G.R. No. 246127 - De Leon vs. Asombrado-Llacuna

Case Summary (G.R. No. 246127)

Petitioner

Atty. Roberto F. De Leon was sued in his capacity as former President of PSB and is the petitioner before the Supreme Court seeking reversal of the Court of Appeals decision that set aside an HLURB Board decision dismissing Lourdes’s complaint.

Respondent

Lourdes S. Asombrado-Llacuna purchased the subject lot from Prosecor, lived on the property since acquisition, and alleges non-delivery of the Torrens title despite full payment and an executed Deed of Absolute Sale.

Key Dates

Material events include: purchase from Prosecor (July 5, 1983); Deed of Absolute Sale (May 27, 1986); Assignment of Mortgage executed by PSB to J.M. Tuason & Co., Inc. (May 11, 1993); PSB dissolution (June 30, 1996); Lourdes’s discovery of an annotation regarding the Assignment on TCT No. 186004 and receipt of a certified copy (February 2012); demand letters to Atty. De Leon (September 13 & 20, 2012); HLURB complaint filed (September 21, 2012); HLURB Arbiter decision (March 1, 2016); HLURB Board denial of review (June 16, 2016); Court of Appeals decision setting aside HLURB and remanding (October 15, 2018); CA denial of reconsideration (March 12, 2019); petition for review to the Supreme Court (May 14, 2019); Supreme Court decision reinstating HLURB Board dismissal (March 2, 2022).

Applicable Law and Authorities

Governing constitutional framework: 1987 Philippine Constitution (decision rendered after 1990). Statutory and regulatory provisions specifically invoked in the proceedings include PD No. 957, Section 25 (obligation of owner/developer to deliver title), Civil Code Article 1144 (prescription for actions upon written contracts — ten years), HLURB procedural rules and resolutions (e.g., HLURB Resolution No. 851, series of 2009, and HLURB Resolution No. 980, series of 2019, Section 8), and Republic Act No. 11232 (corporate existence and juridical personality). Controlling jurisprudence cited by the Court includes Department of Finance v. Dela Cruz, Jr. (exhaustion of administrative remedies and its exceptions), Collao, Jr. v. Albania (non-joinder of indispensable parties is curable), and Heirs of Fe Tan Uy v. International Exchange Bank (corporate juridical personality and limited personal liability of officers).

Facts — Sale, Non-delivery of Title, Assignment of Mortgage

Prosecor developed Provident Village and sold the subject lot to Lourdes (Deed of Absolute Sale dated May 27, 1986). Despite full payment and the deed, Prosecor failed to deliver the Torrens title, which remained registered to Lopez (TCT No. 186004). Prosecor was later dissolved. PSB, represented by Atty. De Leon, executed an Assignment of Mortgage over the subject property in favor of J.M. Tuason & Co., Inc. on May 11, 1993. Lourdes discovered, upon obtaining a certified copy of TCT No. 186004 in 2012, an annotation regarding that Assignment of Mortgage and thereafter sent demand letters to Atty. De Leon requesting delivery of the title, to which he did not respond.

HLURB Proceedings and Reliefs Sought

Lourdes filed an HLURB complaint (September 21, 2012) against Atty. De Leon and PSB praying primarily for the delivery of TCT No. 186004 in her name and for damages and attorney’s fees. Atty. De Leon answered, asserting lack of HLURB jurisdiction (complaint not against the developer), failure to state a cause of action (PSB and he were not the real parties in interest), and prescription and laches (cause of action alleged to arise from the 1986 Deed of Absolute Sale).

HLURB Arbiter and Board Decisions

The HLURB Arbiter dismissed Lourdes’s complaint, reasoning the complaint was not filed against an indispensable party (Prosecor, the seller/developer) and there was no proof that PSB succeeded to Prosecor’s obligations. Lourdes’s verified petition for review to the HLURB Board of Commissioners was denied (June 16, 2016), thereby affirming dismissal.

