ARRANZA VS. BF HOMES, INC.

G.R. No. 131683   June 19, 2000

DAVIDE, JR., C.J.:

Facts:

Respondent Yao was the owner of a commercial building, a portion of which is leased to herein
petitioner. However, during the renewal of the contract of lease, the two disagreed on the rental rate, and to
resolve the controversy, they submitted their disagreement to arbitration. Two arbitrators (Alamarez and
Sabile) has been appointed by the parties while the appointment of the third arbitrator (Tupang) was held
in abeyance because La Naval Drug instructed its arbitrator to defer the same until its Board of Directors
could convene and approved Tupang’s appointment. This was theorized by the respondent as dilatory
tactics, hence, he prayed that a summary hearing be conducted and direct the 2 arbitrators to proceed with
the arbitration in accordance with Contract of Lease and the applicable provisions of the Arbitration law, by
appointing and confirming the appointment of the Third Arbitrator; and that the Board of Three Arbitrators
be ordered to immediately convene and resolve the controversy before it. The respondent court announced
that the two arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator and ordered the parties to submit
their position papers on the issue as to whether or not respondent Yao's claim for damages may be litigated
upon in the summary proceeding for enforcement of arbitration agreement. In moving for reconsideration
of the said Order, petitioner argued that in Special Case No. 6024, the respondent court sits as a special
court exercising limited jurisdiction and is not competent to act on respondent Yao's claim for damages,
which poses an issue litigable in an ordinary civil action. However, respondent court was not persuaded
by petitioner's submission, hence, it denied the motion for reconsideration. While the appellate court has
agreed with petitioner that, under Section 6 of Republic Act No. 876, a court, acting within the limits of its
special jurisdiction, may in this case solely determine the issue of whether the litigants should proceed or
not to arbitration, it, however, considered petitioner in estoppel from questioning the competence of the
court to additionally hear and decide in the summary proceedings private respondent's claim for damages,
it (petitioner) having itself filed similarly its own counterclaim with the court a quo.
Respondent Yao was the owner of a commercial building, a portion of which is leased to herein
petitioner. However, during the renewal of the contract of lease, the two disagreed on the rental rate, and to
resolve the controversy, they submitted their disagreement to arbitration. Two arbitrators (Alamarez and
Sabile) has been appointed by the parties while the appointment of the third arbitrator (Tupang) was held
in abeyance because La Naval Drug instructed its arbitrator to defer the same until its Board of Directors
could convene and approved Tupang’s appointment. This was theorized by the respondent as dilatory
tactics, hence, he prayed that a summary hearing be conducted and direct the 2 arbitrators to proceed with
the arbitration in accordance with Contract of Lease and the applicable provisions of the Arbitration law, by
appointing and confirming the appointment of the Third Arbitrator; and that the Board of Three Arbitrators
be ordered to immediately convene and resolve the controversy before it. The respondent court announced
that the two arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator and ordered the parties to submit
their position papers on the issue as to whether or not respondent Yao's claim for damages may be litigated
upon in the summary proceeding for enforcement of arbitration agreement. In moving for reconsideration
of the said Order, petitioner argued that in Special Case No. 6024, the respondent court sits as a special
court exercising limited jurisdiction and is not competent to act on respondent Yao's claim for damages,
which poses an issue litigable in an ordinary civil action. However, respondent court was not persuaded
by petitioner's submission, hence, it denied the motion for reconsideration. While the appellate court has
agreed with petitioner that, under Section 6 of Republic Act No. 876, a court, acting within the limits of its
special jurisdiction, may in this case solely determine the issue of whether the litigants should proceed or
not to arbitration, it, however, considered petitioner in estoppel from questioning the competence of the
court to additionally hear and decide in the summary proceedings private respondent's claim for damages,
it (petitioner) having itself filed similarly its own counterclaim with the court a quo.
Respondent Yao was the owner of a commercial building, a portion of which is leased to herein
petitioner. However, during the renewal of the contract of lease, the two disagreed on the rental rate, and to
resolve the controversy, they submitted their disagreement to arbitration. Two arbitrators (Alamarez and
Sabile) has been appointed by the parties while the appointment of the third arbitrator (Tupang) was held
in abeyance because La Naval Drug instructed its arbitrator to defer the same until its Board of Directors
could convene and approved Tupang’s appointment. This was theorized by the respondent as dilatory
tactics, hence, he prayed that a summary hearing be conducted and direct the 2 arbitrators to proceed with
the arbitration in accordance with Contract of Lease and the applicable provisions of the Arbitration law, by
appointing and confirming the appointment of the Third Arbitrator; and that the Board of Three Arbitrators
be ordered to immediately convene and resolve the controversy before it. The respondent court announced
that the two arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator and ordered the parties to submit
their position papers on the issue as to whether or not respondent Yao's claim for damages may be litigated
upon in the summary proceeding for enforcement of arbitration agreement. In moving for reconsideration
of the said Order, petitioner argued that in Special Case No. 6024, the respondent court sits as a special
court exercising limited jurisdiction and is not competent to act on respondent Yao's claim for damages,
which poses an issue litigable in an ordinary civil action. However, respondent court was not persuaded
by petitioner's submission, hence, it denied the motion for reconsideration. While the appellate court has
agreed with petitioner that, under Section 6 of Republic Act No. 876, a court, acting within the limits of its
special jurisdiction, may in this case solely determine the issue of whether the litigants should proceed or
not to arbitration, it, however, considered petitioner in estoppel from questioning the competence of the
court to additionally hear and decide in the summary proceedings private respondent's claim for damages,
it (petitioner) having itself filed similarly its own counterclaim with the court a quo.
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 Paranaque Subdivision.

