Case Digest (G.R. No. 151298)
Facts:
On November 24, 1997, Spouses Miniano and Leta dela Cruz (Petitioners) entered into a Contract to Sell with Spouses Archimedes and Marlyn Aguila (Respondents) for a house on a 171-sq.m. portion of a subdivision lot for P3.3 million, with a P1.5 million downpayment and installment terms; possession was delivered to Respondents. Petitioners filed a complaint for cancellation and damages on January 13, 1999; the parties executed a Compromise Agreement approved by the Regional Trial Court on July 12, 1999, but the Court of Appeals nullified that judgment on grounds invoking Rep. Act No. 6552 and P.D. No. 957, prompting this petition for review.
Issues:
- Does HLURB have exclusive jurisdiction over the dispute?
- Was the Compromise Agreement properly nullified by the Court of Appeals?
Ruling:
The Court reversed the Decision and Resolution of the Court of Appeals and reinstated the Decision and Order of the Regional Trial Court, holding that the HLURB lacked exclusive jurisdiction and that the Compromise Agreement was valid and binding and immediately executory. Costs were awarded against the Respondents.
Ratio:
Jurisdiction depends on the nature of the action as pleaded and not on the defendant's defenses; because the complaint sought judicial cancellation for nonpayment, it fell within the trial court's competence and not within the exclusive remedial scope of P.D. No. 1344 or P.D. No. 957, petitioner-sellers were not subdivision developers, and HLURB jurisdiction is not automatic. The Court also held that a judicial compromise is a contract with the force of law and res judicata unless it is a void contract under Article 1409 or vitiated by defect of consent; Rep. Act No. 6552 did not mandate the Court of Appeals' remedial treatment because Section 4, not Section 3, applied where less than two years of installments were paid, so the appellate court erred in treating the downpayment as thirty months of installments or in ordering a fifty percent refund.
Doctrine:
- P.D. No. 1344 and P.D. No. 957 confer jurisdiction based on the nature of the complaint, not merely on the parties' relationship.
- A court's jurisdiction is determined by the allegations in the complaint and cannot be divested by defenses raised by the defendant.
- A judicial Compromise Agreement is binding, has the force of law between the parties, and is immediately executory unless void under Article 1409 or vitiated by consent.
- Rep. Act No. 6552 Section 3 applies only where at least two years of installments have been paid; Section 4 governs when less than two years have been paid and prescribes the applicable grace and cancellation procedures.
- A seller may seek judicial rescission for buyer default without first executing a notarial rescission.