Court of Appeals Resolution

Lourdes appealed to the Court of Appeals. The CA set aside the HLURB Board decision and remanded the case to HLURB’s Expanded National Capital Region Field Office for the inclusion of Prosecor as an indispensable party and for further proceedings. The CA treated the failure to implead an indispensable party as a curable defect and applied an exception to exhaustion of administrative remedies, holding that the issue was essentially one of law that courts could decide.

Issues Presented to the Supreme Court

Atty. De Leon’s petition to the Supreme Court raised primarily: (a) that the CA disregarded the doctrine of exhaustion of administrative remedies (citing HLURB Resolution No. 851, s. 2009, which channels Board decisions to the Office of the President); (b) that the CA erred in setting aside the HLURB Board decision dismissing the complaint for failure to implead an indispensable party; (c) that there was no privity or successor-in-interest relationship between Prosecor and PSB; (d) that prescription and laches barred Lourdes’s claim; and (e) that Atty. De Leon cannot be personally liable for corporate obligations.

Supreme Court Analysis — Exhaustion of Remedies and Non-joinder

The Court agreed with the CA that the doctrine of exhaustion of administrative remedies admits exceptions, including where the issue is purely legal and will ultimately be decided by the courts. Citing Department of Finance v. Dela Cruz, Jr., the Court found Lourdes’s challenge to the HLURB’s dismissal for failure to implead an indispensable party raised a purely legal question, justifying judicial review despite non-exhaustion. The Court also acknowledged jurisprudence (Collao, Jr. v. Albania) that non-joinder of indispensable parties is not a ground for outright dismissal but is ordinarily curable by impleading the party.

Supreme Court Analysis — Futility of Joinder Given Prosecor’s Dissolution

Although the Court agreed with the legal principles applied by the CA, it found error in the CA’s remedy of remand for inclusion of Prosecor. The Court emphasized that Prosecor had been dissolved and thus lost juridical personality; under HLURB procedural rules (Section 8 of HLURB Resolution No. 980, s. 2019) and RA No. 11232, only natural or juridical persons may be parties. Because Prosecor no longer exists as a juridical per

Case Syllabus (G.R. No. 246127)

Procedural Posture

Petition for Review on Certiorari dated May 14, 2019 filed by Atty. Roberto F. De Leon seeking reversal of: (a) Court of Appeals Decision dated October 15, 2018 and (b) Court of Appeals Resolution dated March 12, 2019, in CA-G.R. SP No. 149981, which set aside the HLURB Board of Commissioners Decision dated June 16, 2016.
The case originated from a complaint filed by Lourdes S. Asombrado-Llacuna against Atty. De Leon and Provident Savings Bank (PSB) before the Housing and Land Use Regulatory Board (HLURB).
The Supreme Court rendered its Decision on March 02, 2022 (G.R. No. 246127), penned by Justice Gaerlan, granting the petition in part and reinstating the HLURB Board of Commissioners' June 16, 2016 decision insofar as it dismissed Lourdes' complaint.

Factual Background — Property and Transactions

The subject property is Lot 39, Block 4, No. 62 St. Mary, Provident Village, Marikina City, originally reflected in Transfer Certificate of Title (TCT) No. 186004 in the name of Eusebio L. Lopez, Jr.
Provident Securities Corporation (Prosecor) developed Provident Village.
On July 5, 1983, Lourdes purchased the subject property from Prosecor.
A Deed of Absolute Sale dated May 27, 1986 was executed by Prosecor, represented by Romulo M. Dimayuga, and Manolo B. Llacuna (Lourdes' husband), in favor of Lourdes.
Lourdes and her family have continuously lived on the subject property from acquisition until the present.
Despite full payment and the Deed of Absolute Sale, Prosecor failed to deliver the Torrens title to Lourdes; the TCT remained in the name of Lopez.
Prosecor was eventually dissolved.

Assignment of Mortgage, Bank Involvement and Corporate Changes

On May 11, 1993, an Assignment of Mortgage over the subject property (still under Lopez’s name) was executed by Provident Savings Bank (PSB), represented by Atty. Roberto F. De Leon as President, assigning PSB's rights under a real estate mortgage to J.M. Tuason & Co., Inc.
Atty. De Leon resigned as President of PSB in the mid-1990s.
PSB was dissolved on June 30, 1996.

