Case Summary (G.R. No. 164789)
Alleged Concealment of Title Defects
CGA faithfully paid until its administrative pastor discovered that the lot formed part of consolidated Lots 2-F and 2-G (Bsd-04-000829), originally awarded under Presidential Decree No. 27 and subsequently retained by the original owner under Republic Act No. 6657 by a DAR Order of October 2, 1997. That order was affirmed by the Office of the President, the Court of Appeals, and ultimately by the Supreme Court, confirming that the subject land remained under agrarian litigation and was not free of encumbrances.
RTC Action for Rescission
On April 30, 2002, CGA filed with the Regional Trial Court a complaint for rescission under Civil Code Article 1381, alleging fraudulent concealment of the litigation status and requesting (a) rescission of both Contracts to Sell, (b) refund of ₱2,515,899.20, and (c) actual, moral, exemplary damages, attorney’s fees, and litigation expenses.
Respondents’ Jurisdictional Objection
Rather than answering the complaint, the respondents moved to dismiss for lack of jurisdiction, invoking PD No. 957 and PD No. 1344 to argue that the Housing and Land Use Regulatory Board (HLURB) had exclusive jurisdiction over any dispute involving a subdivision lot sale. CGA countered that its action sought rescission and damages, not specific performance, and thus fell outside the HLURB’s exclusive remit.
Court of Appeals Decision
The RTC denied the motion to dismiss, but the Court of Appeals granted certiorari, held that the HLURB’s jurisdiction over subdivision-sale disputes embraced all claims by lot buyers against developers (including refund claims), and dismissed the RTC complaint for lack of jurisdiction.
Issue on Supreme Court Review
The Supreme Court was tasked with determining whether an action for rescission and refund of payments for a disputed subdivision lot falls under the exclusive jurisdiction of the HLURB or remains cognizable by the regular courts.
Statutory Framework of HLURB Jurisdiction
Presidential Decree No. 957 (1976) conferred upon the National Housing Authority (now HLURB) exclusive authority to regulate the subdivision and condominium trade. PD No. 1344 (1978) expanded this grant to include exclusive jurisdiction over unsound real estate practices, refund claims by lot buyers, and specific performance actions. Subsequent executive orders transferred these powers from NHA to HSRC and finally to the HLURB.
Jurisdictional Scope and Exceptions
The Supreme Court’s precedents clarify that HLURB jurisdiction is strictly limited to cases brought by subdivision or condominium buyers against developers for unsound practices, refunds, or specific performance. Complaints filed by developers against buyers, or disputes not clearly grounded in those categories, remain within the jurisdiction of the regular courts.
Application to the Present Case
CGA’s principal demand is a refun
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Facts
- On April 30, 1998, Christian General Assembly, Inc. (CGA) entered into a Contract to Sell with Spouses Avelino C. Ignacio and Priscilla T. Ignacio for Lot 1, Block 4 of Villa Priscilla Subdivision in Barangay Cutcut, Pulilan, Bulacan, covering 791 square meters.
- The original consideration was ₱2,373,000.00, payable by a down payment of ₱1,186,500.00 and equal monthly amortizations of ₱46,593.85 (24% per annum interest) over three years, beginning June 1998.
- By mutual amendment on August 5, 2000, the parties extended the payment period to five years, increased the total price to ₱2,706,600.00, and set monthly installments at ₱37,615.00 (24% per annum interest) starting September 2000.
- CGA consistently paid all installments until discovering that the title was part of two PD 27 lots (Lots 2-F and 2-G Bsd-04-000829) previously awarded to tenant-beneficiaries under Operation Land Transfer, later retained by Purificacion S. Imperial under RA 6657.
- The DAR’s October 2, 1997 order granting Imperial retention was affirmed on appeal by the Office of the President and the Court of Appeals, and finally by this Court in G.R. No. 165650 (January 19, 2005).
- Upon learning of the title defect and respondents’ alleged concealment, CGA formally demanded rescission and restitution of ₱2,515,899.20 on April 5, 2002, which respondents refused.
Procedural History
- April 30, 2002: CGA filed a complaint for rescission and damages (actual, moral, exemplary), attorney’s fees, and litigation expenses before RTC, Branch 14, Malolos, Bulacan.
- Respondents moved to dismiss for lack of jurisdiction, invoking PD No. 957 and PD No. 1344 to vest exclusive jurisdiction in the HLURB.
- October 15, 2002: RTC denied the motion, ruling rescission and damages claims due to fraud were outside HLURB’s jurisdiction.
- Respondents filed a petition for certiorari in the Court of Appeals.
- October 20, 2003: CA set aside the RTC order, holding the HLURB had exclusive jurisdiction over any subdivision-lot sale dispute.