Spouses Raet v. Court of Appeals

An ejectment judgment is conclusive only on the question of possession and does not bar an HLURB action to determine whether a contract of sale was perfected; no specific performance lies absent a perfected contract. No perfected contract of sale existed where the price and payment terms were not agreed, the alleged agent had no written authority, the principal did not ratify, no written contract existed, and the financing loan applications were disapproved.

Petitioners spouses Raet and spouses Mitra sought to acquire units in the Las Villas de Sto. Niño Subdivision in Meycauayan, Bulacan, a project developed by private respondent PVDHC primarily for buyers qualified to obtain GSIS loans. Because petitioners were not GSIS members, they arranged to use the GSIS policies of other persons as accommodation parties. The dispute concerns the HLURB's exclusive jurisdiction over cases of specific performance and unsound real estate business practices under E.O. No. 648, as amended by E.O. No. 90.

In 1984, spouses Cesar and Elvira Raet and spouses Rex and Edna Mitra negotiated with Amparo Gatus over the possibility of buying Gatus's rights to certain units at the Las Villas de Sto. Niño Subdivision in Meycauayan, Bulacan, a subdivision developed by private respondent Phil-Ville Development and Housing Corporation (PVDHC) primarily for parties qualified to obtain loans from the Government Service Insurance System (GSIS). The spouses Raet paid Gatus P40,000.00 and the spouses Mitra paid P35,000.00, for which Gatus issued receipts in her own name.

In early 1985, the spouses Raet and the spouses Mitra applied directly with PVDHC to purchase units. As they were not GSIS members, they looked for members who could act as accommodation parties by allowing them to use their policies. PVDHC would process the applications upon GSIS approval of petitioners' loan applications. The spouses Raet presented the GSIS policy of Ernesto Casidsid, while the spouses Mitra presented that of Edna Lim. The spouses Raet paid P32,653.00 and the spouses Mitra paid P27,000.00 to PVDHC on the understanding that these amounts would be credited to the purchase prices of the units, which would be determined after approval of their loan applications. Meanwhile, the spouses Raet were allowed to occupy the unit on Lot 4, Block 67, Phase 4A, while the spouses Mitra were given the unit on Lot 7, Block 61, Phase 4A.

The GSIS disapproved the loan applications. PVDHC advised petitioners to seek other sources of financing, and in the meantime allowed them to remain in the premises. Upon complaint of Elvira Raet, the Office of the Provincial Prosecutor of Bulacan charged Gatus with estafa in the RTC of Malolos, Bulacan. The case was dismissed, and the RTC found that Gatus never misrepresented herself as an agent of PVDHC; she was acquitted in a decision dated August 25, 1989.

Because petitioners failed to raise money, PVDHC sent them separate demand letters dated November 10, 1988 asking them to vacate the units. Petitioners refused. PVDHC then filed ejectment cases before the MTC of Meycauayan, Bulacan, which on May 24, 1991 ordered petitioners to surrender possession of the units and to pay fees, litigation expenses, and costs of suit. The MTC decision was affirmed by the RTC of Malolos, Bulacan and then by the CA; the SC dismissed petitioners' appeal on December 2, 1992.

On May 18, 1988 and November 24, 1988, the spouses Raet and the spouses Mitra had earlier filed complaints against PVDHC with the RTC of Malolos, Bulacan for recovery of supplemental costs they had paid to PVDHC. The Raet complaint was dismissed because the RTC had no jurisdiction over disputes between subdivision buyers and developers, which fell within the exclusive competence of the Housing and Land Use Regulatory Board (HLURB). The Mitra complaint was withdrawn on April 17, 1990. On April 15, 1991, the spouses Raet and the spouses Mitra filed a complaint for specific performance and damages against Amparo Gatus and PVDHC with the HLURB.

The HLURB Arbiter found that PVDHC and Gatus transacted with petitioners despite knowing they were not qualified under the GSIS financing scheme; that PVDHC accepted payments and allowed them to occupy the premises despite that knowledge and without a written instrument modifying the terms agreed upon between petitioners and Gatus; that PVDHC informed petitioners of their disqualification only after several years of occupation; and that Gatus did not unequivocally inform petitioners that she was merely selling her interests over the properties. The records also showed that the total costs of the units and the payment schemes were not established, that the figures petitioners relied on were estimates given by Gatus, that Gatus had no written authority from PVDHC to act as its agent, that PVDHC had no knowledge of the figures Gatus gave petitioners, and that no written contracts evidenced the alleged sales.