Discovery, Demand Letters, and Lourdes’ Immediate Actions

In February 2012, Lourdes obtained a certified true copy of TCT No. 186004 from the Registry of Deeds of Marikina City and discovered an annotation regarding the Assignment of Mortgage between PSB and J.M. Tuason & Co., Inc.
Lourdes did not annotate an adverse claim on TCT No. 186004 despite asserting ownership by virtue of the 1986 Deed of Absolute Sale.
Lourdes engaged counsel, who on September 13 and September 20, 2012 sent demand letters to Atty. De Leon demanding delivery of TCT No. 186004 within five days and warning of legal action including a complaint before HLURB.
Atty. De Leon did not respond to the demand letters.

HLURB Complaint: Claims and Reliefs Sought

On September 21, 2012, Lourdes filed a Complaint before HLURB against Atty. De Leon and PSB seeking:
- Delivery of TCT No. 186004 in favor of Lourdes;
- Moral damages in the amount of P500,000.00;
- Attorneys’ fees of P200,000.00; and
- Costs of suit.
HLURB issued summons; Atty. De Leon was served and filed an Answer on October 30, 2012.

Defenses Raised by Atty. De Leon at HLURB

Atty. De Leon moved for dismissal on grounds of: (1) lack of jurisdiction over the subject matter because the complaint was filed against a bank rather than the developer; (2) failure to state a cause of action because Prosecor, not PSB or Atty. De Leon, is the real party-in-interest; and (3) prescription and laches given the long delay (complaint instituted more than 26 years after the 1986 Deed of Absolute Sale).
He argued no privity between Lourdes and PSB and that Lourdes did not present evidence that PSB is Prosecor’s successor-in-interest.

Evidence and Allegations of Lourdes’ Side at HLURB

Lourdes submitted position papers and judicial affidavits, including that of her husband Manolo alleging he worked as Prosecor’s Chief Accountant (1966–1987) and that "Prosecor and PSB share the same Chairman and President" (Manolo’s judicial affidavit).
Lourdes’ counsel emphasized full payment and the Deed of Absolute Sale in support of her claim to the title.

HLURB Arbiter Decision (March 1, 2016) and Grounds

HLURB Arbiter Lorina Rigor dismissed Lourdes’ complaint on two principal grounds: (1) failure to implead Prosecor, the seller/developer, as an indispensable party; and (2) failure to prove that PSB, a banking institution, is the successor-in-interest of Prosecor.
The dismissal rested on the absence of the actual party obligated to deliver the title (Prosecor).

Verified Petition for Review to HLURB Board of Commissioners and Decision (June 16, 2016)

Lourdes filed a Verified Petition for Review before the HLURB Board of Commissioners alleging, among other points, that PSB is Prosecor's successor-in-interest and reiterating alleged inside information from her husband.
The HLURB Board of Commissioners denied Lourdes’ verified petition for review on June 16, 2016, effectively affirming the Arbiter’s dismissal. The dispositive language: "WHEREFORE, the complainant's appeal is denied. SO ORDERED."

Petition for Review to the Court of Appeals (CA)

Lourdes filed a petition for review under Rule 43 before the CA raising:
I. Whether the HLURB Board of Commissioners erred in denying the appeal and affirming the Arbiter’s decision;
II. Whether the HLURB Arbiter committed error in dismissing the complaint for failure to implead an indispensable party; and
III. Whether respondents can be held liable for delivery of title and damages.
Atty. De Leon argued before the CA: (1) failure to exhaust administrative remedies (HLURB Resolution No. 851, series of 2009) required dismissal; (2) the HLURB did not err in dismissing for failure to implead an indispensable party; and (3) Lourdes filed a baseless complaint entitling Atty. De Leon to damages.

Court of Appeals Decision (October 15, 2018) — Dispositive Ruling and Reasoning

The CA set aside the HLURB Board of Commissioners’ decision and remanded the case to the HLURB Expanded National Capital Region Field Office for the inclusion of Provident Securities Corporation (Prosecor) as an indispensable party-defendant and for "the conduct of appropriate further proceedings."
The CA reasoned that failure to implead an indispensable party is a curable error and n