Administrative Law Case Digests: Introduction to Administrative Law

Administrative Law Case Digests Arellano University School of Law aiza ebina/2015

CHRISTIAN GENERAL ASSEMBLY, INC. vs IGNACIO 597 SCRA 266 Origin and Development of Administrative Law Growth and Utilization of Administrative Agencies FACTS: On April 30, 1998, CGA entered into a Contract to Sell a subdivision lot (subject property) with the respondents - the registered owners and developers of a housing subdivision known as Villa Priscilla Subdivision located in Barangay Cutcut, Pulilan, Bulacan. According to CGA, it religiously paid the monthly installments until its administrative pastor discovered that the title covering the subject property suffered from fatal flaws and defects. Understandably aggrieved after discovering these circumstances, CGA filed a complaint against the respondents before the RTC on April 30, 2002. CGA claimed that the respondents fraudulently concealed the fact that the subject property was part of a property under litigation; thus, the Contract to Sell was a rescissible contract under Article 1381 of the Civil Code. CGA asked the trial court to rescind the contract; order the respondents to return the amounts already paid; and award actual, moral and exemplary damages, attorney's fees and litigation expenses. Instead of filing an answer, the respondents filed a motion to dismiss asserting that the RTC had no jurisdiction over the case. Citing PD No. 957 and PD No. 1344, the respondents claimed that the case falls within the exclusive jurisdiction of the HLURB since it involved the sale of a subdivision lot. CGA opposed the motion to dismiss, claiming that the action is for rescission of contract, not specific performance, and is not among the actions within the exclusive jurisdiction of the HLURB, as specified by PD No. 957 and PD No. 1344. On October 15, 2002, the RTC issued an order denying the respondents' motion to dismiss. The RTC held that the action for rescission of contract and damages due to the respondents' fraudulent misrepresentation that they are the rightful owners of the subject property, free from all liens and encumbrances, is outside the HLURB's jurisdiction. The respondents countered by filing a petition for certiorari with the CA. In its October 20, 2003 decision, the CA found merit in the respondents' position and set the RTC order aside; the CA ruled that the HLURB had exclusive jurisdiction over the subject matter of the complaint since it involved a contract to sell a subdivision lot based on the provisions of PD No. 957 and PD No. 1344. Contending that the CA committed reversible error, the CGA now comes before the Court asking us to overturn the CA decision and resolution. ISSUE: Whether or not an action to rescind a contract to sell a subdivision lot that the buyer found to be under litigation falls under the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB). RULING: Yes. The nature of an action and the jurisdiction of a tribunal are determined by the material allegations of the complaint and the law governing at the time the action was commenced. The jurisdiction of the tribunal over the subject matter or nature of an action is conferred only by law, not by the parties' consent or by their waiver in favor of a court that would otherwise have no jurisdiction over the subject matter or the nature of an action. Thus, the determination of whether the CGA's cause of action falls under the jurisdiction of the HLURB necessitates a closer examination of the laws defining the HLURB's jurisdiction and authority. The surge in the real estate business in the country brought with it an increasing number of cases between subdivision owners/developers and lot buyers on the issue of the extent of the HLURB's exclusive jurisdiction. In the cases that reached us, we have consistently ruled that the HLURB has exclusive jurisdiction over complaints arising from contracts between the subdivision developer and the lot buyer or those aimed at compelling the subdivision developer to comply with its contractual and statutory obligations to make the subdivision a better place to live in. We view CGA's contention - that the CA erred in applying Article 1191 of the Civil Code as basis for the contract's rescission - to be a negligible point. Regardless of whether the rescission of contract is based on Article 1191 or 1381 of the Civil Code, the fact remains that what CGA principally wants is a refund of all payments it already made to the respondents. This intent, amply articulated in its complaint, places its action within the ambit of the HLURB's exclusive jurisdiction and outside the reach of the regular courts. Accordingly, CGA has to file its complaint before the HLURB, the body with the proper jurisdiction. RATIO: In general, the quantum of judicial or quasi-judicial powers which an administrative agency may exercise is defined in the enabling act of such agency. In other words, the extent to which an administrative entity may exercise such powers depends largely, if not wholly on the provisions of the

