G.R. No.
156287 February 16, blocked the right of way to his private
2010
FELICITAS M. MACHADO and
MARCELINO P. MACHADO, Petitioners,
vs.
RICARDO L. GATDULA, COMMISSION
ON THE SETTLEMENT OF LAND
PROBLEMS, and IRINEO S. PAZ, Sheriff
IV, Office of the Provincial Sheriff, San
Pedro, Laguna, Respondents.
DECISION
BRION, J.:
Before this Court is the Petition for Review
on Certiorari1 filed by petitioners Felicitas
M. Machado and Marcelino P. Machado
(the Machados), assailing the decision2 of
the Court of Appeals (CA) dated January
31, 2002 and the resolution3 dated
December 5, 2002 in CA-G.R. SP No.
65871. The CA decision dismissed the
Machados’ petition for certiorari and their
motion for reconsideration, and upheld the
jurisdiction of the Commission on
Settlement of Land Problems (COSLAP) to
render judgment over a private land and to
issue the corresponding writs of execution
and demolition.
THE FACTUAL ANTECEDENTS
The dispute involves two adjoining
parcels of land located in Barangay San
Vicente, San Pedro, Laguna, one
belonging to the Machados, and the
other belonging to respondent Ricardo
L. Gatdula (Gatdula).
On February 2, 1999, Gatdula wrote a
letter4 to the COSLAP requesting
assistance because the Machados allegedly
property by constructing a two-door
apartment on their property.
Acting on Gatdula’s letter, the COSLAP
conducted a mediation conference on
February 25, 1999; the parties then agreed
to have a verification survey conducted on
their properties and to share the attendant
expenses. Thereafter, the COSLAP issued
an Order dated March 16, 1999 directing
the Chief of the Survey Division of the
Community Environment and Natural
Resources Office – Department of
Environment and Natural Resources
(CENRO-DENR), to conduct a verification
survey on May 9, 1999. The order likewise
stated that in the event that no surveyor is
available, the parties may use the services
of a private surveyor, whom the CENRO-
DENR Survey Division would deputize.
As scheduled, a private surveyor, Junior
Geodetic Engineer Abet F. Arellano (Engr.
Arellano), conducted a verification survey of
the properties in the presence of both
parties. Engr. Arellano submitted a report to
the COSLAP finding that the structure
built by the Machados encroached upon
an alley found within the Gatdula
property. Engr. Arellano’s findings
corroborated the separate report of
Engineer Noel V. Soqueco of the CENRO,
Los Baños, Laguna that had also been
submitted to the COSLAP.
The Machados contested these reports in
their position paper dated August 26, 1999.
They alleged that Gatdula had no right of
action since they did not violate Gatdula’s
rights.5 They further assailed the jurisdiction
of the COSLAP, stating that the proper
forum for the present case was the Regional
Trial Court of San Pedro, Laguna.

