G.R. No. 211301 - Park Developers, Inc. vs. Daclan

Case Summary (G.R. No. 211301)

Factual Background

On September 24, 2003, Elizabeth D. Daclan purchased from Park Developers Incorporated an "Application for Continual Use" for a family estate memorial lot at Sanctuary Memorial Park, Barangay Timalan, Naic, Cavite, for a total contract price of P708,000 payable in thirty-six monthly installments. By the time she instituted suit, respondent had paid P457,760.74. Sometime in 2005 respondent discovered, through an HLURB certification, that Park Developers Incorporated had not been issued a certificate of registration or license to sell for the project and that the advertised improvements did not exist as represented. In consequence, respondent filed an action for annulment of contract with damages against Park Developers Incorporated and its corporate officers.

Trial Court Proceedings

On March 31, 2011, Branch 67, RTC, Pasig City rendered judgment annulling the "Application for Continual Use" and ordered petitioners, jointly and solidarily, to return to respondent all payments in the amount of P457,760.74, plus legal interest computed from the time petitioners failed to return the amount despite demand. The RTC also awarded moral damages in the amount of P50,000, exemplary damages in the amount of P50,000, and attorney's fees in the amount of P100,000, and denied respondent's compulsory counterclaim. Petitioners filed a notice of appeal pursuant to Section 2(a), Rule 41, Rules of Court and the RTC gave due course to the appeal by order dated July 11, 2011.

Court of Appeals Ruling

The Court of Appeals dismissed petitioners' appeal by Decision dated August 12, 2013 and entered a Resolution dated February 10, 2014 denying their Motion for Reconsideration. The CA concluded that petitioners had raised only a pure question of law — the trial court's jurisdiction — and that, under Section 2, Rule 50, Rules of Court, an appeal under Rule 41 to the CA that raises only questions of law must be dismissed because such issues are exclusively reviewable by the Supreme Court under Rule 45.

Issues Presented to the Supreme Court

Petitioners contended that the CA erred in dismissing their appeal and asked the Supreme Court to decide the novel issue whether the HLURB rather than the RTC had primary jurisdiction over actions to annul contracts for the purchase or continual use of memorial lots. Petitioners asserted that the RTC's March 31, 2011 decision was void for lack of jurisdiction and that the proper forum for respondent's complaint was the HLURB.

Petitioners’ Contentions in the Court Below and Before the Supreme Court

Petitioners framed a single assignment of error: that the lower court lacked jurisdiction. They consistently maintained that jurisdiction over the subject matter rested primarily with the HLURB and that because jurisdiction was vested in the administrative agency the RTC judgment was void. Petitioners did not challenge the RTC’s findings of fact or the merits of the annulment, restitution, and damages awarded.

The Supreme Court’s Threshold Ruling on Procedural Posture

The Court agreed that petitioners presented a pure question of law and that the CA correctly dismissed the appeal under Section 2, Rule 50, Rules of Court because questions purely of law are reviewable by the Supreme Court under Rule 45. The Court nevertheless exercised judicial prerogative to relax procedural rules and resolve the substantive controversy on the merits so as to do substantial justice, citing precedents that permit such liberal construction when equity and prompt disposition require it.

The Doctrine of Primary Jurisdiction and Administrative Competence

The Court discussed the doctrine of primary jurisdiction, explaining that when a dispute requires the specialized competence and expertise of an administrative agency a litigant should first seek relief before that agency even if the courts have original cognizance. The doctrine applies where enforcement of a claim requires resolution of issues placed within the special competence of the administrative body, and a court may suspend proceedings or dismiss without prejudice to allow the agency to decide the matter.

Statutory and Regulatory Framework Governing HLURB Jurisdiction

The Court examined the statutory and regulatory evolution of the HLURB's adjudicatory competence. It noted that Article IV, Section 5(c) of Executive Order No. 648 empowered the HLURB to issue rules enforcing land use policies, and that HLURB Resolution No. 681-00 prescribed registration and licensing procedures for memorial parks. The Court described the 2011 Rules (HLURB Resolution No. 871-11) and the 2017 Revised Rules of Proceedings Before Regional Arbiters (HLURB Resolution No. 963-17), emphasizing that the 2017 Rules expressly included memorial parks among developments over which regional arbiters exercise exclusive and original jurisdiction under Section 6.1, Rule 2. The Court also recounted that Republic Act No. 9904 and the later Republic Act No. 11201 widened and reorganized the institutional framework, reconstituting the HLURB into the Human Settlements Adjudication Commission (HSAC) and defining "real estate projects" to include memorial parks under the IRR of RA 11201. Sections 33 and 34 of the IRR set out the exclusive appellate jurisdiction of the Commission and the original and exclusive jurisdiction of the Regional Adjudicators, respectively.

