FIRST DIVISION [G.R. No. 131683.

June 19, 2000] JESUS LIM ARRANZA; LORENZO CINCO; QUINTIN TAN; JOSE ESCOBAR; ELBERT FRIEND; CLASSIC HOMES VILLAGE ASSOCIATION, INC.; BF NORTHWEST HOMEOWNERS ASSOCIATION, INC.; and UNITED BF HOMEOWNERS ASSOCIATIONS, INC ., petitioners, vs. B.F. HOMES, INC. AND THE HONORABLE COURT OF APPEALS, respondent. DECISION DAVIDE, JR., C.J.: For resolution in this petition is the issue of whether it is the Securities and Exchange Commission (SEC) or the Housing and Land Use Regulatory Board (HLURB) that has jurisdiction over a complaint filed by subdivision homeowners against a subdivision developer that is under receivership for specific performance regarding basic homeowners needs such as water, security and open spaces. Respondent BF Homes, Inc. (BFHI), is a domestic corporation engaged in developing subdivisions and selling residential lots. One of the subdivisions that respondent developed was the BF Homes Paraaque Subdivision, which now sprawls across not only a portion of the City of Paraaque but also those of the adjoining cities of Las Pias and Muntinlupa. When the Central Bank ordered the closure of Banco Filipino, which had substantial investments in respondent BFHI, respondent filed with the SEC a petition for rehabilitation and a declaration that it was in a state of suspension of payments. On 18 March 1985, the SEC placed respondent under a management committee. Upon that committees dissolution on 2 February 1988, the SEC appointed Atty. Florencio B. Orendain as a Receiver, and approved a Revised Rehabilitation Plan. As a Receiver, Orendain instituted a central security system and unified the sixty~five homeowners associations into an umbrella homeowners association called United BF Homeowners Associations, Inc. (UBFHAI), which was thereafter incorporated with the Home Insurance and Guaranty Corporation (HIGC).[1] In 1989, respondent, through Orendain, turned over to UBFHAI control and administration of security in the subdivision, the Clubhouse and the open spaces along Concha Cruz Drive. Through the Philippine Waterworks and Construction Corporation (PWCC), respondents managing company for waterworks in the various BF Homes subdivisions, respondent entered into an agreement with UBFHAI for the annual collection of community assessment fund and for the purchase of eight new pumps to replace the over~capacitated pumps in the old wells. On 7 November 1994, Orendain was relieved by the SEC of his duties as a Receiver, and a new Board of Receivers consisting of eleven members of respondents Board of Directors was appointed for the implementation of Phases II and III of respondents rehabilitation. [2] The new Board, through its Chairman, Albert C. Aguirre, revoked the authority given by Orendain to use the open spaces at Concha Cruz Drive and to collect community assessment funds; deferred the purchase of new pumps; recognized BF Paraaque Homeowners Association, Inc., (BFPHAI) as the representative of all homeowners in the subdivision; took over the management of the Clubhouse; and deployed its own security guards in the subdivision. Consequently, on 5 July 1995, herein petitioners filed with the HLURB a class suit "for and in behalf of the more than 7,000 homeowners in the subdivision" against respondent BFHI, BF Citiland Corporation, PWCC and A.C. Aguirre Management Corporation "to enforce the rights of purchasers of lots" in BF Homes Paraaque.[3] They alleged that: 1......The forty (40) wells, mostly located at different elevations in Phases 3 and 4 of the subdivision and with only twenty~seven (27) productive, are the sources of the inter~connected water system in the 765~hectare subdivision; 2......There is only one drainage and sewer system; 3......There is one network of roads; 4......There are eight (8) entry and exit points to the subdivision and from three (3) municipalities (now cities), a situation obtaining in this subdivision only and nowhere else; 5......There was no security force for the entire subdivision until 1988; 6......There are not enough open spaces in the subdivision in relation to the total land area developed; and whatever open spaces are available have been left unkempt, undeveloped and neglected; 7......There are no zoning guidelines which resulted in unregulated constructions of structures and the proliferation of business establishments in residential areas; and 8......The BFPHAI became "moribund" sometime in 1980 on account of its failure to cope with the delivery of basic services except for garbage collection.