The COSLAP Ruling
On October 25, 1999, the COSLAP issued
a resolution6 (October 25, 1999 COSLAP
Resolution) directing the Machados to
reopen the right of way in favor of
Gatdula. In so ruling, the COSLAP relied on
the verification survey made by Engr.
Arellano, which established that the
Machados had encroached on the existing
alley in Gatdula’s property.
The COSLAP declared the Machados
estopped from questioning its
jurisdiction to decide the case, since
they actively participated in the
mediation conferences and the
verification surveys without raising any
jurisdictional objection. It ruled that its
jurisdiction does not depend on the
convenience of the Machados.
The Machados filed a motion for
reconsideration which the COSLAP denied
in a resolution dated January 24, 2000.
On February 18, 2000, the Machados filed a
notice of appeal7 with the Office of the
President (OP).
While this appeal was pending, the
COSLAP, upon Gatdula’s motion, issued a
writ of execution8 enforcing the terms of the
October 25, 1999 COSLAP Resolution. The
Machados opposed the writ by filing a
motion to quash on March 30, 2001.9 They
argued that the October 25, 1999 COSLAP
Resolution was not yet ripe for execution in
view of the pending appeal before the OP.
Since the Machados persistently refused to
reopen the right of way they closed, the
provincial sheriff recommended to COSLAP
the issuance of a writ of demolition. The
COSLAP issued the writ of demolition10 on
July 12, 2001.
The CA Ruling
On July 31, 2001, the Machados went to the
CA for relief through a Petition for Certiorari
and Prohibition,11 claiming that the
COSLAP issued the writs of execution and
demolition with grave abuse of discretion.
The CA found the Machados’ claim
unfounded and, accordingly, dismissed their
petition in its decision of January 31,
2002.12 It declared that the COSLAP
correctly issued the assailed writs because
the October 25, 1999 COSLAP Resolution
had already become final and executory for
failure of the Machados to avail of the
proper remedy against the COSLAP orders
and resolutions. Under Section 3 (2)13 of
Executive Order No. 561 (EO 561), the
resolutions, orders, and decisions of the
COSLAP become final and executory 30
days after promulgation, and are appealable
by certiorari only to the Supreme Court. In
Sy v. Commission on the Settlement of
Land Problems,14 it was held that under the
doctrine of judicial hierarchy, the orders,
resolutions and decisions of the COSLAP,
as a quasi-judicial agency, are directly
appealable to the CA under Rule 43 of the
1997 Rules of Civil Procedure, and not to
the Supreme Court. Thus, the CA ruled that
the Machados’ appeal to the OP was not
the proper remedy and did not suspend the
running of the period for finality of the
October 25, 1999 COSLAP Resolution.
On the issue of jurisdiction, the CA found
that the COSLAP was created to provide a
more effective mechanism for the
expeditious settlement of land problems, in
general; the present case, therefore, falls
within its jurisdiction.15 Moreover, the
Machados’ active participation in the
mediation conference and their consent to
bring about the verification survey bound
them to the COSLAP’s decisions, orders
and resolutions.
From this CA decision, the Machados filed a
motion for reconsideration,16 which the CA
subsequently denied in its Resolution of
December 5, 2002.17
The Machados thus filed the present Rule
45 petition with this Court, raising two vital
issues:
1. Whether the COSLAP has jurisdiction
over Gatdula’s complaint for right of way
against the Machados; and
2. Whether the COSLAP can validly issue
the writs of execution and demolition
against the Machados.
THE COURT’S RULING
We find the petition meritorious.
The COSLAP does not have jurisdiction
over the present case
In resolving the issue of whether the
COSLAP has jurisdiction over the present
case, a review of the history of the COSLAP
and an account of the laws creating the
COSLAP and its predecessor, the
Presidential Action Committee on Land
Problems (PACLAP), is in order.
The COSLAP’s forerunner, the PACLAP,
was created on July 31, 1970 pursuant to
Executive Order No. 251. As originally
conceived, the committee was tasked to
expedite and coordinate the investigation
and resolution of land disputes, streamline
and shorten administrative procedures,
adopt bold and decisive measures to solve
land problems, and/or recommend other
solutions.
On March 19, 1971, Executive Order No.
305 was issued reconstituting the PACLAP.
The committee was given exclusive
jurisdiction over all cases involving
public lands and other lands of the
public domain,18 and was likewise vested
with adjudicatory powers phrased in broad
terms:
1. To investigate, coordinate, and resolve
expeditiously land disputes, streamline
administrative proceedings, and, in general,
to adopt bold and decisive measures to
solve problems involving public lands and
lands of the public domain.19 [emphasis
supplied]
Thereafter, Presidential Decree No. 832
(PD 832)20 was issued on November 27,
1975 reorganizing the PACLAP and
enlarging its functions and duties. The
decree also granted PACLAP quasi-judicial
functions. Section 2 of PD 832 states:
Section 2. Functions and duties of the
PACLAP. – The PACLAP shall have the
following functions and duties:
1. Direct and coordinate the activities,
particularly the investigation work, of the
various government agencies and agencies
involved in land problems or disputes, and
streamline administrative procedures to
relieve small settlers and landholders and
members of cultural minorities of the
expense and time-consuming delay
attendant to the solution of such problems
or disputes;
2. Refer for immediate action any land
problem or dispute brought to the attention
of the PACLAP, to any member agency
having jurisdiction thereof: Provided, That
when the Executive Committee decides to
act on a case, its resolution, order or
decision thereon shall have the force and
effect of a regular administrative resolution,
order or decision, and shall be binding upon
the parties therein involved and upon the
member agency having jurisdiction thereof;
xxxx
4. Evolve and implement a system of
procedure for the speedy investigation and
resolution of land disputes or problems at
provincial level, if possible. [emphasis
supplied]
The PACLAP was abolished by EO 561
effective on September 21, 1979, and was
replaced by the COSLAP. Unlike the former
laws, EO 561 specifically enumerated the
instances when the COSLAP can exercise
its adjudicatory functions:
Section 3. Powers and Functions. – The
Commission shall have the following powers
and functions:
xxxx
2. Refer and follow up for immediate action
by the agency having appropriate
jurisdiction any land problem or dispute
referred to the Commission: Provided, That
the Commission may, in the following
cases, assume jurisdiction and resolve land
problems or disputes which are critical and
explosive in nature considering, for
instance, the large number of the parties
involved, the presence or emergence of
social tension or unrest, or other similar
critical situations requiring immediate action:
(a) Between occupants/squatters and
pasture lease agreement holders or timber
concessionaires;
(b) Between occupants/squatters and
government reservation grantees;
(c) Between occupants/squatters and public
land claimants or applicants;
(d) Petitions for classification, release
and/or subdivision of lands of the public
domain; and
(e) Other similar land problems of grave
urgency and magnitude.
The Commission shall promulgate such
rules and procedures as will ensure
expeditious resolution and action on the
above cases. The resolution, order or
decision of the Commission on any of the
foregoing cases shall have the force and
effect of a regular administrative resolution,
order or decision and shall be binding upon
the parties therein and upon the agency
having jurisdiction over the same. Said
resolution, order or decision shall become
final and executory within thirty (30) days
from its promulgation and shall be
appealable by certiorari only to the Supreme
Court. [emphasis supplied]
Under these terms, the COSLAP has two
different rules in acting on a land dispute or
problem lodged before it, e.g., COSLAP can
assume jurisdiction only if the matter is one
of those enumerated in paragraph 2(a) to
(e) of the law. Otherwise, it should refer the
case to the agency having appropriate
jurisdiction for settlement or resolution.21 In
resolving whether to assume jurisdiction
over a case or to refer it to the particular
agency concerned, the COSLAP considers:
(a) the nature or classification of the land
involved; (b) the parties to the case; (c) the
nature of the questions raised; and (d) the
need for immediate and urgent action
thereon to prevent injury to persons and
damage or destruction to property. The
terms of the law clearly do not vest on
the COSLAP the general power to
assume jurisdiction over any land
dispute or problem.22 Thus, under EO
561, the instances when the COSLAP may
resolve land disputes are limited only to
those involving public lands or those
covered by a specific license from the
government, such as pasture lease
agreements, timber concessions, or
reservation grants.23
Undisputably, the properties involved in
the present dispute are private lands
owned by private parties, none of whom
is a squatter, a patent lease agreement
holder, a government reservation
grantee, a public land claimant or a
member of any cultural minority.24
Moreover, the dispute between the
parties can hardly be classified as
critical or explosive in nature that would
generate social tension or unrest, or a
critical situation that would require
immediate and urgent action. The issues
raised in the present case primarily involve
the application of the Civil Code
provisions on Property and the
Easement of Right of Way. As held in
Longino v. General,25 "disputes requiring
no special skill or technical expertise of an
administrative body that could be resolved
by applying pertinent provisions of the Civil
Code are within the exclusive jurisdiction of
the regular courts."
The Machados cannot invoke Section 3,
paragraph 2(e) of EO 561, which provides
that the COSLAP may assume jurisdiction
over complaints involving "other similar land
problems of grave urgency," to justify the
COSLAP’s intervention in this case. The
statutory construction principle of ejusdem
generic prescribes that where general
words follow an enumeration of persons or
things, by words of a particular and specific
meaning, such general words are not to be
construed in their widest extent but are to
be held as applying only to persons or
things of the same kind as those specifically
mentioned.26 A dispute between two
parties concerning the right of way over
private lands cannot be characterized as
similar to those enumerated under Section
3, paragraph 2(a) to (d) of EO 561.1avvphi1
In Davao New Town Development
Corporation v. Commission on the
Settlement of Land Problems27 – where we
ruled that the COSLAP does not have
blanket authority to assume every matter
referred to it – we made it clear that its
jurisdiction is confined only to disputes over
lands in which the government has a
proprietary or regulatory interest.
The CA apparently misread and misapplied
the Court’s ruling in Bañaga v. Court of
Appeals.28 Bañaga involved two
contending parties who filed free patent
applications for a parcel of public land with
the Bureau of Lands. Because of the
Bureau of Lands’ failure to act within a
reasonable time on the applications and to
conduct an investigation, the COSLAP
decided to assume jurisdiction over the
case. Since the dispute involved a public
land on a free patent issue, the COSLAP
undeniably had jurisdiction over the Bañaga
case.
Jurisdiction is conferred by law and a
judgment issued by a quasi-judicial body
without jurisdiction is void
By reason of the Machados’ active
participation in the mediation
conferences and the COSLAP
verification surveys, the CA declared the
Machados estopped from questioning
the body’s jurisdiction and bound by its
decisions, orders and resolutions. We
disagree with this ruling.
Jurisdiction over a subject matter is
conferred by law and not by the parties’
action or conduct.29 Estoppel generally
does not confer jurisdiction over a cause
of action to a tribunal where none, by
law, exists. In Lozon v. NLRC,30 we
declared that:
Lack of jurisdiction over the subject matter
of the suit is yet another matter. Whenever it
appears that the court has no jurisdiction
over the subject matter, the action shall be
dismissed. This defense may be interposed
at any time, during appeal or even after final
judgment. Such is understandable, as this
kind of jurisdiction is conferred by law and
not within the courts, let alone the parties, to
themselves determine or conveniently set
aside. In People v. Casiano, this Court, on
the issue of estoppel, held:
The operation of the principle of estoppel on
the question of jurisdiction seemingly
depends upon whether the lower court
actually had jurisdiction or not. If it had no
jurisdiction, but the case was tried and
decided upon the theory that it had
jurisdiction, the parties are not barred, on
appeal, from assailing such jurisdiction, for
the same ‘must exist as a matter of law, and
may not be conferred by consent of the
parties or by estoppel’ However if the lower
court had jurisdiction, and the case was
heard and decided upon a given theory,
such, for instance, as that the court had no
jurisdiction, the party who induced it to
adopt such theory will not be permitted, on
appeal, to assume an inconsistent position
– that the lower court had jurisdiction. Here,
the principle of estoppel applies. The rule
that jurisdiction in conferred by law, and
does not depend upon the will of the parties,
has no bearing thereon. [emphasis
supplied]
In this case, the COSLAP did not have
jurisdiction over the subject matter of the
complaint filed by Gatdula, yet it proceeded
to assume jurisdiction over the case and
even issued writs of execution and
demolition against the Machados. The lack
of jurisdiction cannot be cured by the
parties’ participation in the proceedings
before the COSLAP.31 Under the
circumstances, the Machados can rightfully
question its jurisdiction at anytime, even
during appeal or after final judgment. A
judgment issued by a quasi-judicial body
without jurisdiction is void.32 It cannot be
the source of any right or create any
obligation. All acts pursuant to it and all
claims emanating from it have no legal
effect. The void judgment can never
become final and any writ of execution
based on it is likewise void.33
WHEREFORE, premises considered, we
GRANT the petition for review on certiorari.
The assailed Court of Appeals decision
dated January 31, 2002 and resolution
dated December 5, 2002 in CA-G.R. SP No. Dinalupihan, Bataan, Branch 5, to proceed
65871 are REVERSED and SET ASIDE. with trial. Also assailed is the Resolution2
The Decision of the Commission on the dated September 22, 2004 denying the
Settlement of Land Problems dated October motion for reconsideration.
25, 1999 in COSLAP Case No. 99-59, as
well as the writ of execution dated March Factual Antecedents
21, 2001 and the writ of demolition dated
July 12, 2001, are declared NULL and VOID This case began with a Complaint for
for having been issued without jurisdiction. Damages filed by respondent Danes B.
Sanchez (respondent) against the
SO ORDERED.
University of Santo Tomas (UST) and its
G.R. No. 165569 July 29, 2010
Board of Directors, the Dean and the
Assistant Dean of the UST College of
UNIVERSITY OF SANTO TOMAS,
Nursing, and the University Registrar for
GLENDA A. VARGAS, MA. SOCORRO S.
their alleged unjustified refusal to release
GUANHING, in their capacities as Dean
the respondent’s Transcript of Records
and Assistant Dean, respectively, of the
(ToR). The case was raffled to Branch 5 of
College of Nursing of the University of
the RTC of Dinalupihan, Bataan, and
Santo Tomas, and RODOLFO N. CLAVIO,
docketed as Civil Case No. DH-788-02.
in his capacity as Registrar of the
University of Santo Tomas, Petitioners,
In his Complaint, respondent alleged that he
vs.
graduated from UST on April 2, 2002 with a
DANES B. SANCHEZ, Respondent.
Bachelor’s Degree of Science in Nursing.
He was included in the list of candidates for
DECISION
graduation and attended graduation
ceremonies. On April 18, 2002, respondent
DEL CASTILLO, J.:
sought to secure a copy of his ToR with the
UST Registrar’s Office, paid the required
Where a valid cause of action exists, parties
fees, but was only given a Certificate of
may not simply bypass litigation by the
Graduation by the Registrar. Despite
simple expediency of a Motion to Dismiss.
repeated attempts by the respondent to
Instead of abbreviating the proceedings, it
secure a copy of his ToR, and
has had the opposite effect: unnecessary
submission of his class cards as proof
litigation for almost seven years. Here, in
of his enrolment, UST refused to release
particular, where any resolution of the case
his records, making it impossible for him
will depend on the appreciation of evidence,
to take the nursing board examinations,
a full-blown trial is necessary to unearth all
and depriving him of the opportunity to
relevant facts and circumstances.
make a living. The respondent prayed that
the RTC order UST to release his ToR and
This petition for review on certiorari assails
hold UST liable for actual, moral, and
the Decision1 dated July 20, 2004 of the
exemplary damages, attorney’s fees, and
Court of Appeals (CA) in CA-G.R. SP No.
the costs of suit.
79404 which affirmed the denial of
petitioners’ motion to dismiss and directed
the Regional Trial Court (RTC) of
Instead of filing an Answer, petitioners filed
a Motion to Dismiss4 where they claimed
that they refused to release respondent’s
ToR because he was not a registered
student, since he had not been enrolled in
the university for the last three semesters.
They claimed that the respondent’s
graduation, attendance in classes, and
taking/passing of examinations were
immaterial because he ceased to be a
student when he failed to enroll during the
second semester of school year 2000-2001.
They also sought the dismissal of the case
on the ground that the complaint failed to
state a cause of action, as paragraph 10 of
the complaint admitted that:
10. On several occasions, [respondent]
went to see the [petitioners] to get his ToR,
but all of these were futile for he was not
even entertained at the Office of the Dean.
Worst, he was treated like a criminal forcing
him to admit the fact that he did not enroll
for the last three (3) semesters of his
schooling. [Petitioner] Dean tried to
persuade the [respondent] to give the
original copies of the Class Cards which he
has in his possession. These are the only
[bits of] evidence on hand to prove that he
was in fact officially enrolled. [Respondent]
did not give the said class cards and instead
gave photo copies to the [Petitioner] Dean.
The Office of the Dean of Nursing of
[petitioner] UST became very strict in
receiving documents from the [respondent].
[They have] to be scrutinized first before the
same are received. Receiving, as
[respondent] believes, is merely a
ministerial function [of] the [petitioners] and
the documents presented for receiving need
not be scrutinized especially so when x x x
they are not illegal. Copies of the class
cards are hereto attached as "F" hereof.5
After the parties filed their responsive
pleadings,6 petitioners filed a Supplement
to their Motion to Dismiss,7 alleging that
respondent sought administrative recourse
before the Commission on Higher Education
(CHED) through a letter-complaint dated
January 21, 2003. Thus, petitioners claimed
that the CHED had primary jurisdiction to
resolve matters pertaining to school
controversies, and the filing of the instant
case was premature.
Ruling of the Regional Trial Court
After another exchange of pleadings,8 the
RTC issued an Order9 dated April 1, 2003
denying the Motion to Dismiss on the
ground that the issues involved required an
examination of the evidence, which should
be threshed out during trial. Petitioners’
Motion for Reconsideration10 was denied in
an Order11 dated August 1, 2003, so
petitioners sought recourse before the CA.
Ruling of the Court of Appeals
The CA affirmed the denial of petitioners’
Motion to Dismiss, and directed the RTC to
proceed with trial.
Issues
Petitioners seek recourse before us raising
the following issues:
1) The CHED exercises quasi-judicial power
over controversies involving school matters
and has primary jurisdiction over
respondent’s demand for the release of his
ToR. Thus, respondent failed to exhaust
administrative remedies;
2) Since respondent sought recourse with
both the CHED and the RTC, respondent
violated the rule against forum-shopping;
and
3) The Complaint failed to state a cause of
action, since respondent admitted that he
was not enrolled in UST in the last three
semesters prior to graduation.
Our Ruling
The petition is denied for lack of merit.
The doctrine of exhaustion of administrative
remedies does not apply in this case.
The doctrine of exhaustion of administrative
remedies requires that where a
remedy before an administrative agency is
provided, the administrative agency
concerned must be given the opportunity to
decide a matter within its jurisdiction before
an action is brought before the courts.12
Failure to exhaust administrative remedies
is a ground for dismissal of the action.13
In this case, the doctrine does not apply
because petitioners failed to
demonstrate that recourse to the CHED
is mandatory – or even possible – in an
action such as that brought by the
respondent, which is essentially one for
mandamus and damages. The doctrine
of exhaustion of administrative remedies
admits of numerous exceptions,14 one
of which is where the issues are purely
legal and well within the jurisdiction of
the trial court, as in the present case. 15
Petitioners’ liability – if any – for
damages will have to be decided by the
courts, since any judgment inevitably
calls for the application and the
interpretation of the Civil Code.16 As
such, exhaustion of administrative remedies
may be dispensed with. As we held in
Regino v. Pangasinan Colleges of Science
and Technology:17
x x x exhaustion of administrative remedies
is applicable when there is competence on
the part of the administrative body to act
upon the matter complained of.
Administrative agencies are not courts; x x x
neither [are they] part of the judicial system,
[or] deemed judicial tribunals. Specifically,
the CHED does not have the power to
award damages. Hence, petitioner could
not have commenced her case before the
Commission. (Emphasis ours)
In addition, the rule on primary
jurisdiction applies only where the
administrative agency exercises quasi-
judicial or adjudicatory functions.18
Thus, an essential requisite for this
doctrine to apply is the actual existence
of quasi-judicial power.19 However,
petitioners have not shown that the
CHED possesses any such power to
"investigate facts or ascertain the
existence of facts, hold hearings, weigh
evidence, and draw conclusions."20
Indeed, Section 8 of Republic Act No.
772221 otherwise known as the Higher
Education Act of 1994, certainly does not
contain any express grant to the CHED
of judicial or quasi-judicial power.
Petitioners also claim that even without any
express grant of quasi-judicial power by the
legislature, the CHED is authorized to
adjudicate the case filed by respondent on
the strength of the following provisions of
the Manual of Regulations of Private
Schools:22
(1) Section 33, which authorizes the CHED
to cancel or revoke the graduation of any
student whose records are found to be
fraudulent:
Section 33. Authority to Graduate Without
Department Approval. One of the benefits
which may be made available for accredited
schools of the appropriate level is the
authority to graduate students from
accredited courses or programs of study
without prior approval of the Department,
the conditions of which are as follows:
a) The school head must furnish the
Regional Office of the region where the
school is situated a copy of its certificate of
accreditation.
b) Within two weeks after the graduation
exercise, the school shall submit to the
Regional Office concerned an alphabetical
list of graduates by course, accompanied by
a certification under oath signed by the
school registrar certifying that the students
listed (1) have complied with all the
requirements of the Department, (2) were
conferred their respective certificates or
degrees on a specific date, (3) have
complete scholastic records on file in the
school, and (4) have their Form 137 for high
school and Form IX for college, as the case
may be, in the custody of the school. This
list shall be sufficient basis for issuing
special orders, if still necessary.
The school will be held fully liable for the
veracity of the records without prejudice to
any legal action, including revocation of
government recognition, as may be called
for under the circumstances.
The Department reserves the right to cancel
or revoke the graduation of any student
whose records are found to be fraudulent.
(2) Section 72, which permits the school to
withhold students’ credentials under certain
specified circumstances, and authorizes the
CHED to
issue a student’s credentials in case these
are unlawfully withheld by the school:
Section 72. Withholding of Credentials. The
release of the transfer credentials of any
pupil or student may be withheld for reasons
of suspension, expulsion, or non-payment of
financial obligations or property
responsibility of the pupil or student to the
school. The credentials shall be released as
soon as his obligation shall have been
settled or the penalty of suspension or
expulsion lifted.
However, if, after due inquiry, a school is
found to have unjustifiably refused to issue
transfer credentials or student records, the
Department may issue the same without
prejudice to the imposition of appropriate
administrative sanctions against the school
concerned.
The most cursory perusal of these
provisions shows that they are inapplicable.
Section 33 concerns the conditions and
authority of accredited schools to authorize
the graduation of students without the prior
authority of the CHED. Corollarily, the
CHED may cancel or revoke the graduation
if it is found to be fraudulent. We are not
aware that the CHED has taken any action
to revoke the respondent’s graduation,
though it is free to do so.
As regards Section 72, it refers to a school’s
right to withhold the release of credentials
due to "suspension, expulsion, or non-
payment of financial obligations or property
responsibility." None of these circumstances
is present, and there has been no intimation
that respondent’s ToR has been withheld on
any of these grounds.
In any event, even if we were to assume
that these provisions were applicable, the
CHED remains without authority to
adjudicate an action for damages.
Respondent is not guilty of forum shopping
Forum shopping exists when, as a result of
an adverse opinion in one
forum, a party seeks a favorable opinion
(other than by appeal or certiorari) in
another, or when he institutes two or more
actions or proceedings grounded on the
same cause, on the gamble that one or the
other court would make a favorable
disposition.23 Here, there can be no forum
shopping precisely because the CHED is
without quasi-judicial power, and cannot
make any disposition of the case – whether
favorable or otherwise. As we held in
Cabarrus, Jr. v. Bernas:24
The courts, tribunal and agencies referred
to under Circular No. 28-91, revised Circular
No. 28-91 and Administrative Circular No.
04-94 are those vested with judicial powers
or quasi-judicial powers and those who not
only hear and determine controversies
between adverse parties, but to make
binding orders or judgments. As succinctly
put by R.A. 157, the NBI is not performing
judicial or quasi-judicial functions. The NBI
cannot therefore be among those forums
contemplated by the Circular that can
entertain an action or proceeding, or even
grant any relief, declaratory or otherwise.
The Complaint states a cause of action
Under Rule 16, Section 1(g) of the Rules of
Court, a motion to dismiss may be made on
the ground that the pleading asserting the
claim states no cause of action.25 To clarify
the essential test required to sustain
dismissal on this ground, we have explained
that "[t]he test of the sufficiency of the facts
found in a petition, to constitute a cause of
action, is whether admitting the facts
alleged, the court could render a valid
judgment upon the same in accordance with
the prayer of the petition."26 Stated
otherwise, a complaint is said to assert a
sufficient cause of action if, admitting what
appears solely on its face to be correct, the
plaintiff would be entitled to the relief prayed
for.27
The Complaint makes the following
essential allegations: that petitioners
unjustifiably refused to release respondent’s
ToR despite his having obtained a degree
from UST; that petitioners’ claim that
respondent was not officially enrolled is
untrue; that as a result of petitioners’
unlawful actions, respondent has not been
able to take the nursing board exams since
2002; that petitioners’ actions violated
Articles 19-21 of the Civil Code; and that
petitioners should be ordered to release
respondent’s ToR and held liable for
₱400,000.00 as moral damages,
₱50,000.00 as exemplary damages,
₱50,000.00 as attorney’s fees and costs of
suit, and ₱15,000.00 as actual damages.
Clearly, assuming that the facts alleged in
the Complaint are true, the RTC would be
able to render a valid judgment in
accordance with the prayer in the
Complaint.
Petitioners argue that paragraph 10 of the
Complaint contains an admission that
respondent was not officially enrolled at fraudulently? If so, why was he permitted by
UST. Said paragraph reads: the petitioners to graduate? Was there fault
or negligence on the part of any of the
10. On several occasions, [respondent] parties? Clearly, these are factual matters
went to see the [petitioners] to get his ToR, which can be best ventilated in a full-blown
but all of these were futile for he was not proceeding before the trial court.
even entertained at the Office of the Dean.
Worst, he was treated like a criminal forcing WHEREFORE, the petition is DENIED. The
him to admit the fact that he did not enroll Decision dated July 20, 2004 and the
for the last three (3) semesters of his Resolution dated September 22, 2004 of the
schooling. [Petitioner] Dean tried to Court of Appeals in CA-G.R. SP No. 79404
persuade the [respondent] to give the are AFFIRMED. The Regional Trial Court of
original copies of the Class Cards which he Dinalupihan, Bataan, Branch 5, is
has in his possession. These are the only DIRECTED to continue the proceedings in
[bits of] evidence on hand to prove that he Civil Case No. DH-788-02 with all deliberate
was in fact officially enrolled. [Respondent] speed.
did not give the said class cards and instead
gave photo copies to the [Petitioner] Dean. Costs against petitioners.
The Office of the Dean of Nursing of
[petitioner] UST became very strict in SO ORDERED.
receiving documents from the [respondent].
[They have] to be scrutinized first before the
same are received. Receiving, as
[respondent] believes, is merely a
ministerial function [of] the [petitioners] and
the documents presented for receiving need
not be scrutinized especially so when x x x
they are not illegal. Copies of the class
cards are hereto attached as "F" hereof.28

This statement certainly does not support

petitioners’ claim that respondent admitted
that he was not enrolled.1avvphi1 On the
contrary, any allegation concerning the use
of force or intimidation by petitioners, if
substantiated, can only serve to strengthen
respondent’s complaint for damages.

