Published — February 24, 2021
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
More on condominiums aside from purchase price: ON LICENSE TO SELL SUBDIVISION LOT OR CONDOMINIUM UNIT
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A condominium unit’s bounds are reckoned by the interior surfaces
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Common areas are excluded in determining the total area of a condominium unit
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A buyer may recover the total amount of the purchase price in the sale of condominium units
May a condominium unit buyer recover the purchase price in the sale of condominium units?
For a better understanding, let us take the case of Joseph Harry Walter Poole-Blunden vs. Union Bank of the Philippines, G.R. No. 205838, November 29, 2017.
In this case, Poole came across an advertisement placed by Union Bank in the Manila Bulletin. The ad was for the public auction of certain properties. One of these properties was a condominium unit advertised to have an area of 95 square meters. Thinking that it was sufficient and spacious enough for his residential needs, Poole decided to register for the sale and bid on the unit.
On the day of the auction, Poole won the unit. Thus, eventually, Poole entered into a Contract to Sell with Union Bank. The contract stipulated that Poole would pay 10% of the purchase price as down payment and that the balance shall be paid over a period of 15 years in equal instalments with interest.
Poole started occupying the unit in June 2001. By July 20, 2003, he was able to fully pay the unit. In late 2003, Poole decided to construct two (2) additional bedrooms in the unit. Upon examining it, he noticed apparent problems in its dimensions. He took rough measurements of the unit, which indicated that its floor area was just about 70 squares, not 95 square meters, as advertised by Union Bank.
Poole got in touch with an officer of Union Bank to raise the matter, but no action was taken. Poole wrote the Union Bank, informing it of the discrepancy. He asked for the cancellation of the Contract to Sell, along with a refund of the amounts he had paid, in the event that it was conclusively established that the area unit was less than 95 square meters.
In a letter dated December 6, 2004, Union Bank informed Poole that the unit was confirmed to be 95 square meters, inclusive of the terrace and the common areas surrounding it. Poole was not satisfied with the Union Bank’s response. Thus, he hired an independent geodetic engineer who later issued a certification stating that the total floor area was only for 74.4 square meters. The Union Bank explained but Poole was unsatisfied.
Poole the filed a complaint for the Recission of Contract for the recovery of the purchase price he paid.
May Poole recover the total amount of the purchase price he paid?
The Supreme Court said:
Yes.
Union Bank committed fraud in failing to disclose to Poole that the advertised 95 square meters was inclusive of common areas. Also, the inclusion of the common area in the computation of the unit’s total area is inconsistent with Republic Act No. 4726, otherwise known as the Condominium Act. Furthermore, a condominium unit’s bounds are reckoned by the interior surfaces. It excludes common areas. Thus, when Poole agreed to purchase the unit, he never consented to including the area as part of its purchase price.
As a consequence, the Contract to Sell entered into by Poole and Union Bank was declared null and void. The Union Bank was ordered to pay Poole the total amount of the purchase price.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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