G.R. Nos. 145156-57. July 29, 2005.
SOLID HOMES, INC., Petitioner, vs. SPOUSES ANCHETA K. TAN and CORAZON DE JESUS TAN, Respondents.

FACTS

Petitioner Solid Homes, Inc., a subdivision developer, sold a lot in its Loyola Grand Villas Subdivision. The lot was eventually purchased by respondent spouses Tan in 1985. The respondents discovered that the subdivision lacked the promised infrastructure and utility systems (water, sewerage, electricity) and was occupied by squatters, contrary to the approved plans and advertisements. In 1995, the respondents demanded that petitioner fulfill its obligations under P.D. No. 957, which mandates developers to provide these facilities. Upon petitioner’s failure to comply, the respondents filed a complaint with the HLURB.
The HLURB Arbiter and Board of Commissioners ruled in favor of the respondents, ordering petitioner to provide the facilities and clear the lot of squatters or, alternatively, to replace the lot with a similar one with facilities. The Office of the President affirmed this but modified the alternative remedy: if no replacement lot was available, petitioner was to refund only the purchase price plus interest. The respondents sought reconsideration, arguing for payment of the lot’s current market value instead of the purchase price, but this was denied.

ISSUE

Whether the Court of Appeals erred in modifying the decision of the Office of the President by ordering petitioner to pay the current market value of the lot, instead of merely the purchase price plus interest, in case no replacement lot is available.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic centers on the application of equity and the prevention of unjust enrichment under the circumstances. P.D. No. 957 imposes a statutory obligation on subdivision developers to provide basic utilities and facilities. Petitioner’s prolonged failure to develop the subdivision for nearly two decades constituted a clear breach of this legal and contractual duty.
The Court held that limiting the monetary liability to the purchase price plus interest, as the Office of the President ordered, would be grossly inequitable. It would allow the developer to profit from its own wrong. The value of real property escalates over time. Requiring payment of only the original price would enable the developer to potentially re-sell the same lot at its current, higher market value, thereby unjustly enriching itself at the expense of the aggrieved buyers. This outcome is contrary to reason, justice, and the protective intent of P.D. No. 957. Therefore, the Court of Appeals correctly ordered the payment of the current market value as the proper measure of indemnity, ensuring the respondents are placed in the position they would have been in had the obligation been timely fulfilled and preventing the petitioner from benefiting from its own default.