Petitioners raised "issues" on the following basic needs of the homeowners: rights~of~way; water; open spaces; road and perimeter wall repairs; security; and the interlocking corporations that allegedly made it convenient for respondent "to compartmentalize its obligations as general developer, even if all of these are hooked into the water, roads, drainage and sewer systems of the subdivision." [4] Thus, petitioners prayed that: A. A cease~and~desist order from selling any of the properties within the subdivision be issued against respondent BFHI, BF Citi, ACAMC, and/or any and all corporations acting as surrogates/alter~egos, sister companies of BFHI and/or its stockholders until the warranties, facilities and infrastructures shall have been complied with or put up (and) the advances of UBFHAI reimbursed, otherwise, to cease and desist from rescinding valid agreements or contracts for the benefit of complainants, or committing acts diminishing, diluting or otherwise depriving complainants of their rights under the law as homeowners; B. .....After proper proceedings the bond or deposit put up by respondent BF Homes, Inc. be forfeited in favor of petitioners; C. .....Respondent BFHI be ordered to immediately turnover the roads, open spaces, and other facilities built or put up for the benefit of lot buyers/homeowners in the subdivision to complainant UBFHAI as representative of all homeowners in BF Homes Paraaque, free from all liens, encumbrances, and taxes in arrears; D. If the open spaces in the subdivision are not sufficient as required by law, to impose said penalties/sanctions against BFHI or the persons responsible therefor; E. .....Order the reimbursement of advances made by UBFHAI; F. .....Turn over all amounts which may have been collected from users fees of the strip of open space at Concha Cruz Drive; G. .....Order PWCC to effect and restore 24~hour water supply to all residents by adding new wells replacing over~capacitated pumps and otherwise improving water distribution facilities; H. Order PWCC to continue collecting the Community Development Fund and remit all amounts collected to UBFHAI; I......Order BFHI to immediately withdraw the guards at the clubhouse and the 8 entry and exit points to the subdivision, this being an act of usurpation and blatant display of brute force; J. .....The appropriate penalties/sanctions be imposed against BF Citi, ACAMC or any other interlocking corporation of BFHI or any of its principal stockholders in respect of the diminution/encroaching/violation on the rights of the residents of the subdivision to enjoy/avail of the facilities/services due them; and K......Respondents be made to pay attorneys fees and the costs of this suit.[5] In its answer, respondent claimed that (a) it had complied with its contractual obligations relative to the subdivisions dev elopment; (b) respondent could not be compelled to abide by agreements resulting from Orendains ultra vires acts; and (c) petitioners were precluded from instituting the instant action on account of Section 6(c) of P.D. No. 902~A providing for the suspension of all actions for claims against a corporation under receivership. Respondent interposed counterclaims and prayed for the dismissal of the complaint.[6] Petitioners thereafter filed an urgent motion for a cease~and~desist/status quo order. Acting on this motion, HLURB Arbiter Charito M. Bunagan issued a 20~day temporary restraining order to avoid rendering nugatory and ineffectual any judgment that could be issued in the case;[7] and subsequently, an Order granting petitioners prayer for preliminary injunction was issued enjoining and restraining respondent BF Homes, Incorporated, its agents and all persons acting for and in its behalf from taking over/administering the Concha Garden Row, from issuing stickers to residents and non-residents alike for free or with fees, from preventing necessary improvements and repairs of infrastructures within the authority and administration of complainant UBFHAI, and from directly and indirectly taking over security in the eight (8) exit points of the subdivision or in any manner interfering with the processing and vehicle control in subject gates and otherwise to remove its guards from the gates upon posting of a bond of One Hundred Thousand Pesos (P100,000.00) which bond shall answer for whatever damages respondents may sustain by reason of the issuance of the writ of preliminary injunction if it turns out that complainant is not entitled thereto. [8] Respondent thus filed with the Court of Appeals a petition for certiorari and prohibition docketed as CA~G.R. SP No. 39685. It contended in the main that the HLURB acted "completely without jurisdiction" in issuing the Order granting the writ of preliminary injunction considering that inasmuch as respondent is under receivership, the "subject matter of the case is one exclusively within the jurisdiction of the SEC." [9] On 28 November 1997, the Court of Appeals rendered a decision[10] annulling and setting aside the writ of preliminary injunction issued by the HLURB. It ruled that private respondents action may properly be regarded as a "claim" within the contemplation of PD No. 902~A which s hould be placed on equal footing with those of petitioners other creditor or creditors and which should be filed with the Committee of Receivers. In any event, pursuant to Section 6(c) of P.D. No. 902~A and SECs Order of 18 March 1985, petitioners action against respondent, which is under receivership, should be suspended. Hence, petitioners filed the instant petition for review on certiorari. On 26 January 1998, the Court issued a temporary restraining order (TRO) enjoining respondent, its officers, representatives and persons acting upon its orders from (a) taking over/administering the Concha Garden Row; (b) issuing stickers to residents and non~residents alike for free or with fees; (c) preventing necessary improvements and repairs of infrastructures within the authority and administration of complainant United

