G.R. No. 158840 , October 27, 2006
Pilar Development Corporation, petitioner, vs. Sps. Cesar Villar and Charlotte Villar and John Does, respondents.

FACTS

Pilar Development Corporation (PDC) filed an ejectment suit against spouses Villar before the Metropolitan Trial Court (MeTC) of Las Piñas City. PDC alleged that after executing a Contract to Sell for a house and lot in 1994, the respondents defaulted on their monthly amortizations starting October 1997. PDC cancelled the contract via a Notice of Cancellation in 1998 but did not refund the cash surrender value of the payments made. Despite demands, respondents refused to vacate the property. The MeTC ruled in favor of PDC, ordering the respondents to vacate and pay rentals.
On appeal, the Regional Trial Court (RTC) reversed the MeTC decision and dismissed the case for lack of jurisdiction. The RTC held that the controversy involved issues on the validity of the contract cancellation and the right to a refund, which, under Presidential Decree No. 1344, fall within the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB), not the regular courts. PDC directly elevated the case to the Supreme Court on a pure question of law.

ISSUE

Whether the MeTC has jurisdiction over the ejectment suit or if jurisdiction lies exclusively with the HLURB.

RULING

The Supreme Court granted the petition, reversing the RTC and reinstating the MeTC decision with modification. The Court held that the MeTC properly exercised jurisdiction over the ejectment case. Jurisdiction is determined by the allegations in the complaint. PDC’s complaint was one for unlawful detainer, essentially alleging that respondents’ right to possess the property under the Contract to Sell was terminated upon cancellation due to default, and their subsequent refusal to vacate constituted unlawful withholding of possession.
The Court clarified that the mere relationship of subdivision developer and lot buyer does not automatically vest jurisdiction in the HLURB. For the HLURB’s exclusive jurisdiction to attach under P.D. No. 1344, the case must involve claims by the buyer against the developer (e.g., specific performance, refund) arising from statutory or contractual obligations related to the sale. Here, the suit was instituted by the developer against the buyers to recover possession of the property, a matter inherently within the competence of regular courts. The raised issues of contract cancellation and refund were merely incidental defenses that did not divest the MeTC of its jurisdiction over the possessory action. However, the Court modified the MeTC judgment by ordering the deduction of the cash surrender value from the accrued rentals awarded to PDC, as its failure to refund such value rendered the cancellation ineffective until such refund was made.