Case Summary (G.R. No. 131683)
Background and Development of Receivership
BFHI was placed under rehabilitation by the Securities and Exchange Commission (SEC) following the closure of Banco Filipino, which held substantial investments in BFHI. Starting on March 18, 1985, the SEC appointed a management committee to oversee BFHI, followed by the appointment of a Receiver, Atty. Florencio B. Orendain, on February 2, 1988. Orendain implemented a central security system and unified various homeowners' associations into an umbrella organization, the United BF Homeowners’ Associations, Inc. (UBFHAI). In 1989, control and administration of certain subdivision facilities were turned over to UBFHAI. A new Board of Receivers was appointed by the SEC on November 7, 1994, and it subsequently revoked the authority previously granted by Orendain.
Petitioners’ Complaint and Reliefs Sought
On July 5, 1995, the petitioners filed a class suit with the Housing and Land Use Regulatory Board (HLURB), representing thousands of homeowners, against BFHI and related entities. They alleged deficiencies in subdivision infrastructure, including water supply, drainage, roads, security, open spaces, and the absence of zoning guidelines leading to unregulated constructions. They asserted failure by BFHI to fulfill contractual and statutory obligations as a developer, notably the provision and maintenance of essential facilities.
The petitioners sought multiple reliefs, including a cease-and-desist order barring BFHI from selling properties until compliance, forfeiture of bonds, turnover of roads and open spaces free from liens and encumbrances, penalties for insufficient open spaces, reimbursement of community funds advanced, restoration of continuous water supply services, removal of BFHI security guards, imposition of penalties against affiliated corporations, and payment of attorney's fees and costs.
Respondent’s Position and Preliminary Proceedings
Respondent BFHI asserted compliance with contractual obligations and argued that agreements made by the previous Receiver were ultra vires and thus void. It maintained the suit was barred by Section 6(c) of Presidential Decree (P.D.) No. 902-A, which mandates suspension of actions against corporations under receivership. The HLURB initially issued a temporary restraining order and subsequently a preliminary injunction in favor of the petitioners, which the Court of Appeals invalidated, ruling that the petitioners’ complaint constituted a “claim” under P.D. No. 902-A and was subject to suspension.
Jurisdictional Issue Defined by Supreme Court
The Supreme Court framed the central issue as whether the SEC or the HLURB has jurisdiction over the petitioners’ claims, with a subsidiary question on whether HLURB proceedings should be suspended pending the SEC receivership proceedings.
Jurisdiction under P.D. Nos. 957 and 902-A: Distinct Mandates
The Court analyzed P.D. No. 957, which grants the HLURB exclusive jurisdiction to regulate real estate trade and business, including cases of specific performance, unsound practices, and claims by lot buyers against developers. This jurisdiction originated with the National Housing Authority, later transferred to the Human Settlements Regulatory Commission, then succeeded by the HLURB.
Conversely, P.D. No. 902-A grants the SEC original and exclusive jurisdiction over corporate matters specific to fraud, intra-corporate disputes, and election or appointments within corporations under its supervision.
The Court emphasized that while both laws regulate corporations, their scopes differ: the SEC oversees corporate operations broadly; the HLURB regulates subdivision development and buyers’ rights.
Jurisdiction over Developer-Homeowner Disputes Lies with HLURB
The present dispute centers on enforcement of specific performance regarding subdivision infrastructure and related rights of homeowners, qualifying as unsound real estate business practice under P.D. No. 957. The Court held that HLURB possesses the requisite expertise and jurisdiction to address such complaints. Petitioners, as lot buyers and homeowners, do not possess the status (e.g., stockholders) to trigger SEC jurisdiction under its charter.
Effect of Receivership on HLURB Jurisdiction
The Court explained that receivership does not extinguish the corporation's legal existence or its ongoing obligations. A receiver acts in a fiduciary capacity to preserve assets and manage the corporation impartially. Accordingly, the receivership status of BFHI does not suspend its fundamental statutory or contractual duties as a subdivision developer.
The Court interpreted Section 6(c) of P.D. No. 902-A—which suspends actions against corporations under receivership—as referring solely to pecuniary claims or monetary demands, not to actions for specific performance or enforcement of obligations that are not primarily monetary in nature.
Clarification of the Term “Claim” Under P.D. No. 902-A
Relying on prior jurisprudence, the Court clarified that “claim” in the context of P.D. No. 902-A signifies demands for money or pecuniary liabilities. The petitioners’ case seeks enforcement of subdivision development obligations and is only incidentally related to money, thus falling outside the suspension provision.
Delineation of Jurisdiction Between HLURB and SEC
The SEC’s jurisdiction applies mainly to matters involving internal corporate affairs, fraud affecting shareholders or investors, and intra-corporate disputes. Since petitioners are third-party lot buyers, their complaint, concerning subdivision development obligations and homeowner rights under P.D. No. 957, is outside this ambit.