BF Homeowners Association, Inc. (UBFHAI); (d) directly and indirectly taking over security in the eight (8) exit points of a ll of BF Homes Paraaque Subdivision or in any manner interfering with the processing and vehicle control in the subject gates; and (e) otherwise to remove its guards from the gates.[11] Respondents motion to lift the TRO was denied. At the hearing on 1 July 1998, the primary issue in this case was defined as "which body has jurisdiction over petitioners claims, the Housing and Land Use Regulatory Board (HLURB) or the Securities and Exchange Commission (SEC)?" The collateral issue to be addressed is "assuming that the HLURB has jurisdiction, may the proceedings therein be suspended pending the outcome of the receivership before the SEC?" For their part, petitioners argue that the complaint referring to rights of way, water, open spaces, road and perimeter wall repairs, security and respondents interlocking corporations that facilitated circumvention of its obligation involves unsound real estate practice s. The action is for specific performance of a real estate developers obligations under P.D. No. 957, and the relief sought is revocation of the subdivision projects registration certificate and license to sell. These issues are within the jurisdiction of the HLURB. Even if respondent is under receivership, its obligations as a real estate developer under P.D. No. 957 are not suspended. Section 6(c) of P.D. No. 902~A, as amended by P.D. No. 957, on "suspension of all actions for claims against corporations" refers solely to monetary claims which are but incidental to petitioners complaints against BFH I, and if filed elsewhere than the HLURB, it would result to splitting causes of action. Once determined in the HLURB, however, the monetary awards should be submitted to the SEC as established claims. Lastly, the acts enjoined by the HLURB are not related to the disposition of BFHIs assets as a corporation undergoing its final phase of rehabilitation. On the other hand, respondent asserts that the SEC, not the HLURB, has jurisdiction over petitioners complaint based on the contracts entered into by the former receiver. The SEC, being the appointing authority, should be the one to take cognizance of controversies arising from the performance of the receivers duties. Since respondents properties are under the SECs custodia legis, they are exempt from any court process. Jurisdiction is the authority to hear and determine a cause the right to act in a case.[12] It is conferred by law and not by mere administrative policy of any court or tribunal.[13] It is determined by the averments of the complaint and not by the defense contained in the answer. [14] Hence, the jurisdictional issue involved here shall be determined upon an examination of the applicable laws and the allegations of petitioners compla int before the HLURB. Presidential Decree No. 957 (The Subdivision and Condominium Buyers Protective Decree) was issued on 12 July 1976 in answer to the popular ca ll for correction of pernicious practices of subdivision owners and/or developers that adversely affected the interests of subdivision lot buyers. Thus, one of the "whereas clauses" of P.D. No. 957 states: WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers. Section 3 of P.D. No. 957 empowered the National Housing Authority (NHA) with the "exclusive jurisdiction to regulate the real estate trade and business." On 2 April 1978, P.D. No. 1344 was issued to expand the jurisdiction of the NHA to include the following: SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and decide cases of the following nature: A......Unsound real estate business practices; B......Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and C......Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman. (Italics supplied.) Thereafter, the regulatory and quasi~judicial functions of the NHA were transferred to the Human Settlements Regulatory Commission (HSRC) by virtue of Executive Order No. 648 dated 7 February 1981. Section 8 thereof specifies the functions of the NHA that were transferred to the HSRC including the authority to hear and decide "cases on unsound real estate business practices; claims involving refund filed against project owners, developers, dealers, brokers or salesmen and cases of specific performance." Executive Order No. 90 dated 17 December 1986 renamed the HSRC as the Housing and Land Use Regulatory Board (HLURB).[15] The boom in the real estate business all over the country resulted in more litigation between subdivision owners/developers and lot buyers with the issue of the jurisdiction of the NHA or the HLURB over such controversies as against that of regular courts. In the cases [16] that reached this Court, the ruling has consistently been that the NHA or the HLURB has 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. Notably, in Antipolo Realty Corporation v. National Housing Authority,[17] one of the issues raised by the homeowners was the failure of Antipolo Realty to develop the subdivision in accordance with its undertakings under the contract to sell. Such undertakings include providing the subdivision with concrete curbs and gutters, underground drainage system, asphalt paved roads, independent water system, electrical installation with concrete posts, landscaping and concrete sidewalks, developed park or amphitheater and 24~hour security guard service. The Court held that the complaint filed by the homeowners was within the jurisdiction of the NHA.

