SECOND DIVISION
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CHRISTIAN GENERAL ASSEMBLY, INC.,
Petitioner, - versus - SPS. AVELINO C. IGNACIO and PRISCILLA T. IGNACIO,
Respondents. |
G.R. No. 164789 Present: Quisumbing, J., Chairperson,
CARPIO-MORALES,
brion, DEL CASTILLO, and ABAD, JJ. Promulgated:
August 27, 2009 |
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D
E C I S I O N
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BRION, J.:
We resolve in
this Rule 45 petition the legal issue of whether an action to rescind a contract
to sell a subdivision lot that the buyer found to be under litigation falls
under the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB).
In this petition,[1] Christian General Assembly, Inc. (CGA) prays that we set aside the
decision[2] issued by the Court of
Appeals (CA) in CA–G.R. SP No. 75717 that dismissed its complaint for rescission filed
with the Regional Trial Court (RTC) of
Bulacan for lack of jurisdiction, as well as the CA resolution[3]
that denied its motion for reconsideration.
FACTUAL ANTECEDENTS
The present controversy traces its
roots to the case filed by CGA against the Spouses Avelino and Priscilla
Ignacio (respondents) for rescission
of their Contract to Sell before the RTC, Branch 14, Malolos, Bulacan. The
facts, drawn from the records and outlined below, are not in dispute.
On P2,373,000.00 for the subject
property on installment basis; they were to pay a down payment of P1,186,500,
with the balance payable within three years on equal monthly amortization
payments of P46,593.85, inclusive of interest at 24% per annum, starting
June 1998.
On August 5, 2000,
the parties mutually agreed to amend the Contract to Sell to extend the payment
period from three to five years, calculated from the date of purchase and based
on the increased total consideration of P2,706,600, with equal monthly
installments of P37,615.00, inclusive of interest at 24% per annum,
starting September 2000.
According to
CGA, it religiously paid the monthly installments until its administrative
pastor discovered that the title covering the subject property suffered from fatal
flaws and defects. CGA learned that the subject property was actually part of two
consolidated lots (Lots 2-F and 2-G Bsd-04-000829 [OLT]) that the respondents
had acquired from Nicanor Adriano (Adriano)
and Ceferino Sison (Sison), respectively.
Adriano and Sison were former tenant-beneficiaries of Purificacion S. Imperial
(Imperial) whose property in Cutcut,
Pulilan, Bulacan[5] had been
placed under Presidential Decree (PD) No. 27’s Operation Land Transfer.[6] According
to CGA, Imperial applied for the retention of five hectares of her land under
Republic Act No. 6657,[7] which
the Department of Agrarian Reform (DAR)
granted in its
Understandably
aggrieved after discovering these circumstances, CGA filed a complaint against
the respondents before the RTC on
Instead of
filing an answer, the respondents filed a motion to dismiss asserting that the
RTC had no jurisdiction over the case.[11]
Citing PD No. 957[12]
and PD No. 1344, the respondents claimed that the case falls within the
exclusive jurisdiction of the HLURB since it involved the sale of a subdivision
lot. CGA opposed the motion to dismiss,
claiming that the action is for rescission of contract, not specific
performance, and is not among the actions within the exclusive jurisdiction of
the HLURB, as specified by PD No. 957 and PD No. 1344.
On
The
respondents countered by filing a petition for certiorari with the CA. In its
Contending
that the CA committed reversible error, the CGA now comes before the Court
asking us to overturn the CA decision and resolution.
THE PETITION
In its petition, CGA argues that the CA erred -
(1)
in applying Article 1191 of the Civil Code for
breach of reciprocal obligation, while the petitioner’s action is for the rescission
of a rescissible contract under Article 1381 of the same Code, which is
cognizable by the regular court; and
(2)
in holding that the HLURB has exclusive jurisdiction over the
petitioner’s action by applying Antipolo
Realty Corp v. National Housing Corporation[13] and
other cited cases.
In essence, the main issue we are
asked to resolve is which of the two – the regular court or the HLURB – has
exclusive jurisdiction over CGA’s action for rescission and damages.
