Cadimas vs. Carrion

The jurisdiction of the HLURB under Section 1 of P.D. No. 1344 is limited to cases involving subdivision lot or condominium unit buyers against project owners, developers, dealers, brokers, or salesmen, and does not extend to a complaint for accion reivindicatoria filed by an ordinary seller against a buyer for breach of a contract to sell, even if the subject property is located within a subdivision. Jurisdiction over the subject matter is determined by the material allegations of the complaint and the law in force at the time the action was commenced, and cannot be made to depend on the defenses set up in the answer or motion to dismiss.

Petitioner Marjorie B. Cadimas, acting through her attorney-in-fact Venancio Z. Rosales, was the owner of a townhouse located at Lot 4-F-1-12 No. 23 Aster Street, West Fairview Park Subdivision, Quezon City, covered by Transfer Certificate of Title No. N-251570. Respondent Marites Carrion offered to purchase the townhouse, and the parties executed a Contract To Sell dated 4 August 2003 for the sum of ₱330,000.00 payable in installments. Respondent Gemma Hugo was allegedly the transferee of Carrion's rights over the property through a special power of attorney. The dispute centered on whether the RTC or the HLURB had jurisdiction over the complaint filed by petitioner, an issue governed by the scope of P.D. No. 957 and P.D. No. 1344, which confer exclusive quasi-judicial jurisdiction on the HLURB over specific classes of real estate cases involving subdivision and condominium developers, sellers, and buyers.

Petitioner Marjorie B. Cadimas, through her attorney-in-fact Venancio Z. Rosales, owned a townhouse located at Lot 4-F-1-12 No. 23 Aster Street, West Fairview Park Subdivision, Quezon City, covered by Transfer Certificate of Title No. N-251570. On 4 August 2003, petitioner and respondent Marites Carrion executed a Contract To Sell over the townhouse for ₱330,000.00, payable in installments. Paragraph 8 of the contract expressly prohibited Carrion from selling, mortgaging, ceding, or transferring the rights conferred upon her without the written consent of petitioner.

According to the complaint, Carrion violated this provision when she transferred ownership of the property to respondent Gemma Hugo under the guise of a special power of attorney authorizing Hugo to manage and administer the property for and in behalf of Carrion. Petitioner sent Carrion a written demand to explain the alleged violation, but Carrion ignored the letter. Petitioner thereafter demanded in writing that Carrion and Hugo vacate the property and sought cancellation of the contract. When Carrion and Hugo refused to vacate and surrender possession, petitioner filed a complaint for accion reivindicatoria and damages, docketed as Civil Case No. Q-04-53581 and raffled to Branch 85 of the RTC of Quezon City.

On 28 October 2004, petitioner filed a motion to declare Carrion in default for failure to file a responsive pleading despite service of summons and a copy of the complaint. On 18 November 2004, respondent Hugo filed a motion to dismiss on her own behalf and on behalf of Carrion, citing lack of jurisdiction on the part of the RTC and estoppel or laches on the part of petitioner. Hugo argued that the HLURB had jurisdiction because the ultimate issue was whether petitioner, as owner and developer of the subdivision, was guilty of unsound real estate business practices. Hugo also contended that the RTC had not acquired jurisdiction over Carrion because of non-compliance with Section 16, Rule 14 on service of summons on a non-resident defendant. Attached to the motion, however, was a special power of attorney from Carrion authorizing Hugo to manage and administer the subject property and to prosecute and defend all suits to protect Carrion's rights and interests.

The RTC denied the motion to dismiss in an Omnibus Order dated 21 March 2005, holding that jurisdiction is determined by the allegations of the complaint and not by the defenses in the motion to dismiss. The RTC also found that summons was properly served and that Hugo had misled the court by failing to disclose at the outset that she was equipped with a special power of attorney. Accordingly, the RTC declared Carrion in default, directed petitioner to present evidence ex-parte against her, and directed Hugo to file an answer. Hugo filed an answer on 18 April 2005 with a compulsory counterclaim for damages, and the following day petitioner presented evidence ex-parte against Carrion. Hugo sought reconsideration, praying for dismissal of the complaint, lifting of the default order, and extraterritorial service of summons on Carrion. On 17 January 2007, the RTC issued an order upholding its jurisdiction, lifting the default order against Carrion in the interest of substantial justice, and setting the case for pre-trial.

