G.R. No. 131683 - Arranza vs. B.F. Homes, Inc.

Petitioners: Jesus Lim Arranza, Lorenzo Cinco, Quintin Tan, Jose Escobar, Elbert Friend, Classic Homes Village Association, Inc., BF Northwest Homeowners' Association, Inc., and United BF Homeowners' Associations, Inc. (UBFHAI).
Respondents: BF Homes, Inc. (BFHI) and the Honorable Court of Appeals.
BFHI is a domestic corporation engaged in subdivision development and sale of residential lots, including the BF Homes Parañaque Subdivision spanning portions of Parañaque, Las Piñas, and Muntinlupa.
Banco Filipino’s closure led BFHI to file a rehabilitation petition with the Securities and Exchange Commission (SEC), resulting in the appointment of receivers and a management committee.

SEC placed BFHI under a management committee (March 1985) and later appointed Atty. Florencio B. Orendain as Receiver (February 1988).
As Receiver, Orendain unified 65 homeowners’ associations into UBFHAI, incorporated with the Home Insurance and Guaranty Corporation (HIGC).
In 1989, BFHI, through Orendain, turned over management of security, clubhouse, and open spaces at Concha Cruz Drive to UBFHAI.
BFHI, via its managing company PWCC, entered into agreements with UBFHAI for water system improvements and community assessment fund collections.

In November 1994, Orendain was relieved, and a new Board of Receivers composed of BFHI Board members was appointed to oversee further rehabilitation phases.
The new Board revoked prior authority given to UBFHAI regarding open spaces and collection of funds, recognized BF Parañaque Homeowners’ Association, Inc. (BFPHAI) as representatives of homeowners, took over clubhouse management, and deployed security guards.

On July 5, 1995, petitioners filed a class suit with the Housing and Land Use Regulatory Board (HLURB) for enforcement of homeowners’ rights concerning basic subdivision services and facilities—rights of way, water supply, open spaces, roads, security, and management of interlocking corporations.
Allegations included inadequate and uncoordinated water systems, lack of security until 1988, insufficient and neglected open spaces, absence of zoning guidelines, and BFPHAI’s moribund status since 1980.
Prayer included cease-and-desist orders against BFHI and affiliated corporations from further selling lots or rescinding homeowner agreements, forfeiture of bonds or deposits, turnover of facilities to UBFHAI, sanctions for inadequate open spaces, reimbursement of advances and funds, restoration of 24-hour water supply, withdrawal of BFHI security guards, imposition of penalties for violations, and payment of attorney’s fees and costs.

BFHI claimed compliance with contractual obligations, asserted voidness of agreements made by Orendain as ultra vires, and relied on Section 6(c) of P.D. No. 902-A to suspend claims due to receivership.
HLURB Arbiter issued a 20-day Temporary Restraining Order (TRO) on petitioners’ urgent motion to avoid ineffectual judgments.
HLURB granted a preliminary injunction enjoining BFHI from administering Concha Garden Row, issuing stickers, interfering with UBFHAI’s improvements, managing security checkpoints, and required posting of a P100,000 bond.

BFHI filed for certiorari before the Court of Appeals (CA), alleging HLURB acted without jurisdiction and that the SEC had exclusive jurisdiction due to receivership.
On November 28, 1997, CA annulled HLURB’s injunction, holding that petitioners’ action was a “claim” subject to suspension under P.D. No. 902-A and should be filed with the Committee of Receivers.
Petitioners filed a petition for review on certiorari before the Supreme Court (June 1998). The Court issued a TRO enjoining respondent from acts violative of HLURB’s injunction.
The Supreme Court framed the primary issue: whether the HLURB or SEC has jurisdiction over petitioners’ claims, with a collateral issue whether HLURB proceedings should be suspended pending rehabilitation under SEC.

P.D. No. 957 (1976) created to protect subdivision buyers from unscrupulous developers, granting exclusive jurisdiction to the National Housing Authority (NHA) over real estate trade and business regulation.
P.D. No. 1344 (1978) expanded NHA’s powers, including jurisdiction over unsound real estate business practices, claims by subdivision lot buyers, and specific performance actions.
Executive Order No. 648 (1981) transferred NHA’s regulatory functions to the Human Settlements Regulatory Commission (HSRC).
Executive Order No. 90 (1986) renamed HSRC as the Housing and Land Use Regulatory Board (HLURB).
Jurisprudence consistently places jurisdiction over subdivision buyer-developer disputes with the NHA/HLURB, not regular courts.
P.D. No. 902-A establishes SEC’s jurisdiction over corporations, emphasizing protection of investors and creditors, including disputes involving corporate governance and intra-corporate relations.

Whether the SEC or the HLURB has jurisdiction over a complaint filed by subdivision homeowners against a developer under receivership seeking specific performance of obligations relating to basic services and subdivision facilities.

Assuming HLURB has jurisdiction, whether the HLURB proceedings should be suspended pending the outcome of rehabilitation and receivership before the SEC.