According to CGA, the exclusive jurisdiction of the HLURB, as
set forth in PD No. 1344 and PD No. 957, is limited to cases involving specific
performance and does not cover actions for rescission.
Taking
the opposing view, respondents insist that since CGA’s case involves the sale
of a subdivision lot, it falls under the HLURB’s exclusive jurisdiction.
THE
COURT’S RULING
We find no
merit in the petition and consequently affirm the CA decision.
Development
of the HLURB’s jurisdiction
The nature of an action and the
jurisdiction of a tribunal are determined by the material
allegations of the complaint and the law governing at the time the action was
commenced. The jurisdiction of the tribunal over the subject matter or nature of an
action is conferred only by law, not by the parties’ consent or by their waiver
in favor of a court that would otherwise have no jurisdiction over the subject
matter or the nature of an action.[14] Thus, the determination of whether
the CGA’s cause of action falls under the jurisdiction of the HLURB
necessitates a closer examination of the laws defining the HLURB’s jurisdiction
and authority.
PD No. 957, enacted on
WHEREAS, reports of alarming
magnitude also show cases of swindling and fraudulent manipulations perpetrated
by unscrupulous subdivision and condominium sellers and operators, such as failure
to deliver titles to the buyers or titles free from liens and encumbrances, and
to pay real estate taxes, and fraudulent sales of the same subdivision lots to
different innocent purchasers for value;
Section 3 of PD No. 957 granted
the National Housing Authority (NHA) the
“exclusive jurisdiction to regulate the real estate trade and business.” Thereafter,
PD No. 1344 was issued on
SECTION
1. In the exercise of its functions to
regulate the real estate trade and business and in addition to its powers
provided for in Presidential Decree No. 957, the National Housing Authority
shall have exclusive jurisdiction to hear and decide cases of the following
nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and
C. 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.
Executive Order No. 648 (EO 648), dated
SECTION
8. Transfer
of Functions. -The regulatory functions of the National Housing Authority
pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are
hereby transferred to the Commission [Human Settlements Regulatory Commission].
x x x. Among these regulatory functions
are: 1) Regulation of the real estate trade and business; x x x 11) 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.
Pursuant
to Executive Order No. 90 dated
Rationale
for HLURB’s extensive quasi-judicial powers
The surge in the real estate business in the country
brought with it an increasing number of cases between subdivision
owners/developers and lot buyers on the issue of the extent of the HLURB’s
exclusive jurisdiction. In the cases that reached us, we have consistently ruled
that the HLURB has exclusive jurisdiction over complaints arising from
contracts between the subdivision developer and the lot buyer or those aimed at
compelling the subdivision developer to comply with its contractual and
statutory obligations to make the subdivision a better place to live in.[15]
We explained the HLURB’s exclusive jurisdiction
at length in Sps. Osea v. Ambrosio,[16] where we said:
Generally,
the extent to which an administrative agency may exercise its powers depends
largely, if not wholly, on the provisions of the statute creating or empowering
such agency. Presidential Decree (P.D.) No. 1344, “Empowering The National Housing Authority To Issue
Writ Of Execution In The Enforcement Of Its Decision Under Presidential Decree
No. 957,” clarifies and spells out the quasi-judicial dimensions of
the grant of jurisdiction to the HLURB in the following specific terms:
SEC. 1.
In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers
provided for in Presidential Decree No. 957, the National Housing Authority
shall have exclusive jurisdiction to
hear and decide cases of the following nature:
A. Unsound
real estate business practices;
B. Claims
involving refund and any other claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker or salesman;
and
C. Cases
involving specific performance of contractual and statutory obligations filed
by buyers of subdivision lots or condominium units against the owner,
developer, dealer, broker or salesman.
The extent to which the HLURB has been vested with quasi-judicial
authority must also be determined by referring to the terms of
P.D. No. 957, “The Subdivision And
Condominium Buyers' Protective Decree.”