Similarly, in Alcasid v. Court of Appeals,[18] the Court ruled that the HLURB, not the RTC, has jurisdiction over the complaint of lot buyers for specific performance of alleged contractual and statutory obligations of the defendants, to wit, the execution of contracts of sale in favor of the plaintiffs and the introduction in the disputed property of the necessary facilities such as asphalting and street lights. In the case at bar, petitioners complaint is for specific performance to enforce their rights as purchasers of subdivision l ots as regards rights of way, water, open spaces, road and perimeter wall repairs, and security. Indisputably then, the HLURB has jurisdiction over the complaint. The fact that respondent is under receivership does not divest the HLURB of that jurisdiction. A receiver is a person appointed by the court, or in this instance, by a quasi~judicial administrative agency, in behalf of all the parties for the purpose of preserving and conserving the property and preventing its possible destruction or dissipation, if it were left in the possession of any of the parties. [19] It is the duty of the receiver to administer the assets of the receivership estate; and in the management and disposition of the property committed to his possession, he acts in a fiduciary capacity and with impartiality towards all interested persons.[20] The appointment of a receiver does not dissolve a corporation, nor does it interfere with the exercise of its corporate rights.[21] In this case where there appears to be no restraints imposed upon respondent as it undergoes rehabilitation receivership,[22] respondent continues to exist as a corporation and hence, continues or should continue to perform its contractual and statutory responsibilities to petitioners as homeowners. Receivership is aimed at the preservation of, and at making more secure, existing rights; it cannot be used as an instrument for the destruction of those rights.[23] No violation of the SEC order suspending payments to creditors would result as far as petitioners complaint before the HLURB is concerned. To reiterate, what petitioners seek to enforce are respondents obligations as a subdivision developer. Such claims are basically not pecuniary in nature although it could incidentally involve monetary considerations. All that petitioners claims entail is the exercise of proper subdivision man agement on the part of the SEC~appointed Board of Receivers towards the end that homeowners shall enjoy the ideal community living that respondent portrayed they would have when they bought real estate from it. Neither may petitioners be considered as having "claims" against respondent within the context of the following proviso of Section 6 (c) of P.D. No. 902~A, as amended by P.D. Nos. 1653, 1758 and 1799, to warrant suspension of the HLURB proceedings: [U]pon appointment of a management committee, rehabilitation receiver, board or body, pursuant to this Decree, all actions forclaims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. (Italics supplied.) In Finasia Investments and Finance Corporation v. Court of Appeals, [24] this Court defined and explained the term "claim" in Section 6 (c) of P.D. No. 902~A, as amended, as follows: We agree with the public respondent that the word "claim" as used in Sec. 6 (c) of P.D. 902~A, as amended, refers to debts or demands of a pecuniary nature. It means "the assertion of a right to have money paid. It is used in special proceedings like those before administrative court, on insolvency." (Emphasis supplied.) Hence, in Finasia Investments, the Court held that a civil case to nullify a special power of attorney because the principals signature was forged shou ld not be suspended upon the appointment of a receiver of the mortgagee to whom a person mortgaged the property owned by such principal. The Court ruled that the cause of action in that civil case "does not consist of demand for payment of debt or enforcement of pecuniary liability." It added: It has nothing to do with the purpose of Section 6 (c) of P.D. 902~A, as amended, which is to prevent a creditor from obtaining an advantage or preference over another with respect to action against corporation, partnership, association under management or receivership and to protect and preserve the rights of party litigants as well as the interest of the investing public or creditors. Moreover, a final verdict on the question of whether the special power of attorney in question is a forgery or not will not amount to any preference or advantage to Castro who was not shown to be a creditor of FINASIA. [25] In this case, under the complaint for specific performance before the HLURB, petitioners do not aim to enforce a pecuniary demand. Their claim for reimbursement should be viewed in the light of respondents alleged failure to observe its statutory and contractual obliga tions to provide petitioners a "decent human settlement" and "ample opportunities for improving their quality of life." [26] The HLURB, not the SEC, is equipped with the expertise to deal with that matter. On the other hand, the jurisdiction of the SEC is defined by P.D. No. 902~A, as amended, as follows: SEC. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: a).....Devices or schemes employed by or any act of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with the Commission; b).....Controversies arising out of intra~corporate or partnership relations, between and among stockholders, members of associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity; [and]