Respondents elevated the matter to the Court of Appeals via a special civil action for certiorari, praying that the RTC orders be reversed and the complaint dismissed for lack of jurisdiction. The Court of Appeals, in its Decision dated 27 September 2007, granted the petition and ordered the dismissal of the complaint, reasoning that the property was part of a subdivision project and thus within HLURB jurisdiction. The appellate court denied petitioner's motion for reconsideration on 9 November 2007.

• Jurisdiction Based on Complaint Allegations: Petitioner argued that based on the allegations in the complaint and the reliefs sought, the RTC has jurisdiction over the case, as the complaint alleged a breach of contract to sell by an ordinary seller seeking cancellation of the contract and recovery of possession and ownership — causes of action within the RTC's competence.
• Submission to RTC Jurisdiction: Petitioner maintained that in any case, respondents expressly submitted to or recognized the RTC's jurisdiction by filing an answer with a compulsory counterclaim, which constitutes an express recognition of the RTC's jurisdiction over the complaint.
• Wrong Remedy: Petitioner argued that respondents erroneously availed of a Rule 65 petition for certiorari instead of filing a timely appeal from the order denying their motion to dismiss.

• HLURB Jurisdiction: Respondents argued that the HLURB has jurisdiction over the complaint because 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, making the HLURB the proper forum.
• Subdivision Lot Character: Respondents contended that the property was part of a subdivision project, as indicated by a provision in the contract to sell mandating membership of the buyer in a housing corporation, thus vesting jurisdiction in the HLURB.
• Improper Service of Summons: Respondents averred that the RTC had not acquired jurisdiction over the person of respondent Carrion for failure to comply with Section 16, Rule 14 of the Rules of Court on proper service of summons on a non-resident defendant.
• Estoppel or Laches: Respondents pleaded estoppel and/or laches as a bar to petitioner's claims.

• Jurisdiction: Whether the RTC or the HLURB has jurisdiction over the complaint for accion reivindicatoria and damages filed by an ordinary seller against a buyer for breach of a contract to sell a townhouse located within a subdivision.
• Effect of Defenses on Jurisdiction: Whether the allegations in respondents' motion to dismiss regarding unsound real estate business practices can oust the RTC of jurisdiction over the action.
• Submission to Jurisdiction: Whether respondents' filing of an answer with a compulsory counterclaim constituted submission to the RTC's jurisdiction.

• Jurisdiction: Yes. The RTC has jurisdiction over the complaint. The nature of the action and the jurisdiction of the tribunal are determined by the material allegations of the complaint and the law at the time the action was commenced. The complaint alleged an ordinary sale by an ordinary seller seeking redress for breach of contract, which does not fall under any of the classes of cases enumerated in Section 1 of P.D. No. 1344.
• Effect of Defenses on Jurisdiction: No. The defenses set up in the motion to dismiss cannot serve to oust the RTC of jurisdiction. Jurisdiction over the subject matter is determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to recover, and cannot be made to depend upon the defenses in the answer or motion to dismiss.
• Submission to Jurisdiction: Yes, in any case. The compulsory counterclaim pleaded in respondents' answer was an express recognition of the RTC's jurisdiction over the complaint, though the Court's ruling rested primarily on the nature of the action as pleaded in the complaint.

• Jurisdiction: 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. Section 1 of P.D. No. 1344 confers exclusive jurisdiction on the HLURB over three classes of cases: (a) unsound real estate business practices; (b) claims involving refund and other claims filed by subdivision lot or condominium unit buyers against project owners, developers, dealers, brokers, or salesmen; and (c) cases involving specific performance of contractual and statutory obligations filed by buyers against owners, developers, dealers, brokers, or salesmen. The scope of this authority, as indicated in the preambular paragraphs of the statute, is directed at regulating the conduct of subdivision owners, developers, operators, and sellers who renege on their obligations to provide basic subdivision requirements and who engage in fraudulent practices against lot buyers. Nothing in the complaint or the contract to sell suggests that petitioner is a subdivision lot developer, owner, broker, or salesman, or that the nature of the controversy calls for the application of P.D. No. 957 or P.D. No. 1344. The complaint does not allege that petitioner is a subdivision lot buyer; rather, petitioner is an ordinary seller seeking redress for the alleged violation of the terms of the contract to sell. Paragraphs (b) and (c) of Section 1 concern cases commenced by subdivision lot or condominium unit buyers against developers and sellers, not vice versa. The complaint is thus well within the jurisdiction of the RTC.