Section 3 of this statute provides:
x x x National Housing
Authority [now HLURB]. - The National
Housing Authority shall have exclusive jurisdiction to regulate the real estate
trade and business in accordance with the provisions of this Decree.
The
need for the scope of the regulatory authority thus lodged in the HLURB is
indicated in the second, third and fourth preambular paragraphs of PD 957 which
provide:
WHEREAS, numerous reports
reveal that many real estate subdivision owners, developers, operators, and/or
sellers have reneged on their representations and obligations to provide and
maintain properly subdivision roads, drainage, sewerage, water systems,
lighting systems, and other similar basic requirements, thus endangering the
health and safety of home and lot buyers;
WHEREAS, reports of alarming
magnitude also show cases of swindling
and fraudulent manipulations perpetrated by unscrupulous subdivision and
condominium sellers and operators, such
as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to pay real estate
taxes, and fraudulent sales of the same subdivision lots to different innocent
purchasers for value;
x x x x
WHEREAS, this state of
affairs has rendered it imperative that the real estate subdivision and
condominium businesses be closely supervised and regulated, and that penalties
be imposed on fraudulent practices and manipulations committed in connection
therewith.
The
provisions of PD 957 were intended to encompass all questions regarding
subdivisions and condominiums. The intention was aimed at providing for an
appropriate government agency, the HLURB, to which all parties aggrieved in the
implementation of provisions and the enforcement of contractual rights with
respect to said category of real estate may take recourse. The
business of developing subdivisions and corporations being imbued with public
interest and welfare, any question arising from the exercise of that
prerogative should be brought to the HLURB which has the technical know-how on
the matter. In the exercise of its powers, the HLURB must commonly interpret
and apply contracts and determine the rights of private parties under such
contracts. This ancillary power is no
longer a uniquely judicial function, exercisable only by the regular courts.
As
observed in C.T. Torres Enterprises, Inc. v. Hibionada:
The
argument that only courts of justice can adjudicate claims resoluble under the
provisions of the Civil Code is out of step with the fast-changing times. There
are hundreds of administrative bodies now performing this function by virtue of
a valid authorization from the legislature. This quasi-judicial function, as it
is called, is exercised by them as an incident of the principal power entrusted
to them of regulating certain activities falling under their particular
expertise.
In
the Solid Homes case for example the Court affirmed the competence of the Housing and Land Use Regulatory Board to award
damages although this is an essentially judicial power exercisable ordinarily
only by the courts of justice. This departure from the traditional allocation
of governmental powers is justified by expediency, or the need of the
government to respond swiftly and competently to the pressing problems of the
modern world. [Emphasis supplied.]
Another case – Antipolo Realty
Corporation v. NHA[17] – explained the grant of the HLURB’s expansive quasi-judicial
powers. We said:
In this era of clogged court dockets, the need for specialized administrative boards or commissions with the special knowledge, experience and capability to hear and determine promptly disputes on technical matters or essentially factual matters, subject to judicial review in case of grave abuse of discretion, has become well nigh indispensable. Thus, in 1984, the Court noted that ‘between the power lodged in an administrative body and a court, the unmistakable trend has been to refer it to the former’.
xxx
In general, the quantum of judicial or quasi-judicial powers which an administrative agency may exercise is defined in the enabling act of such agency. In other words, the extent to which an administrative entity may exercise such powers depends largely, if not wholly on the provisions of the statute creating or empowering such agency. In the exercise of such powers, the agency concerned must commonly interpret and apply contracts and determine the rights of private parties under such contracts, One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely judicial function, exercisable only by our regular courts. [Emphasis supplied.]
Subdivision
cases under the RTC’s jurisdiction
The
expansive grant of jurisdiction to the HLURB does not mean, however, that all
cases involving subdivision lots automatically fall under its jurisdiction. As
we said in Roxas v. Court of Appeals: [18]
In our view, the mere relationship between
the parties, i.e., that of being subdivision owner/developer
and subdivision lot buyer, does not
automatically vest jurisdiction in the HLURB.
