Delos Santos v. Spouses Sarmiento
REITERATIONFacts
The Antecedents: This case originated from a Contract to Buy and Sell for a residential lot between Jin Jin Delos Santos (Santos) and Spouses Reynato D. and Leni C. Sarmiento, acting through IA-JAN Sarmiento Realty, Inc. (IJSRI). Santos paid a down payment, with the balance to be paid over five years. Subsequently, Santos and the Spouses Sarmiento executed a Cancellation of Contract to Buy and Sell, wherein the Spouses Sarmiento agreed to refund Santos P584,355.10 in exchange for the return of the lot. Santos later demanded a refund of P760,000.00 with interest, which the Spouses Sarmiento initially agreed to provide within 90 days. Procedural History: When the refund was not made, Santos filed a complaint with the Housing and Land Use Regulatory Board (HLURB) seeking enforcement of the cancellation contract and the refund. Concurrently, IJSRI filed a separate case with the HLURB against Santos for specific performance, alleging default in payments under the original contract to sell. Despite initial confusion regarding consolidation, the cases were eventually decided jointly by HLURB Arbiter Joselito Melchor, who ordered the Spouses Sarmiento (or IJSRI) to pay Santos P584,255.10 with interest and damages. IJSRI's subsequent Petition for Review was dismissed by the HLURB for failure to attach an appeal bond. The Court of Appeals (CA), upon a Petition for Certiorari and Mandamus by IJSRI, vacated the HLURB's decision and order, directing that the cases be heard separately due to grave abuse of discretion. The Petition: Santos filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's decision. Santos argued that the CA erred in finding grave abuse of discretion when the HLURB rendered a consolidated decision, asserting the cases involved the same parties and intimately related issues. Santos also contended that the CA disregarded the principle of piercing the veil of corporate fiction by treating Spouses Sarmiento and IJSRI as separate entities, and that the CA erred in vacating the dismissal of IJSRI's petition for review due to the lack of an appeal bond. The Supreme Court, however, raised the issue of jurisdiction motu proprio.
Issue(s)
Whether the Housing and Land Use Regulatory Board (HLURB) has jurisdiction over the cases filed by Jin Jin Delos Santos (Santos) and IA-JAN Sarmiento Realty, Inc. (IJSRI). Whether the Court of Appeals erred in finding grave abuse of discretion on the part of the HLURB arbiters. Whether the Spouses Sarmiento and IA-JAN Sarmiento Realty, Inc. should be treated as separate entities or as one under the principle of piercing the veil of corporate fiction.
Ruling
The Supreme Court granted the petition, set aside the Court of Appeals Decision, and dismissed the cases filed before the HLURB for lack of jurisdiction, without prejudice to their filing in the proper court.
Ratio Decidendi
On the Jurisdiction of the HLURB: The Supreme Court held that the HLURB has no jurisdiction over the subject matter of both cases (REM-102299-10723 and REM-102299-10732). The jurisdiction of the HLURB is limited to cases involving subdivision or condominium projects, lots, or units, and specifically those filed by buyers against project owners/developers or vice versa as a compulsory counterclaim. The contract to sell in this case did not establish that the property was a subdivision lot as defined by P.D. No. 957, nor did it allege that the parties were subdivision owners or developers. The parties were treated as ordinary sellers and buyers of real property. The Court emphasized that HLURB is not a collection agency for real estate businesses and cannot entertain cases filed by developers against buyers unless it is a compulsory counterclaim. On the Court of Appeals' Finding of Grave Abuse of Discretion: While the Court of Appeals correctly set aside the HLURB's decision and order, its disposition of remanding the cases for separate hearing was incorrect. The proper disposition, given the lack of jurisdiction, was outright dismissal. The CA's finding of grave abuse of discretion was based on the HLURB's erroneous assumption of jurisdiction. On Piercing the Veil of Corporate Fiction: The Court did not delve into the issue of piercing the veil of corporate fiction as it found that the HLURB lacked jurisdiction from the outset. The primary issue was the nature of the property and the parties involved in relation to the HLURB's limited jurisdiction under P.D. No. 957 and P.D. No. 1344. The Court noted that the contract to sell was on stationery of IJSRI but the sellers were designated as Spouses Sarmiento, and there was no clear allegation that IJSRI was a subdivision developer or that the property was a subdivision lot, thus the principle of piercing the veil of corporate fiction was not the determinative factor for HLURB's jurisdiction.
Main Doctrine
The Housing and Land Use Regulatory Board (HLURB) has no jurisdiction over cases involving ordinary real estate transactions that do not clearly allege and establish that the property is a subdivision or condominium project or lot, and that the parties are buyers/owners and developers/owners within the meaning of P.D. No. 957 and P.D. No. 1344. Cases filed by developers against buyers are generally outside HLURB's jurisdiction, except as a compulsory counterclaim.