Central Bank ordered Banco Filipino its closure where it had substantial investments in BFHI. However, a petition
for rehabilitation and a declaration for suspension of payments was filed in SEC by BFHI. Atty. Florencio B.
Orendain was appointed by the SEC as a Receiver.

Orendain was relieved by the SEC of his duties as a Receiver, and a new Board of Receivers consisting of eleven
members of respondents Board of Directors was appointed for the implementation of Phases II and III of
respondents rehabilitation.

The new Board, revoked the authority given by Orendain to use the open spaces at Concha Cruz Drive and to
collect community assessment funds; deferred the purchase of new pumps; recognized BF Paranaque
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.

Petitioners Arranza et al. filed with the HLURB a class suit "for and in behalf of the more than 7,000 homeowners"
against respondent BFHI et al to enforce the rights of purchasers of lots in BF Homes Paranaque. Respondent
asserts that the SEC, not the HLURB, has jurisdiction over petitioners Arranza et al. 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 receivers duties.

Respondent Yao was the owner of a commercial building, a portion of which is leased to herein
petitioner. However, during the renewal of the contract of lease, the two disagreed on the rental rate, and to
resolve the controversy, they submitted their disagreement to arbitration. Two arbitrators (Alamarez and
Sabile) has been appointed by the parties while the appointment of the third arbitrator (Tupang) was held
in abeyance because La Naval Drug instructed its arbitrator to defer the same until its Board of Directors
could convene and approved Tupang’s appointment. This was theorized by the respondent as dilatory
tactics, hence, he prayed that a summary hearing be conducted and direct the 2 arbitrators to proceed with
the arbitration in accordance with Contract of Lease and the applicable provisions of the Arbitration law, by
appointing and confirming the appointment of the Third Arbitrator; and that the Board of Three Arbitrators
be ordered to immediately convene and resolve the controversy before it. The respondent court announced
that the two arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator and ordered the parties to submit
their position papers on the issue as to whether or not respondent Yao's claim for damages may be litigated
upon in the summary proceeding for enforcement of arbitration agreement. In moving for reconsideration
of the said Order, petitioner argued that in Special Case No. 6024, the respondent court sits as a special
court exercising limited jurisdiction and is not competent to act on respondent Yao's claim for damages,
which poses an issue litigable in an ordinary civil action. However, respondent court was not persuaded
by petitioner's submission, hence, it denied the motion for reconsideration. While the appellate court has
agreed with petitioner that, under Section 6 of Republic Act No. 876, a court, acting within the limits of its
special jurisdiction, may in this case solely determine the issue of whether the litigants should proceed or
not to arbitration, it, however, considered petitioner in estoppel from questioning the competence of the
court to additionally hear and decide in the summary proceedings private respondent's claim for damages,
it (petitioner) having itself filed similarly its own counterclaim with the court a quo.
Respondent Yao was the owner of a commercial building, a portion of which is leased to herein
petitioner. However, during the renewal of the contract of lease, the two disagreed on the rental rate, and to
resolve the controversy, they submitted their disagreement to arbitration. Two arbitrators (Alamarez and
Sabile) has been appointed by the parties while the appointment of the third arbitrator (Tupang) was held
in abeyance because La Naval Drug instructed its arbitrator to defer the same until its Board of Directors
could convene and approved Tupang’s appointment. This was theorized by the respondent as dilatory
tactics, hence, he prayed that a summary hearing be conducted and direct the 2 arbitrators to proceed with
the arbitration in accordance with Contract of Lease and the applicable provisions of the Arbitration law, by
appointing and confirming the appointment of the Third Arbitrator; and that the Board of Three Arbitrators
be ordered to immediately convene and resolve the controversy before it. The respondent court announced
that the two arbitrators chose Mrs. Eloisa R. Narciso as the third arbitrator and ordered the parties to submit
their position papers on the issue as to whether or not respondent Yao's claim for damages may be litigated
upon in the summary proceeding for enforcement of arbitration agreement. In moving for reconsideration
of the said Order, petitioner argued that in Special Case No. 6024, the respondent court sits as a special
court exercising limited jurisdiction and is not competent to act on respondent Yao's claim for damages,
which poses an issue litigable in an ordinary civil action. However, respondent court was not persuaded
by petitioner's submission, hence, it denied the motion for reconsideration. While the appellate court has
agreed with petitioner that, under Section 6 of Republic Act No. 876, a court, acting within the limits of its
special jurisdiction, may in this case solely determine the issue of whether the litigants should proceed or
not to arbitration, it, however, considered petitioner in estoppel from questioning the competence of the
court to additionally hear and decide in the summary proceedings private respondent's claim for damages,
it (petitioner) having itself filed similarly its own counterclaim with the court a quo.
Issues:

Whether or not SEC, not the HLURB, has jurisdiction over the complaint based on the contracts entered into by the
former receiver.

Ruling:

Jurisdiction is the authority to hear and determine a cause the right to act in a case. It is conferred by law and not
by mere administrative policy of any court or tribunal. It is determined by the averments of the complaint and not
by the defense contained in the answer. 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.

Section 3 of P.D. No. 957 empowered the National Housing Authority (NHA) with the "exclusive jurisdiction to
regulate the real estate trade and business." 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. renamed the HSRC as the Housing and Land Use Regulatory Board (HLURB).

The Supreme Court ruled 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.