G.R. No. L-30351 September 11, 1974
AUREA BAÑEZ and RAMON BAÑEZ Substituted by their legal heir, OSCAR VIRATA BAÑEZ, petitioners, vs. COURT OF APPEALS and PIO ARCILLA, respondents.

FACTS

Respondent Pio Arcilla occupied and improved a parcel of land owned by the People’s Homesite and Housing Corporation (PHHC) in 1956. His occupancy was recorded by the PHHC. However, in 1960, the PHHC awarded the same lot to Cristeta Laquihon under a conditional contract to sell, which required her to eject squatters and construct a house within one year. Arcilla had no notice of this award, and no action was taken to oust him. Laquihon died in 1962 without fulfilling the conditions. Her father, Basilio Laquihon, adjudicated the rights to himself and subsequently assigned them to petitioner Aurea Bañez to settle a debt. The PHHC Board approved this transfer via Resolution.
Arcilla only learned of these developments in 1963 when notified to vacate. He protested the award and transfer, claiming the original awardee acquired no rights due to non-compliance with conditions and that the transferee was disqualified. The PHHC dismissed his protest. After Aurea Bañez completed payments, the PHHC executed a deed of sale in her favor in 1964. Arcilla then filed a court action to nullify the award to Bañez and to compel the PHHC to award the lot to him instead.

ISSUE

The primary issue is whether the Court of Appeals erred in nullifying the transfer and award of the PHHC lot to Aurea Bañez and in recognizing Pio Arcilla’s preferential right to purchase the lot.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision dismissing Arcilla’s complaint. The legal logic rests on the nature of the rights involved and the absence of a valid legal basis for Arcilla’s claim.
First, Arcilla, as a mere occupant or squatter, possessed no vested right to acquire the lot. His possession, though long-standing, did not create a preferential right under the law or PHHC rules. Possession alone, without a contractual grant from the owner, does not translate into a right to purchase. The PHHC, as the absolute owner, retained the prerogative to whom to sell its property.
Second, the subsequent approval by the PHHC Board of the transfer to Aurea Bañez cured any initial defect arising from the original awardee’s non-compliance. The PHHC, through its Board Resolution, validly exercised its discretion to approve the transfer as a “meritorious case.” This administrative act is binding in the absence of grave abuse of discretion. The Court found no such abuse.
Third, Arcilla failed to prove his claim that the Bañez spouses were disqualified transferees. The evidence presented was merely a tax declaration in their names for a property in San Juan. A tax declaration is not conclusive proof of ownership. Without clear evidence that they already owned a residential lot, a condition for disqualification under applicable rules was not met. Furthermore, Republic Act No. 498 , which voids sales to existing lot owners, was held inapplicable as it pertains to cities, municipalities, and provinces, not to the PHHC.
Therefore, Arcilla’s action had no legal foundation. The PHHC’s award and subsequent sale to Aurea Bañez, duly approved by its governing board, were valid and binding.