statute creating or empowering such agency. In the exercise of such powers, the agency concerned must commonly interpret and apply contracts and determine the rights of private parties under such contracts, One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely judicial function, exercisable only by our regular courts. --REALTY EXCHANGE VENTURE CORPORATION vs SENDINO 233 SCRA 665 Origin and Development of Administrative Law Growth and Utilization of Administrative Agencies FACTS: Private respondent Lucina C. Sendino entered into a reservation agreement with Realty Exchange Venture, Inc. (REVI) for a 120-square meter lot in Raymondville Subdivision in Sucat, Paranaque for P307,800.00 as its purchase price. She paid P1,000.00 as partial reservation fee on January 15, 1989 and completed payment of this fee on January 20, 1989 by paying P4,000.00. On July 18, 1989, private respondent paid REVI P16,600.00 as full downpayment on the purchase price. However, she was advised by REVI to change her co-maker, which she agreed, asking for an extension of one month to do so. For alleged non-compliance with the requirement of submission of the appropriate documents under the terms of the original agreement, REVI, through its Vice-President for Marketing, informed respondent of the cancellation of the contract on the 31st of July 1989. On April 20, 1990, private respondent filed a complaint for Specific Performance against REVI with the office of Appeals, Adjudication and Legal Affairs (OAALA) of the Housing and Land Use Regulatory Board (HLURB) asking that respondent be ordered to comply and continue with the sale of the house and lot, and to pay damages. On April 3, 1991 the HLURB, whose authority to hear and decide the complaint was challenged by REVI in its answer, rendered its judgment in favor of private respondent and ordered petitioners to continue with the sale of the house and lot and to pay private respondent damages and costs of the suit. An appeal from this decision was taken to the HLURB OAALA Arbiter, which affirmed the Board's decision. The decision of the OAALA Arbiter was appealed to the Office of the President, herein public respondent. On January 7, 1993, the public respondent rendered its decision dismissing the petitioners' appeal. Motion for reconsideration of the decision was denied by the public respondent on January 26, 1993. Consequently petitioners come before this Court, in this petition, which the Court resolves to treat as a petition for certiorari. ISSUE: Whether or not the public respondent committed serious error in declaring that the HLURB has quasi-judicial functions notwithstanding absence of express grant by E.O. No. 90 which created it RULING: No. It is settled that rules of procedure are as a matter of course construed liberally in proceedings before administrative bodies. In the instant case, the original suit for specific performance and damages was filed by the private respondent with the HLURB-OAALA, an administrative body not hamstrung by the strict procedural technicalities of the Rules of Court. Under the circumstances, it was certainly appropriate for the HLURB-OAALA to have acted on the substantive questions relating to the validity of petitioners' unilateral rescission of the contract without unduly concerning itself with a mere procedural slip, the non-joinder of private petitioner's husband in the original complaint before the HLURB. Moreover, since petitioners participated in the administrative proceedings without objecting to or raising the procedural infirmity, they were certainly estopped from raising it on appeal before the Office of the President and before this Court. Proceeding to the principal issues raised by the petitioner, while E.O. 85 dated 12 December 1986 abolished the Ministry of Human Settlements (MHS), it is patently clear from a reading of its provisions that the said executive order did not abolish the Human Settlements Regulatory Commission (HSRC) which continued to exercise its powers and functions even after the Ministry of Human Settlements ceased to exist. In spite of the Aquino Government's stated intention of eradicating what it considered the vestiges of the previous regime, it was not its intention to create a vacuum by abolishing those juridical entities, agencies, corporations, etc., attached to or supervised by the MHS, which performed vital administrative functions. Pursuant to this provision therefore, the President subsequently issued Executive Order No. 90, series of 1986, recognizing the Human Settlements Regulatory Commission (renamed the HLURB) as one of the principal housing agencies of the government. Prior to this, Executive Order No. 648 in 1981 transferred all the functions of the National Housing Authority (pursuant to Presidential Decrees Nos. 957, 1216 and 1344) to the Human Settlements Regulatory Commission (HSRC) consolidating all regulatory functions relating to land use and housing development in a single entity. Being the sole regulatory body for housing