• Effect of Defenses on Jurisdiction: It is an elementary rule of procedural law that jurisdiction over the subject matter is determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to recover upon all or some of the claims asserted. As a necessary consequence, jurisdiction cannot be made to depend upon the defenses set up in the answer or the motion to dismiss, for otherwise the question of jurisdiction would almost entirely depend upon the defendant. The averments in the complaint and the character of the relief sought are the matters to be consulted. Thus, the allegations in respondents' motion to dismiss regarding unsound real estate business practices, even if proved true, cannot serve to oust the RTC of jurisdiction over actions for breach of contract and damages conferred upon it by law. The Court of Appeals erred in relying on the fact that the property was located within a subdivision; not every controversy involving a subdivision or condominium unit falls under the competence of the HLURB, and the mere allegation of a relationship between the parties as subdivision owner/developer and subdivision lot buyer does not automatically vest jurisdiction in the HLURB. The decisive element is the nature of the action as enumerated in Section 1 of P.D. No. 1344.

• Submission to Jurisdiction: The compulsory counterclaim pleaded in respondents' answer constituted an express recognition of the RTC's jurisdiction over the complaint for accion reivindicatoria. However, the Court's ruling did not rest on this ground alone, as jurisdiction over the subject matter is conferred by law and not by consent or waiver. The primary basis for the ruling was that the complaint, on its face, alleged a cause of action within the RTC's jurisdiction.

• Determination of Jurisdiction by Allegations of the Complaint — Jurisdiction over the subject matter or nature of an action is determined by the material allegations of the complaint and the law in force at the time the action was commenced. It cannot be made to depend upon the defenses set up in the answer or the motion to dismiss, for otherwise the question of jurisdiction would almost entirely depend upon the defendant. The averments in the complaint and the character of the relief sought are the matters to be consulted. The Court applied this doctrine to hold that respondents' allegations of unsound real estate business practices in their motion to dismiss could not oust the RTC of jurisdiction, as the complaint on its face alleged a breach of contract action by an ordinary seller.

• Scope of HLURB Jurisdiction Under P.D. No. 1344 — The HLURB's exclusive quasi-judicial jurisdiction under Section 1 of P.D. No. 1344 is limited to three classes of cases: (a) unsound real estate business practices; (b) claims involving refund and other claims filed by subdivision lot or condominium unit buyers against project owners, developers, dealers, brokers, or salesmen; and (c) cases involving specific performance of contractual and statutory obligations filed by buyers against owners, developers, dealers, brokers, or salesmen. The jurisdictional grant must be read in light of the statute's preambular paragraphs, which indicate that the law was enacted to protect subdivision lot and condominium unit buyers from the pernicious and fraudulent practices of subdivision owners, developers, and sellers. For an action to fall within the HLURB's exclusive jurisdiction, the decisive element is the nature of the action as enumerated in Section 1. The mere fact that the subject property is located within a subdivision, or that the parties stand in a developer-buyer relationship, does not automatically vest jurisdiction in the HLURB.

• Jurisdiction Conferred Only by Law — Jurisdiction 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. While the Court noted that respondents' filing of an answer with a compulsory counterclaim constituted an express recognition of the RTC's jurisdiction, the primary basis for the ruling remained the statutory conferment of jurisdiction as determined by the complaint's allegations.

• "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." — This passage states the foundational principle governing jurisdictional determination, serving as the ratio decidendi for the Court's holding that the RTC, not the HLURB, had jurisdiction.

• "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 necessary consequence, the jurisdiction of 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." — This passage articulates the canonical formulation of the rule that jurisdiction cannot be ousted by defenses raised by the defendant, directly refuting the Court of Appeals' reliance on respondents' characterization of the dispute.

• "Not every controversy involving a subdivision or condominium unit falls under the competence of the HLURB 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." — This passage defines the controlling test for HLURB jurisdiction, distinguishing it from the Court of Appeals' erroneous reliance on the subdivision character of the property.

• Javellana vs. Hon. Presiding Judge, RTC, Branch 30, Manila, G.R. No. 139067, 23 November 2004, 443 SCRA 497 — Followed. The Court affirmed RTC jurisdiction over a complaint for accion publiciana and sum of money where 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. The case established that 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 in the HLURB.

