
petitioners to pay only the purchase price would be unjust enrichment
because the value of the property has escalated, and so petitioners
could resell it at a higher price today.
DOCTRINE: A cause of action arises when that which should have been
done is not done, or that which should not have been done is done. In
this case, the cause of action arose when Solid Homes delayed in
complying with their obligation to develop the property as advertised
after demand from spouses Tan to do so.
BACKGROUND:
 April 7, 1980  Solid Homes Inc. sold to spouses Joe and Myrna
Uy a subdivision lot in Loyola Grand Villas Subdivision, Quezon
City. The title was then registered in their name.
 February 1985  The spouses Uy sold the same lot to spouses
Ancheta and Corazon Tan. The title was transferred as thus.
RACHELLE ANNE GUTIERREZ
ATTY.
o When spouses Tan visited the property they found that
there had been no development at all: No
infrastructure, utility systems for water, sewerage,
electricity and telephone, as announced in the
approved plans and advertisements of the subdivision.
o Also, squatters occupy their lot and surrounding areas.
 December 18, 1995  Spouses Tan demanded that Solid Homes
provide the needed utility systems and clear the area of
squatters to allow lot owners in the area a full access to and
peaceful possession of their respective lots, in conformity with
P.D. No. 957 which requires an owner or developer of a
subdivision project to develop the same within one year from
the issuance of its license.
 Spouses Tan filed with the Field Office of the Housing and Land
Use Regulatory Board (HLURB) a complain for performance and
damages after petitioner failure to comply with their demands.
 September 17, 1996  HLURB Arbiter ordered petitioner to
perform its obligation, or in the alternative, to replace it with a
lot of similar size and available facilities within the subdivision.
 April 16, 1997  HLURB Board of Commissioners affirmed the
Arbiter’s ruling.
 June 3, 1999  The Office of the President affirmed the
decision, but modified the alternative such that in the event
that Solid Homes fails to replace the subject lot with another
(because it had already sold or transferred all of its properties in
the subdivision to others), it should pay spouses Tan the total
amount which they paid as purchase price with legal interest.
 May 23, 2000  The Court of Appeals affirmed the decision of
the HLURB Board of Commissioners, and instead ordered Solid
Homes to pay spouses Tan with the current market value of the
lot in the event that it cannot be replaced with another.
ISSUES TO BE RESOLVED:
1. Whether or not respondents’ right to bring the instant case
against petitioner has already prescribed.
PROPERTY DIGESTS (2013 – 2014)
2. Whether the petitioner should pay them merely the purchase
price with legal interest or the current market value thereof.
RESOLUTIONS AND ARGUMENTS
ISSUE 1  Whether or not respondents’ right to bring the instant case
against petitioner has already prescribed  NO. Prescription began to
run only on December 18, 1995 when spouses Tan demanded that Solid
Homes fulfill their obligation.
Major Point 1: Article 1144, Civil Code provides that an action for
specific performance upon a written contract prescribes 10 years from
the time the right of action accrues, and such action accrues only upon
the concurrence of the three requisites:
 The main contention here is WHEN the 10 years began: April 7,
1980 (the date spouses Uy bought the lot from Solid Homes) or
February 1985 (the date when spouses Tan bought the lot).
 3 Requisites for a cause of action to exist:
o A right in favor of the plaintiff by whatever means and
under whatever law it arises or is created
o An obligation on the part on the defendant to respect
such right
o An act or omission on the part of such defendant
violative of the right of the plaintiff.
 Banco Filipino Savings and Mortgage Bank v. CA  And a cause
of action arises when that which should have been done is not
done, or that which should not have been done is done.
o In short, when the 3rd requisite happens, that’s when
the action accrues.
 Social Security System vs. Moonwalk Development and Housing
Corporation, et al.  an obligor violates his obligation to the
obligee from the time the latter made a demand for
performance, which demand also marks the point of time when
the former incurs mora or delay.
RACHELLE ANNE GUTIERREZ
ATTY. VIVENCIO ABANO
o The prescriptive period within which the oblige may
bring an action against the obligor does not commence
to run until a demand is made.
 Respondents made their written demand upon petitioner to
perform what is incumbent upon it only on December 18, 1995, it
was only from that date when the 10--‐year prescriptive period
under Article 1144 commenced to run. And since respondents’
complaint for specific performance was filed with the Field
Office of the HLURB only on April 1, 1996, or less than four (4)
months after the date of their demand, petitioner’s reliance on
prescription of action is simply without any leg to stand on.
ISSUE 2  Whether the petitioner should pay them merely the
purchase price with legal interest or the current market value thereof.
 Petitioner should pay the market value of the lot, NOT the purchase
price, in light of increase in its value through the years.
Major Point 1: The Court refused a literal application of Article 1385,
Civil Code which provides that “Rescission creates the obligation to
return the things which were the object of the contract, together with
their fruits, and the price with its interests; consequently, it can be
carried out only when he who demands rescission can return whatever
he may be obliged to restore.”
 Were we to follow the letter of Article 1385, we will in effect be
paving the way to an absurd situation whereby subdivision
developers who have reneged on their contractual and 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,
respondents Solid Homes, Inc. would enrich themselves at the
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