Temporal Limitation of Administrative Jurisdiction and Its Effect on the Present Case

Despite the expansion and clarification of administrative jurisdiction in the 2017 Rules and RA 11201, the Court observed that those rules and statutes were not in force at the time respondent filed her complaint in late 2005 or early 2006. The Court therefore examined Presidential Decree No. 1344, which at the time limited the HLURB's exclusive jurisdiction to specific categories such as subdivision lots and condominium units, and noted the precedent in Delos Santos v. Spouses Sarmiento that the HLURB's jurisdiction is limited to causes of action enumerated under Section 1 of PD 1344 and that jurisdictional facts must be pleaded. Given that the statutory and regulatory expansion postdated the filing of the case, the Court concluded that the RTC, as a court of general jurisdiction, properly exercised jurisdiction over respondent's complaint.

Merits: Annulment of Consent, Restitution and Damages

On the merits the Court found no reason to disturb the RTC's factual findings because petitioners did not attack them on appeal. The RTC had annulled the Application for Continua

Case Syllabus (G.R. No. 211301)

Parties and Procedural Posture

Park Developers Incorporated, Reynaldo Jesus B. Pasco, Sr., Rolando Golla, Nenita B. Pasco, Julito Caparas, Teresa Caparas, and Constancio Bernardo were the petitioners before the Court of Appeals and the Supreme Court.
Elizabeth D. Daclan was the respondent and original plaintiff in the action for annulment of contract with damages filed in the Regional Trial Court.
The trial court rendered judgment on March 31, 2011 in Civil Case No. 70647, annulling the agreement and awarding restitution, damages, and attorney's fees in favor of Elizabeth D. Daclan.
Petitioners filed an appeal to the Court of Appeals under Section 2(a), Rule 41 of the Rules of Court, which was dismissed by the Court of Appeals for raising only questions of law.
Petitioners filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court before the Supreme Court challenging the Court of Appeals' dismissal.

Key Factual Allegations

On September 24, 2003, Elizabeth D. Daclan executed an instrument denominated "Application for Continual Use" to purchase a family estate memorial lot at Sanctuary Memorial Park in Naic, Cavite.
The total contract price was PHP 708,000 and the purchase was payable in thirty-six monthly installments.
At the time of suit, Elizabeth D. Daclan had paid Park Developers Incorporated a total of PHP 457,760.74.
In 2005, Elizabeth D. Daclan learned from the Housing and Land Use Regulatory Board that no Certificate of Registration or License to Sell had been issued to Park Developers Incorporated for the project.
Elizabeth D. Daclan alleged that the developer's advertising representations and the absence of authority to sell vitiated her consent.

Trial Court Decision

The Regional Trial Court, Branch 67, Pasig City, declared on March 31, 2011 that the agreement denominated "Application for Continual Use" was annulled.
The RTC ordered petitioners, jointly and solidarily, to return PHP 457,760.74 to Elizabeth D. Daclan plus legal interest from demand.
The RTC also awarded moral damages of PHP 50,000, exemplary damages of PHP 50,000, and attorney's fees of PHP 100,000.
The RTC denied respondent's compulsory counterclaim for lack of merit.

Appeal and Court of Appeals Ruling

Petitioners took an appeal to the Court of Appeals and raised a single issue that the trial court lacked jurisdiction because the HLURB had primary jurisdiction.
The Court of Appeals dismissed the appeal on August 12, 2013 pursuant to Section 2, Rule 50 of the Rules of Court because the appeal raised only questions of law.
The Court of Appeals denied petitioners' motion for reconsideration by resolution dated February 10, 2014.

Issues Presented to the Supreme Court

The dispositive issue presented was whether the HLURB and not the Regional Trial Court had primary jurisdiction over actions to annul contracts for the purchase or continual use of memorial lots when the developer allegedly lacked a certificate of registration and license to sell and the memorial park lacked improvements.
Petitioners maintained that the RTC judgment was void for lack of jurisdiction and that this jurisdictional question was the sole ground of appeal.

Legal and Regulatory Framework

Section 2, Rule 41 and Rule 45 of the Rules of Court govern the modes of appeal from the Regional Trial Court and prescribe that pure questions of law must be taken to the Supreme Court by petition for review on certiorari.
Section 2, Rule 50 of the Rules of Court provides for dismissal of appeals to the Court of Appeals that raise only questions