c).....Controversies in the election or appointments of directors, trustees, officers, or managers of such corporation, partnerships or associations. For the SEC to acquire jurisdiction over any controversy under these provisions, two elements must be considered: (1) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy. [27] The first element requires that the controversy must arise "out of intra~corporate or partnership relations between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the State in so far as it concerns their individual franchises."[28] Petitioners are not stockholders, members or associates of respondent. They are lot buyers and now homeowners in the subdivision developed by the respondent. The second element requires that the dispute among the parties be intrinsically connected with the regulation or the internal affairs of the corporation, partnership or association.[29] The controversy in this case is remotely related to the "regulation" of respondent corporation or to respondents "internal affairs." It should be stressed that the main concern in this case is the issue of jurisdiction over petitioners complaint against res pondent for specific performance. P.D. No. 902~A, as amended, defines the jurisdiction of the SEC; while P.D. No. 957, as amended, delineates that of the HLURB. These two quasi~judicial agencies exercise functions that are distinct from each other. The SEC has authority over the operation of all kinds of corporations, partnerships or associations with the end in view of protecting the interests of the investing public and creditors. On the other hand, the HLURB has jurisdiction over matters relating to observance of laws governing corporations engaged in the specific business of development of subdivisions and condominiums. The HLURB and the SEC being bestowed with distinct powers and functions, the exercise of those functions by one shall not abate the performance by the other of its own functions. As respondent puts it, "there is no contradiction between P.D. No. 902~A and P.D. No. 957."[30] What complicated the jurisdictional issue in this case is the fact that petitioners are primarily praying for the retention of respondents obligations under the Memorandum of Agreement that Receiver Orendain had entered into with them but which the present Board of Receivers had revoked. In Figueroa v. SEC,[31] this Court has declared that the power to overrule or revoke the previous acts of the management or Board of Directors of the entity under receivership is within a receivers authority, as provided for by S ection 6 (d) (2) of P.D. No. 902~A. Indeed, when the acts of a previous receiver or management committee prove disadvantageous or inimical to the rehabilitation of a distressed corporation, the succeeding receiver or management committee may abrogate or cast aside such acts. However, that prerogative is not absolute. It should be exercised upon due consideration of all pertinent and relevant laws when public interest and welfare are involved. The business of developing subdivisions and corporations being imbued with public interest and welfare, any question arising from the exercise of that prerogative should be brought to the proper agency that has technical know~how on the matter. P.D. No. 957 was promulgated to encompass all questions regarding subdivisions and condominiums. It is aimed at providing for an appropriate government agency, the HLURB, to which all parties aggrieved in the implementation of its provisions and the enforcement of contractual rights with respect to said category of real estate may take recourse. Nonetheless, the powers of the HLURB may not in any way be deemed as in derogation of the SECs authority. P.D. Nos. 902~A and 957, as far as both are concerned with corporations, are laws in pari materia. P.D. No. 902~A relates to all corporations, while P.D. No. 957 pertains to corporations engaged in the particular business of developing subdivisions and condominiums. Although the provisions of these decrees on the issue of jurisdiction appear to collide when a corporation engaged in developing subdivisions and condominiums is under receivership, the same decrees should be construed as far as reasonably possible to be in harmony with each other to attain the purpose of an expressed national policy.[32] Hence, the HLURB should take jurisdiction over petitioners complaint because it pertains to matters within the HLURBs compe tence and expertise. The HLURB should view the issue of whether the Board of Receivers correctly revoked the agreements entered into between the previous receiver and the petitioners from the perspective of the homeowners interests, which P.D. No. 957 aims to protect. Whatever monetary awards t he HLURB may impose upon respondent are incidental matters that should be addressed to the sound discretion of the Board of Receivers charged with maintaining the viability of respondent as a corporation. Any controversy that may arise in that regard should then be addressed to the SEC. It is worth noting that the parties agreed at the 1 July 1998 hearing that should the HLURB establish and grant petitioners claims, the same should be referred to the SEC. Thus, the proceedings at the HLURB should not be suspended notwithstanding that respondent is still under receivership. The TRO that this Court has issued should accordingly continue until such time as the HLURB shall have resolved the controversy. The present members of the Board of Receivers should be reminded of their duties and responsibilities as an impartial Board that should serve the interests of both the homeowners and respondents creditors. Their interests, financial or otherwise, as members of respondents Board of Directors should be circumscribed by judicious and unbiased performance of their duties and responsibilities as members of the Board of Receivers. Otherwise, respondents full rehabilitation may face a bleak future. Both parties should never give full rein to acts that could prove detrimental to the interests of the homeowners and eventually jeopardize respondents rehabilitation. WHEREFORE, the questioned Decision of the Court of Appeals is hereby REVERSED and SET ASIDE. This case is REMANDED to the Housing and Land Use Regulatory Board for continuation of proceedings with dispatch as the Securities and Exchange Commission proceeds with the rehabilitation of respondent BF Homes, Inc., through the Board of Receivers. Thereafter, any and all monetary claims duly established before the HLURB shall be referred to the Board of Receivers for proper disposition and thereafter, to the SEC, if necessary. No costs. SO ORDERED. Puno, Kapunan, Pardo and Ynares-Santiago, JJ., concur.

