Realty Exchange Venture Corporation and/or Magdiwang Realty Corporation vs. Sendino

The HLURB has quasi-judicial jurisdiction over specific performance actions filed by subdivision lot buyers against owners or developers, may decide cases through divisions, and must apply Republic Act No. 6552’s requirement that cancellation of a reservation agreement be effected by notarial act.

Private respondent Lucina S. Sendino contracted with Realty Exchange Venture, Inc. (REVI) for the purchase of a 120-square meter lot in Raymondville Subdivision, Sucat, Parañaque, while Magdiwang Realty Corporation (MRC) appeared as the registered owner of the subject lot. The regulatory backdrop involved Executive Order No. 85, which abolished the Ministry of Human Settlements but did not abolish the Human Settlements Regulatory Commission; Executive Order No. 648, which transferred the National Housing Authority’s regulatory functions, including adjudication of specific performance cases, to the HSRC; and Executive Order No. 90, which renamed the HSRC as the Housing and Land Use Regulatory Board (HLURB). Presidential Decree No. 957 and Republic Act No. 6552 supplied the statutory rules on subdivision lot sales and cancellation of installment contracts.

Private respondent Lucina C. Sendino entered into a reservation agreement with Realty Exchange Venture, Inc. (REVI) for a 120-square meter lot in Raymondville Subdivision in Sucat, Parañaque, with a purchase price of P307,800.00. On January 15, 1989, she paid P1,000.00 as partial reservation fee and completed payment of this fee on January 20, 1989 by paying P4,000.00. On July 18, 1989, she paid REVI P16,600.00 as full downpayment on the purchase price.

REVI advised her to change her co-maker. She agreed and asked for a one-month extension to do so. For alleged non-compliance with the requirement of submission of the appropriate documents under the terms of the original agreement, REVI, through its Vice-President for Marketing, informed her of the cancellation of the contract on July 31, 1989.

On April 20, 1990, private respondent filed a complaint for specific performance against REVI with the Office of Appeals, Adjudication and Legal Affairs (OAALA) of the Housing and Land Use Regulatory Board (HLURB). She asked that REVI be ordered to comply and continue with the sale of the house and lot, Block 4, Lot 17, Raymondville Subdivision, Sucat Road, Parañaque, Metro Manila; to pay actual, nominal and moral damages; P10,000.00 attorney’s fees; and P10,000.00 exemplary damages. The complaint was amended on August 17, 1990 to implead Magdiwang Realty Corporation (MRC), which appeared to be the registered owner of the subject lot under TCT No. 76023.

The administrative proceedings thereafter resolved the complaint in private respondent’s favor, and the case eventually reached the Supreme Court after the Office of the President dismissed petitioners’ appeal. The dispute centered on the validity of REVI’s unilateral cancellation of the reservation agreement and on the authority of the HLURB to adjudicate the buyer’s complaint.

• HLURB Jurisdiction: Petitioners argued that the public respondent committed serious error in declaring that the HLURB has quasi-judicial functions notwithstanding the absence of an express grant by Executive Order No. 90.
• Board En Banc and Delegation: Petitioners maintained that even if the HLURB has quasi-judicial functions, the Board of Commissioners must sit in a decision to render judgment and cannot delegate its quasi-judicial authority to a subordinate office.
• Nature of the Lot: Petitioners argued that the public respondent gravely abused its discretion in declaring that the lot subject of the contract sought to be enforced is paraphernal despite admission of its conjugal nature.
• Cancellation under RA 6552: Petitioners argued that the public respondent gravely abused its discretion in declaring that only notarial notice of rescission may validly cancel a reservation agreement pursuant to Republic Act No. 6552.
• Capacity and Non-Joinder: Petitioners questioned private respondent’s capacity to bring her complaint before the HLURB-OAALA, citing the non-joinder of her husband in the original complaint.