and land development, the renamed body, the HLURB, 11would have been reduced to a functionally sterile entity if, as the petitioner contends, it lacked the powers exercised by its predecessor which included the power to settle disputes concerning land use and housing development and acquisition. As explicitly provided by law, jurisdiction over actions for specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner or developer, is vested exclusively in the HSRC. There is no question that a statute may vest exclusive original jurisdiction in an administrative agency over certain disputes and controversies falling within the agency's special expertise. The National Housing Authority (now HLURB) shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the terms of PD No. 957 which defines the quantum of judicial or quasi-judicial powers of said agency. Clearly, therefore, the HLURB properly exercised its jurisdiction over the case filed by the petitioners with its adjudicative body, the OAALA, in ordering petitioners to comply with their obligations arising from the Reservation Agreement. In general, the quantum of judicial or quasi-judicial powers which an administrative agency may exercise is defined in the agency's enabling act. The Court recognizes the HLURB as the successor agency of the HSRC's powers and functions, it therefore follows that the transfer of such functions from the NHA to the HRSC effected by Section 8 of E.O. 648, series of 1981, thereby resulted in the acquisition by the HLURB of adjudicatory powers which included the power to "hear and decide cases of unsound real estate business practices and cases of specific performance." Obviously, in the exercise of its powers and functions, the HLURB must interpret and apply contracts, determine the rights of the parties under these contracts, and award damages whenever appropriate. We fail to see how the HSRC - which possessed jurisdiction over the actions for specific performance for contractual and statutory obligations filed by buyers of subdivision lots against developers - had suddenly lots its adjudicatory powers by the mere fiat of a change in name through E.O. 90. In fine, the HLURB-OAALA acted within the scope of its authority in ordering petitioners to comply and continue with the sale of the house and lot subject of the contract between the original parties. It cannot be gainsaid that the quasi-judicial functions exercised by the body are necessary incidents to the proper exercise of its powers and functions under E.O. 90 and the laws enacted delineating the scope of authority of its Board of Commissioners. Denying the body those functions so necessary in carrying out its power to regulate housing and land use results in its effective emasculation as an important regulatory body in an area vital to the national economy. RATIO: One thrust of the multiplication of administrative agencies is that the interpretation of such contracts and agreements and the determination of private rights under these agreements is no longer a uniquely judicial function. The absence of any provision, express or implied, in E.O. 90, repealing those quasi-judicial powers inherited by the HSRC from the National Housing Authority, furthermore militates against petitioners' position on the question. --ANTIPOLO REALTY CORPORATION vs. NATIONAL HOUSING AUTHORITY 153 SCRA 399 Origin and Development of Administrative Law Growth and Utilization of Administrative Agencies FACTS: Jose Hernando acquired prospective and beneficial ownership over Lot. No. 15, Block IV of the Ponderosa Heights Subdivision in Antipolo, Rizal, from the petitioner Antipolo Realty Corporation under a Contract to Sell. On 28 August 1974, Hernando transferred his rights over the said lot to private respondent Virgilio Yuson, embodied in a Deed of Assignment and Substitution of Obligor. However, for failure of Antipolo Realty to develop the subdivision project in accordance with its undertaking under Clause 17 of the Contract to Sell (subdivision beautification), Mr. Yuson paid only the arrearages pertaining to the period up to, and including, the month of August 1972 and stopped all monthly installment payments falling due thereafter. On 14 October 1976, the president of Antipolo Realty sent a notice to private respondent Yuson advising that the required improvements in the subdivision had already been completed, and requesting resumption of payment of the monthly installments on Lot No. 15. For his part, Mr. Yuson replied that he would conform with the request as soon as he was able to verify the truth of the representation in the notice. In a second letter dated 27 November 1976, Antipolo Realty reiterated its request, citing the decision rendered by the National Housing Authority (NHA) on 25 October 1976 in Case No. 252 (entitled "Jose B. Viado Jr., complainant vs. Conrado S. Reyes, respondent") declaring Antipolo Realty to have "substantially complied with its commitment to the lot buyers pursuant to the Contract to Sell. A formal demand was made for full and immediate payment of the amount of P16,994.73, representing installments which, Antipolo Realty alleged, had accrued during the period while the improvements were being completed — i.e., between September 1972 and October 1976.