We fully agree with the RTC’s finding that a

resolution of the case requires the
presentation of evidence during trial. Based
on the parties’ allegations, the issues in this
case are far from settled. Was respondent
enrolled or not? Was his degree obtained

[G.R. No. 80916. November 9, 1990.]
C.T. TORRES ENTERPRISES, INC.,
Petitioner, v. HON. ROMEO J.
HIBIONADA, EFREN DIONGON, and
PLEASANTVILLE DEVELOPMENT
CORPORATION, Respondents.
Federico T . Tabino, Jr. for Petitioner.
Depasucat, Depasucat & Su Law Offices for
Efren Diongon.
November 1990 - Philippine Supreme Court
Decisions/Resolutions
Philippine Supreme Court Jurisprudence
DECISION
CRUZ, J.:
The same issue of jurisdiction that was
raised in Solid Homes v. Payawal 1 is
raised in the case at bar. The same ruling
laid down in that earlier case must be
applied in the present controversy.
The petitioner as agent of private
respondent Pleasantville Development
Corporation sold a subdivision lot on
installment to private respondent Efren
Diongon. The installment payments having
been completed, Diongon demanded the
delivery of the certificate of title to the
subject land. When neither the petitioner nor
Pleasantville complied, he filed a complaint
against them for specific performance and
damages in the Regional Trial Court of
Negros Occidental. This was docketed as
Civil Case No. 3514. The two defendants
each filed an answer with cross-claim and
counterclaim. The plaintiff filed a reply and
answered the counterclaims. Pre-trial was
scheduled and heard and trial briefs were
submitted by Pleasantville and Diongon.
The case was set for initial hearing. It was
then that C.T. Torres Enterprises filed a
motion to dismiss for lack of jurisdiction,
contending that the competent body to hear
and decide the case was the Housing and
Land Use Regulatory Board. The motion
was heard and Diongon later filed an
opposition. On September 17, 1987, the trial
court 2 denied the motion to dismiss in an
order reading as follows:
Before this Court for resolution is the Motion
to Dismiss filed by defendant C.T. Torres
Enterprises, Inc. alleging among other
things, that this Court has no jurisdiction
over the subject matter considering that the
present action falls within the jurisdiction of
the Housing and Land Use Regulatory
Board by virtue of Executive Order No. 90
dated December 17, 1986.
Plaintiff filed an opposition to the said
motion to dismiss traversing the allegations
therein stated. A perusal of both pleadings
and the complaint filed by plaintiff, the issue
to be determined are basically governed by
the provisions of the New Civil Code,
particularly on contracts. The complaint is
one for specific performance with
damages which is a justiciable issue
under the Civil Code and jurisdiction to
hear the said issue is conferred on the
regular Courts pursuant to Batas
Pambansa Blg. 129.
It is, therefore, the finding of this Court that
jurisdiction as conferred by law is vested in
the regular courts and not in the Housing
and Land Use Regulatory Board. The
Motion to Dismiss is, therefore, DENIED for
lack of merit.
SO ORDERED.
The petitioner is now before this Court on
certiorari to question this order.
In holding that the complaint for specific
performance with damages was justiciable
under the Civil Code and so came under the
jurisdiction of the regular courts under B.P.
129, the trial court failed to consider the
express provisions of P.D. No. 1344 and
related decrees. It also erred in supposing
that only the regular courts can interpret and
apply the provisions of the Civil Code, to the
exclusion of the quasi-judicial bodies.
P.D. No. 957, promulgated July 12, 1976
and otherwise known as "The Subdivision
and Condominium Buyers’ Protective
Decree," provides that the National Housing
Authority shall have exclusive authority to
regulate the real estate trade and business.
The scope of the regulatory authority lodged
in the National Housing Authority is
indicated in the second and third
paragraphs of the preamble, thus:
WHEREAS, the 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 (Emphasis supplied)
P.D. No. 1344, which was promulgated April
2, 1978, and empowered the National
Housing Authority to issue writs of execution
in the enforcement of its decisions under
P.D. No. 957, specified the quasi-judicial
jurisdiction of the agency as follows:
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:chanrob1es
virtual 1aw library
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. (Emphasis supplied)
Under E.O. No. 648 dated February 7,
1981, the regulatory functions conferred on
the National Housing Authority under P.D.
Nos. 957, 1344 and other related laws were
transferred to the Human Settlements
Regulatory Commission, which was
renamed Housing and Land Use Regulatory
Board by E.O. No. 90 dated December 17,
1986.
It is clear from Section 1(c) of the above
quoted PD No. 1344 that the complaint
for specific performance with damages
filed by Diongon with the Regional Trial
Court of Negros Occidental comes under
the jurisdiction of the Housing and Land
Use Regulatory Board. Diongon is a
buyer of a subdivision lot seeking
specific performance of the seller’s
obligation to deliver to him the
corresponding certificate of title.
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.
Thus we have held:
It is by now commonplace learning that
many administrative agencies exercise and
perform adjudicatory powers and functions,
though to a limited extent only. Limited
delegation of judicial or quasi-judicial
authority to administrative agencies (e.g. the
Securities and Exchange Commission and
the National Labor Relations Commission)
is well recognized in our jurisdiction,
basically because the need for special
competence and experience has been
recognized as essential in the resolution of
questions of complex or specialized
character and because of a companion
recognition that the dockets of our regular
courts have remained crowded and
clogged. 3
x x x
As a result of the growing complexity of the
modern society, it has become necessary to
create more and more administrative bodies
to help in the regulation of its ramified
activities. Specialized in the particular fields
assigned to them, they can deal with the
problems thereof with more expertise and
dispatch than can be expected from the
legislature or the courts of justice. This is
the reason for the increasing vesture of
quasi-legislative and quasi-judicial powers
in what is now not unreasonably called the
fourth department of the government. 4
vested in the Housing and Land Use
Regulatory Board. We also hold that the
order denying the motion to dismiss was
subject to immediate challenge before this
Court as the filing (and denial) of a motion
for reconsideration was not an
indispensable requirement.

x x x WHEREFORE, the petition is GRANTED.

The questioned Order of September 17,
1987, is SET ASIDE and Civil Case No.
There is no question that a statute may vest 3514 in the Regional Trial Court of Negros
exclusive original jurisdiction in an Occidental is hereby DISMISSED, without
administrative agency over certain disputes prejudice to the filing of the proper
and controversies falling within the agency’s complaint with the Housing and Land Use
special expertise. The very definition of an Regulatory Board if so desired. No costs.
administrative agency includes its being
vested with quasi-judicial powers. The ever SO ORDERED.
increasing variety of powers and functions
given to administrative agencies recognizes
the need for the active intervention of
administrative agencies in matters calling
for technical knowledge and speed in
countless controversies which cannot
possibly be handled by regular courts. 5

The argument of the private respondents

that the petition is premature because no
motion for reconsideration of the questioned
order of trial court had been filed stresses
the rule but disregards the exception. It is
settled that the motion for reconsideration
may be dispensed with if the issue raised is
a question of law, 6 as in the case at bar.
The issue pleaded here is lack of
jurisdiction. It could therefore be raised
directly and immediately with this Court
without the necessity of an antecedent
motion for reconsideration.

We hold, in sum, that the complaint for

specific performance and damages was
improperly filed with the respondent court,
jurisdiction over the case being exclusively

HLC CONSTRUCTION VS EMILY HOME
OWNERS
Assailed in the instant petition for certiorari
under Rule 651 of the Rules of Court is the
March 15, 1999 order2 of the Regional Trial
Court of Davao del Sur, Branch 19, denying
the motion to dismiss of petitioners HLC
Construction and Development Corporation
and Henry Lopez Chua, on the ground of
lack of jurisdiction and a defective
certification against non-forum shopping.
Respondents Emily Homes Subdivision
Homeowners Association (EHSHA) and the
150 individual members thereof filed on
October 21, 1998 a civil action for breach of
contract, damages and attorneys fees with
the Regional Trial Court of Davao del Sur,
Branch 19, against petitioners, the
developers of low-cost housing units like
Emily Homes Subdivision. Respondents
alleged that petitioners used substandard
materials in the construction of their houses,
like coco lumber and termite-infested door
jambs. Petitioners furthermore allegedly did
not adhere to the house plan specifications
because the ceiling lines were sagging and
there were deviations from the plumb line of
the mullions, door jams (sic) and concrete
columns. Respondents asked petitioners
to repair their defective housing units
but petitioners failed to do so.
Respondents had to repair their
defective housing units using their own
funds. Hence, they prayed for actual and
moral damages arising from petitioners
breach of the contract plus exemplary
damages and attorneys fees.
On December 11, 1998, petitioners filed a
motion to dismiss the complaint,
claiming that it was the Housing and
Land Use Regulatory Board (HLURB)
and not the trial court which had
jurisdiction over the case. They also cited
the defective certification on non-forum
shopping which was signed only by the
president of EHSHA and not by all its
members; such defect allegedly warranted
the dismissal of the complaint. The trial
court denied petitioners motion to dismiss
on the ground that the case fell within its
jurisdiction, not with the HLURB, and that
respondents certificate of non-forum
shopping substantially complied with Rule 7,
Section 5 of the 1997 Rules of Civil
Procedure. It also denied petitioners motion
for reconsideration.
Aggrieved, petitioners filed the instant
petition for certiorari, alleging that the trial
court committed grave abuse of discretion
amounting to lack or in excess of jurisdiction
in holding (1) that the case between
petitioners and respondents fell within the
jurisdiction of the civil courts and (2) that
respondents had substantially complied with
the rules on forum shopping despite the fact
that only one of the 150 respondents had
signed the certificate therefor.
Petitioners are correct that the case
between them and respondents fell within
the jurisdiction of the HLURB, not the trial
court. However, we cannot sustain
petitioners contention that respondents
certificate of non-forum shopping was
defective, thus allegedly warranting the
outright dismissal thereof by the trial court.
The general rule is that the certificate of
non-forum shopping must be signed by all
the plaintiffs in a case and the signature of
only one of them is insufficient.4 However,
the Court has also stressed that the rules on
forum shopping were designed to promote
and facilitate the orderly administration of
justice and thus should not be interpreted
with such absolute literalness as to subvert
its own ultimate and legitimate objective.5
The strict compliance with the provisions
regarding the certificate of non-forum
shopping merely underscores its mandatory
nature in that the certification cannot be
altogether dispensed with or its
requirements completely disregarded. It
does not thereby prohibit substantial
compliance with its provisions under
justifiable circumstances.
Thus in the recent case of Cavile, et al. vs.
Heirs of Clarita Cavile, et al.,[7] we ruled:
[T]he execution by Thomas George Cavile,
Sr., in behalf of all the other petitioners of
the certificate of non-forum shopping
constitute substantial compliance with the
Rules. All the petitioners, being relatives
and co-owners of the properties in dispute,
share a common interest thereon. They also
share a common defense in the complaint
for partition filed by respondents. Thus,
when they filed the instant petition, they filed
it as a collective, raising only one argument
to defend their rights over the properties in
question. There is sufficient basis, therefore,
for Thomas George Cavile, Sr. to speak for
and in behalf of his co-petitioners that they
have not filed any action or claim involving
the same issues in another court or tribunal,
nor is there other pending action or claim in
another court or tribunal involving the same
issues. Moreover, it has been held that the
merits of the substantive aspects of the
case may be deemed as special
circumstances for the Court to take
cognizance of a petition for review although
the certification against forum shopping was
executed and signed by only one of the
petitioners.
The above ruling is squarely applicable to
the present case. Respondents (who were
plaintiffs in the trial court) filed the complaint
against petitioners as a group, represented
by their homeowners association president
who was likewise one of the plaintiffs, Mr.
Samaon M. Buat. Respondents raised one
cause of action which was the breach of
contractual obligations and payment of
damages. They shared a common interest
in the subject matter of the case, being the
aggrieved residents of the poorly
constructed and developed Emily Homes
Subdivision. Due to the collective nature of
the case, there was no doubt that Mr.
Samaon M. Buat could validly sign the
certificate of non-forum shopping in behalf
of all his co-plaintiffs. In cases therefore
where it is highly impractical to require all
the plaintiffs to sign the certificate of non-
forum shopping, it is sufficient, in order not
to defeat the ends of justice, for one of
plaintiffs, acting as representative, to sign
the certificate provided that, as in Cavile et
al., the plaintiffs share a common interest in
the subject matter of the case or filed the
case as a collective, raising only one
common cause of action or defense.
In any case, even if it was correct for the
trial court to rule that respondents had
substantially complied with the rules on
forum shopping and thus, their complaint
before it should not be dismissed, we find
that the trial court should have nonetheless
dismissed the complaint for a more
important reason it had no jurisdiction over
it. It is the HLURB, not the trial court, which
had jurisdiction over respondents complaint.
The HLURB is the government agency
empowered to regulate the real estate trade
and business, having exclusive jurisdiction
to hear and decide cases involving:
(a) unsound real estate
business practices;
(b) claims involving refunds
and any other claims filed by subdivision lot
or condominium unit buyers against the
project owner, developer, dealer, broker or
salesman;
(c) and 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.
In this case, respondents complaint was for
the reimbursement of expenses incurred in
repairing their defective housing units
constructed by petitioners. Clearly, the
HLURB had jurisdiction to hear it. In the
case of Arranza vs. B.F Homes, Inc.,10 this
Court ruled that:
xxx the HLURB has 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.1
The fact that the subject matter of the
complaint involved defective housing units
did not remove the complaint from the
HLURBs jurisdiction. The delivery of
habitable houses was petitioners
responsibility under their contract with
respondents. The trial court should have
granted the motion to dismiss filed by
petitioners so that the issues therein could
be expeditiously heard and resolved by the
HLURB.
WHEREFORE, the petition is hereby
GRANTED. The March 15, 1999 order of
the Regional Trial Court of Davao del Sur,
Branch 19, denying the petitioners motion to
dismiss, is ANNULLED and Civil Case No.
3731 before it (trial court) is hereby
DISMISSED for lack of jurisdiction. This is
without prejudice to the re-filing of the
respondents complaint in the HLURB.
SO ORDERED.
 ENRIQUE A. SOBREPEÑA, JR.,
Respondents.

DECISION

BRION, J.:

Before us is the petition for certiorari1] filed

by the spouses Leonardo and Milagros
Chua (petitioners) to assail the Resolution
dated November 4, 2002 of the City
Prosecutor of Pasig in I.S. No. PSG 02-02-
09150. The City Prosecutor’s Resolution
dismissed the complaint filed by the
petitioners against Ferdinand T. Santos,
Robert John L. Sobrepeña, Noel M. Cariño,
Roberto S. Roco, Alice Odchique-Bondoc,
Romulo T. Santos and Enrique A.
Sobrepeña, Jr. (private respondents) for
violation of Presidential Decree (P.D.) No.
957, otherwise known as "The Subdivision
and Condominium Buyers Protective
Decree."

FACTUAL BACKGROUND

The antecedent facts, drawn from the

records, are briefly summarized below.