• Jurisdiction of Regular Courts: Private respondent relied on Sections 1 and 8 of the Judiciary Reorganization Act of 1980, but the Court found this reliance untenable because Section 19, paragraph 6 of the same law recognizes the exclusive jurisdiction of bodies exercising judicial or quasi-judicial functions.
• Resort to Courts under P.D. 957: Private respondent claimed that resort to the courts was justified under Section 41 of Presidential Decree No. 957, specifically under the phrase “legal remedies that may be available to aggrieved subdivision lot buyers.”
• Applicability of RA 6552: The Solicitor General, for public respondent, pointed out that Republic Act No. 6552 makes no distinction between “option” and “sale,” and that under Presidential Decree No. 957 “sale” includes an option of sale or purchase, a solicitation of sale, or an offer to sell, thereby covering reservation agreements.
• Validity of Cancellation: The cancellation was invalid for failure to comply with Republic Act No. 6552’s notarial act requirement.

• HLURB Quasi-Judicial Functions: Whether the HLURB has quasi-judicial functions notwithstanding the absence of an express grant in Executive Order No. 90.
• Board En Banc and Delegation: Whether the Board of Commissioners is allowed to sit in a decision to render judgment and to delegate its quasi-judicial authority to a subordinate office.
• Cancellation under RA 6552: Whether the public respondent gravely abused its discretion in declaring that only notarial notice of rescission may validly cancel a reservation agreement pursuant to Republic Act No. 6552.
• Capacity and Non-Joinder: Whether private respondent had capacity to bring her complaint before the HLURB-OAALA despite the non-joinder of her husband.

• HLURB Quasi-Judicial Functions: Yes. The HLURB has quasi-judicial functions; Executive Order No. 85 did not abolish the HSRC, Executive Order No. 90 renamed it, and Executive Order No. 648 transferred the NHA’s regulatory functions, including specific performance cases, to it.
• Board En Banc and Delegation: Yes. The Board may constitute divisions of three and delegate adjudicatory functions; Executive Order No. 648 authorizes it to adopt rules of procedure, and no law withholds that power.
• Cancellation under RA 6552: No. The public respondent did not gravely abuse its discretion; Republic Act No. 6552 applies to reservation agreements, and cancellation must be by notarial act.
• Capacity and Non-Joinder: Yes. The complaint could proceed; procedural rules are liberally construed in administrative bodies, and petitioners were estopped from raising the non-joinder after participating without objection.

• HLURB Quasi-Judicial Functions: Executive Order No. 85 abolished the Ministry of Human Settlements but did not abolish the Human Settlements Regulatory Commission, which continued to exercise its powers and functions. Section 3 of Executive Order No. 85 mandated that the final disposition and organizational alignment of entities attached to the MHS be subject to subsequent enactments by the President. Pursuant to this, Executive Order No. 90 recognized the HSRC, renamed the HLURB, as one of the principal housing agencies. Executive Order No. 648 had earlier transferred all functions of the National Housing Authority under Presidential Decrees Nos. 957, 1216, and 1344 to the HSRC, consolidating regulatory functions relating to land use and housing development. The HLURB would have been reduced to a functionally sterile entity if it lacked the powers exercised by its predecessor, including the power to settle disputes concerning land use and housing development and acquisition. In United Housing Corporation vs. Hon. Dayrit, the Court ruled that jurisdiction over actions for specific performance of contractual and statutory obligations filed by buyers of subdivision lots or condominium units against the owner or developer is vested exclusively in the HSRC. Section 1 of Presidential Decree No. 1344 provides exclusive jurisdiction over unsound real estate business practices, claims involving refund, and cases involving specific performance. Section 8 of Executive Order No. 648 transferred these regulatory functions to the HSRC. The constitutionality of such grant of exclusive jurisdiction was upheld in Tropical Homes Inc. vs. National Housing Authority and Antipolo Realty Corporation vs. National Housing Authority. The HLURB must interpret and apply contracts, determine the rights of the parties, and award damages whenever appropriate. The absence of any provision in Executive Order No. 90 repealing those quasi-judicial powers inherited by the HSRC from the National Housing Authority militates against petitioners’ position. Thus, the HLURB properly exercised jurisdiction over the case filed by private respondent with its adjudicative body, the OAALA.