Arranza vs. BF Homes [G.R. No. 131683. June 19, 2000] The boom in the real estate business all over the country resulted in more litigation between subdivision owners/developers and lot buyers with the issue of the jurisdiction of the NHA or the HLURB over such controversies

as against that of regular courts. In the cases that reached this Court, the ruling has consistently been that the NHA or the HLURB has 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. Notably, in Antipolo Really Corporation v. National Housing Authority one of the issues raised by the homeowners was the failure of Antipolo Realty to develop the subdivision in accordance with its undertakings under the contract to sell. Such undertakings include providing the subdivision with concrete curbs and gutters, underground drainage system, asphalt paved roads, independent water system, electrical installation with concrete posts, landscaping and concrete sidewalks, developed park or amphitheater and 24-hour security guard service. The Court held that the complaint filed by the homeowners was within the jurisdiction of the NHA. Similarly, in Alcasid v. Court of Appeals, the Court ruled that the HLURB, not the RTC, has jurisdiction over the complaint of lot buyers for specific performance of alleged contractual and statutory obligations of the defendants, to wit, the execution of contracts of sale in favor of the plaintiffs and the introduction in the disputed property of the necessary facilities such as asphalting and street lights. In the case at bar, petitioners' complaint is for specific performance to enforce their rights as purchasers of subdivision lots as regards rights of way, water, open spaces, road and perimeter wall repairs, and security. Indisputably then, the HLURB has jurisdiction over the complaint. The fact that respondent is under receivership does not divest the HLURB of that jurisdictionThe appointment of a receiver does not dissolve a corporation, nor does it interfere with the exercise of its corporate rights.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 129098 December 6, 2006

AMELIA CABRERA, petitioner, vs. MANUEL LAPID, FERNANDO BALTAZAR, REYNALDO F. CABRERA and DIONY VENTURA, respondents.

DECISION

TINGA, J.: The instant petition for review on certiorari seeks the reversal of the Resolution1 dated 13 May 1996 and the Order2 dated 21 March 1997, both issued by the Office of the Ombudsman. The Resolution dismissed the complaint-affidavit filed by petitioner against respondents and the Order denied her motion for reconsideration. The instant petition originated from a Complaint-Affidavit3 filed in November 1995 by petitioner Amelia M. Cabrera with the Office of the Ombudsman ("Ombudsman"). Named respondents were Manuel Lapid, Fernando Baltazar, Reynaldo F. Cabrera and Superintendent Diony Ventura, respectively, in their capacities as Governor of Pampanga, Mayor of Sasmuan, Pampanga, Vice-Mayor of Sasmuan, Pampanga and Superintendent of the Philippine National Police (PNP)-Region 3, Pampanga. In her three(3)-page affidavit, petitioner accused respondents of violating Section 3(e) of the Anti-Graft and Corrupt Practices Act and Article 324 of the Revised Penal Code.