For an action to fall within the exclusive jurisdiction
of the HLURB, the decisive element is the nature of the
action as enumerated in Section 1 of P.D. 1344. On this matter, we have
consistently held that the concerned administrative agency, the National
Housing Authority (NHA) before and now the HLURB, has jurisdiction over
complaints aimed at compelling the subdivision developer to comply with its
contractual and statutory obligations.
xxx
Note particularly pars. (b) and (c) as
worded, where the HLURB’s jurisdiction concerns cases commenced by subdivision
lot or condominium unit buyers. As to par. (a), concerning “unsound real
estate practices,” it would appear that
the logical complainant would be the buyers and customers against the sellers
(subdivision owners and developers or condominium builders and realtors ), and
not vice versa. [Emphasis supplied.]
Pursuant to Roxas, we held in Pilar
Development Corporation v. Villar[19] and Suntay v. Gocolay[20] that the HLURB has no jurisdiction over cases filed
by subdivision or condominium owners or developers against subdivision lot or condominium unit buyers or owners. The rationale behind this can be found in the
wordings of Sec. 1, PD No. 1344, which expressly qualifies that the cases
cognizable by the HLURB are those instituted by subdivision
or condomium buyers or owners against the project developer or owner. This is also in keeping with the policy
of the law, which is to curb
unscrupulous practices in the real estate trade and business.[21]
Thus, in
the cases of Fajardo Jr. v. Freedom to Build, Inc.,[22] and
Cadimas v. Carrion,[23] we upheld the RTC’s jurisdiction even if the subject matter was a
subdivision lot since it was the subdivision developer who filed the action
against the buyer for violation of the contract to sell.
The only
instance that HLURB may take cognizance of a case filed by the developer is
when said case is instituted as a compulsory counterclaim to a pending case
filed against it by the buyer or owner of a subdivision lot or condominium unit.
This was what happened in Francel Realty Corporation v. Sycip,[24] where the HLURB took cognizance of the developer’s claim
against the buyer in order to forestall splitting of causes of action.
Obviously,
where it is not clear from the allegations in the complaint that the property
involved is a subdivision lot, as in Javellana v. Hon.
Presiding Judge, RTC,
Branch 30,
The
Present Case
In the present case, CGA is
unquestionably the buyer of a subdivision lot from the respondents, who sold
the property in their capacities as owner and developer. As CGA stated in its complaint:
2.01. Defendants are the registered owners and developers of a housing subdivision presently known as Villa Priscilla Subdivision located at Brgy. Cutcut, Pulilan, Bulacan;
2.02 On or about April 30, 1998, the plaintiff thru its Administrative Pastor bought from defendants on installment basis a parcel of land designated at Lot 1, Block 4 of the said Villa Priscilla Subdivision xxx
xxx
2.04 At the time of
the execution of the second Contract to Sell (Annex “B”),
2.05 Plaintiff has been religiously paying the agreed monthly installments until its Administrative Pastor discovered recently that while apparently clean on its face, the title covering the subject lot actually suffers from fatal flaws and defects as it is part of the property involved in litigation even before the original Contract to Sell (Annex “A”), which defendants deliberately and fraudulently concealed from the plaintiff;
2.06 As shown in the technical description of TCT No. T-127776 (Annex “C”), it covers a portion of consolidated Lots 2-F and 2-G Bsd-04-000829 (OLT), which were respectively acquired by defendants from Nicanor Adriano and Ceferino Sison, former tenants-beneficiaries of Purificacion S. Imperial, whose property at Cutcut, Pulilan, Bulacan originally covered by TCT No. 240878 containing an area of 119,431 square meters was placed under Operation Land Transfer under P.D. No. 27;
2.07 Said Purificacion S. Imperial applied for retention of five (5) hectares of her property at Cutcut, Pulilan, Bulacan under Rep, Act No. 6657 and the same was granted by the Department of Agrarian Reform (DAR) to cover in whole or in part farm lots previously awarded to tenants-beneficiaries, including inter alia Nicanor Adriano’s Lot 2-F and Ceferino Sison’s Lot 2-G Bsd-04-000829 (OLT).