HLURB’s jurisdiction pertains specifically to real estate trade and contractual compliance in the context of subdivisions and condominiums, making it the proper venue for these disputes.
Interaction Between Receiver’s Authority and HLURB Jurisdiction
While the Board of Receivers has authority to revoke previous agreements made by a former receiver in the interest of corporate rehabilitation, this power is subject to consideration of pertinent laws and welfare of the public, including homeowners' interests. The HLURB serves as the proper forum to evaluate such agreements from the perspective of homeowners' rights and community interests.
Furthermore, any monetary awards arising from HLURB decisions should be referred to the Board of Receivers and, if necessary, to the SEC for disposition, ensuring a harmonious operation between both agencies without prejudicing rehabilitation efforts.
Supreme Court Ruling and Final Directives
The Supreme Court reversed the Court of Appeals' ruling, holding that the HLURB has jurisdiction to continue hearing the complai
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Case Syllabus (G.R. No. 131683)
Factual Background and Parties Involved
- Respondent BF Homes, Inc. (BFHI) is a domestic corporation engaged in subdivision development and residential lot sales, including BF Homes Parañaque subdivision, which spans parts of Parañaque, Las Piñas, and Muntinlupa cities.
- Banco Filipino’s closure led to BFHI’s petition to the Securities and Exchange Commission (SEC) for rehabilitation and declaration of suspension of payments.
- SEC appointed a management committee in 1985 and later a receiver, Atty. Florencio B. Orendain, in 1988, approving a Revised Rehabilitation Plan.
- Orendain created a unified homeowners association umbrella called United BF Homeowners’ Associations, Inc. (UBFHAI), incorporated with Home Insurance and Guaranty Corporation (HIGC).
- In 1989, control of security, clubhouse, and open spaces in the subdivision was turned over to UBFHAI.
- Agreements with Philippine Waterworks and Construction Corporation (PWCC) related to waterworks management and community fund collections were made during this period.
- In 1994, the SEC appointed a new Board of Receivers, revoking prior authorities given by Orendain, taking over various subdivision management aspects, and recognizing BF Parañaque Homeowners’ Association, Inc. (BFPHAI) as the homeowners’ representative.
Petitioners’ Complaints and Claims before HLURB
- Petitioners, representing over 7,000 homeowners, filed a class suit with the Housing and Land Use Regulatory Board (HLURB) in 1995 to enforce basic homeowners’ rights.
- Issues raised included:
- Water supply deficiencies due to mostly nonproductive wells in the subdivision's interconnected water system.
- Only one drainage and sewer system serving the subdivision.
- Insufficient and neglected open spaces.
- Lack of security force prior to 1988.
- Insufficient zoning and unauthorized constructions in residential areas.
- Moribund status of previous homeowners’ association for failure to deliver basic services.
- Basic homeowner needs cited involved rights-of-way, water, open spaces, roads, perimeter wall repairs, security, and the role of interlocking corporations allegedly enabling the subdivision developer to compartmentalize obligations.
- Reliefs sought included:
- Cease-and-desist orders against respondent and related corporations from selling properties and rescinding valid contracts.
- Forfeiture of bonds or deposits.
- Turnover of subdivision facilities free from liens and taxes to UBFHAI.
- Imposition of penalties for insufficient open spaces.
- Reimbursement of advances by UBFHAI.
- Restoration and improvement of water supply.
- Continuation of community fund collections by PWCC.
- Withdrawal of respondent’s security guards and prohibition from unauthorized security control.
- Payment of attorney’s fees and costs.
Respondent’s Position and Defense
- BFHI contended:
- It had complied with contractual obligations.
- Agreements entered by the previous receiver (Orendain) were ultra vires and could not bind respondent.
- Petitioners’ suit was precluded by the suspension of actions against corporations under receivership as provided by Section 6(c) of Presidential Decree No. (P.D.) 902-A.
- Filed counterclaims and sought dismissal of the petitioners’ complaints.
Procedural History and Temporary Reliefs Granted
- Petitioners moved for a cease-and-desist and status quo order, leading the HLURB Arbiter to issue a 20-day temporary restraining order (TRO).
- HLURB subsequently granted a preliminary injunction enjoining respondent from taking control over subdivision common areas and security, conditioned on posting a P100,000 bond.
- Respondent sought to annul this injunction before the Court of Appeals (CA), arguing HLURB acted without jurisdiction due to the SEC’s exclusive jurisdiction over corporations under receivership.
- The CA annulled HLURB’s preliminary injunction and ruled that petitioners' action constituted a "claim" under P.D. 902-A and therefore should be suspended.
- The Supreme Court issued a TRO maintaining status quo pending resolution.
- Upon hearing, the Court framed the issue as jurisdictional: whether HLURB or