G.R. No. 156164 September 4, On February 11, 1999, the petitioners (as
2009 buyers) and Fil-Estate Properties, Inc.
(FEPI, as developers) executed a
SPS. LEONARDO AND MILAGROS Contract To Sell a condominium unit.
CHUA, Petitioners, Despite the lapse of three (3) years, FEPI
vs. failed to construct and deliver the
HON. JACINTO G. ANG, DENNIS R. contracted condominium unit to the
PASTRANA, IN THEIR CAPACITIES AS petitioners.
CITY AND ASSISTANT PROSECUTOR
OF PASIG, RESPECTIVELY, FERDINAND As a result, the petitioners filed on
T. SANTOS, ROBERT JOHN L. September 3, 2002 a Complaint-Affidavit3
SOBREPEÑA, NOEL M. CARIÑO, before the Office of the City Prosecutor of
ROBERTO S. ROCO, ALICE ODCHIQUE- Pasig City accusing the private
BONDOC,* ROMULO T. SANTOS AND respondents, as officers and directors of
FEPI, of violating P.D. No. 957, specifically
its Sections 17 and 20, in relation with
Section 39.4 These provisions state:
Sec. 17. Registration. - All contracts to sell,
deeds of sale and other similar instruments
relative to the sale or conveyance of the
subdivision lots and condominium units,
whether or not the purchase price is paid in
full, shall be registered by the seller in the
Office of the Register of Deeds of the
province or city where the property is
situated.
xxx
Sec. 20. Time of Completion. - Every owner
or developer shall construct and provide the
facilities, improvements, infrastructures and
other forms of development, including water
supply and lighting facilities, which are
offered and indicated in the approved
subdivision or condominium plans,
brochures, prospectus, printed matters,
letters or in any form of advertisement,
within one year from the date of the
issuance of the license for the subdivision or
condominium project or such other period of
time as may be fixed by the Authority.
xxx
Sec. 39. Penalties. - Any person who shall
violate any of the provisions of this Decree
and/or any rule or regulation that may be
issued pursuant to this Decree shall, upon
conviction, be punished by a fine of not
more than twenty thousand (P20,000.00)
pesos and/or imprisonment of not more than
ten years: Provided, That in the case of
corporations, partnership, cooperatives, or
associations, the President, Manager or
Administrator or the person who has charge
of the administration of the business shall
be criminally responsible for any violation of
this Decree and/or the rules and regulations
promulgated pursuant thereto. [Emphasis
supplied]
The petitioners alleged that the private
respondents did not construct and failed
to deliver the contracted condominium
unit to them and did not register the
Contract to Sell with the Register of
Deeds.
Of the seven (7) private respondents, only
private respondent Alice Odchique-Bondoc
filed a Counter-Affidavit.5 She countered
that the City Prosecutor has no
jurisdiction over the case since it falls
under the exclusive jurisdiction of the
Housing and Land Use Regulatory Board
(HLURB).
On November 4, 2002, Assistant City
Prosecutor Dennis R. Pastrana and Pasig
City Prosecutor Jacinto G. Ang (public
respondents), respectively issued and
approved the Resolution6 dismissing the
complaint for being premature. The
Resolution held that it is the HLURB that
has exclusive jurisdiction over cases
involving real estate business and practices.
THE PETITION and THE PARTIES’
POSITIONS
On December 12, 2002, the petitioners filed
the present petition7 anchored on the
following ground:
PUBLIC RESPONDENTS COMMITTED
MANIFEST ERROR AND GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION,
WHEN IT DISMISSED PETITIONER'S
COMPLAINANT (sic) ON THE GROUND
THAT THE HLURB, NOT THEIR OFFICE
HAS JURISDICTION TO CONDUCT
PRELIMINARY INVESTIGATION AND FILE
THE CORRESPONDING INFORMATION
IN COURT FOR CRIMINAL VIOLATIONS
OF P.D. No. 957.8
The petitioners argue that jurisdiction to
entertain criminal complaints is lodged
with the city prosecutor and that the
jurisdiction of the HLURB under P.D. No.
957 is limited to the enforcement of
contractual rights, not the investigation
of criminal complaints.
In their Comment, the private respondents
submit that the petition should be
dismissed outright because the
petitioners failed to avail of other
remedies provided by law, such as (a) the
filing of a motion for reconsideration with the
City Prosecutor of Pasig City, (b) the filing of
a petition for review with the Secretary of
the Department of Justice (DOJ), (c) the
filing of a motion for reconsideration of any
judgment rendered by the DOJ, or (d) the
filing of an appeal or a petition for certiorari
with the Court of Appeals (CA); that even if
certiorari is a proper remedy, the petition
was filed in violation of the hierarchy of
courts; and that even on the merits, the
petition must fail since the public
respondents correctly dismissed the
complaint as a reasonable interpretation of
P.D. No. 957 which requires a prior
determination by the HLURB that a
corporation violated P.D. No. 957 before
criminal charges may be filed against its
corporate officers.
In their Reply, the petitioners reiterate that
the public respondents abdicated their
authority to conduct a preliminary
investigation and to indict the private
respondents for criminal violations of P.D.
No. 957 when they dismissed the criminal
complaint for being premature.10
OUR RULING
We find the petition meritorious.
At the outset, we note that the petitioners
indeed filed the present petition for certiorari
without prior recourse to other available
remedies provided by law and the
observance of the judicial hierarchy of
courts. Nonetheless, the rules on prior
recourse to these available remedies are
not without exceptions, nor is the
observance of the judicial hierarchy of
courts an inflexible rule; the peculiarity,
uniqueness and unusual character of the
factual and circumstantial settings of a case
may allow the flexible application of these
established legal principles to achieve fair
and speedy dispensation of justice.
A prior motion for reconsideration is
unnecessary: (a) where the order is a patent
nullity, as where the court a quo has no
jurisdiction; (b) where the questions raised
in the certiorari proceedings have been duly
raised and passed upon by the lower court,
or are the same as those raised and passed
upon in the lower court; (c) where there is
an urgent necessity for the resolution of the
question and any further delay would
prejudice the interests of the Government or
of the petitioner; (d) where, under the
circumstances, a motion for reconsideration
would be useless; (e) where petitioner was
deprived of due process and there is an
extreme urgency for relief; (f) where, in a
criminal case, relief from an order of arrest
is urgent and the grant of such relief by the
trial court is improbable; (g) where the
proceedings in the lower court are a nullity
for lack of due process; (h) where the
proceedings were ex parte or in which the
petitioner had no opportunity to object; or (i)
where the issue raised is one purely of law
or where public interest is involved.11
On the other hand, prior exhaustion of
administrative remedies may be dispensed
with and judicial action may be validly
resorted to immediately: (a) when there is a
violation of due process; (b) when the issue
involved is purely a legal question; (c) when
the administrative action is patently illegal
amounting to lack or excess of jurisdiction;
(d) when there is estoppel on the part of the
administrative agency concerned; (e) when
there is irreparable injury; (f) when the
respondent is a department secretary
whose acts as an alter ego of the President
bear the implied and assumed approval of
the latter; (g) when to require exhaustion of
administrative remedies would be
unreasonable; (h) when it would amount to
a nullification of a claim; (i) when the subject
matter is a private land in land case
proceedings; (j) when the rule does not
provide a plain, speedy and adequate
remedy; or (k) when there are
circumstances indicating the urgency of
judicial intervention.
On the non-observance of the principle of
hierarchy of courts, it must be remembered
that this rule generally applies to cases
involving conflicting factual allegations.
Cases which depend on disputed facts for
decision cannot be brought immediately
before us as we are not triers of facts. A
strict application of this rule may be
excused when the reason behind the rule
is not present in a case, as in the present
case, where the issues are not factual
but purely legal. In these types of
questions, this Court has the ultimate
say so that we merely abbreviate the
review process if we, because of the
unique circumstances of a case, choose
to hear and decide the legal issues
outright.
In the present petition for certiorari, we find
that there are four (4) compelling reasons to
allow the petitioners' invocation of our
jurisdiction in the first instance, even without
prior recourse to a motion for
reconsideration or to the exhaustion of
administrative remedies, and even in
disregard of the principle of hierarchy of
courts.
First, the petitioners raise a pure question of
law involving jurisdiction over criminal
complaints for violation of P.D. No. 957. A
question of law exists when the doubt or
controversy concerns the correct application
of law or jurisprudence to a certain set of
facts; or when the issue does not call for an
examination of the probative value of the
evidence presented, the truth or falsehood
of facts being admitted.15 As noted earlier,
this Court is the undisputed final arbiter of
all questions of law.
Second, the present case requires prompt
action because public interest and welfare
are involved in subdivision and
condominium development, as the terms of
P.D. Nos. 957 and 1344 expressly reflect.16
Questions of conflicting processes,
essentially based on jurisdiction, will
consistently recur as people’s need for
housing (and hence, subdivisions and
condominiums) escalate. Shelter is a basic
human need whose fulfillment cannot afford
any kind of delay.17
Third, considering that this case has been
pending for nearly seven (7) years (since
the filing of the Complaint-Affidavit on
September 3, 2002) to the prejudice not
only of the parties involved, but also of the
subdivision and condominium regulatory
system and its need for the prompt
determination of controversies, the interests
of justice now demand the direct resolution
of the jurisdictional issue this proceeding
poses. As mentioned, at stake in this case
is shelter – a basic human need and to
remand the case to the DOJ for a
determination of the merits of the parties’
jurisdictional tug-of-war would not serve any
purpose other than to further delay its
resolution.18 Thus, the practicality of the
situation and the need for the speedy
administration of justice justify a departure
from the strict application of procedural
rules. Besides, the issue before us presents
no special difficulty, and we feel it should be
decided now, without going through the
procedural formalities that shall anyway end
up with this Court.
Fourth, the petition is meritorious. The
public respondents committed grave abuse
of discretion in dismissing the criminal
complaints for violation of P.D. No. 957 on
the ground that jurisdiction lies with the
HLURB.
Generally, the extent to which an
administrative agency may exercise its
powers depends largely, if not wholly, on
the provisions of the statute creating and
defining the terms of the agency’s mandate.
P.D. No. 1344 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 of its quasi-judicial authority,
on the other hand, is defined by the terms of
P.D. No. 957 whose Section 3 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 provisions of P.D No. 957 were
intended to encompass all questions
regarding subdivisions and condominiums.
The intention was to provide for an
appropriate government agency, the
HLURB, to which all parties – buyers and
sellers of subdivision and condominium
units - may seek remedial recourse. The law
recognized, too, that subdivision and
condominium development involves public
interest and welfare and should be brought
to a body, like the HLURB, that has
technical expertise.2In the exercise of its
powers, the HLURB, on the other hand, is
empowered to interpret and apply contracts,
and determine the rights of private parties
under these contracts. This ancillary power,
generally judicial, is now no longer with the
regular courts to the extent that the
pertinent HLURB laws provide.21
Viewed from this perspective, the HLURB’s
jurisdiction over contractual rights and
obligations of parties under subdivision and
condominium contracts comes out very
clearly. But hand in hand with this definition
and grant of authority is the provision on
criminal penalties for violations of the
Decree, provided under the Decree’s
Section 39, heretofore quoted.
Significantly, nothing in P.D. No. 957
vests the HLURB with jurisdiction to
impose the Section 39 criminal penalties.
What the Decree provides is the
authority of the HLURB to impose
administrative fines under Section 38, as
implemented by the Rules Implementing
the Subdivision and Condominium
Buyer’s Protective Decree. This Section
of the Decree provides:
Sec. 38. Administrative Fines. – The
Authority may prescribe and impose
fines not exceeding ten thousand pesos
for violations of the provisions of this
Decree or of any rule or regulation
thereunder. Fines shall be payable to the
Authority and enforceable through writs
of execution in accordance with the
provisions of the Rules of Court.
The Implementing Rules, for their part,
clarify that "The implementation and
payment of administrative fines shall not
preclude criminal prosecution of the
offender under Section 39 of the Decree."
Thus, the implementing rules themselves
expressly acknowledge that two separate
remedies with differing consequences may
be sought under the Decree, specifically,
the administrative remedy and criminal
prosecution.
Unless the contrary appears under other
provisions of law (and in this case no such
provision applies), the determination of the
criminal liability lies within the realm of
criminal procedure as embodied in the
Rules of Court. Section 2, Rule 112 of these
Rules provide that the prerogative to
determine the existence or non-existence of
probable cause lies with the persons duly
authorized by law; as provided in this Rule,
they are (a) Provincial or City Prosecutors
and their assistants; (b) Judges of the
Municipal Trial Courts and Municipal Circuit
Trial Courts; (c) National and Regional State
Prosecutors; and (d) other officers as may
be authorized by law.
In the present case, the petitioners have
expressly chosen to pursue the criminal
prosecution as their remedy but the
prosecutor dismissed their complaint. The
prosecutor’s dismissal for prematurity was
apparently on the view that an
administrative finding of violation must first
be obtained before recourse can be made
to criminal prosecution. This view is not
without its model in other laws; one such
law is in the prosecution of unfair labor
practice under the Labor Code where no
criminal prosecution for unfair labor practice
can be instituted without a final judgment in
a previous administrative proceeding. The
need for a final administrative determination
in unfair labor practice cases, however, is a
matter expressly required by law. Where the
law is silent on this matter, as in this case,
the fundamental principle – that
administrative cases are independent from
criminal actions23 – fully applies, subject
only to the rules on forum shopping under
Section 5, Rule 7 of the Rules of Court.24 In
the present case, forum shopping is not
even a matter for consideration since the
petitioners have chosen to pursue only one
remedy – criminal prosecution. Thus, we
see no bar to their immediate recourse to
criminal prosecution by filing the appropriate
complaint before the prosecutor’s office.
In light of these legal realities, we hold
that the public respondent prosecutors
should have made a determination of
probable cause in the complaint before
them, instead of simply dismissing it for
prematurity. Their failure to do so and
the dismissal they ordered effectively
constituted an evasion of a positive duty
and a virtual refusal to perform a duty
enjoined by law; they acted on the case
in a manner outside the contemplation of
law. This is grave abuse of discretion
amounting to a lack of or in excess of
jurisdiction warranting a reversal of the
assailed resolution.25 In the concrete
context of this case, the public
prosecutors effectively shied away from
their duty to prosecute, a criminal
violation of P.D. No. 957 as mandated by
Section 5, Rule 110 of the Rules of Court
and Republic Act No. 5180,26 as
amended,27 otherwise known as the Law
on Uniform Procedure of Preliminary
Investigation.
motion for reconsideration of any judgment
rendered by the DOJ, and (d) intermediate
recourse to the CA, are remedies that the
dictates of orderly procedure and the
hierarchy of authorities cannot dispense
with. Only the extremely peculiar
circumstances of the present case
compelled us to rule as we did; thus our
ruling in this regard is a rare one that should
be considered pro hac vice.
WHEREFORE, we hereby GRANT the
petition and accordingly REVERSE and
SET ASIDE the Resolution dated November
4, 2002 of the City Prosecutor of Pasig in
I.S. No. PSG 02-02-09150. The complaint is
hereby ordered returned to the Office of the
City Prosecutor of Pasig City for the
determination of probable cause and the
filing of the necessary information, if
warranted. No costs.
SO ORDERED.

As a final word, we stress that the

immediate recourse to this Court that this
Decision allows should not serve as a
precedent in other cases where the
prosecutor dismisses a criminal complaint,
whether under P.D. No. 957 or any other
law. Recourse to (a) the filing a motion for
reconsideration with the City or Provincial
Prosecutor, (b) the filing a petition for review
with the Secretary of the DOJ, (c) the filing a
 HOME BANKERS SAVINGS & TRUST
CO., Petitioner,
vs.
THE HONORABLE COURT OF APPEALS,
PABLO N. AREVALO, FRANCISCO A.
UY, SPOUSES LEANDRO A. SORIANO,
JR. and LILIAN SORIANO, ALFREDO LIM
and FELISA CHI LIM/ALFREDO LIM,
Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on

certiorari under Rule 45 of the Rules of
Court seeking to annul the Decision1 of the
Court of Appeals (CA) dated November 28,
1996 in CA-G.R. SP No. 40892 and its
Resolution dated February 19, 1997
denying petitioner’s motion for
reconsideration.