xxx
2.08
Said order of
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3.03
As may thus be seen, the defendants
deliberately and fraudulently concealed from the plaintiff that fact that the
parcel of land sold to the latter under the Contract to Sell (Annexes “A” and
“B”) is part of the property already under litigation and in fact part of the
five-hectare retention awarded to the original owner, Purificacion S. Imperial.
xxx
3.05 Plaintiff is by law entitled to the rescission of the Contracts to Sell (Annexes “A” and “B”) by restitution of what has already been paid to date for the subject property in the total amount of P2,515,899.20, thus formal demand therefor was made on the defendants thru a letter dated April 5, 2002, which they received but refused to acknowledge receipt. Copy of said letter is hereto attached and made part hereof as Annex “J”. [27] [Emphasis supplied.]
From these allegations, the main thrust
of the CGA complaint is clear – to
compel the respondents to refund the payments already made for the subject
property because the respondents were selling a property that they apparently
did not own. In other words, CGA claims
that since the respondents cannot comply with their obligations under the
contract, i.e., to deliver the
property free from all liens and encumbrances, CGA is entitled to rescind the
contract and get a refund of the payments already made. This cause of action clearly falls under
the actions contemplated by Paragraph (b), Section 1 of PD No. 1344, which
reads:
SEC. 1. In the
exercise of its functions to regulate the real estate trade and business and in addition to its powers provided for in
Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and
decide cases of the following nature:
xxx
B. Claims involving refund and any other
claims filed by subdivision lot or
condominium unit buyer against the
project owner, developer, dealer, broker or salesman; and
We view CGA’s
contention – that the CA erred in applying Article 1191 of the Civil Code as
basis for the contract’s rescission – to be a negligible point. Regardless of
whether the rescission of contract is based on Article 1191 or 1381 of the
Civil Code, the fact remains that what CGA principally wants is a refund of all
payments it already made to the respondents. This intent, amply articulated in
its complaint, places its action within the ambit of the HLURB’s exclusive jurisdiction
and outside the reach of the regular courts. Accordingly, CGA has to file its
complaint before the HLURB, the body with the proper jurisdiction.
WHEREFORE, premises considered, we DENY the petition and AFFIRM the October 20, 2003 Decision of
the Court of Appeals in CA G.R. SP No. 75717 dismissing for lack of
jurisdiction the CGA complaint filed with the RTC, Branch 14 of Malolos, Bulacan.
SO ORDERED.
ARTURO
D. BRION
Associate Justice
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WE CONCUR: LEONARDO A. QUISUMBING
Associate Justice Chairperson |
|
|
MORALES-CONCHITA
CARPIO Associate
Justice |
MARIANO C. Associate Justice |
ROBERTO A. ABAD
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
REYNATO S. PUNO
Chief Justice
[1] Dated
[2]
Dated
[3] Dated
[4] Designated as
[5] Originally covered by TCT No. 240878, with an area of 119,431 square meters.
[6] Decreeing the emancipation of tenants from the bondage of the soil, transferring to them the ownership of the land they till and providing the instruments and mechanism therefor.
[7] Comprehensive Agrarian Reform Law of 1988.
[8] In O.P. Case No. 02-I-340.
[9] In CA GR SP No. 80031.
[10] Rollo, pp. 41-49.
[11]
[12] The Subdivision and Condominium Buyers’ Protective Decree.
[13] G.R. No. L-50444,
[14] Laresma v. Abellana, G.R. No. 140973,
[15] Arranza v. B.F. Homes, G.R. No. 131683,
[16] G.R. No. 162774,
[17] G.R. No. 50444,
[18] G.R. No. 138955,
[19] G.R. No. 158840,
[20] G.R. No. 144892,
[21] Francel Realty Corporation v. Sycip, G.R. No. 154684,
[22] G.R.
No. 134692,
[23] G.R. No. 180394,
[24] Supra note 21.
[25] G.R. No. 139067,
[26] G.R. No. 151298,
[27] Supra note 10.