Breach of Trust

      Faith and husband Effie dreamed of having their own house and lot in the future. To fulfil their dream and to ensure their children’s future, they figured out that Effie would apply as an oversea’s worker in the Middle East. After filling several applications he was finally hired. Thus, he left his wife and a year-old daughter in the house of his aunt.

            

      After a year, the couple had saved an ample amount of money to make an initial payment for a residential lot. Faith confided what she would like to do to Lorna, a new acquaintance, who happened to be a real estate salesperson or agent in the next town’s newly opened residential subdivision. Lorna invited Faith to go with her in the subdivision site and showed her the available residential lots for sale. Faith consulted her husband through a long distance call. They decided to acquire a lot through one of the monthly instalment schedules that the Residential Subdivision’s owner and developer were offering then. Within the period of three years, they were able to complete the payment of the residential lot. Faith asked Lorna when the title of the lot could be transferred to their names. Lorna told Faith to hold on to a title of lot, which was in the name of another person, as an assurance that soon the new title would be transferred to their names. A year had passed and the title had not been transferred to the name of the couple.

      Faith who had paid all the instalments throughout the past felt a little guilt despite the silence of her husband. She decided to seek the advice of her uncle who happened to be a real estate broker in his cousins’ real estate company. Her uncle noted all her narrations regarding the problem and prepared a letter stating the basic facts of the problem to the housing authority of the region. The housing authority’s legal unit answered the letter but would just like to be assured that the complainant was not forum shopping. Her uncle prepared all the required documents to substantiate her complaints to the housing authority and to assure the legal unit also that she was not forum shopping. Faith requested her uncle to put on hold the letters and the evidences regarding the problem. She told her uncle that the salesperson and the subdivision manager talked to her and promised that the title of the new residential lot would be transferred to their names.

      In a month’s time, the new title of residential lot was transferred to the name of the couple. The compliance of the subdivision owner and developer could have been a perfect one, had it not been for the hitch that the new residential lot was not the one that Faith originally agreed to buy. Faith and Effie finally agreed to the settlement since the new residential lot was in a choice or primary location within the subdivision. They also thought that if they would pursue the case, the litigation process would be long, expensive and the outcome or the verdict was unsure.

Alternative Courses of Actions:

• Faith should have requested for a photocopy each of the residential lot’s title, tax declaration and approved location plan of the subdivision. She should have requested from the Provincial Assessor’s Office for a certified photocopy of the title of the subject residential lot. The certified photocopy of the title would show if the lot was used as collateral for the loans of the subdivision owner from a banking institution, in order to have additional cash for the development of the subdivision. The tax declaration would indicate the amount of the tax that the owner paid for the real estate tax of the lot. The approved location plan would give the actual location of the residential lot within the subdivision. 

• Faith should have required the subdivision management to prepare a Contract to Sell between them and the subdivision owner. In the said legal instrument the technical description of the residential lot she originally chose to buy should be specified. This could have prevented possible switching of properties. 

• Upon completion of all the monthly instalments, Faith should have requested for a certified photocopy of the title of the residential lot she originally chose to purchase. In this way, she could have verified if the lot was used as collateral at a much later date or if the title had been transferred to the name of any other buyer of residential lot. 

Please note: All law abiding owners and developers know very well that any proven complaint against them regarding fault in transferring paid residential lots will result to administrative sanction on the part of the persons involve in the actual sale of the subject property and cancellation of license to sell of the subdivision,   (refer to Sec. 8 and 9 of P. D. 957). This could be the reason why the salesperson and the manager assured Faith of immediate transfer of ownership to the couple.

      The compromise in switching properties had been tolerated since the owner-developer offered a residential lot from the prime location within the subdivision.

      Let us be prudent in following our amortization or instalment schedule, in turn let us require the owners and developers to act with propriety with regards to transferring to our names what rightfully belongs to us and what we had paid with hard earned money. Be vigilant and wise while we follow our dreams. See you till the next review of our real life experience.

The Three Widows

      The BLL Realty Development Corporation is the owner and developer of a Model C residential subdivision. A total of 120 residential lots were developed and up for sale. Two employees from the Animal Nutrition Unit of Sta. Maria Corporation applied for a residential lot each, through their respective loan from the Countrywide Housing Mortgage and Finance Corporation, a government corporation. Prior to their application to CHMFC, they requested the management of BLL to transfer to their name the respective title of the lot they wanted to purchase and that would be paid through the said loan. The management agreed with this arrangement. Both of the employees’ applications for house and lot loans were approved by the CHMFC.

         The proceeds of the house and lot loans were released through a conduit provincial bank branch, in which case, the Lucky Savings and Loans Association, Inc., also known as Lucky Bank. The LSLAI or Lucky Bank had official and legal agreement to take care of releasing the amount of loans and to accept the monthly amortization or payment. Both employees entered into a legal agreement with Ms. Delilah W., a widow, who assisted them in the processing of all the required papers for the loans, for a certain fee.

        The proceeds of the loans were released to both employees. Mr. Radge H., one of the employees, hired his relatives to construct his house. On the other hand, Mr. Gus S., the second employee, entered into a legal agreement with Ms. Delilah W. to be the contractor of his house. Ms, Delilah W. requested Ms. Camela U., a widow and the eldest of three siblings who own the BLL Dev. Corp., to permit her to be the contractor of Mr. Gus S.’ house. Due to the irking persistence of Ms. Delilah W., finally Ms. Camela U. relented. 

     After two months, Mr. Radge H.’s House was completed and inspected by the representatives of CHMFC and LSLAI and the lot balance was released and paid to BLL. Unluckily, in the middle of the construction of his house, Mr. Gus S. died and left Ms. Gus S., the widow, to oversee the construction of their house. After a month, Ms. Delilah W. informed Ms. Gus S. that the construction would stop due to shortage of fund. The representatives of CHMFC and LSLAI inspected the house and found that the toilet and other bathroom fixtures, the grills for the windows and the interior and exterior painting stated in the specifications of the house plan were missing. CHMFC and LSLAI declared that the house was incomplete and stopped the payment of the lot balance.

After six months, Ms. Gus S. received the full benefits due to her husband’s death, but she did not bother to complete the house with the reason that she would save them for their children. The LSLAI foreclosed the property and BLL did not receive any payment at all.  

Alternative Courses of Actions:

            This is not an attempt to solve the problem but just a venture to look at some alternatives and courses of actions that should have been taken into consideration to avoid or prevent some untoward incidents.

o       Mr. Gus S. should have employed a master carpenter and a small team of local artisans to construct his house just like what Mr. Radge H. did.

o       Ms. Camela U. should not have allowed Ms. Delilah W. to be the contractor of the house.

The total proceeds of the house and lot loan that the borrower received was about ₱350,000.00.The lot cost was ₱99,450.00 and the contractor’s fee was 35% of what was left for house construction. The contractor’s fee amounted to ₱250,550.00 x .35 = ₱87,692.50. The remaining ₱162,857.50 was the amount left used to build the house.

o Ms. Camela U. should have imposed a contract or agreement with Ms. Delilah W. that specifically stated that as a contractor she would build the house as specified and in conformity with the requirement of both the CHMFC and LSLAI, to assure payment of the lot balance to BLL.

o   Ms. Camela U should have imposed on Ms. Delilah W. to post some sort of bond equivalent to the contractor’s fee or the lot balance.

    
Remember that BLL initiated trust through its agreement to transfer the lot in the name of the employees, thus it could also require other parties to make tangible form of assurance of payment.

           Dear readers and followers of this blog, it is now your chance to select the best alternative courses of action or suggest your own version. Keep on thinking, it is good exercise for our memories.