• Conclusiveness of Ejectment Judgment: Petitioners contended that the CA committed reversible error in concluding that the facts and judgment in the unlawful detainer case before the MTC of Meycauayan, Bulacan, affirmed by the appellate courts, barred their action for specific performance, which was exclusively cognizable by the HLURB. They invoked Section 7, Rule 70, Rules of Court, and jurisprudence holding that an ejectment judgment is conclusive only as to de facto possession and that its factual findings are not conclusive in a different cause of action not involving possession.
• Perfected Contracts of Sale: Petitioners contended that the CA committed reversible error in concluding that, under the undisputed facts, there were no perfected contracts of purchase and sale between petitioners and PVDHC over the lots and houses subject of the complaint for specific performance before the HLURB.
• Findings of the Office of the President: Petitioners contended that the CA committed reversible error in not considering the factual findings of the Office of the President, which were supported by substantial evidence and not contrary to law, as final and binding on the CA.

• No Perfected Contract — Price Estimates: Respondent PVDHC pointed out that the figures petitioners relied on were mere estimates given to them by Amparo Gatus.

• Conclusiveness of Ejectment Judgment: Whether the judgment in the ejectment case is conclusive only on possession and does not bar an HLURB action for specific performance to determine whether a contract of sale was perfected.
• Perfected Contracts of Sale: Whether there were perfected contracts of sale between petitioners and PVDHC over the units in question.
• Findings of the Office of the President: Whether the CA erred in not treating the factual findings of the Office of the President as final and binding.

• Conclusiveness of Ejectment Judgment: Yes. The ejectment judgment is conclusive only on possession; it does not bar the HLURB from determining whether contracts of sale were perfected.
• Perfected Contracts of Sale: No. No perfected contracts of sale existed: the records did not establish total costs and payment schemes; Gatus had no written authority to act as PVDHC's agent; PVDHC did not ratify her acts; no written contracts evidenced the sales; and the GSIS loan applications failed.
• Findings of the Office of the President: No. The CA correctly refused to give conclusive effect to the Office of the President's factual findings because the evidence on record pointed to opposite conclusions.

• Conclusiveness of Ejectment Judgment: The SC agreed with petitioners that the ejectment judgment was conclusive only on possession. It does not settle the principal question in the case, which is whether there were perfected contracts of sale between petitioners and PVDHC over the units. Under §8(11) of E.O. No. 648 dated February 7, 1981, as amended by E.O. No. 90 dated December 17, 1986, the HLURB has the power to hear and decide cases of unsound real estate business practices, claims involving refund filed against project owners, developers, dealers, brokers, or salesmen, and cases of specific performance. This jurisdiction is exclusive and has been held to extend to determining whether there is a perfected contract of sale between a condominium buyer and developer. The Office of the President correctly pointed out that the case stemmed from an action for specific performance regarding agreements or contracts to purchase houses and lots in a subdivision owned, developed, and/or marketed by PVDHC, and was therefore within the HLURB's exclusive province. Thus, the ejectment ruling could not bar the HLURB from deciding the perfected-sale question.
• Perfected Contracts of Sale: The SC agreed with the CA that the parties had not reached any agreement on the sale. First, the records did not show the total costs of the units and the payment schemes. The HLURB Arbiter gave credence to petitioners' allegations that there were agreements on prices, but PVDHC pointed out that the figures were mere estimates given by Gatus; the transactions therefore lacked the requisites essential for perfection. Second, petitioners dealt with Gatus, but Gatus was not PVDHC's agent. The estafa case against her was dismissed because she never represented herself as PVDHC's agent. Article 1874 of the Civil Code requires that an agent selling land have written authorization, which Gatus did not possess. Petitioners knew from the beginning that Gatus was negotiating in her own behalf, not as PVDHC's agent, so the HLURB Arbiter's finding of agency had no factual basis. Third, PVDHC had no knowledge of the figures Gatus gave petitioners as estimates, so it could not have ratified them when petitioners applied. PVDHC was to enter into agreements only upon approval of the GSIS loan applications, which failed. Fourth, no written contracts evidenced the alleged sales; contracts of such importance would not ordinarily be left unwritten. The CA correctly held that there was no perfected and enforceable contract of sale or agreement to sell, no meeting of minds on terms, especially price, but at best a proposed contract to sell that did not ripen because the GSIS loans were not approved. Without a perfected contract as an independent source of obligation, the binding prestation to do or give and the corollary right to exact compliance do not arise; there can be no specific performance of a contractual obligation as yet non-existent. No written deed of conveyance was executed by PVDHC. Finally, petitioners' occupation for more than three years before the ejectment case was by PVDHC's forbearance; since this pertained to possession, the MTC ruling was conclusive, and no presumption of any acquired right arose from the occupation.
• Findings of the Office of the President: The SC generally accords great respect to factual findings of administrative agencies. However, this rule does not apply when the evidence on record calls for a reversal or modification of those findings. Because the evidence pointed to factual conclusions opposite those reached by the Office of the President, the CA correctly refused to give conclusive effect to the administrative findings.