In her Complaint-Affidavit, petitioner stated that she entered into a lease agreement with the Municipality of Sasmuan over a tract of land for the purpose of devoting it to fishpond operations. According to petitioner, she had spent approximately P5,000,000.00 for its construction before the fishpond operations commenced in August 1995. A month later, petitioner learned from newspaper reports of the impending demolition of her fishpond as it was purportedly illegal and blocked the flow of the Pasak River. Thus, petitioner sent the fishpond administrator to dissuade respondents from destroying her property.4 Despite pleas from petitioner, respondents ordered the destruction of petitioner's fishpond. The property was demolished on 10 October 1995 by dynamite blasting. Petitioner alleged that the demolition was purposely carried out in the presence of media representatives and other government officials to gain media mileage. Petitioner imputed evident bad faith on respondents Mayor Baltazar and Vice-Mayor Cabrera in allowing the destruction of the fishpond despite their prior knowledge of the existence of the lease agreement. She also charged respondents Governor Lapid and Senior Superintendent Ventura with gross inexcusable negligence for ordering the destruction of the fishpond without first verifying its legality.5 At the preliminary investigation, respondents, except Senior Superintendent Ventura, submitted counter-affidavits, denying the accusations against them. In the counter-affidavit jointly filed by Mayor Baltazar and Vice-Mayor Cabrera, they insisted that contrary to petitioner's claim, the fishpond was an illegal structure because it was erected on the seashore, at the mouth of the Pasak River, and sat on an inalienable land. They claimed that the demolition was done by the Task Force Bilis Daloy upon the directive of then President Fidel V. Ramos.6 In his Counter-Affidavit,7 Governor Lapid averred that the contract of lease between petitioner and the Municipality of Sasmuan, represented by then Mayor Abelardo Panlaqui, was executed two weeks before respondent Mayor Baltazar took his oath of office in 1995. Governor Lapid also argued that under the law, the Department of Agriculture (DA) is the government agency authorized to enter into licensing agreements for fishpond operations, and as per certification by the DA Regional Director, petitioner's fishpond operation was not covered by a fishpond lease agreement or application. Governor Lapid also referred to the certification by the Municipal Health Officer of Sasmuan issued before the actual demolition of the fishpond, describing it as a nuisance per se and recommending its abatement.8 On 13 May 1996, the Ombudsman issued the assailed Resolution, dismissing petitioner's complaint. The dismissal was based on the declaration that the fishpond was a nuisance per se and, thus, may be abated by respondents in the exercise of the police power of the State.9 Petitioner sought reconsideration of the Resolution, arguing that under Sec. 149 of Republic Act (R.A.) No. 7160, otherwise known as the Local Government Code of 1991, the exclusive authority to grant fishery privileges is vested in the municipalities. Petitioner also questioned the certification by the Municipal Health Officer, alleging that the same was issued before the ocular inspection of the property which took place only on the day of the demolition. Petitioner also contended that a judicial proceeding was necessary to determine whether the property indeed had caused the flooding.10 Respondents filed separate oppositions to petitioner's motion for reconsideration.11 Petitioner filed a reply to the opposition12 and respondent Governor Lapid filed a rejoinder to the reply.13 In the Order dated 21 March 1997, the Ombudsman affirmed its 13 May 1996 Resolution. It ruled that the repealing clause of R.A. No. 7160 expressly repealed only Sec. 2, 6 and 29 of Presidential Decree (P.D.) No. 704 so that in harmonizing the remaining provisions of P.D. No. 704 and the provisions of R.A. No. 7160 applicable to the grant of fishery privileges, the Bureau of Fisheries and Aquatic Resources (BFAR) is the government agency authorized to grant fishpond license or permit in areas not identified as municipal waters or not declared as alienable or disposable by the Department of Environment and Natural Resources (DENR). Since it appears from DENR records that the subject property has not been declared disposable or included in areas devoted for fishpond development, the Ombudsman concluded that the lease agreement entered into by petitioner was voidab initio. In view of the illegality of the lease agreement, the Ombudsman ruled that its demolition was justified. The Ombudsman described the demolition as a valid exercise of police power and in accordance with the provision of Sec. 28 of P.D. No. 704 directing the removal of any fishpen or fishpond that obstructed the free navigation of a stream or lake. It also upheld the authority of the district health officer to determine the abatement of a nuisance without need of judicial proceedings.14 Petitioner elevated the matter to this Court via a petition for review on certiorari under Rule 45 of the Rules of Court to assail the 13 May 1996 Resolution and 21 March 1997 Order of the Ombudsman. Petitioner subsequently filed an

amended petition for review on certiorari to implead the Ombudsman as respondent, although in a petition for review on certiorari, the tribunal whose issuance is assailed need not be impleaded as respondent. The petition imputes the following errors on the Ombudsman: I. THE OFFICE OF THE OMBUDSMAN ERRED AND EXCEEDED ITS AUTHORITY IN RULING THAT THE LEASE CONTRACT BETWEEN THE MUNICIPALITY OF SASMUAN AND PETITIONER IS NULL AND VOID. II. THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT THE DEMOLITION OF THE FISHPOND WAS VALIDLY MADE BY VIRTUE OF THE DECLARATION BY THE HEALTH OFFICER THAT IT WAS A NUISANCE PER SE. III. THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT THE DEMOLITION IS PART OF THE PROPER EXERCISE OF THE POLICE POWER OF THE STATE. IV. THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT PETITIONER WAS GIVEN DUE NOTICE AND HEARING BEFORE THE FISHPOND WAS BLASTED. V. THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT PROBABLE CAUSE DOES NOT EXIST TO INDICT RESPONDENTS FOR VIOLATION OF THE SUBJECT OFFENSES.15 Clearly, this is an appeal from the questioned issuances of the Ombudsman. However, such direct resort to this Court from a resolution or order of the Ombudsman is not sanctioned by any rule of procedure. Neither can petitioner avail of Sec. 2716 of R.A. No. 6770, otherwise known as The Ombudsman Act of 1989. The provision allowed direct appeals in administrative disciplinary cases from the Office of the Ombudsman to the Supreme Court. The right to appeal is granted only in respect to orders or decisions of the Ombudsman in administrative cases.17 The provision does not cover resolutions of the Ombudsman in criminal cases. More importantly, Sec. 27 of R.A. No. 6770 insofar as it allowed a direct appeal to this Court was declared unconstitutional in Fabian v. Hon. Desierto.18 However, an aggrieved party in criminal actions is not without any recourse. Where grave abuse of discretion amounting to lack or excess of jurisdiction taints the findings of the Ombudsman on the existence of probable cause, the aggrieved party may file a petition for certiorari under Rule 65.19 The remedy from resolutions of the Ombudsman in preliminary investigations of criminal cases is a petition for certiorari under Rule 65, not a petition for review on certiorari under Rule 45.20 But in this case, petitioner has taken the position that the Ombudsman has decided questions of substance contrary to law and the applicable decisions of the Supreme Court. That is a ground under a Rule 45 petition. Indeed, from a reading of the assignment of errors, it is clear that petitioner does not impute grave abuse of discretion to the Ombudsman in issuing the assailed Resolution and Order. Rather, she merely questions his findings and conclusions. As stated earlier, direct appeal to the Supreme Court via a petition for review on certiorari is not sanctioned by any rule of procedure. By availing of a wrong remedy, the petition should be dismissed outright.

