Delos Santos vs. Sarmiento

The HLURB does not have jurisdiction over cases involving real property that is not alleged or established to be a subdivision or condominium project, nor over cases filed by a subdivision or condominium owner or developer against a buyer, unless filed as a compulsory counterclaim.

Jin-Jin Delos Santos (Santos) entered into a Contract to Buy and Sell with Spouses Reynato and Leni Sarmiento (Spouses Sarmiento) for a residential lot in IA-JAN Homes. Before full payment, they executed a Cancellation of Contract to Buy and Sell. Disputes arose regarding the refund and payments, leading to two separate complaints filed before the Housing and Land Use Regulatory Board (HLURB): one by Santos against Spouses Sarmiento for refund, and another by IA-JAN Sarmiento Realty, Inc. (IJSRI) against Santos for specific performance.

On March 17, 1995, Spouses Sarmiento agreed to sell to Santos an 82-square meter residential lot in IA-JAN Homes for P824,000.00, with P300,000.00 paid upfront and the balance payable within five years. The contract was written on stationery bearing the letterhead of IA-JAN Sarmiento Realty, Inc. (IJSRI), but the designated owners-sellers were Spouses Sarmiento.

Before the purchase price was fully paid, the parties executed a Cancellation of Contract to Buy and Sell on April 19, 1997, where Spouses Sarmiento agreed to refund Santos P584,355.10, and Santos agreed to surrender possession. When Spouses Sarmiento failed to refund the amount, Santos demanded payment on July 14, 1999. Spouses Sarmiento promised to pay within 90 days but failed to do so.

Santos filed a complaint with the HLURB (docketed as REM-102299-10723) against Spouses Sarmiento to enforce the cancellation and demand a refund. Meanwhile, IJSRI filed a separate complaint for specific performance against Santos (docketed as REM-102299-10732), alleging it was the vendor, that Santos defaulted, and leaving an unpaid balance. Santos admitted entering into the contract with IJSRI but claimed additional payments and argued her obligations were extinguished by the cancellation of the contract.

Santos moved to consolidate the two cases, which Arbiter San Vicente initially granted but later reversed, directing separate hearings. However, Arbiter Melchor treated the cases as consolidated and rendered a decision on February 26, 2001, ordering Santos to pay IJSRI. IJSRI's petition for review was dismissed for failure to attach an appeal bond. IJSRI then filed a Petition for Certiorari and Mandamus with the Court of Appeals, which set aside the HLURB decision and order and remanded the cases for separate resolution. Santos elevated the CA decision to the Supreme Court via a Petition for Review on Certiorari.

• Consolidation of Cases: Petitioner argued that the CA erred in concluding there was grave abuse of discretion when Arbiter Melchor rendered a consolidated decision, given that the cases involved the same parties, matters, and intimately related issues.
• Piercing the Veil of Corporate Fiction: Petitioner maintained that the CA erred in disregarding the principle of piercing the veil of corporate fiction, as Spouses Sarmiento and IJSRI never considered themselves as independent and separate entities in their dealings with her.
• Dismissal of Petition for Review: Petitioner argued that the CA erred in concluding there was grave abuse of discretion when Arbiter Melchor dismissed IJSRI's Petition for Review for failure to attach the required appeal bond.

• HLURB Jurisdiction: Whether the HLURB had jurisdiction over the cases, considering the subject property was not alleged to be a subdivision or condominium project and one case was filed by a purported developer against a buyer.

• HLURB Jurisdiction: No. The HLURB lacked jurisdiction over both cases because the property was not shown to be a subdivision lot or condominium unit, and one case was filed by a purported developer against a buyer.

