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Jesus Lim Arranza et al. v B.F. Homes, Inc. et al.

 Petitioners filed with HLURB a class suit “for and in behalf of the more than 7,000
June 19, 2000|Davide, Jr., C.J.| Administrative Procedure; Jurisdiction homeowners in the subdivision” against BFHI, et al “to enforce the rights of
Digester: Anna Mickaella Lingat purchasers of lots in BF Homes Parañaque.
 In BFHI’s answer, it claimed that:
SUMMARY: Respondent BF Homes, Inc (BFHI), is a domestic corporation engaged o It complied with its contractual obligations relative to the subdivisions
in developing subdivision and selling residential lots. With the withdrawal of substantial development
investments in BFHI, respondent filed with the SEC a petition for rehabilitation. Atty o It could not be compelled to abide by agreements resulting from Orendain’s
Florencio Orendain was appointed as receiver. He was later relieved by the SEC of his ultra vires acts
duties as a Receiver. The new Board of Receivers revoked the authority given by o Petitioners were precluded from instituting the instant action because of the
Orendain to use the open spaces at Concha Cruz Drive and to collect community suspension of all actions for claims against a corporation under receivership.
assessment funds; deferred the purchase of new pumps ; recognized BF Paranaque
Homeowners Association (BFPHAI) as the representative of all homeowners; took over HLURB
the management of the Clubhouse and deployed its own guards. Petitioners filed with  Ruled in favor of the petitioners
the HLURB a class suit “for and in behalf of the more than 7,000 homeowners” against  Enjoined BFHI:
respondent BFHI et al to enforce the rights of purchasers of lots in BF Homes o From taking over/administering Concha Garden Row
Paranaque 3. Respondents asserts that the SEC, not the HLURB, has jurisdiction o From issuing stickers to residents and non-residents alike for free or with fees
arguing that the SEC, being the appointing authority should be the one to take o From preventing necessary improvements and repairs of infrastructures within
cognizance of controversies arising from the performance of the receiver’s duties. The the authority and administration of UBFHAI
Court held that it is HLURB that has jurisdiction over the case, and not the SEC. o From taking over security in the exit points of the subdivision
DOCTRINE: The SEC has authority over the operation of all kinds of corporations, CA
partnerships or associations with the end in view of protecting the interests of the
 Reversed; set aside the writ of preliminary injuction issued by HLURB
investing public and creditors. The HLURB has jurisdiction over matters relating to
observance of laws governing corporations engaged in the specific business of  Petitioner’s action should be regarded as a “claim” within the contemplation of PD
development of subdivisions and condominiums. No 902-A, which should be placed on equal footing with those of petitioners other
creditor or creditors and which should be filed with the Committee of Receivers.
FACTS:  Petitioner’s action against BFHI, which is under receivership, should be suspended.
 BF Homes, Inc. (BFHI) is domestic corporation engaged in developing
RULING: Decision of the Court of Appeals is hereby REVERSED and SET ASIDE.
subdivisions and selling residential lots. One of the subdivisions that BFHI
This case is REMANDED to the Housing and Land Use Regulatory Board for
developed was the BF Homes Parañaque Subd.
continuation of proceedings with dispatch as the Securities and Exchange Commission
 When Central Bank ordered the closure of Banco Filipino, which had substantial proceeds with the rehabilitation of respondent BF Homes, Inc., through the Board of
investments in BFHI, BFHI filed with the SEC a petition for rehabilitation and a Receivers. Thereafter, any and all monetary claims duly established before the HLURB
declaration that it was in a state of suspension of payment. SEC placed BFHI under shall be referred to the Board of Receivers for proper disposition and thereafter, to the
a management committee, appointed Atty. Florencio B. Orendain as a Receiver, SEC, if necessary. No costs.
and approved a Revised Rehabilitation Plan.
 Orendain instituted a central security system and unified the 65 homeowner’s Whether the HLRUB has the jurisdiction over the petitioner’s claims? – YES,
associations into an umbrella homeowners association called “United BF not the SEC.
Homeowners Associations (UBFHAI).  PETITIONER’S ARGUMENTS:
 BFHI turned over to UBFHAI control and administration of security in the o The issues are within the jurisdiction of HLURB.
subdivision, clubhouse and open spaces. o Their complaint refers to rights of way, water, open spaces, road and perimeter
 Orendain was relieved by the SEC of his duties as a Receiver, and a new Board of wall repairs, security and BFHI’s interlocking corporations that facilitated the
Receivers was appointed. The new Board revoked Orendain’s authority to use the circumvention of its obligation involves unsound real estate practices.
open spaces and to collect community assessment funds; deferred the purchase of o The action is for specific performance of a real estate developers obligations
new pumps; recognized BF Parañaque Homeowners Association, Inc (BFPHAI) as under PD No 957 and the relief sought is revocation of the subdivision
the representative of all homeowners in the subdivision; took over the management projects registration certificate and license to sell.
of the Clubhouse; and deployed its own security guard in the subdivision.
o Even if BFHI is under receivership, its obligations as a real estate developer  A receiver is a person appointed by the court, or in this instance, by a quasi-judicial
are not suspended. administrative agency, in behalf of all the parties for the purpose of preserving and
o Suspension of all actions for claims refers solely to monetary claims which are conserving the property and preventing its possible destruction or dissipation, if it
but incidental to their complaints against BFHI. If filed elsewhere than were left in the possession of any of the parties.