• Board En Banc and Delegation: Section 5 of Executive Order No. 648 defines the powers and duties of the Commission and mandates the Board to adopt rules of procedure for the conduct of its business and to perform functions necessary for the effective accomplishment of its functions. Nothing in Executive Order No. 90 or Executive Order No. 648 denies or withholds the power or authority to delegate adjudicatory functions to a division. The power conferred upon an administrative agency to issue rules and regulations necessary to carry out its functions is an adequate source of authority to delegate a particular function, unless by express provision of the Act or by implication it has been withheld. The practical necessity of establishing a procedure whereby cases are decided by three Commissioners assumes greater significance because the HLURB has only four full-time commissioners and five part-time commissioners to deal with all its functions. The part-time commissioners act merely in an ex-officio capacity, and requiring a majority of the Board to sit en banc on each and every case would result in an administrative nightmare.

• Cancellation under RA 6552: Section 24 of Presidential Decree No. 957 provides that the rights of the buyer in the event of failure to pay installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552. Republic Act No. 6552 makes no distinction between “option” and “sale” which, under Presidential Decree No. 957, also includes an exchange or attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell directly. This all-embracing definition virtually includes all transactions concerning land and housing acquisition, including reservation agreements. Since Republic Act No. 6552 mandates cancellation by notarial act, among other requirements, before any cancellation of a contract may be effected, petitioners’ precipitate cancellation of its contract with private respondent without observing the conditions imposed by the said law was invalid and improper.

• Capacity and Non-Joinder: Rules of procedure are as a matter of course construed liberally in proceedings before administrative bodies. The original suit for specific performance and damages was filed with the HLURB-OAALA, an administrative body not hamstrung by the strict procedural technicalities of the Rules of Court. It was appropriate for the HLURB-OAALA to act on the substantive questions relating to the validity of petitioners’ unilateral rescission of the contract without unduly concerning itself with the non-joinder of private respondent’s husband in the original complaint. Moreover, since petitioners participated in the administrative proceedings without objecting to or raising the procedural infirmity, they were estopped from raising it on appeal before the Office of the President and before the Supreme Court.

• Quasi-Judicial Jurisdiction of the HLURB — The HLURB, as successor to the HSRC and the NHA, has exclusive jurisdiction over actions for specific performance of contractual and statutory obligations filed by buyers of subdivision lots or condominium units against owners or developers. The Court applied this doctrine by holding that Executive Order No. 85 did not abolish the HSRC, Executive Order No. 90 merely renamed it as the HLURB, and Executive Order No. 648 transferred the NHA’s regulatory and adjudicatory functions to it. The HLURB may interpret and apply contracts, determine the rights of the parties, and award damages whenever appropriate.

• Delegation of Adjudicatory Functions to Divisions — An administrative agency with the power to adopt rules of procedure may delegate adjudicatory functions to divisions unless the enabling law expressly or impliedly withholds that power. The Court applied this doctrine by allowing the HLURB Board of Commissioners to constitute divisions of three to decide cases, noting that the Board has only four full-time and five part-time commissioners and that requiring the Board to sit en banc in every case would be impractical and an administrative nightmare.

• Applicability of Republic Act No. 6552 to Reservation Agreements — Republic Act No. 6552 governs the rights of buyers in installment sales of subdivision lots and condominium units, and it requires cancellation of the contract by notarial act. The term “sale” under Presidential Decree No. 957 includes every disposition or attempt to dispose for a valuable consideration, a contract of purchase and sale, an exchange or attempt to sell, a solicitation of a sale, or an offer to sell. The Court applied this doctrine by holding that the all-embracing definition includes reservation agreements, and that petitioners’ unilateral cancellation without notarial act was invalid and improper.