• HLURB Jurisdiction: The jurisdiction of the HLURB is determined by the nature of the cause of action, the subject matter, and the parties. Under P.D. No. 1344, the HLURB has jurisdiction over cases filed by subdivision lot or condominium unit buyers against the project owner, developer, dealer, broker, or salesman. The property must be a subdivision project or lot, or a condominium project or unit, as defined in P.D. No. 957. In this case, the contract to sell merely described the lot as being in IA-JAN Homes, with no indication that it was partitioned or registered as a subdivision project. Furthermore, the case filed by IJSRI was instituted by a purported subdivision owner against a buyer, which falls outside the HLURB's jurisdiction unless filed as a compulsory counterclaim. Therefore, the HLURB erred in taking cognizance of the cases, and the proper disposition was outright dismissal for lack of jurisdiction.

• Jurisdiction of the HLURB — The HLURB's jurisdiction is limited to cases filed by buyers or owners of subdivision lots or condominium units against the project owner, developer, broker, or salesman, involving unsound real estate business practices, claims for refund, or specific performance. The jurisdictional facts must be clearly alleged in the complaint, including that the property is a subdivision or condominium project. The Court applied this doctrine to hold that the HLURB lacked jurisdiction because the property was not shown to be a subdivision lot and one case was filed by a developer against a buyer.
• Cases Filed by Developers Against Buyers — The general rule is that the HLURB has no jurisdiction over cases filed by subdivision or condominium owners or developers against buyers, as the policy of the law is to protect the buying public from unscrupulous practices. The only exception is when the case is filed as a compulsory counterclaim to a pending case filed by the buyer. The Court applied this rule to IJSRI's complaint, which was filed separately and thus should not have been entertained by the HLURB.

• "Not every case involving buyers and sellers of real estate may be filed with the HLURB. Its jurisdiction is limited to those cases filed by the buyer or owner of a subdivision or condominium and based on any of the causes of action enumerated under Section 1 of P.D. No. 1344, and which jurisdictional facts must be clearly alleged in the complaint." — This passage defines the scope and limits of the HLURB's jurisdiction, emphasizing the requirement that the property must be a subdivision or condominium and the complaint must allege the necessary jurisdictional facts.
• "HLURB is not a collection agency that real estate businesses can employ to exact payment from their clients. Its mandate is to police real estate trade and business to protect the buying public." — This passage explains the rationale behind the rule that the HLURB cannot entertain cases instituted by developers against their buyers, highlighting the protective purpose of the agency's mandate.

• Javellana vs. Presiding Judge — Cited to show that the HLURB lacks jurisdiction when the complaint does not allege that the subject lot is a subdivision lot, even if the contract refers to it as a "regular subdivision project."
• Pilar Development Corporation vs. Villar and Suntay vs. Gocolay — Cited as the general rule that the HLURB has no jurisdiction over cases filed by subdivision or condominium owners or developers against buyers.
• Francel Realty Corp. vs. Sycip — Cited as the exception where the HLURB may take cognizance of a case filed by a developer if it is a compulsory counterclaim to a pending case filed by the buyer, to forestall splitting of causes of action.
• Lacson Hermanas, Inc. vs. Heirs of Cenon Ignacio — Cited to show that regular courts, not the HLURB, have jurisdiction over actions involving real property not alleged to be a subdivision or condominium property.
• Kakilala vs. Faraon — Cited to show that the HLURB has no jurisdiction when it is never alleged that the property is a subdivision or condominium and that the parties are subdivision or condominium buyer and developer/owner.

• Section 1, P.D. No. 1344 — Empowers the NHA (now HLURB) with exclusive jurisdiction over unsound real estate business practices, claims for refund by subdivision lot or condominium unit buyers, and specific performance of contractual and statutory obligations by buyers against owners, developers, brokers, or salesmen. The Court used this to define the limits of HLURB jurisdiction.
• Section 2(d) and (e), P.D. No. 957 — Defines "subdivision project" and "subdivision lot." The Court used these definitions to determine that the subject property did not qualify as a subdivision lot under the law.

Ynares-Santiago (Chairperson), Callejo, Sr., Chico-Nazario, and Nachura, JJ., concur.