Yuson refused to pay the September 1972 - October 1976 monthly installments but agreed to pay the post October 1976 installments. Antipolo Realty responded by rescinding the Contract to Sell, and claiming the forfeiture of all installment payments previously made by Mr. Yuson. Yuson brought his dispute with Antipolo Realty before NHA. Antipolo Realty filed a motion to dismiss, which NHA denied. After hearing, the NHA rendered a decision on 9 March 1978 ordering the reinstatement of the Contract to Sell. A motion for reconsideration of Antipolo Realty was also denied. ISSUE: Whether or not in hearing the complaint of Yuson and in ordering the reinstatement of the Contract to Sell between the parties NHA assumed the performance of judicial or quasi-judicial functions which it was not authorized to perform RULING: No. It is by now commonplace learning that many administrative agencies exercise and perform adjudicatory powers and functions, though to a limited extent only. Limited delegation of judicial or quasijudicial authority to administrative agencies (e.g., the Securities and Exchange Commission and the National Labor Relations Commission) is well recognized in our jurisdiction, basically because the need for special competence and experience has been recognized as essential in the resolution of questions of complex or specialized character and because of a companion recognition that the dockets of our regular courts have remained crowded and clogged. The Court held that under the law creating NHA it is empowered to regulate the real estate trade and business involving specific performance of contractual and statutory obligations filed by buyers of subdivision lots or condominium units against the owner, developer, dealer, broker or salesman. The Court held that under the "sense-making and expeditious doctrine of primary jurisdiction, the courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an administrative tribunal where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered." RATIO: In general, the quantum of judicial or quasi-judicial powers which an administrative agency may exercise is defined in the enabling act of such agency. In other words, the extent to which an administrative entity may exercise such powers depends largely, if not wholly, on the provisions of the statute creating or empowering such agency. In the exercise of such powers, the agency concerned must commonly interpret and apply contracts and determine the rights of private parties under such contracts. One thrust of the multiplication of administrative agencies is that the interpretation of contracts and the determination of private rights thereunder is no longer a uniquely judicial function, exercisable only by our regular courts. --US vs DORR 2 Phil 332 Administration as an Organization Distinguished from Government FACTS: The defendants have been convicted upon a complaint charging them with the offense of writing, publishing, and circulating a scurrilous libel against the Government of the United States and the Insular Government of the Philippine Islands. The complaint is based upon section 8 of Act No. 292 of the Commission, which is as follows: "Every person who shall utter seditious words or speeches, write, publish, or circulate scurrilous libels against the Government of the United States or the Insular Government of the Philippine Islands, or which tend to disturb or obstruct any lawful officer in executing his office, or which tend to instigate others to cabal or meet together for unlawful purposes, or which suggest or incite rebellious conspiracies or riots, or which tend to stir up the people against the lawful authorities, or to disturb the peace of the community, the safety and order of the Government, or who shall knowingly conceal such evil practices, shall be punished by a fine not exceeding two thousand dollars or by imprisonment not exceeding two years, or both, in the discretion of the court." The alleged libel was published as an editorial in the issue of the "Manila Freedom" of April 6, 1902, under the caption of" A few hard facts." ISSUE: Whether or not the article be regarded as embraced within the description of "scurrilous libels against the Government of the United States or the Insular Government of the Philippine Islands" RULING: No. The important question is to determine what is meant in section 8 of Act No. 292 by the expression "the Insular Government of the Philippine Islands." Does it mean in a general and abstract sense the existing laws and institutions of the Islands, or does it mean the aggregate of the individuals by

whom the Government of the Islands is, for the time being, administered? Either sense would doubtless be admissible. We understand, in modern political science, by the term "government", that institution or aggregate of institutions by which an independent society makes and carries out those rules of action which are necessary to enable men to live in a social state, or which are imposed upon the people forming that society by those who possess the power or authority of prescribing them. Government is the aggregate of authorities which rule a society. By "administration" again, we understand in modern times, and especially in more or less free countries, the aggregate of those persons in whose hands the reins of government are for the time being (the chief ministers or heads of departments)." (Bouvier, Law Dictionary, 89l.) But the writer adds that the terms "government and ’’administration" are not always used in their strictness, and that "government" is often used for ’’administration.’’ The article in question contains no attack upon the governmental system of the United States, and it is quite apparent that, though grossly abusive as respects both the Commission as a body and some of its individual members, it contains no attack upon the governmental system by which the authority of the United States is enforced in these Islands. The form of government by a Civil Commission and a Civil Governor is not assailed. It is the character of the men who are intrusted with the administration of the government that the writer is seeking to bring into disrepute by impugning the purity of their motives, their public integrity, and their private morals, and the wisdom of their policy. The publication of the article, therefore, no seditious tendency being apparent, constitutes no offense under Act No. 292, section 8. RATIO: Government is the aggregate of authorities which rule a society. By "administration" again, we understand in modern times, and especially in more or less free countries, the aggregate of those persons in whose hands the reins of government are for the time being (the chief ministers or heads of departments). The terms "government and ’’administration" are not always used in their strictness, and that "government" is often used for ’’administration.’’ ---