The Supreme Court ruled that the constitutional mandate requiring courts to clearly state the facts and law in their decisions does not prohibit the use of “memorandum decisions.” These decisions, which adopt the findings of lower courts, are valid under certain conditions and do not violate due process. This means that government agencies, like the Office of the President, can affirm lower court decisions by referencing their findings, as long as the parties involved are properly informed and due process is observed throughout the proceedings.

Adoption by Reference: Was Due Process Undermined?

This case revolves around a dispute between Solid Homes, Inc. (SHI) and respondents Evelina Laserna and Gloria Cajipe, concerning a Contract to Sell a parcel of land. After the respondents filed a complaint due to the non-execution of a Deed of Sale despite alleged payment, the Housing and Land Use Regulatory Board (HLURB) ruled in favor of the respondents, a decision affirmed by both the Office of the President (OP) and the Court of Appeals (CA). SHI challenged the OP’s decision, arguing that it merely adopted the HLURB’s findings without independently stating the facts and law, violating Section 14, Article VIII of the 1987 Philippine Constitution. Further, SHI claimed the respondents lacked a cause of action because they had not fully paid for the property. The Supreme Court ultimately addressed whether the OP’s adoption by reference was constitutional and whether the respondents’ complaint lacked a cause of action.

The Supreme Court clarified that the constitutional requirement for decisions to clearly state facts and law does not invalidate “memorandum decisions.” These decisions, which adopt findings from lower tribunals, are acceptable if they meet specific conditions. The Court emphasized the grounds of expediency and efficiency given the heavy dockets. The Court, citing previous rulings, affirmed that such decisions comply with constitutional mandates.

Building on this principle, the Court cited jurisprudence establishing the conditions for valid memorandum decisions. The incorporated findings must be directly accessible, not remotely referenced. Specifically, the adopted facts and laws should be included in a statement attached to the decision. Such direct access suggests that the higher court carefully reviewed the lower court’s decision before affirming it. In the case at hand, the Office of the President’s decision included the HLURB’s findings as an annex, thereby facilitating direct access.

However, the Court clarified that Section 14, Article VIII of the 1987 Constitution primarily applies to judicial proceedings, not administrative ones. As such, the decisions of executive departments or administrative agencies are not strictly obligated to meet these requirements. Due process in administrative proceedings is satisfied when parties have the opportunity to be heard and the decision is grounded in evidence, adequately informing the parties of its factual and legal basis. As established in Ang Tibay v. CIR, administrative due process emphasizes fair hearing, consideration of evidence, and reasoned decision-making.

Addressing the due process concerns, the Court held that the Office of the President considered HLURB’s decision as accurate and sufficient. The parties were adequately informed of the basis of the decision because the Office of the President’s decision noted and relied on the facts in HLURB decision. While the Rules of Court may be applied supplementally in administrative proceedings, it is not mandated. Moreover, even if the constitutional provision were applicable, the OP’s decision fulfilled the requirements outlined in Permskul.

Turning to the issue of cause of action, the Court addressed whether respondents complaint was valid given that they had not yet fully paid for the property. It clarified that the 1987 HLURB Rules of Procedure gives the HLURB Arbiter the discretion to dismiss or continue the hearing in instances where a complaint may not have a valid cause of action. The complaint’s lack of full payment did not necessarily mandate its dismissal, as HLURB had the authority to pursue settlement and evidence.

Moreover, the appellate court found respondents to have cause of action due to potential cancellation of the contract. The rights of the buyer, especially against unfair contract cancellation or forfeiture of payments, are crucial. Pertinently, the petitioner cannot consider the contract as cancelled and the payments made as forfeited as stated in Section 4, RA 6552 or the Realty Installment Buyer Protection Act.

Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

Finally, the Court addressed the payment respondents allegedly made. Despite the respondents tendering payment of the balance as determined by the HLURB Board of Commissioners, the petitioner refused to accept. While tender of payment demonstrates intent to fulfill the obligation, the respondents failure to follow it up with consignation meant that no valid payment was made. As a result, respondents obligation to pay the full purchase price stands. The court reiterated that a contract to sell not rescinded stands, obliging parties to meet requirements within.

FAQs

What was the main legal issue in this case?	The primary legal issue was whether the Office of the President violated due process by adopting the findings of the HLURB Board of Commissioners without a detailed, independent recitation of facts and law in its decision.
What is a memorandum decision?	A memorandum decision is a type of ruling where a higher court adopts by reference the findings of fact and conclusions of law from a lower court’s decision, rather than fully restating them.
Does a memorandum decision violate the Constitution?	Not necessarily. The Supreme Court has ruled that memorandum decisions are constitutional under certain conditions, particularly if the incorporated findings are easily accessible to the parties involved.
What does due process mean in administrative proceedings?	In administrative proceedings, due process requires that parties have the opportunity to be heard, that the tribunal considers the evidence presented, and that the decision is based on substantial evidence and communicated clearly to the parties.
Did the respondents have a valid cause of action, given non-payment?	The Court of Appeals ruled the respondent had a cause of action due to his rights under RA 6552, protecting him from immediate contract cancellation and the forfeiture of payments made due to non-payment of amortization.
What happens when a creditor refuses a tender of payment?	When a creditor refuses a valid tender of payment without just cause, the debtor can be discharged from the obligation by consigning the sum due, meaning depositing it with the judicial authority.
Is a buyer protected if a developer fails to develop a property?	Yes, Presidential Decree No. 957, also known as “The Subdivision and Condominium Buyers’ Protective Decree,” aims to protect subdivision and condominium buyers from fraudulent real estate practices.
Can a Contract to Sell be automatically cancelled if the buyer defaults?	No, the Realty Installment Buyer Protection Act (RA 6552) provides grace periods and requires proper notice before a contract can be cancelled due to the buyer’s failure to pay installments.

The Supreme Court’s decision clarifies the acceptability and limits of memorandum decisions in administrative cases, emphasizing that substance, fairness, and full opportunity to be heard are paramount. The decision affirms the importance of the Realty Installment Buyer Protection Act and due notice for contract cancellation in real estate transactions, reinforcing protections for installment buyers.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: SOLID HOMES, INC. vs. EVELINA LASERNA AND GLORIA CAJIPE, G.R. No. 166051, April 08, 2008