• Liberal Construction of Procedural Rules in Administrative Proceedings — Rules of procedure are liberally construed in proceedings before administrative bodies, which are not bound by the strict procedural technicalities of the Rules of Court. The Court applied this doctrine by treating the non-joinder of private respondent’s husband as a mere procedural slip that did not defeat the HLURB-OAALA’s jurisdiction, especially since petitioners participated without objection and were estopped from raising the defect on appeal.

• Exclusive Administrative Jurisdiction — A statute may vest exclusive original jurisdiction in an administrative agency over certain disputes and controversies falling within the agency’s special expertise. The Court applied this doctrine by upholding the grant of exclusive jurisdiction to the National Housing Authority, now the HLURB, over cases involving the sale of lots in commercial subdivisions, as sustained in Tropical Homes Inc. vs. National Housing Authority and Antipolo Realty Corporation vs. National Housing Authority.

• “As explicitly provided by law, jurisdiction over actions for specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner or developer, is vested exclusively in the HSRC…” — This passage states the core jurisdictional rule that the Court adopted in recognizing the HLURB as the successor agency with exclusive jurisdiction over specific performance cases filed by subdivision lot buyers.
• “The absence of any provision, express or implied, in E.O. 90, repealing those quasi-judicial powers inherited by the HSRC from the National Housing Authority, furthermore militates against petitioners’ position on the question.” — This passage rejects the argument that Executive Order No. 90 stripped the HLURB of quasi-judicial functions, and it anchors the Court’s holding that the HLURB retained the adjudicatory powers of its predecessor.
• “Since R.A. 6552 mandates cancellation by notarial act — among other requirements — before any cancellation of a contract may be effected, petitioners’ precipitate cancellation of its contract with private respondent without observing the conditions imposed by the said law was invalid and improper.” — This passage is the ratio decidendi on the invalidity of the unilateral cancellation and confirms that Republic Act No. 6552 applies to the reservation agreement.
• “It is settled that rules of procedure are as a matter of course construed liberally in proceedings before administrative bodies.” — This passage supports the Court’s ruling that the non-joinder of private respondent’s husband did not defeat the complaint before the HLURB-OAALA.

• United Housing Corporation vs. Hon. Dayrit, 181 SCRA 295 (1990) — Controlling precedent recognizing the HLURB as the successor agency of the HSRC’s powers and functions, including exclusive jurisdiction over actions for specific performance filed by subdivision lot or condominium unit buyers against owners or developers.
• Tropical Homes Inc. vs. National Housing Authority, 152 SCRA 540 (1987) — Upheld the constitutionality of the grant of exclusive jurisdiction to the National Housing Authority, now the HLURB, over cases involving the sale of lots in commercial subdivisions.
• Antipolo Realty Corporation vs. National Housing Authority, 153 SCRA 399 (1987) — Sustained the exclusive jurisdiction of the National Housing Authority, now the HLURB, and restated that the agency has the quantum of judicial or quasi-judicial powers defined by Presidential Decree No. 957.
• C.T. Torres Enterprises, Inc. vs. Hibionada, 191 SCRA 268 (1990) — Cited to support the HLURB’s competence to award damages as an incident to its regulatory and adjudicatory functions.
• Solid Homes, Inc. vs. Payawal, 177 SCRA 72 (1989) — Cited as tracing the HLURB’s competence to award damages to the exclusive power conferred by Presidential Decree No. 1344 to hear and decide claims involving refund and any other claims filed by subdivision lot or condominium unit buyers against project owners, developers, dealers, brokers, or salesmen.
• Police Commission vs. Lood, 127 SCRA 757 (1984) — Cited for the rule that rules of procedure are liberally construed in proceedings before administrative bodies.
• Fleming vs. Mohawk Wrecking and Lumber Co., 331 U.S. 111-124, cited in American Tobacco Co. vs. Director of Patents, 67 SCRA 287 (1975) — Cited for the principle that the power conferred upon an administrative agency to issue rules and regulations necessary to carry out its functions is an adequate source of authority to delegate a particular function, unless expressly or impliedly withheld.