Each of private respondents entered into

separate contracts to sell with
TransAmerican Sales and Exposition
(TransAmerican) through the latter’s
Owner/General Manager, Engr. Jesus
Garcia, involving certain portions of land
covered by Transfer Certificate of Title
(TCT) No. 19155, located at No. 45 Gen.
Lim Street, Heroes Hill, Quezon City,
together with one unit three-storey
townhouse to be built on each portion,
as follows:

Respondent Pablo N. Arevalo purchased

the portion of land denominated as Unit No.
52 for the amount of P750,000.00 on
August 21, 1988 and had already fully paid
the purchase price on September 3, 1988;

G.R. No. 128354 April 26, 2005

Respondent Alfredo Lim purchased the
portion of land denominated as Unit No. 13
for the amount of P800,000.00 on
December 22, 1988 and fully paid the same
upon execution of the agreement on the
same day;
Respondent Francisco A. Uy purchased
the portion of land denominated as Unit No.
64 on October 29, 1988 in the amount of
P800,000.00 payable in installments and
had allegedly made a total payment of
P581,507.41. He ordered to stop the
payment of all [postdated] checks from
September 1990 to November 1995 on the
ground of non-completion of his unit and
had later learned of the foreclosure of
the property;
Respondent spouses Leandro A.
Soriano, Jr. and Lilian Soriano purchased
the portion of land denominated as Unit No.
35 on February 15, 1990 in the amount of
P1,600,000.00 and had allegedly made a
payment of P669,960.00. They had
stopped paying because of non-
completion of the project and had later
learned of the foreclosure of the
property;
Respondents Alfredo Lim and Santos
Lim purchased the portion of land
denominated as Unit No. 76 for
P700,000.00 on October 1988 and had
been fully paid as of March 18, 1989;
Santos Lim subsequently sold and
assigned his share of the property to
private respondent Felisa Chi Lim on May
12, 1989.
It is stipulated in their respective
contracts that their individual
townhouses will be fully completed and
constructed as per plans and
specifications and the respective titles
thereto shall be delivered and
transferred to private respondents free
from all liens and encumbrances upon
their full payment of the purchase price.
However, despite repeated demands,
Garcia/TransAmerican failed to comply with
their undertakings.
On May 30, 1989, Engr. Garcia and his
wife Lorelie Garcia obtained from
petitioner Home Bankers Savings and
Trust Company (formerly Home Savings
Bank and Trust Company) a loan in the
amount of P4,000,000.00 and without the
prior approval of the Housing and Land
Use Regulatory Board (HLURB), the
spouses mortgaged7 eight lots covered
by TCT Nos. 3349 to 3356 as collateral.
Petitioner registered its mortgage on these
titles without any other encumbrance or lien
annotated therein. The proceeds of the
loan were intended for the development of
the lots into an eight-unit townhouse project.
However, five out of these eight titles turned
out to be private respondents’ townhouses
subject of the contracts to sell with
Garcia/TransAmerican.
When the loan became due, Garcia failed to
pay his obligation to petitioner.
Consequently, petitioner instituted an
extrajudicial foreclosure8 on the subject
lots and being the highest bidder in the
public auction, a certificate of sale9 in its
favor was issued by the sheriff on February
26, 1990. Subsequently, the sheriff’s
certificate of sale was registered and
annotated on the titles of the subject lots in
the Register of Deeds of Quezon City.
On November 8, 1990, private respondents
filed a complaint with the Office of Appeals,
Adjudication and Legal Affairs (OAALA),
HLURB, against Garcia/TransAmerican as
seller/developer of the property and
petitioner, as indispensable party, for non-
delivery of titles and non-completion of the
subdivision project.10 They prayed for the
completion of the units, annulment of the
mortgage in favor of petitioner, release of
the mortgage on the lots with fully paid
owners and delivery of their titles, and for
petitioner to compute individual loan values
of amortizing respondents and to accept
payments from them and damages.
Petitioner filed its Answer contending that
private respondents have no cause of action
against it; that at the time of the loan
application and execution of the promissory
note and real estate mortgage by Garcia,
there were no known individual buyers of
the subject land nor annotation of any
contracts, liens or encumbrances of third
persons on the titles of the subject lots; that
the loan was granted and released without
notifying HLURB as it was not necessary.
Private respondents filed their Reply and a
motion for the judgment on the pleadings.
Petitioner did not file a rejoinder. Private
respondents filed a manifestation reiterating
for a judgment on their pleadings and asked
that the reliefs prayed for be rendered as far
as petitioner was concerned. Upon motion
of private respondents, the case against
Garcia/TransAmerican was archived for
failure to serve summons on him/it despite
efforts to locate his whereabouts or its
office. The case was then considered
submitted for decision.
On August 16, 1991, OAALA rendered its
Decision,11 the dispositive portion of which
reads:
WHEREFORE, Judgment is hereby
rendered as follows:
1. Declaring the mortgage executed by
and between respondents Engr. Jesus
Garcia/TransAmerican Sales and Exposition
and Home Bankers Savings and Trust
Company (formerly Home Savings Bank
and Trust Company) to be unenforceable as
against all the complainants;
2. Ordering the Register of Deeds of
Quezon City to cancel the annotations of
the mortgage indebtedness between
respondents Engr. Jesus Garcia and Home
Bankers Savings and Trust Company
(formerly Home Savings Bank and Trust
Company);
3. Ordering, likewise the Register of
Deeds of Quezon City to cancel the
annotation of the Certificate of Sale in favor
of the respondent Home Bankers Savings
and Trust Company on the following
Transfer Certificates of Title to wit:
1) TCT No. 3350
2) TCT No. 3351
3) TCT No. 3352
4) TCT No. 3354
5) TCT No. 3356
4. Ordering respondent Home Bankers
Savings and Trust Company (formerly
Home Savings Bank and Trust Company)
to:
4.1. AS TO THE FIRST CAUSE OF
ACTION
Deliver to Complainant Pablo N. Arevalo
TCT No. 3352 free from all liens and
encumbrances.
4.2. AS TO THE SECOND CAUSE OF
ACTION
Deliver to Complainant Alfredo Lim TCT No.
3356 free from all liens and encumbrances.
4.3. AS TO THE THIRD CAUSE OF
ACTION
To compute and/or determine the loan value
of complainant Francisco A. Uy who was
not able to complete or make full payment
and to accept payment and/or receive
amortization from said complainant
Francisco A. Uy and upon full payment to
deliver TCT No. 3351 free from all liens and
encumbrances.
4.4. AS TO THE FOURTH CAUSE OF
ACTION
To compute and/or determine the loan value
of Complainant Spouses Leandro A.
Soriano, Jr. and Lilian Soriano who were not
able to complete or make full payment and
to accept and/or receive amortization from
said Complainants Soriano and upon full
payment to deliver TCT No. 3354 free from
all liens and encumbrances.
4.5. AS TO THE FIFTH CAUSE OF
ACTION
Deliver to complainant Alfredo Lim and
Felisa Chi Lim TCT No. 3350 free from all
liens and encumbrances.
without prejudice to its right to require
respondent Engr. Jesus
Garcia/TransAmerican to constitute new
collaterals in lieu of the said titles sufficient
in value to cover the mortgage obligation.12
Petitioner filed an appeal with the Board of
Commissioners of the HLURB which
dismissed the same in a decision dated
June 15, 1992.13 Petitioner then elevated
the case to the Office of the President which
rendered a decision dated June 30, 199514
dismissing the appeal and affirming the
June 15, 1992 decision of the HLURB.
Petitioner’s motion for reconsideration was
also denied in a Resolution dated May 7,
1996.15
Petitioner filed a petition for review with the
CA which, in the herein assailed decision
dated November 28, 1996, denied the
petition and affirmed the decision of the
Office of the President. The CA applied the
case of Union Bank of the Philippines vs.
HLURB, et al.,16 where it was held that the
act of a subdivision developer of mortgaging
the subdivision without the knowledge and
consent of a unit buyer and without the
approval of the National Housing Authority
(NHA, now HLURB) is violative of Section
18 of P.D. No. 957 thus, falling under the
exclusive jurisdiction of HLURB.
The CA upheld the findings of the OAALA,
HLURB that private respondents had
already entered into separate contracts to
sell with TransAmerican as early as 1988
while it was only in 1989 that spouses
Garcia applied for a loan with petitioner and
executed a mortgage contract over the
subject lots; that the proceeds of the loan
were purposely intended for the
development of a property which was the
same property subject of the contracts to
sell; that despite the contracts to sell,
Garcia/TransAmerican did not apprise
petitioner of the existence of these contracts
nor did petitioner exhaust any effort to
inquire into their existence since petitioner
merely relied on the purported clean
reconstituted titles in the name of Garcia;
that the mortgage of the subject lots without
the consent of the buyers and the
authorization of the HLURB is a clear
violation of P.D. No. 957; that the mortgage
contract is void and unenforceable against
private respondents.
Petitioner’s motion for reconsideration was
denied by the CA in its Resolution dated
February 19, 1997.17
Petitioner is now before us raising the
following grounds in support of its petition:
A. THE OFFICE OF THE PRESIDENT
ERRED IN RULING THAT THE HLURB
HAS JURISDICTION TO NULLIFY OR
DECLARE UNENFORCEABLE THE REAL
ESTATE MORTGAGE VALIDLY
CONSTITUTED BY THE OWNER.
B. ASSUMING ARGUENDO THAT THE
HLURB HAS JURISDICTION,
RESPONDENT COURT MANIFESTLY
ERRED IN FINDING THE REAL ESTATE
MORTGAGE IN FAVOR OF HOME AS
INVALID AND UNENFORCEABLE
AGAINST RESPONDENTS.
C. IN THE EVENT THAT THE DECISION
OF THE RESPONDENT COURT FINDING
THE REAL ESTATE MORTGAGE IN
FAVOR OF HOME AS INVALID AND
UNENFORCEABLE AGAINST
RESPONDENTS IS UPHELD, THE
UNREGISTERED CONTRACTS TO SELL
IN FAVOR OF RESPONDENTS SHOULD
ALSO BE HELD VALID ONLY AS TO THE
PARTIES THERETO BUT
UNENFORCEABLE AGAINST
PETITIONER.
Private respondents filed their Comment
and petitioner filed its Reply thereto.
In a Resolution dated February 23, 2004,
we gave due course to the petition and
required the parties to submit their
respective memoranda which they complied
with.
The petition is devoid of merit.
Notably, the issues raised are mere rehash
of the issues already passed upon by the
HLURB, the Office of the President and the
CA which we uphold as we find no
reversible errors committed.
Petitioner claims that HLURB has no
power to declare the mortgage contract
over real property executed between a
real estate developer and petitioner, a
banking institution, void or
unenforceable, as it is properly within
the jurisdiction of the Regional Trial
Court. Petitioner asserts that being a
mortgagee of the subject lots and a
purchaser in good faith, it is not a
project owner, developer, or dealer
contemplated under P.D. No. 1344, the
law which expanded the jurisdiction of
the NHA; and that since there is no
seller-buyer relationship existing
between it and private respondents,
HLURB has no jurisdiction to rule on the
validity of the mortgage and to annul
foreclosure proceedings.
The argument is untenable.
The CA did not err in affirming the decision
of the Office of the President that HLURB
has jurisdiction to declare invalid the
mortgage contract executed between
Garcia/TransAmerican and petitioner over
the subject lots insofar as private
respondents are concerned. It correctly
relied on Union Bank of the Philippines vs.
HLURB, et al.18 where we squarely ruled
on the question of HLURB’s jurisdiction to
hear and decide a condominium buyer’s
complaint for: (a) annulment of a real estate
mortgage constituted by the project owner
without the consent of the buyer and without
the prior written approval of the NHA; (b)
annulment of the foreclosure sale; and (c)
annulment of the condominium certificate of
title that was issued to the highest bidder at
the foreclosure sale, thus:
. . . The issue in HLURB Case No. REM-
062689-4077 is the validity of the real estate
mortgage of David’s condominium unit that
FRDC executed in favor of the Union Bank
and Far East Bank without prior approval of
the National Housing Authority and the
legality of the title which the mortgage
banks acquired as highest bidder therefore
in the extrajudicial foreclosure sale. The
applicable provisions of P.D. No. 957,
otherwise known as "The Subdivision and
Condominium Buyer’s Protective Decree"
are quoted hereunder as follows:
Sec. 3. NATIONAL HOUSING
AUTHORITY. – The National Housing
Authority shall have exclusive jurisdiction to
regulate the real estate trade and business
in accordance with the provisions of this
Decree.
Section 18. Mortgages – No mortgage on
any unit or lot shall be made by the owner
or developer without prior written approval
of the authority. Such approval shall not be
granted unless it is shown that the proceeds
of the mortgage loan shall be used for the
development of the condominium or
subdivision project and effective measures
have been provided to ensure such
utilization. The loan value of each lot or unit
covered by the mortgage shall be
determined and the buyer thereof if any
shall be notified before the release of the
loan. The buyer may, at his option, pay his
installment for the lot or unit directly to the
mortgagee who shall apply the payments to
the corresponding mortgage indebtedness
secured by the particular lot or unit being
paid for, with a view to enabling said buyer
to obtain title over the lot or unit promptly
after full payment thereof.
P.D. No. 1344 of April 2, 1978 expanded the
jurisdiction of the National Housing Authority
to include the following:
Sec. 1. In the exercise of its function 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, broker or
salesman.
On February 7, 1981, Executive Order No.
648 transferred the regulatory and quasi-
judicial functions of the NHA to the Human
Settlements Regulatory Commission.
Sec. 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, together with such applicable
personnel, appropriation, records,
equipment and property necessary for the
enforcement and implementation of such
functions. Among these regulatory
functions are:
1. Regulation of the real estate trade and
business:
...
7. Approval of mortgage on any
subdivision lot or condominium unit made
by the owner or developer;
...
11. Hear and decide cases on unsound real
estate business practices; claims involving
refund filed against project owners,
developers, dealers, brokers, or salesmen;
and cases of specific performance.
Executive Order No. 90 dated December
17, 1986 changed the name of the Human
Settlements Regulatory Commission to
Housing and Land Use Regulatory Board
(HLURB).
Clearly, FRDC’s act of mortgaging the
condominium project to Bancom and
FEBTC, without the knowledge and consent
of David as buyer of a unit therein, and
without the approval of the NHA (now
HLURB) as required by P.D. No. 957, was
not only an unsound real estate business
practice but also highly prejudicial to the
buyer. David, who has a cause of action for
annulment of the mortgage, the mortgage
foreclosure sale, and the condominium
certificate of title that was issued to the UBP
and FEBTC as the highest bidders at the
sale. The case falls within the exclusive
jurisdiction of the NHA (now HLURB) as
provided in P.D. No. 957 of 1976 and P.D.
No. 1344 of 1978.
...
We hold that the jurisdiction of the HLURB
to regulate the real estate trade is broad
enough to include jurisdiction over
complaints for specific performance of the
sale, or annulment of the mortgage, of a
condominium unit, with damages.19
Petitioner avers that the Union Bank ruling
is not applicable in its case, since it had no
knowledge of any buyer of the subject lots
at the time the mortgage was constituted;
that there was no construction in the subject
lots at the time petitioner accepted the same
as collateral; that the title to the subject
property was still in the process of being
reconstituted and the loan was in fact meant
for the development of the subject lots into
an eight-unit townhouse project.
We are not persuaded.
Contrary to petitioner’s claim that there were
no buyers of the subject lots at the time of
the constitution of the mortgage, records
show that private respondents Arevalo, Uy,
Alfredo Lim and Santos Lim had entered
into contracts to sell with
Garcia/TransAmerican as early as 1988 for
their respective lots. In fact, they, except for
Uy, had already fully paid their townhouse
units in 1988 without the certificates of title
being delivered to them. Garcia mortgaged
the subject lots without their knowledge and
consent.
While private respondents spouses Soriano
bought the subject lots after the constitution
of the mortgage in favor of petitioner, the
subject lots are, as early as 1988,
subdivision lots which as defined under
Section 2(e) of P.D. No. 957 to mean any of
the lots, whether residential, commercial,
industrial, or recreational in a subdivision
project20 are entitled to the protection of
P.D. No. 957.
Under Section 18 of P.D. No. 957, it is
provided that no mortgage on any unit or lot
shall be made by the owner or developer
without prior written approval of the
authority. Such approval shall not be
granted unless it is shown that the proceeds
of the mortgage loan shall be used for the
development of the condominium or
subdivision project and effective measures
have been provided to ensure such
utilization. As in the Union Bank, the
mortgage was constituted on the subject
lots in favor of petitioner without the prior
written approval from the HLURB, thus
HLURB has jurisdiction to rule on the
validity of the mortgage.
Notwithstanding that petitioner became the
owner of the subject lots by being the
highest bidder in the extrajudicial
foreclosure sale, it must be remembered
that it was first a mortgagee of the same.
Since the lot was mortgaged in violation of
Section 18 of P.D. No. 957, HLURB has
jurisdiction to declare the mortgage void
insofar as private respondents are
concerned and to annul the foreclosure
sale. In Far East Bank and Trust Co. vs.
Marquez,21 we held that Section 18 of P.D.
No. 957 is a prohibitory law, and acts
committed contrary to it are void. We said:
In determining whether a law is mandatory,
it is necessary to ascertain the legislative
intent, as stated by Sen. Arturo M.
Tolentino, an authority on civil law:
There is no well-defined rule by which a
mandatory or prohibitory law may, in all
circumstances, be distinguished from one
which is directory, suppletory, or permissive.
In the determination of this question, the
prime object is to ascertain the legislative
intention. Generally speaking, those
provisions which are mere matter of form, or
which are not material, do not affect any
substantial right, and do not relate to the
essence of the thing to be done, so that
compliance is a matter of convenience
rather than substance, are considered to be
directory. On the other hand, statutory
provisions which relate to matters of
substance, affect substantial rights and are
the very essence of the thing required to be
done, are regarded as mandatory.
In Philippine National Bank vs. Office of the
President, we had occasion to mull over the
intent of P.D. No. 957 thus:
. . . [T]he unmistakable intent of the law [is]
to protect innocent lot buyers from
scheming subdivision developers. As
between these small lot buyers and the
gigantic financial institutions which the
developers deal with, it is obvious that the
law – as an instrument of social justice –
must favor the weak. Indeed, the petitioner
Bank had at its disposal vast resources with
which it could adequately protect its loan
activities, and therefore is presumed to have
conducted the usual "due diligence"
checking and ascertaining (whether thru
ocular inspection or other modes of
investigation) the actual status, condition,
utilization and occupancy of the property
offered as collateral, . . . On the other hand,
private respondents obviously were
powerless to discover attempt of the land
developer to hypothecate the property being
sold to them. It was precisely in order to
deal with this kind of situation that P.D. No.
957 was enacted, its very essence and
intendment being to provide a protective
mantle over helpless citizens who may fall
prey to the razzmatazz of what P.D. No. 957
termed "unscrupulous subdivision and
condominium sellers."
Concededly, P.D. No. 957 aims to protect
innocent lot buyers. Section 18 of the
decree directly addresses the problem of
fraud committed against buyers when the lot
they have contracted to purchase, and
which they have religiously paid for, is
mortgaged without their knowledge. The
avowed purpose of P.D. No. 957 compels
the reading of Section 18 as prohibitory –
acts committed contrary to it are void. Such
construal ensures the attainment of the
purpose of the law: to protect lot buyers, so
that they do not end up still homeless
despite having fully paid for their home lots
with their hard-earned cash.22
Since the mortgage is void, HLURB’s orders
of the cancellation of the sheriff’s certificate
of sale, release of the mortgaged lots and
delivery of the corresponding titles to
respondents who had fully paid the
purchase price of the units are but the
necessary consequences of the invalidity of
the mortgage for the protection of private
respondents.
Anent the second issue, petitioner contends
that since the titles on their face were free
from any claims, liens and encumbrances at
the time of the mortgage, it is not obliged
under the law to go beyond the certificates
of title registered under the Torrens system
and had every reason to rely on the
correctness and validity of those titles.
We are not convinced.
While the cases23 cited by petitioner held
that the mortgagee is not under obligation to
look beyond the certificate of title when on
its face, it was free from lien or
encumbrances, the mortgagees therein
were considered in good faith as they were
totally innocent and free from negligence or
wrongdoing in the transaction. In this case,
petitioner knew that the loan it was
extending to Garcia/TransAmerican was for
the purpose of the development of the eight-
unit townhouses. Petitioner’s insistence
that prior to the approval of the loan, it
undertook a thorough check on the property
and found the titles free from liens and
encumbrances would not suffice. It was
incumbent upon petitioner to inquire into the
status of the lots which includes verification
on whether Garcia had secured the
authority from the HLURB to mortgage the
subject lots. Petitioner failed to do so. We
likewise find petitioner negligent in failing to
even ascertain from Garcia if there are
buyers of the lots who turned out to be
private respondents. Petitioner’s want of
knowledge due to its negligence takes the
place of registration, thus it is presumed to
know the rights of respondents over the lot.
The conversion of the status of petitioner
from mortgagee to buyer-owner will not
lessen the importance of such
knowledge.24 Neither will the conversion
set aside the consequence of its negligence
as a mortgagee.25
Judicial notice can be taken of the uniform
practice of banks to investigate, examine
and assess the real estate offered as
security for the application of a loan. We
cannot overemphasize the fact that the
Bank cannot barefacedly argue that simply
because the title or titles offered as security
were clean of any encumbrances or lien,
that it was thereby relieved of taking any
other step to verify the over-reaching
implications should the subdivision be
auctioned on foreclosure.26 We find
apropos to cite our ruling in Far East Bank
and Trust Co. vs. Marquez, thus:27
Petitioner argues that it is an innocent
mortgagee whose lien must be respected
and protected, since the title offered as
security was clean of any encumbrances or
lien. We do not agree.
. . . As a general rule, where there is
nothing on the certificate of title to indicate
any cloud or vice in the ownership of the
property, or any encumbrance thereon, the
purchaser is not required to explore further
than what the Torrens Title upon its face
indicates in quest for any hidden defect or
inchoate right that may subsequently defeat
his right thereto. This rule, however, admits
of an exception as where the purchaser or
mortgagee has knowledge of a defect or
lack of title in the vendor, or that he was
aware of sufficient facts to induce a
reasonably prudent man to inquire into the
status of the property in litigation.
Petitioner bank should have considered that
it was dealing with a [townhouse] project
that was already in progress. A reasonable
person should have been aware that, to
finance the project, sources of funds could
have been used other than the loan, which
was intended to serve the purpose only
partially. Hence, there was need to verify
whether any part of the property was
already the subject of any other contract
involving buyers or potential buyers. In
granting the loan, petitioner bank should not
have been content merely with a clean title,
considering the presence of circumstances
indicating the need for a thorough
investigation of the existence of buyers like
respondent. Having been wanting in care
and prudence, the latter cannot be deemed
to be an innocent mortgagee.
Petitioner cannot claim to be a mortgagee in
good faith. Indeed it was negligent, as
found by the Office of the President and by
the CA. Petitioner should not have relied
only on the representation of the mortgagor
that the latter had secured all requisite
permits and licenses from the government
agencies concerned. The former should
have required the submission of certified
true copies of those documents and verified
their authenticity through its own
independent effort.
Having been negligent in finding out what
respondent’s rights were over the lot,
petitioner must be deemed to possess
constructive knowledge of those rights.
As to the third issue, petitioner contends
that private respondents were negligent in
failing to register their contracts to sell in
accordance with Section 17 of P.D. No. 957;
that private respondents’ unregistered
contracts to sell are binding only on them
and Garcia/TransAmerican but not on
petitioner which had no actual or
constructive notice of the sale at the time
the mortgage was constituted.