• Ejectment judgment limited to possession — A judgment in an ejectment case is conclusive only on the question of possession and does not settle the principal question of whether a contract of sale was perfected. The SC applied this by holding that the MTC ejectment ruling did not bar the HLURB from deciding whether petitioners and PVDHC had perfected contracts of sale.
• HLURB exclusive jurisdiction over specific performance — Under §8(11) of E.O. No. 648, as amended by E.O. No. 90, the HLURB has exclusive power to hear cases of unsound real estate business practices, refund claims against project owners, developers, dealers, brokers, or salesmen, and cases of specific performance. This jurisdiction extends to determining whether a perfected contract of sale exists between a buyer and developer. The SC applied this by holding that the HLURB, not the ejectment court, had authority to decide the perfected-sale question.
• No specific performance absent perfected contract — A contract of sale requires a meeting of minds on its terms, especially the price; without a perfected contract, there is no independent source of obligation and no right to exact specific performance. The SC applied this by finding no agreement on total costs and payment schemes, only estimates from Gatus, and at best a proposed contract to sell that did not ripen.
• Agent's written authority for sale of land — Article 1874 of the Civil Code requires that an agent selling land have written authority from the principal. The SC applied this by holding that Gatus had no written authorization from PVDHC and was not its agent, so no valid sale through her could arise.
• Ratification requires knowledge — A principal cannot ratify acts of which it had no knowledge. The SC applied this by holding that PVDHC could not have ratified the figures Gatus gave petitioners because PVDHC had no knowledge of them and was to contract only upon approval of the GSIS loan applications.
• Respect for administrative findings is not absolute — Factual findings of administrative agencies generally deserve respect, but the rule does not apply when the evidence on record calls for reversal or modification. The SC applied this by upholding the CA's refusal to treat the Office of the President's findings as conclusive because the evidence pointed to opposite conclusions.
• Occupation by forbearance creates no presumption of right — Occupation of property by the owner's forbearance does not give rise to a presumption of any right acquired by the occupant. The SC applied this by holding that petitioners' occupation for more than three years before the ejectment case was by PVDHC's forbearance and did not create a right in their favor.

• "The decision in the ejectment suit is conclusive only on the question of possession of the subject premises. It does not settle the principal question involved in the present case, namely, whether there were perfected contracts of sale between petitioners and private respondent PVDHC involving the units in question." — This is the SC's core ruling on the effect of the ejectment judgment.
• "This jurisdiction of the HLURB is exclusive. It has been held to extend to the determination of the question whether there is a perfected contract of sale between a condominium buyer and developer." — The SC uses this to explain why the HLURB, not the ejectment court, must decide the perfected-sale question.
• "The parties' transactions, therefore, lacked the requisites essential for the perfection of contracts." — The SC states this after finding no established total costs and payment schemes.
• "There can be no specific performance of a contractual obligation as yet non-existent." — The SC adopts the CA's reasoning that specific performance cannot lie without a perfected contract.

• Tejada vs. Homestead Property Corporation, 178 SCRA 164, 167 (1989) — Cited as authority that the HLURB's exclusive jurisdiction extends to determining whether there is a perfected contract of sale between a condominium buyer and developer.
• Anderson vs. NLRC, 252 SCRA 116, 121 (1996) — Cited as authority that the rule according respect to administrative factual findings does not apply when the evidence on record calls for reversal or modification.

• Section 8(11), Executive Order No. 648 (as amended by Executive Order No. 90) — Gives the HLURB power to hear and decide cases of unsound real estate business practices, claims involving refund filed against project owners, developers, dealers, brokers, or salesmen, and cases of specific performance. The SC applied this to hold that the HLURB had exclusive jurisdiction over petitioners' specific performance complaint and the determination of whether a contract of sale was perfected.
• Article 1874, Civil Code — Requires that an agent selling land have written authorization from the principal for the sale to be valid. The SC applied this by holding that Gatus lacked written authority from PVDHC and was not its agent.
• Section 7, Rule 70, Rules of Court — Petitioners invoked this rule for the proposition that an ejectment judgment is conclusive only as to de facto possession; the SC agreed that the ejectment decision did not settle the perfected-sale question.