Title
De Leon vs. Asombrado-Llacuna
Case
G.R. No. 246127
Decision Date
Mar 2, 2022
Lourdes purchased property from Prosecor but never received the title. She sued PSB and Atty. De Leon, but the Supreme Court dismissed her complaint, citing lack of evidence linking PSB to Prosecor and futility of including dissolved Prosecor as a party.
property dispute
dismissal of complaint
delivery of title

Case Summary (G.R. No. 246127)

Ownership, Sale, and Non-Delivery of Title

The subject property was originally owned by Lopez and was developed under the subdivision project Provident Village, which was developed by Prosecor. 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 by Lourdes’s husband, Manolo B. Llacuna, in his capacity as Lourdes’s husband. Lourdes and her family allegedly lived in the property continuously from the time she acquired it from Prosecor.

Despite full payment and the execution of the Deed of Absolute Sale, Prosecor did not deliver the title to Lourdes. Thus, TCT No. 186004 remained under the name of Lopez. Prosecor was later dissolved.

In May 11, 1993, Provident Savings Bank (PSB), represented by Atty. De Leon as its President, executed an Assignment of Mortgage involving the subject property. Under the assignment, PSB, as assignor, transferred its rights and interests over the real estate mortgage covering the subject property (still under Lopez’s name) to J.M. Tuason & Co., Inc. Afterward, Atty. De Leon resigned as PSB President, and PSB was later dissolved on June 30, 1996.

Lourdes discovered the annotation of the mortgage assignment in February 2012 when she obtained a certified true copy of TCT No. 186004 from the Registry of Deeds of Marikina City. She did not immediately file an adverse claim. Instead, she engaged counsel and issued demands in September 2012 for Atty. De Leon to deliver the title within five days.

Lourdes’s Demands and Filing Before the HLURB

Lourdes’s counsel sent two demand letters dated September 13, 2012 and September 20, 2012, directing Atty. De Leon to deliver the Torrens title in favor of Lourdes, warning that legal action before the HLURB and other legal action would follow if the demand went unheeded. Atty. De Leon did not respond to the letters.

On September 21, 2012, Lourdes filed a complaint before the HLURB against Atty. De Leon and PSB. She sought delivery of TCT No. 186004 in her favor and demanded damages, including moral damages of P500,000.00, attorney’s fees of P200,000.00, and costs of suit.

Atty. De Leon’s Defense in the HLURB

Atty. De Leon received the HLURB summons on October 23, 2012 and filed his answer on October 30, 2012. He prayed for dismissal on three grounds: (1) lack of jurisdiction over the subject matter; (2) failure to state a cause of action; and (3) prescription and laches.

His jurisdictional argument was that the HLURB had no authority because the complaint was brought by a subdivision lot buyer not against the developer, but against a banking institution. He also argued that neither he nor PSB were the proper parties in interest. He maintained that Prosecor was the real party-in-interest because it was a separate and distinct entity from PSB.

On prescription and laches, he asserted that Lourdes’s cause of action was based on events dating back to the execution of the Deed of Absolute Sale in 1986, which he characterized as more than 26 years prior to the HLURB complaint.

HLURB Arbiter and Board of Commissioners: Dismissal for Non-joinder and Lack of Proof

After the parties submitted position papers, the HLURB Arbiter (Arbiter Lorina Rigor) rendered a decision on March 1, 2016 dismissing Lourdes’s complaint. The Arbiter gave two reasons: first, Lourdes did not file the complaint against an indispensable party, Prosecor, the seller/developer; second, Lourdes did not prove by evidence that PSB, as a banking institution, was the successor-in-interest of Prosecor.

Lourdes then filed a verified petition for review before the HLURB Board of Commissioners. She raised, among others, that PSB was the successor-in-interest of Prosecor. In support, she claimed her husband Manolo had worked for Prosecor and had alleged “inside information” regarding the relationship of Prosecor and PSB with Mr. De Leon.

On June 16, 2016, the HLURB Board of Commissioners denied Lourdes’s petition for review and affirmed the dismissal.

Proceedings Before the Court of Appeals

Aggrieved, Lourdes filed a petition for review under Rule 43 before the CA, docketed as CA-G.R. SP No. 149981, raising issues on: alleged error in denying the appeal; alleged error in dismissing the complaint for failure to implead an indispensable party; and whether respondents could be held liable for delivery of title and damages.

Atty. De Leon opposed the petition, reiterating, in substance, that: (1) Lourdes failed to exhaust available administrative remedies; (2) the HLURB did not commit reversible error in holding that the indispensable party should have been impleaded; and (3) he was entitled to damages because of the baseless complaint.