• Executive Order No. 85, Section 3 — Provided that the final disposition and final organizational alignment or attachment of juridical entities, agencies, corporations, and councils attached to or under the administrative supervision of the Ministry of Human Settlements shall be subject to subsequent enactments by the President. The Court used this provision to hold that the abolition of the MHS did not abolish the HSRC.
• Executive Order No. 90 (1986) — Recognized the Human Settlements Regulatory Commission, renamed the HLURB, as one of the principal housing agencies of the government. The Court relied on this to confirm that the HLURB inherited the HSRC’s powers and functions.
• Executive Order No. 648, Section 8 — Transferred the regulatory functions of the National Housing Authority under Presidential Decree Nos. 957, 1216, 1344, and other related laws to the Human Settlements Regulatory Commission, including the power to hear and decide cases of unsound real estate business practices, claims involving refund, and cases of specific performance. The Court applied this provision to uphold the HLURB’s adjudicatory jurisdiction.
• Presidential Decree No. 1344, Section 1 — Vested exclusive jurisdiction in the National Housing Authority, now the HLURB, to hear and decide cases of unsound real estate business practices, claims involving refund and any other claims filed by subdivision lot or condominium unit buyers against project owners, developers, dealers, brokers, or salesmen, and cases involving specific performance of contractual and statutory obligations. The Court cited this provision as the statutory basis for the HLURB’s exclusive jurisdiction.
• Presidential Decree No. 957, Section 24 — Provides that the rights of the buyer in the event of failure to pay installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552. The Court applied this provision to hold that Republic Act No. 6552 governed the cancellation of the reservation agreement.
• Presidential Decree No. 957, Section 2(b) — Defines “sale” or “sell” to include every disposition or attempt to dispose for a valuable consideration of a subdivision lot and other improvements, a contract of purchase and sale, an exchange or attempt to sell, a solicitation of a sale, or an offer to sell directly or by an agent or by circular, letter, advertisement, or otherwise. The Court used this definition to include reservation agreements within the coverage of Republic Act No. 6552.
• Republic Act No. 6552, Section 3(b) — Makes no distinction between “option” and “sale” and mandates cancellation by notarial act, among other requirements. The Court applied this provision to invalidate petitioners’ unilateral cancellation of the reservation agreement.
• Judiciary Reorganization Act of 1980, Section 19, paragraph 6 — Provides that regional trial courts have jurisdiction in all other cases not within the exclusive jurisdiction of any court, tribunal, person, or body exercising judicial or quasi-judicial functions. The Court cited this provision to reject the argument that regular courts had jurisdiction over the dispute.
• Presidential Decree No. 957, Section 41 — Contains the phrase “legal remedies that may be available to aggrieved subdivision lot buyers.” The Court rejected private respondent’s reliance on this provision as a justification for resort to the courts.
• Executive Order No. 648, Section 5 — Mandates the Board to adopt rules of procedure for the conduct of its business and to perform functions necessary for the effective accomplishment of its functions. The Court relied on this provision to uphold the Board’s power to delegate adjudicatory functions to divisions.
• Executive Order No. 648, Section 5(J), Article IV, as amended by Executive Order No. 90 — Enumerates the composition of the HLURB Board of Commissioners, including the Chairman of the Housing and Urban Development Coordinating Council as ex-officio chairman, four full-time commissioners, and ex-officio commissioners from various departments. The Court cited this composition to support the practical necessity of deciding cases through divisions.
• HLURB Board Resolution No. R-538, Series of 1994, Section 1 — Enumerates the membership of the HLURB Board of Commissioners. The Court cited this resolution in connection with the Board’s composition and the practicality of delegating adjudicatory functions to divisions.

Cruz, Davide, Jr., Bellosillo, and Quiason, JJ., concur.