• Lacson Hermanas, Inc. vs. Heirs of Cenon Ignacio, G.R. No. 165973, 29 June 2005, 462 SCRA 290 — Followed. Cited for the proposition that 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.

• Antipolo Realty Corp. vs. National Housing Authority, No. L-50444, 31 August 1987, 153 SCRA 399 — Distinguished. Respondents cited this case to argue that the HLURB has jurisdiction over controversies involving the determination of rights under a contract to sell a subdivision lot. The Court distinguished it because the issue in Antipolo Realty called for the determination of whether the developer complied with its obligations to complete specified improvements — a case clearly falling under Section 1, paragraph (c) of P.D. No. 1344 — unlike the instant case, which involved a breach of contract by a buyer.

• Suntay vs. Gocolay, G.R. No. 144892, 23 September 2005, 470 SCRA 627 — Distinguished. The Court of Appeals relied on a statement in Suntay that P.D. No. 957 encompasses all questions regarding subdivisions and condominiums. The Court held this statement to be mere obiter dictum, noting that the Court in Suntay actually nullified HLURB orders for lack of jurisdiction because the action was brought against a condominium buyer and not against the developer, seller, or broker contemplated under P.D. No. 1344.

• Spouses Dela Cruz vs. Court of Appeals, G.R. No. 151298, 17 November 2004, 442 SCRA 492 — Followed. The Court upheld RTC jurisdiction over a complaint for cancellation of a contract to sell a subdivision house and lot because the case did not fall under any of the cases mentioned in Section 1, P.D. No. 1344.

• Roxas vs. Court of Appeals, 439 Phil. 966 (2002) — Followed. Cited for the proposition that the HLURB's jurisdiction under paragraph (a) of Section 1 concerns unsound real estate practices, where the logical complainants would be buyers and customers against sellers, not vice versa.

• Serdoncillo vs. Spouses Benolirao, 358 Phil. 83 (1998) — Followed. Cited for the rule that jurisdiction is determined by the allegations of the complaint and cannot be made to depend on the defenses in the answer or motion to dismiss.

• Arranza vs. B.F. Homes, Inc., 389 Phil. 318 (2000) — Cited for the historical background tracing the creation and transfer of HLURB regulatory functions from the NHA through the HSRC to the HLURB.

• Francel Realty Corporation vs. Sycip, G.R. No. 154684, 8 September 2005, 469 SCRA 424 — Cited as an instance where HLURB jurisdiction was upheld because the developer's claim would have been properly pleaded as a counterclaim in the HLURB case filed by the buyer, to avoid splitting causes of action.

• Section 1, Presidential Decree No. 1344 — Enumerates the exclusive jurisdiction of the NHA (now HLURB) over three classes of cases: (a) unsound real estate business practices; (b) claims involving refund and other claims filed by subdivision lot or condominium unit buyers against project owners, developers, dealers, brokers, or salesmen; and (c) cases involving specific performance of contractual and statutory obligations filed by buyers against owners, developers, dealers, brokers, or salesmen. The Court interpreted this provision in light of the statute's preambular paragraphs to conclude that the HLURB's jurisdiction is limited to cases involving subdivision developers and lot buyers in their specific statutory capacities, and does not extend to a complaint filed by an ordinary seller against a buyer for breach of contract.

• Presidential Decree No. 957 (The Subdivision and Condominium Buyers' Protective Decree) — The foundational statute empowering the NHA with exclusive jurisdiction to regulate the real estate trade and business, supplemented by P.D. No. 1344. The Court held that neither P.D. No. 957 nor P.D. No. 1344 applied to the instant controversy because the complaint did not allege that petitioner was a subdivision developer, owner, broker, or salesman, or that the nature of the controversy required the application of these statutes.

• Rule 45, 1997 Rules of Civil Procedure — Governs the petition for review on certiorari by which petitioner elevated the case to the Supreme Court from the Court of Appeals' decision and resolution.

• Section 16, Rule 14, Rules of Court — Governs service of summons on non-resident defendants. Respondents invoked this provision to argue that the RTC had not acquired jurisdiction over respondent Carrion, but the RTC found that summons was properly served and that respondent Hugo had misled the court by failing to disclose her special power of attorney at the outset.

Justice Leonardo A. Quisumbing (Chairperson), Justice Conchita Carpio Morales, Justice Presbitero J. Velasco, Jr., and Justice Arturo D. Brion concurred in the decision. No separate concurring opinions were written.