On October 15, 2018, the CA set aside the HLURB Board of Commissioners’ decision and ordered remand to the HLURB Expanded National Capital Region Field Office for the inclusion of Prosecor as an indispensable party-defendant and for further proceedings. The CA reasoned that the failure to implead an indispensable party was a curable error and did not warrant dismissal.

Motion for Reconsideration and CA’s Ruling on Exhaustion of Administrative Remedies

Atty. De Leon moved for reconsideration, but the CA denied the motion on March 12, 2019. The CA held that the doctrine of exhaustion of administrative remedies admits exceptions. It concluded that the case fell within an exception because the issue—whether the HLURB’s dismissal anchored on failure to implead an indispensable party was correct—was purely legal.

Issues Raised in the Petition to the Supreme Court

On May 14, 2019, Atty. De Leon filed a petition for review on certiorari before the Supreme Court. He framed two primary issues: first, that the CA decided contrary to law and jurisprudence by disregarding the doctrine of exhaustion of administrative remedies in HLURB cases; and second, that the CA erred in setting aside the HLURB rulings dismissing the complaint for failure to implead an indispensable party.

He argued that HLURB Resolution No. 851, series of 2009 requires appeals from decisions rendered by the HLURB Board of Commissioners to be made to the Office of the President and that failure to comply renders judicial recourse premature. He further argued that under Section 25 of Presidential Decree No. 957, the duty to issue and deliver the title upon full payment falls upon the owner or developer, which he identified as Prosecor, not PSB.

He maintained that Lourdes had not shown that PSB was the successor-in-interest of Prosecor, and that there was no privity of contract between Lourdes and PSB; hence, neither PSB nor he as former PSB President could be held liable. He added that although non-joinder of an indispensable party is generally not a ground for dismissal, Lourdes allegedly intentionally omitted to implead Prosecor despite opportunity.

He also invoked prescription and laches. He argued that because Lourdes’s claim depended on a written contract dated 1986, the applicable prescriptive period under Article 1144 of the Civil Code was ten years, so the claim was time-barred and barred by laches.

Lourdes countered that exhaustion of administrative remedies was inapplicable because the issue raised was purely a question of law and there was no plain, speedy, and adequate remedy. She also asserted that the CA did not err in setting aside the HLURB dismissal because failure to implead indispensable parties is not a ground for dismissal. As to prescription and laches, she noted that Atty. De Leon did not raise the matter before the CA. She also argued that she only discovered the mortgage assignment in 2012 and did not sleep on her rights.

The Supreme Court’s Ruling on Exhaustion of Administrative Remedies

The Supreme Court granted the petition partly meritorious. The Court agreed with the CA that the doctrine of exhaustion of administrative remedies admits exceptions. Citing Department of Finance v. Dela Cruz, Jr., it reiterated that while the doctrine promotes specialized administrative competence and reduces delay and expense, it is not absolute. Among its exceptions are situations where the question involved is purely legal and will ultimately have to be decided by the courts of justice, and where there is no other plain, speedy, and adequate remedy.

Applying these principles, the Court held that the main issue Lourdes raised before the CA was purely legal: whether the HLURB’s dismissal based on failure to implead an indispensable party was correct. Hence, the Court found that the CA did not err in refusing to dismiss Lourdes’s Rule 43 petition for failure to observe exhaustion, because the non-observance fell within a recognized exception.

Non-Joinder of Indispensable Parties: General Rule and Its Limits

The Supreme Court likewise agreed with the CA on a general proposition: the non-joinder of indispensable parties is not an automatic ground for dismissal; rather, the remedy is to implead the indispensable party. The Court cited Collao, Jr. v. Albania, explaining that parties may be impleaded at any stage, and dismissal generally occurs only if the plaintiff refuses to comply with a lawful order to join an indispensable party.

However, the Court found that despite these correct observations, the CA erred in ordering a remand rather than affirming the dismissal. The Court gave three principal reasons tied to the circumstances of the case.

Futility of Remand: Prosecor’s Dissolution and Lack of Evidence of PSB’s Successorship

First, it was admitted that Prosecor had already been dissolved. The Court reasoned that ordering its inclusion as an indispensable party would be futile. It relied on Section 8 of HLURB Resolution No. 980, series of 2019, which stated that only natural or juridical persons may be parties before the HLURB. Since dissolution extinguished Prosecor’s juridical personality, Prosecor could no longer be impleaded, and no relief could b

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