We disagree.
Section 17 of P.D. No. 95728 provides that
the seller shall register the contracts to sell
with the Register of Deeds of Quezon City.
Thus, it is Garcia’s responsibility as seller to
register the contracts and petitioner should
not blame private respondents for not doing
so. As we have said earlier, considering
petitioner’s negligence in ascertaining the
existence or absence of authority from
HLURB for Garcia/TransAmerican to
mortgage the subject lots, petitioner cannot
claim to be an innocent purchaser for value
and in good faith. Petitioner is bound by
private respondents’ contracts to sell
executed with Garcia/TransAmerican.
The last paragraph of Section 18 of P.D.
No. 957 provides that respondents who
have not yet paid in full have the option to
pay their installment for the lot directly to the
mortgagee (petitioner) who is required to
apply such payments to the corresponding
mortgage indebtedness secured by the
particular lot or unit being paid for, with a
view to enabling said buyer to obtain title
over the lot or unit promptly after full
payment thereof. Thus, petitioner is obliged
to accept the payment of remaining unpaid
amortizations, without prejudice to petitioner
bank’s seeking relief against the subdivision
developer.29
Notably, although no issue was taken on the
fact that the case against
Garcia/TransAmerican, the developer/seller
and mortgagor of the subject lots, was
archived for failure to serve summons on
him/it as his whereabouts or the office could
not be located, it must be stated that
Garcia/TransAmerican is not an
indispensable party since a final
determination on the validity of the
mortgage over the subject lots can be
rendered against petitioner. Thus, the
absence of Garcia/TransAmerican did not
hamper the OAALA from resolving the
dispute between private respondents and
petitioner.
In China Bank vs. Oliver,30 we held that the
mortgagor, who allegedly misrepresented
herself to be Mercedes M. Oliver, the
registered owner of TCT No. S-50195, is not
an indispensable party in a case filed by a
person claiming to be the true registered
owner, for annulment of mortgage and
cancellation of title against the mortgagee,
China Bank. We found therein that even
without the mortgagor, the true Mercedes
Oliver can prove in her complaint that she is
the real person referred in the title and she
is not the same person using the name who
entered into a deed of mortgage with the
mortgagee, China Bank.
In the present case, private respondents, in
their complaint, alleged that the mortgage
was constituted without the prior written
approval of the HLURB which is in violation
of Section 18 of P.D. No. 957. Petitioner’s
admission that it granted and released the
loan without notifying the HLURB because
of its belief that it was not necessary to do
so, is fatal to petitioner’s defense. As a
consequence thereof, the mortgage
constituted in favor of petitioner can be
declared invalid as against private
respondents even without the presence of
Garcia/TransAmerican. It is worthy to
mention that the assailed decision was
rendered merely against petitioner and had
not made any pronouncement as to
Garcia/TransAmerican’s liability to private
respondents for the non-completion of the
projects; or to herein petitioner, as
mortgagee.

The present case merely involves the

liability of petitioner bank to private
respondents as buyers of the lots and
townhouse units.

WHEREFORE, the petition is DISMISSED

for lack of merit.

SO ORDERED.

G.R. No. 180394 September 29,

2008

MARJORIE B. CADIMAS, by her

Attorney-In-Fact, VENANCIO Z.
ROSALES,
vs.
MARITES CARRION and GEMMA HUGO,
Respondents.

DECISION

TINGA, J.:

This is a petition for review on certiorari1

under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the Decision2 and
Resolution3 of the Court of Appeals in CA-
G.R. SP No. 98572. The appellate court set
aside two orders4 of the Regional Trial
Court (RTC), Branch 85, Quezon City
issued in Civil Case No. Q-04-53581 on the
ground that the trial court had no jurisdiction
over the case.
The instant petition stemmed from the
complaint5 for accion reivindicatoria and
damages filed by petitioner Marjorie B.
Cadimas, through her attorney-in-fact,
Venancio Z. Rosales, against respondents
Marites Carrion and Gemma Hugo. The
complaint was docketed as Civil Case No.
Q-04-53581 and raffled to Branch 85 of the
RTC of Quezon City.
In the complaint, petitioner averred that she
and respondent Carrion were parties to a
Contract To Sell dated 4 August 2003,
wherein petitioner sold to respondent
Carrion a town house located at Lot 4-F-1-
12 No. 23 Aster Street, West Fairview Park
Subdivision, Quezon City for the sum of
P330,000.00 to be paid in installments.
According to petitioner, Carrion had violated
paragraph 8 of said contract when she
transferred ownership of the property to
respondent Hugo under the guise of a
special power of attorney, which authorized
the latter to manage and administer the
property for and in behalf of respondent
Carrion. Allegedly, petitioner asked
respondent Carrion in writing to explain the
alleged violation but the latter ignored
petitioner’s letter, prompting petitioner to
demand in writing that Carrion and Hugo
vacate the property and to cancel the
contract.6
On 28 October 2004, petitioner filed a
Motion To Declare Defendant Marites
Carrion In Default,7 alleging that despite the
service of summons and a copy of the
complaint, respondent Carrion failed to file a
responsive pleading within the reglementary
period.
Respondent Hugo filed a Motion To Dismiss
on her behalf and on behalf of respondent
Carrion on 18 November 2004, citing the
grounds of lack of jurisdiction to hear the
case on the part of the RTC and estoppel
and/or laches on the part of petitioner.
Respondent Hugo argued that the Housing
and Land Use Regulatory Board (HLURB)
has jurisdiction over the complaint because
ultimately, the sole issue to be resolved was
whether petitioner, as the owner and
developer of the subdivision on which the
subject property stood, was guilty of
committing unsound real estate business
practices.
In the same motion, respondent Hugo
averred that the RTC had not acquired
jurisdiction over the person of respondent
Carrion for not complying with Section 16,
Rule 14 of the Rules of Court on the proper
service of summons on a non-resident
defendant. However, attached to the motion
was a special power of attorney, whereby
respondent Carrion had authorized
respondent Hugo, among others, to manage
and administer the subject property and to
prosecute and defend all suits to protect her
rights and interest in said property.9
After petitioner filed a comment on the
motion to dismiss, the RTC issued an
Omnibus Order10 on 21 March 2005, which
denied the motion to dismiss. The RTC held
that the court’s jurisdiction is not determined
by the defenses set up in the answer or the
motion to dismiss.
In the same omnibus order, the RTC ruled
that summons was served properly, thus,
the court had acquired jurisdiction over
respondent Carrion. The RTC noted that
respondent Hugo’s failure to disclose at the
outset that she was equipped with a special
power of attorney was an act constitutive of
misleading the court. Thus, the RTC
declared respondent Carrion in default,
directed petitioner to present evidence ex-
parte against respondent Carrion, and
respondent Hugo to file an answer.
On 18 April 2005, respondent Hugo filed an
answer on her behalf and as the attorney-in-
fact of respondent Carrion.11 The answer
pleaded a compulsory counterclaim for
damages. The following day, petitioner
presented evidence ex-parte against
respondent Carrion. Thus, on 22 April 2005,
respondent Hugo sought a reconsideration
of the omnibus order, praying for the
dismissal of the complaint, the cancellation
of the presentation of evidence ex-parte, the
lifting of the order of default against
respondent Carrion and the issuance of an
order directing the extraterritorial service of
summons on respondent Carrion.12
On 17 January 2007, the RTC issued an
order, upholding its jurisdiction over
petitioner’s complaint. Citing the interest of
substantial justice, the RTC lifted the order
of default against respondent Carrion and
set the pre-trial conference of the case.13
However, respondents elevated the matter
to the Court of Appeals via a special civil
action for certiorari, praying that the
Omnibus Order dated 21 March 2005 and
Order dated 17 January 2007 issued by
Judge Teodoro T. Riel be reversed and set
aside and that the complaint in Civil Case
No. Q-04-53581 be dismissed for lack of
jurisdiction.
On 27 September 2007, the Court of
Appeals rendered the assailed Decision
granting respondents’ petition for certiorari.
The appellate court set aside the assailed
orders of the RTC and ordered the
dismissal of petitioner’s complaint for lack of
jurisdiction. In its Resolution dated 9
November 2007, the Court of Appeals
denied petitioner’s motion for
reconsideration.
Hence, the instant petition, raising the
following arguments: (1) based on the
allegations in the complaint, the RTC has
jurisdiction over Civil Case No. Q-04-53581;
(2) in any case, respondents have expressly
submitted to or recognized the jurisdiction of
the RTC by filing an answer with
counterclaim; and (3) respondents
erroneously availed of a Rule 65 petition
instead of filing a timely appeal from the
order denying their motion to dismiss.14
Essentially, petitioner argues that based on
the allegations in the complaint and the
reliefs sought, the RTC has jurisdiction over
the matter. In any case, the compulsory
counterclaim pleaded in the answer of
respondents was an express recognition on
their part of the jurisdiction of the RTC over
the complaint for accion reivindicatoria,
petitioner adds.
The petition is meritorious.
The nature of an action and the jurisdiction
of a tribunal are determined by the material
allegations of the complaint and the law at
the time the action was commenced.
Jurisdiction of the tribunal over the subject
matter or nature of an action is conferred
only by law and not by the consent or
waiver upon a court which, otherwise, would
have no jurisdiction over the subject matter
or nature of an action.15
An examination of Section 1 of Presidential
Decree (P.D.) No. 1344, which enumerates
the regulatory functions of the HLURB,17
readily shows that its quasi-judicial function
is limited to hearing only the following
specific cases:
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 or
salesman.
The aforequoted provision must be read in
the light of the statute’s preamble or the
introductory or preparatory clause that
explains the reasons for its enactment or
the contextual basis for its interpretation.
The scope of the regulatory authority thus
lodged in the National Housing Authority
(NHA) [now HLURB] is indicated in the
second and third preambular paragraphs of
the statute 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 ."18
The boom in the real estate business all
over the country resulted in more litigation
between subdivision owners/developers and
lot buyers with the issue of the jurisdiction of
the NHA or the HLURB over such
controversies as against that of regular
courts. In the cases that reached this
Court, the ruling has consistently been
that the NHA or the HLURB has
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.
We agree with the ruling of the RTC that it
has jurisdiction over the case based on the
allegations of the complaint. Nothing in the
complaint or in the contract to sell suggests
that petitioner is the proper party to invoke
the jurisdiction of the HLURB. There is
nothing in the allegations in the complaint or
in the terms and conditions of the contract
to sell that would suggest that the nature of
the controversy calls for the application of
either P.D. No. 957 or P.D. No. 1344 insofar
as the extent of the powers and duties of
the HLURB is concerned.
Note particularly paragraphs (b) and (c) of
Sec. 1, P.D. No. 1344 as worded, where the
HLURB’s jurisdiction concerns cases
commenced by subdivision lot or
condominium unit buyers. As to paragraph
(a), concerning "unsound real estate
practices," the logical complainants
would be the buyers and customers
against the sellers (subdivision owners
and developers or condominium builders
and realtors), and not vice versa.20
The complaint does not allege that
petitioner is a subdivision lot buyer. The
contract to sell does not contain clauses
which would indicate that petitioner has
obligations in the capacity of a
subdivision lot developer, owner or
broker or salesman or a person engaged
in real estate business. From the face of
the complaint and the contract to sell,
petitioner is an ordinary seller of an interest
in the subject property who is seeking
redress for the alleged violation of the terms
of the contract to sell. Petitioner’s complaint
alleged that a contract to sell over a
townhouse was entered into by and
between petitioner and respondent Carrion
and that the latter breached the contract
when Carrion transferred the same to
respondent Hugo without petitioner’s
consent.21 Thus, petitioner sought
the cancellation of the contract and the
recovery of possession and ownership of
the town house. Clearly, the complaint is
well within the jurisdiction of the RTC.
In Javellana v. Hon. Presiding Judge, RTC,
Branch 30, Manila,22 the Court affirmed the
jurisdiction of the RTC over the complaint
for accion publiciana and sum of money on
the ground that the complaint did not allege
that the subject lot was part of a subdivision
project but that the sale was an ordinary
sale on an installment basis. Even the mere
assertion that the defendant is a subdivision
developer or that the subject lot is a
subdivision lot does not automatically vest
jurisdiction on the HLURB. On its face, the
complaint must sufficiently describe the lot
as a subdivision lot and sold by the
defendant in his capacity as a subdivision
developer to fall within the purview of P.D.
No. 957 and P.D. No. 1344 and thus within
the exclusive jurisdiction of the HLURB.23
In their comment, respondents cite Antipolo
Realty Corp. v. National Housing
Authority,24 to bolster the argument that the
HLURB has jurisdiction over controversies
involving the determination of the rights of
the parties under a contract to sell a
subdivision lot. Antipolo Realty is not
squarely applicable to the instant
controversy. The issue in said case called
for the determination of whether the
developer complied with its obligations to
complete certain specified improvements in
the subdivision within the specified period of
time, a case that clearly falls under Section
1, paragraph (c) of P.D. No. 1344.
In the instances where the jurisdiction of the
HLURB was upheld, the allegations in the
complaint clearly showed that the case
involved the determination of the rights and
obligations of the parties in a sale of real
estate under P.D. No. 957,25 or the
complaint for specific performance sought to
compel the subdivision developer to comply
with its undertaking under the contract to
sell,26 or the claim by the subdivision
developer would have been properly
pleaded as a counterclaim in the HLURB
case filed by the buyer against the
developer to avoid splitting causes of
action.27
The statement in Suntay v. Gocolay28 to
the effect that P.D. No. 957 encompasses
all questions regarding subdivisions and
condominiums, which was cited by the
Court of Appeals in the assailed decision, is
a mere obiter dictum. As a matter of fact,
the Court in Suntay nullified the orders
issued by the HLURB over the action for the
annulment of an auction sale, cancellation
of notice of levy and damages on the
ground of lack of jurisdiction. P.D. No. 957
and P.D. No. 1344 were not the applicable
laws because the action was brought
against a condominium buyer and not
against the developer, seller, or broker
contemplated under P.D. No. 1344. The
action likewise involved the determination of
ownership over the disputed condominium
unit, which by its nature does not fall under
the classes of disputes cognizable by the
HLURB under Section 1 of P.D. No. 1344.
The Court of Appeals held that the provision
in the contract to sell mandating
membership of the buyer of the housing unit
in a housing corporation was a strong
indication that the property purchased by
respondent Carrion from petitioner was part
of a tract of land subdivided primarily for
residential purposes. Thus, the appellate
court concluded that the HLURB has
jurisdiction over the controversy because
the property subject thereof was part of a
subdivision project.
Not every controversy involving a necessary consequence, the jurisdiction of
subdivision or condominium unit falls under
the competence of the HLURB29 in the
same way that the mere allegation of
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. No. 1344.30 Notably, in Spouses Dela
Cruz v. Court of Appeals,31 the Court
upheld the jurisdiction of the RTC over the
complaint for cancellation of the contract to
sell of a subdivision house and lot because
the case did not fall under any of the cases
mentioned in Section 1, P.D. No. 1344. In
interpreting said provision, the Court
explained, thus:
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.
For their part, respondents claim that the
resolution of the case ultimately calls for the
interpretation of the contract to sell and the
determination of whether petitioner is guilty
of committing unsound real estate business
practices, thus, the proper forum to hear
and decide the matter is the HLURB. The
argument does not impress.
It is an elementary rule of procedural law
that jurisdiction of the court over the subject
matter is determined by the allegations of
the complaint irrespective of whether or not
the plaintiff is entitled to recover upon all or
some of the claims asserted therein. As a
the court cannot be made to depend upon
the defenses set up in the answer or upon
the motion to dismiss, for otherwise, the
question of jurisdiction would almost entirely
depend upon the defendant. What
determines the jurisdiction of the court is the
nature of the action pleaded as appearing
from the allegations in the complaint. The
averments in the complaint and the
character of the relief sought are the
matters to be consulted.32 Thus, the
allegations in respondents’ motion to
dismiss on the unsound real estate
business practices allegedly committed by
petitioner, even if proved to be true, cannot
serve to oust the RTC of its jurisdiction over
actions for breach of contract and damages
which has been conferred to it by law.

WHEREFORE, the instant petition for

review on certiorari is GRANTED and the
Decision dated 27 September 2007 and
Resolution dated 9 November 2007 of the
Court of Appeals in CA-G.R. SP No. 98572
are REVERSED and SET ASIDE. The
orders dated 21 March 2005 and 17
January 2007 of the Regional Trial Court,
Branch 85, Quezon City in Civil Case No.
Q-04-53581 are REINSTATED. The
Regional Trial Court is ORDERED to
resume the proceedings in and decide Civil
Case No. Q-04-53581 with deliberate G.R. No. 131683 June 19, 2000
speed. Costs against respondents.
JESUS LIM ARRANZA; LORENZO
SO ORDERED. CINCO; QUINTIN TAN; JOSE ESCOBAR;
ELBERT FRIEND; CLASSIC HOMES
VILLAGE ASSOCIATION, INC.; BF
NORTHWEST HOMEOWNERS'
ASSOCIATION, INC.; and UNITED BF
HOMEOWNERS' ASSOCIATIONS, INC.,
petitioners,
vs.
B.F. HOMES, INC. AND THE
HONORABLE COURT OF APPEALS,
respondent.

DAVIDE, JR., C.J.:
For resolution in this petition is the issue of
whether it is the Securities and Exchange
Commission (SEC) or the Housing and
Land Use Regulatory Board (HLURB) that
has jurisdiction over a complaint filed by
subdivision homeowners against
subdivision developer that is under
receivership for specific performance
regarding basic homeowners' needs such
as water, security and open spaces.
Respondent BF Homes, Inc. (BFHI), is a
domestic corporation engaged in developing
subdivisions and selling residential lots.
One of the subdivisions that respondent
developed was the BF Homes Parañaque
Subdivision, which now sprawls across not
only a portion of the City of Parañaque but
also those of the adjoining cities of Las
Piñas and Muntinlupa.
When the Central Bank ordered the
closure of Banco Filipino, which had
substantial investments in respondent
BFHI, respondent filed with the SEC a
petition for rehabilitation and a Cruz Drive and to collect community
declaration that it was in a state of
suspension of payments. On 18 March
1985, the SEC placed respondent under a
management committee. Upon that
committee's dissolution on 2 February 1988,
the SEC appointed Atty. Florencio B.
Orendain as a Receiver, and approved a
Revised Rehabilitation Plan.
As a Receiver, Orendain instituted a central
security system and unified the sixty-five
homeowners' associations into an umbrella
homeowners' association called United BF
Homeowners' Associations, Inc. (UBFHAI),
which was thereafter incorporated with the
Home Insurance and Guaranty Corporation
(HIGC).1
In 1989, respondent, through Orendain,
turned over to UBFHAI control and
administration of security in the subdivision,
the Clubhouse and the open spaces along
Concha Cruz Drive. Through the Philippine
a Waterworks and Construction Corporation
(PWCC), respondent's managing company
for waterworks in the various BF Homes
subdivisions, respondent entered into an
agreement with UBFHAI for the annual
collection of community assessment fund
and for the purchase of eight new pumps to
replace the over-capacitated pumps in the
old wells.
On 7 November 1994, Orendain was
relieved by the SEC of his duties as a
Receiver, and a new Board of Receivers
consisting of eleven members of
respondent's Board of Directors was
appointed for the implementation of Phases
II and III of respondent's rehabilitation.2 The
new Board, through its Chairman, Albert C.
Aguirre, revoked the authority given by
Orendain to use the open spaces at Concha
assessment funds; deferred the purchase of
new pumps; recognized BF Parañaque
Homeowners' Association, Inc., (BFPHAI)
as the representative of all homeowners in
the subdivision; took over the management
of the Clubhouse; and deployed its own
security guards in the subdivision.
Consequently, on 5 July 1995, herein
petitioners filed with the HLURB a class suit
"for and in behalf of the more than 7,000
homeowners in the subdivision" against
respondent BFHI, BF Citiland Corporation,
PWCC and A.C. Aguirre Management
Corporation "to enforce the rights of
purchasers of lots" in BF Homes
Parañaque3 . They alleged that:
1. The forty (40) wells, mostly located at
different elevations in Phases 3 and 4 of the
subdivision and with only twenty-seven (27)
productive, are the sources of the inter-
connected water system in the 765-hectare
subdivision;
2. There is only one drainage and sewer
system;
3. There is one network of roads;
4. There are eight (8) entry and exit points
to the subdivision and from three (3)
municipalities (now cities), a situation
obtaining in this subdivision only and
nowhere else;
5. There was no security force for the entire
subdivision until 1988;
6. There are not enough open spaces in the
subdivision in relation to the total land area
developed; and whatever open spaces are
available have been left unkempt,
undeveloped and neglected;
7. There are no zoning guidelines which
resulted in unregulated constructions of
structures and the proliferation of business
establishments in residential areas; and
8. The BFPHAI became "moribund"
sometime in 1980 on account of its failure to
cope with the delivery of basic services
except for garbage collection.
Petitioners raised "issues" on the following
basic needs of the homeowners: rights-of-
way; water; open spaces; road and
perimeter wall repairs; security; and the
interlocking corporations that allegedly
made it convenient for respondent "to
compartmentalize its obligations as general
developer, even if all of these are hooked
into the water, roads, drainage and sewer
systems of the subdivision."4 Thus,
petitioner prayed that:
A. A cease-and-desist order from selling
any of the properties within the subdivision
be issued against respondent BFHI, BF Citi,
ACAMC, and/or any and all corporations
acting as surrogates/alter-egos, sister
companies of BFHI and/or its stockholders
until the warranties, facilities and
infrastructures shall have been complied
with or put up (and) the advances of
UBFHAI reimbursed, otherwise, to cease
and desist from rescinding valid agreements
or contracts for the benefit of complainants,
or committing acts diminishing, duliting or
otherwise depriving complainants of their
rights under the law as homeowners;
B. After proper proceedings the bond or
deposit put up by respondent BF Homes,
Inc. be forfeited in favor of petitioners;
C. Respondent BFHI be ordered to
immediately turnover the roads, open
spaces, and other facilities built or put up for
the benefit of lot buyers/homeowners in the
subdivision to complainant UBFHAI as
representative of all homeowners in BF
Homes Parañaque, free from all liens,
encumbrances, and taxes in arrears;
D. If the open spaces in the subdivision are
not sufficient as required by law, to impose
said penalties/sanctions against BFHI or the
persons responsible therefor;
E. Order the reimbursement of advances
made by UBFHAI;

