G.R. No.

169343 August 05, 2015

San Miguel Properties, Inc., petitioner
vs.
BF Homes, Inc., respondent

Ponente: Justice Leonardo-De Castro

FACTS:
BF Homes, Inc. is the owner of several parcels of land identified as Italia II Lots.
Represented by Florencio B. Orendain, respondent entered into three successive Deeds of
Absolute Sale with San Miguel Properties Inc. represented by Federico C. Gonzales. Orendain
had sold to Gonzales a total of 130 Italia II lots with a combined area of 44, 345 sqm. amounting
to P106, 247, 701.00. SMPI completed the payments in December 1995, which led for BF
Homes to deliver the Transfer Certificates of Title (TCT) to SMPI. However, out of the 130
Italia II lots, they only gave TCTs for 110 of the lots purchased.
On May 20, 1996 SMPI sent a letter of demand for the delivery of the remaining 20
TCTs. Despite receipt of the letter, BF Homes failed or refused to heed their demand. Thus,
SMPI filed a Complaint for specific performance with damages before the Housing and Land
Use Regulatory Board. In their reply, BF Homes contend that said lots were sold by
representative Orendain in his personal capacity and without authority from them. They also
contended that the three Deeds of Absolute Sale were undated and not notarized, and that the
price paid by petitioner for said lots were grossly inadequate of their actual value. Thus, they
prayed before the HLURB for the declaration of sale of the 130 Italia II lots be null and void and
to return the 110 TCTs given to them.
In its Decision on March 28, 2003, the HLURB suspends the proceeding regarding the
issue as it awaits the ruling of the separate administrative proceeding of whether or not
representative Orendain had the authority to dispose of the subject lots. Said decision is
considered sine qua non in considering whether the Deeds of Sale where invalid or not and to
judge if the remaining 20 TCTs should be delivered.
The OP, in its decision dated January 27, 2004, adjudged that the HLURB should have
resolved the pending case. It then ruled that the Deeds of Sale were valid due to the fact that BF
Homes fully implemented the transactions covered by the first two deeds and only failed to
comply with the third. Furthermore, because of the Commission en banc’s lack of confirming nor
objecting to the sale, it raises the presumption of validity and enforceability of the sale. Thus, the
remaining 20 TCTs has been ordered to be delivered to SMPI, reversing HLURB’s prior ruling.
BF Homes then filed a petition for review to the CA, it then remanded the case back to
the HLURB as it possesses primary jurisdiction of the face, disregarding dismissing the OP’s
ruling. Thus, petitioner SMPI now assails the error in the ruling of CA, in its petition for
certiorari.
ISSUE/S:
1. Whether or not CA erred in remanding the case to the HLURB
2. Whether or not SMPI was entitled to the delivery of the 20 TCTs from BF Homes.
3. Whether or not the Orendain had authority to transact the sale of lots to SMPI.
RULING:
1. Yes. The Court provides Section 1 of PD No. 957 in justifying the ruling of the CA was
said law bestows to the NHA exclusive jurisdiction to hear and decided cases of specific
nature, such as “cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit against the owner,
developer, dealer, broker or salesman.” It is clear from this that HLURB has exclusive
jurisdiction over the complaint filed by SMPI against BF Homes for the delivery of the
remaining 20 TCTs. The OP did not have the authority to resolve the case nor issue a
Decision despite its pending status in the HLURB.
Nevertheless, the Court ruled that there is no necessity in remanding the case back to
HLURB, to do so would be impractical as it entails the repetition of the entire process
once again.
2. Yes. Section 25 of PD No. 957 expressly provides that “the owner or developer shall
deliver the title of the lot or unit to the buyer upon full payment of the lot or unit.” Since
the payment for the 130 lots were completed on December 1995, BF Homes is then
mandated by law and compelled to deliver the TCTs to them as part of their obligation.
The Court further emphasizes that upon full payment of a unit or lot, the seller loses
all its rights and interests to the unit in favor of the buyer. Their contention of the three
Deeds of Sale to be void due to it being unnotarized is invalid. Based on jurisprudence,
said deeds are enforceable since they are already in writing and signed by both parties,
and its notarization is only a formality that can be easily complied with by BF Homes.
Moreover, the deeds were already ratified as BF Homes accepted the benefits and
received full payment from the purchased lots, and they already delivered 110 out of 130
of the TCTs to SMPI.
3. Yes. While it is true that the SEC revoked Orendain’s appointment as rehabilitation
receiver of BF Homes, he was still appointed as the Chairman of FBO Networks
Management Inc. And because as Chairman, he had the capacity to still be a receiver of
BF Homes, thus, his actions of disposing said lots were done out of his official capacity
as representative of BF Homes and is therefore, valid.

COMMENT:
This particular case delves into the Enforceability and Unenforceability of Contracts
under Articles 1358 and 1403 of the Civil Code and the circumstances in which it could be
ratified as provided in Article 1405 of the same code.
Under Article 1358 (1), “Acts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over immovable property; sales of
real property or of an interest therein governed by Articles 1403 (2) and 1405.” Said article
requires for the compliance with the Statute of Frauds for security and convenience to parties.
This case explains that non-compliance with the requirements does not immediately render the
contract void, but rather, unenforceable. Thus, no action can be enforced until the requirement is
fulfilled.
Whereas in Article 1403, an instance of unenforceable contract is one that is entered into
in the name of another person by one who had been given no authority or legal representation.
However, said contract is deemed enforceable when it is ratified. As seen in the case at bar, the
contract entered by Orendain which was allegedly unauthorized is considered ratified since BF
Homes accepted the full payment by SMPI, and that his position as Chairman enabled him to
validly represent BF Homes to enter into a contract of sale with San Miguel.
Furthermore, Article 1405 of the Civil Code states that “contracts infringing the Statute
of Frauds referred to in Article 1403(2) are ratified by the failure to object to the presentation of
oral evidence to prove the same or by the acceptance of benefits under them.” In the case at bar,
the second circumstance is present since BF Homes accepted the payment for the 130 lots,
showing that the contract was indeed ratified and therefore valid.