HLURB, it would result to splitting of causes of action o It is the duty of the receiver to administer the assets of the receivership estate;
o Acts enjoined by HLURB are not related to the disposition of BFHI’s assets as and in the management and disposition of the property committed to his
a corporation undergoing its final phase of rehabilitation. possession, he acts in a fiduciary capacity and with impartiality towards all interested
 RESPONDENT’S ARGUMENTS: persons.
o SEC has the jurisdiction over petitioner’s complaint based on the contracts o The appointment of a receiver does not dissolve a corporation, nor does it
entered into by the former receiver. interfere with the exercise of its corporate rights.
o SEC, being the appointing authority, should be he one tot take cognizance of  In this case where there appears to be no restraints imposed upon respondent as it
controversies arising from the performance of the receiver’s duties. undergoes rehabilitation receivership, respondent continues to exist as a
o Since BFHI’s properties are under SEC’s custodial egis, they are exempt from corporation and hence, continues or should continue to perform its contractual and
any court processes. statutory responsibilities to petitioners as homeowners.
COURT:  No violation of the SEC order suspending payments to creditors would result as far
 PD No 957 (The Subdivision and Condominium Buyers Protective Decree) was as petitioners complaint before the HLURB is concerned. To reiterate, what
issued to answer to the popular call for correction of pernicious practices of petitioners seek to enforce are respondents obligations as a subdivision developer.
subdivision owners and/or developers that adversely affected the interests of Such claims are basically not pecuniary in nature although it could incidentally involve
subdivision lot buyers. monetary considerations.
 Sec 3 of PD No 957 empowered the National Housing Authority (NHA) with the  All that petitioners claims entail is the exercise of proper subdivision management
exclusive jurisdiction to regulate the real estate trade and business. on the part of the SEC-appointed Board of Receivers towards the end that
 Thereafter, the regulatory and quasi-judicial functions of the NHA were transferred homeowners shall enjoy the ideal community living that respondent portrayed they
to the Human Settlements Regulatory Commission (HSRC) by virtue of EO No. would have when they bought real estate from it.
648. Sec 8 of said EO transferred NHA’s authority to hear and decide “cases on  In this case, under the complaint for specific performance before the HLURB,
unsound real estate business practices, claims involving refund filed against project petitioners do not aim to enforce a pecuniary demand. Their claim for
owners, developers, dealers, brokers or salesmen and cases of specific reimbursement should be viewed in the light of respondents alleged failure to
performance” to HSRC. observe its statutory and contractual obligations to provide petitioners a "decent
 The boom in the real estate business all over the country resulted in more litigation human settlement" and "ample opportunities for improving their quality of life."
between subdivision owners/developers and lot buyers with the issue of the The HLURB, not the SEC, is equipped with the expertise to deal with that matter.
jurisdiction of the NHA or the HLURB over such controversies as against that of  For the SEC to acquire jurisdiction over any controversy under these provisions,
the regular courts. two elements must be considered:
 The Court has consistently ruled that NHA or the HLURB has jurisdiction over o (1) the status or relationship of the parties; and
complaints arising from contracts between the subdivision developer and the lot o (2) the nature of the question that is the subject of their controversy.
buyer or those aimed at compelling the subdivision developer to comply with its  The first element requires that the controversy must arise "out of intra~corporate
contractual and statutory obligations to make the subdivision in a better place to or partnership relations between and among stockholders, members or associates;
live in. between any or all of them and the corporation, partnership or association of which
 In the present petition, petitioner’s complaint is for specific performance to enforce they are stockholders, members or associates, respectively; and between such
their rights as purchasers of subdivision lots as regards rights of way, water, open corporation, partnership or association and the State in so far as it concerns their
spaces, road and perimeter wall repairs, and security. The HLURB, then, has individual franchises."
jurisdiction over the complaint.  In this case, petitioners are not stockholders, members or associates of respondent.
They are lot buyers and now homeowners in the subdivision developed by the
Assuming HLURB has jurisdiction, may the proceedings be suspended pending respondent.
the outcome of receivership before the SEC? - NO  The second element requires that the dispute among the parties be intrinsically
 The fact that BFHI is under receivership does not divest the HLURB of that connected with the regulation or the internal affairs of the corporation, partnership
jurisdiction.
or association. The controversy in this case is remotely related to the "regulation"
of respondent corporation or to respondents "internal affairs."
 The main concern in this case is the issue of jurisdiction over petitioners complaint
against respondent for specific performance. P.D. No. 902~A, as amended, defines
the jurisdiction of the SEC; while P.D. No. 957, as amended, delineates that of the
HLURB.
 These two quasi~judicial agencies exercise functions that are distinct from each
other.
o The SEC has authority over the operation of all kinds of corporations,
partnerships or associations with the end in view of protecting the interests of
the investing public and creditors.
o The HLURB has jurisdiction over matters relating to observance of laws
governing corporations engaged in the specific business of development of
subdivisions and condominiums.
 The HLURB and the SEC being bestowed with distinct powers and functions, the
exercise of those functions by one shall not abate the performance by the other of
its own functions. There is no contradiction between P.D. No. 902~A and P.D.
No. 957.