F. Turn over all amounts which may have
been collected from users' fees of the stop
of open space at Concha Cruz Drive;
G. Order PWCC to effect and restore 24-
hour water supply to all residents by adding
new wells replacing over-capacitated pumps
and otherwise improving water distribution
facilities;
H. Order PWCC to continue collecting the
Community Development Fund and remit all
amounts collected to UBFHAI;
I. Order BFHI to immediately withdraw the
guards at the clubhouse and the 8 entry and
exit points to the subdivision, this being an
act of usurpation and blatant display of
brute force;
J. The appropriate penalties/sanctions be
imposed against BF Citi, ACAMC or any
other interlocking corporation of BFHI or any
of its principal stockholders in respect of the
diminution/encroaching/violation on the
rights of the residents of the subdivision to
enjoy/avail of the facilities/services due
them; and
K. Respondents be made to pay attorney's
fees and the costs of this suit.5
In its answer, respondent claimed that (a) it
had complied with its contractual obligations
relative to the subdivision's development;
(b) respondent could not be compelled to
abide by agreements resulting from
Orendain's ultra vires acts; and (c)
petitioners were precluded from instituting
the instant action on account of Section 6(c)
of P.D. No. 902-A providing for the
suspension of all actions for claims against
a corporation under receivership.
Respondent interposed counterclaims and
grayed for the dismissal of the complaint.6
Petitioners thereafter filed an urgent motion
for a cease-and-desist/status quo order.
Acting on this motion, HLURB Arbiter
Charito M. Bunagan issued a 20-day
temporary restraining order to avoid
rendering nugatory and ineffectual any
judgment that could be issued in the case;7
and subsequently, an Order granting
petitioners' prayer for preliminary injunction
was issued
enjoining and restraining respondent BF
Homes, Incorporated, its agents and all
persons acting for and in its behalf from
taking over/administering the Concha
Garden Row, from issuing stickers to
residents and non-residents alike for free or
with fees, from preventing necessary
improvements and repairs of infrastructures
within the authority and administration of
complainant UBFHAI, and from directly and
indirectly taking over security in the eight (8)
exit points of the subdivision or in any
manner interfering with the processing and
vehicle control in subject gates and
otherwise to remove its guards from the
gates upon posting of a bond of One
Hundred Thousand Pesos (P100,000.00)
which bond shall answer for whatever
damages respondents may sustain by
reason of the issuance of the writ of
preliminary injunction if it turns out that
complainant is not entitled thereto.8
Respondent thus filed with the Court of
Appeals a petition for certiorari and
prohibition docketed as CA-G.R. SP No.
39685. It contended in the main that the
HLURB acted "completely without
jurisdiction" in issuing the Order granting the
writ of preliminary injunction considering
that inasmuch as respondent is under
receivership, the "subject matter of the case
is one exclusively within the jurisdiction of
the SEC."9
On 28 November 1997, the Court of
Appeals rendered a decision 10 annulling
and setting aside the writ of preliminary
injunction issued by the HLURB. It ruled that
private respondents' action may properly be
regarded as a "claim" within the
contemplation of PD 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. In any event,
pursuant to Section 6(c) of P.D. No. 902-A
and SEC's Order of 18 March 1985,
petitioners' action against respondent,
which is under receivership, should be
suspended.
Hence, petitioners filed the instant petition
for review on certiorari. On 26 January
1998, the Court issued a temporary
restraining order (TRO) enjoining
respondent, its officers, representatives and
persons acting upon its orders from
(a) taking over/administering the Concha
Garden Row; (b) issuing stickers to
residents and non-residents alike for free or
with fees; (c) preventing necessary
improvements and repairs of infrastructures
within the authority and administration of
complainant United BF Homeowners'
Association, Inc. (UBFHAI); (d) directly and
indirectly taking over security in the eight (8)
exit points of all of BF Homes Parañaque
Subdivision or in any manner interfering
with the processing and vehicle control in
the subject gates; and (e) otherwise to
remove its guards from the gates. . . . . 11
Respondent's motion to lift the TRO was
denied.
At the hearing on 1 July 1998, the primary
issue in this case was defined as "which
body has jurisdiction over petitioners'
claims, the Housing and Land Use
Regulatory Board (HLURB) or the Securities
and Exchange Commission (SEC)?" The
collateral issue to be addressed is
"assuming that the HLURB has jurisdiction,
may the proceedings therein be suspended
pending the outcome of the receivership
before the SEC?"
For their part, petitioners argue that the
complaint referring to rights of way, water,
open spaces, road and perimeter wall
repairs, security and respondent's
interlocking corporations that facilitated
circumvention of its obligation involves
unsound real estate practices. The action is
for specific performance of a real estate
developers' obligations under P.D. No. 957,
and the relief sought is revocation of the
subdivision project's registration certificate
and license to sell. These issues are within
the jurisdiction of the HLURB. Even if
respondent is under receivership, its
obligations as a real estate developer under
P.D. No. 957 are not suspended. Section
6(c) of P.D. No. 902-A, as amended by P.D.
No. 957, on "suspension of all actions for
claims against corporations" refers solely to
monetary claims which are but incidental to
petitioner's complaints against BFHI, and if
filed elsewhere than the HLURB, it would
result to splitting causes of action. Once
determined in the HLURB, however, the
monetary awards should be submitted to
the SEC as established claims. Lastly, the
acts enjoined by the HLURB are not related
to the disposition of BFHI's assets as a
corporation undergoing its final phase of
rehabilitation.
On the other hand, respondent asserts that
the SEC, not the HLURB, has jurisdiction
over petitioners' complaint based on the
contracts entered into by the former
receiver. The SEC, being the appointing
authority, should be the one to take
cognizance of controversies arising from the
performance of the receiver's duties. Since
respondent's properties are under the
SEC's custodia legis, they are exempt from
any court process.
Jurisdiction is the authority to hear and
determine a cause — the right to act in a
case. 12 It is conferred by law and not by
mere administrative policy of any court or
tribunal. 1 It is determined by the averments
of the complaint and not by the defense
contained in the answer. 14 Hence, the
jurisdictional issue involved here shall be
determined upon an examination of the
applicable laws and the allegations of
petitioners' complaint before the HLURB.
Presidential Decree No. 957 (The
Subdivision and Condominium Buyers'
Protective Decree) was issued on 12 July
1976 in answer to the popular call for
correction of pernicious practices of
subdivision owners and/or developers that
adversely affected the interests of
subdivision lot buyers. Thus, one of the
"whereas clauses" of P.D. No. 957 states:
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. . . .
Sec. 3 of P.D. No. 957 empowered the
National Housing Authority (NHA) with the
"exclusive jurisdiction to regulate the real
estate trade and business." On 2 April 1978,
P.D. No. 1344 was issued to expand the
jurisdiction of the NHA to include the
following:
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 lot or condominium
unit against the owner, developer, dealer,
broker or salesman. (Emphasis supplied.)
Thereafter, the regulatory and quasi-judicial
functions of the NHA were transferred to the
Human Settlements Regulatory
Commission (HSRC) by virtue of Executive
Order No. 648 dated 7 February 1981.
Section 8 thereof specifies the functions of
the NHA that were transferred to the HSRC
including the authority to hear and decide
"cases on unsound real estate business
practices; claims involving refund filed
against project owners, developers, dealers,
brokers or salesmen and cases of specific
performance." Executive Order No. 90
dated 17 December 1986 renamed the
HSRC as the Housing and Land Use
Regulatory Board (HLURB). 15
The boom in the real estate business all
over the country resulted in more litigation
between subdivision owners/developers and
lot buyers with the issue of the jurisdiction of
the NHA or the HLURB over such
controversies as against that of regular
courts. In the cases 16 that reached this
Court, the ruling has consistently been that
the NHA or the HLURB has 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.
Notably, in Antipolo Realty Corporation v.
National Housing Authority, 17 one of the
issues raised by the homeowners was the
failure of Antipolo Realty to develop the
subdivision in accordance with its
undertakings under the contract to sell.
Such undertakings include providing the
subdivision with concrete curbs and gutters,
underground drainage system, asphalt
paved roads, independent water system,
electrical installation with concrete posts,
landscaping and concrete sidewalks,
developed park or amphitheater and 24-
hour security guard service. The Court held
that the complaint filed by the homeowners
was within the jurisdiction of the
NHA.1avvphi1
Similarly, in Alcasid v. Court of Appeals, 18
the Court ruled that the HLURB, not the
RTC, has jurisdiction over the complaint of
lot buyers for specific performance of
alleged contractual and statutory obligations
of the defendants, to wit, the execution of
contracts of sale in favor of the plaintiffs and
the introduction in the disputed property of
the necessary facilities such as asphalting
and street lights.
In the case at bar, petitioners' complaint is
for specific performance to enforce their
rights as purchasers of subdivision lots as
regards rights of way, water, open spaces,
road and perimeter wall repairs, and
security. Indisputably then, the HLURB has
jurisdiction over the complaint.
The fact that respondent is under
receivership does not divest the HLURB of
that jurisdiction.1awphil A receiver is a
person appointed by the court, or in this
instance, by a quasi-judicial administrative
agency, in behalf of all the parties for the
purpose of preserving and conserving the
property and preventing its possible
destruction or dissipation, if it were left in
the possession of any of the parties. 19 It is
the duty of the receiver to administer the
assets of the receivership estate; and in the
management and disposition of the property
committed to his possession, he acts in a
fiduciary capacity and with impartiality
towards all interested persons. 20 The
appointment of a receiver does not dissolve
a corporation, nor does it interfere with the
exercise of its corporate rights. 21 In this
case where there appears to be no
restraints imposed upon respondent as it
undergoes rehabilitation receivership, 22
respondent continues to exist as a
corporation and hence, continues or should
continue to perform its contractual and
statutory responsibilities to petitioners as
homeowners.

Receivership is aimed at the preservation
of, and at making more secure, existing
rights; it cannot be used as an instrument
for the destruction of those rights. 2
No violation of the SEC order suspending
payments to creditors would result as far as
petitioners' complaint before the HLURB is
concerned. To reiterate, what petitioners
seek to enforce are respondent's obligations
as a subdivision developer. Such claims are
basically not pecuniary in nature although it
could incidentally involve monetary
considerations. All that petitioners' claims
entail is the exercise of proper subdivision
management on the part of the SEC-
appointed Board of Receivers towards the
end that homeowners shall enjoy the ideal
community living that respondent portrayed
they would have when they bought real
estate from it.
Neither may petitioners be considered as
having "claims" against respondent within
the context of the following proviso of
Section 6 (c) of P.D. No. 902-A, as
amended by P.D. Nos. 1653, 1758 and
1799, to warrant suspension of the HLURB
proceedings:
[U]pon appointment of a management
committee, rehabilitation receiver, board or
body, pursuant to this Decree, all actions for
claims against corporations, partnerships or
associations under management or
receivership pending before any court,
tribunal, board or body shall be suspended
accordingly. (Emphasis supplied.)
In Finasia Investments and Finance
Corporation v. Court of Appeals, 24 this
Court defined and explained the term
"claim" in Section 6 (c) of P.D. No. 902-A,
as amended, as follows:
We agree with the public respondent that
the word "claim" as used in Sec. 6 (c) of
P.D. 902-A, as amended, refers to debts or
demands of a pecuniary nature. It means
"the assertion of a right to have money paid.
It is used in special proceedings like those
before administrative court, on insolvency."
(Emphasis supplied.)
Hence, in Finansia Investments, the Court
held that a civil case to nullify a special
power of attorney because the principal's
signature was forged should not be
suspended upon the appointment of a
receiver of the mortgagee to whom a person
mortgaged the property owned by such
principal. The Court ruled that the cause of
action in that civil case "does not consist of
demand for payment of debt or enforcement
of pecuniary liability." It added:
It has nothing to do with the purpose of
Section 6 (c) of P.D. 902-A, as amended,
which is to prevent a creditor from obtaining
an advantage or preference over another
with respect to action against corporation,
partnership, association under management
or receivership and to protect and preserve
the rights of party litigants as well as the
interest of the investing public or creditors.
Moreover, a final verdict on the question of
whether the special power of attorney in
question is a forgery or not will not amount
to any preference or advantage to Castro
who was not shown to be a creditor of
FINASIA. 25
In this case, under the complaint for specific
performance before the HLURB, petitioners
do not aim to enforce a pecuniary demand.
Their claim for reimbursement should be
viewed in the light of respondent's alleged
failure to observe its statutory and
contractual obligations to provide petitioners
a "decent human settlement" and "ample
opportunities for improving their quality of
life." 26 The HLURB, not the SEC, is
equipped with the expertise to deal with that
matter.
On the other hand, the jurisdiction of the
SEC is defined by P.D. No. 902-A, as
amended, as follows:
Sec. 5. In addition to the regulatory and
adjudicative functions of the Securities and
Exchange Commission over corporations,
partnerships and other forms of
associations registered with it as expressly
granted under existing laws and decrees, it
shall have original and exclusive jurisdiction
to hear and decide cases involving:
a) Devices or schemes employed by or any
act of the board of directors, business
associates, its officers or partners,
amounting to fraud and misrepresentation
which may be detrimental to the interest of
the public and/or of the stockholders,
partners, members of associations or
organizations registered with the
Commission;
b) Controversies arising out of intra-
corporate or partnership relations, between
and among stockholders, members of
associates; between any or all of them and
the corporation, partnership or association
of which they are stockholders, members, or
associates, respectively; and between such
corporation, partnership or association and
the State insofar as it concerns their
individual franchise or right to exist as such
entity; [and]
c) Controversies in the election or
appointments of directors, trustees, officers,
or managers of such corporation,
partnerships or associations.
For the SEC to acquire jurisdiction over any
controversy under these provisions, two
elements must be considered: (1) the status
or relationship of the parties; and (2) the
nature of the question that is the subject of
their controversy. 27 The first element
requires that the controversy must arise "out
of intra-corporate or partnership relations
between and among stockholders,
members or associates; between any or all
of them and the corporation, partnership or
association of which they are stockholders,
members or associates, respectively; and
between such corporation, partnership or
association and the State in so far as it
concerns their individual franchises." 28
Petitioners are not stockholders, members
or associates of respondent. They are lot
buyers and now homeowners in the
subdivision developed by the respondent.
The second element requires that the
dispute among the parties be intrinsically
connected with the regulation or the internal
affairs of the corporation, partnership or
association. 29 The controversy in this case
is remotely related to the "regulation" of
respondent corporation or to respondent's
"internal affairs."
It should be stressed that the main concern
in this case is the 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.
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. On the other hand, 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. As respondent puts it, "there is no
contradiction between P.D. No. 902-A and
P.D. No. 957." 30
What complicated the jurisdictional issue in
this case is the fact that petitioners are
primarily praying for the retention of
respondent's obligations under the
Memorandum of Agreement that Receiver
Orendain had entered into with them but
which the present Board of Receivers had
revoked.
In Figueroa v. SEC, 31 this Court has
declared that the power to overrule or
revoke the previous acts of the
management or Board of Directors of the
entity under receivership is within a
receiver's authority, as provided for by
Section 6 (d) (2) of P.D. No. 902-A. Indeed,
when the acts of a previous receiver or
management committee prove
disadvantageous or inimical to the
rehabilitation of a distressed corporation,
the succeeding receiver or management
committee may abrogate or cast aside such
acts. However, that prerogative is not
absolute. It should be exercised upon due
consideration of all pertinent and relevant
laws when public interest and welfare are
involved. 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 proper
agency that has technical know-how on the
matter.
P.D. No. 957 was promulgated to
encompass all questions regarding
subdivisions and condominiums. It is aimed
at providing for an appropriate government
agency, the HLURB, to which all parties
aggrieved in the implementation of its
provisions and the enforcement of
contractual rights with respect to said
category of real estate may take recourse.
Nonetheless, the powers of the HLURB may
not in any way be deemed as in derogation
of the SEC's authority. P.D. Nos. 902-A and
957, as far as both are concerned with
corporations, are laws in pari materia. P.D.
No. 902-A relates to all corporations, while
P.D. No. 957 pertains to corporations
engaged in the particular business of
developing subdivisions and condominiums.
Although the provisions of these decrees on
the issue of jurisdiction appear to collide
when a corporation engaged in developing
subdivisions and condominiums is under
receivership, the same decrees should be
construed as far as reasonably possible to
be in harmony with each other to attain the
purpose of an expressed national policy. 32
Hence, the HLURB should take jurisdiction
over petitioners' complaint because it
pertains to matters within the HLURB's
competence and expertise. The HLURB
should view the issue of whether the Board
of Receivers correctly revoked the
agreements entered into between the
previous receiver and the petitioners from
the perspective of the homeowners'
interests, which P.D. No. 957 aims to Commission proceeds with the rehabilitation
protect. Whatever monetary awards the of respondent BF Homes, Inc., through the
HLURB may impose upon respondent are Board of Receivers. Thereafter, any and all
incidental matters that should be addressed monetary claims duly established before the
to the sound discretion of the Board of HLURB shall be referred to the Board of
Receivers charged with maintaining the Receivers for proper disposition and
viability of respondent as a corporation. Any thereafter, to the SEC, if necessary. No
controversy that may arise in that regard costs.
should then be addressed to the SEC.
SO ORDERED.
It is worth noting that the parties agreed at
the 1 July 1998 hearing that should the
HLURB establish and grant petitioners'
claims, the same should be referred to the
SEC. Thus, the proceedings at the HLURB
should not be suspended notwithstanding
that respondent is still under receivership.
The TRO that this Court has issued should
accordingly continue until such time as the
HLURB shall have resolved the controversy.
The present members of the Board of
Receivers should be reminded of their
duties and responsibilities as an impartial
Board that should serve the interests of both
the homeowners and respondent's
creditors. Their interests, financial or
otherwise, as members of respondent's
Board of Directors should be circumscribed
by judicious and unbiased performance of
their duties and responsibilities as members
of the Board of Receivers. Otherwise,
respondent's full rehabilitation may face a
bleak future. Both parties should never give
full rein to acts that could prove detrimental
to the interests of the homeowners and
eventually jeopardize respondent's
rehabilitation.

WHEREFORE, the questioned Decision of

the Court of Appeals is hereby REVERSED
and SET ASIDE. This case is REMANDED
to the Housing and Land Use Regulatory
Board for continuation of proceedings with
dispatch as the Securities and Exchange