Even if the Court treats the instant appeal as a petition for certiorari under Rule 65, its dismissal is nevertheless warranted because petitioner failed to present, much more substantiate, any grave abuse of discretion on the part of the Ombudsman. A careful reading of the questioned Resolution reveals that the Ombudsman dismissed petitioner's criminal complaint because respondents had validly resorted to the police power of the State when they effected the demolition of the illegal fishpond in question following the declaration thereof as a nuisance per se. Thus, the Ombudsman was of the opinion that no violation of Section 3(e)21 of the Anti-Graft and Corrupt Practices Act or of Article 32422 of the Revised Penal Code was committed by respondents. In the words of the Ombudsman, "those who participated in the blasting of the subject fishpond were only impelled by their desire to serve the best interest of the general public; for the good and the highest good."23 By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.24 Grave abuse of discretion should be differentiated from an error in judgment. An error of judgment is one which the court may commit in the exercise of its jurisdiction, and which error is reversible only by an appeal. As long as the court acts within its jurisdiction, any alleged errors committed in the exercise of its discretion will amount to nothing more than mere errors of judgment, correctible by an appeal or a petition for review under Rule 45 of the Rules of Court. An error of jurisdiction is one where the act complained of was issued by the court without or in excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari.25 The other errors raised by petitioner pertain to the Ombudsman's opinion on the lack of probable cause to indict respondents. These are purported errors in judgment which can be corrected by an appeal, although not via a direct appeal to this Court. Direct resort to this Court may be had only through the extraordinary writ of certiorari and upon showing that the Ombudsman committed grave abuse of discretion, which petitioner failed to demonstrate. Absent any grave abuse of discretion tainting it, the courts will not interfere with the Ombudsman's supervision and control over the preliminary investigation conducted by him.26 It is beyond the ambit of this Court to review the exercise of discretion of the Ombudsman in prosecuting or dismissing a complaint filed before it.27 The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the functions of the courts will be grievously hampered by innumerable petitions assailing the dismissal of investigatory proceedings conducted by the Office of the Ombudsman with regard to complaints filed before it, in much the same way that the courts would be extremely swamped if they would be compelled to review the exercise of discretion on the part of the fiscals or prosecuting attorneys each time they decide to file an information in court or dismiss a complaint by a private complainant.28 WHEREFORE, the instant petition for review on certiorari is DENIED. No costs. SO ORDERED.

PABLO T. TOLENTINO and TEMPUS PLACE REALTY MANAGEMENT CORPORATION, petitioners, vs. HON. OSCAR LEVISTE, Presiding Judge, RTC, Quezon City, Br. 97 and SPOUSES GERARDO CINCO, JR. and PAMELA H. CINCO, respondents. DECISION
PUNO, J.:

Petitioners Pablo T. Tolentino and Tempus Place Realty Management Corporation seek the review and reversal of the decision and amended decision of the Court of Appeals in CA-G.R. SP No. 59506 entitled Tempus Place Realty Management Corporation and Pablo T. Tolentino vs. Hon. Oscar Leviste, Presiding Judge, RTC Quezon City, Branch 97 and Sps. Gerardo Cinco, Jr., and Pamela H. Cinco. The Court of Appeals denied petitioners petition for annulment of the decision of the Regional Trial Court (RTC) of Quezon City, Branch 97, on the action for specific performance with damages filed by respondents Spouses Gerardo and Pamela Cinco against them. The antecedent facts are as follows: On October 18, 1996, respondents Spouses Gerardo Cinco, Jr. and Pamela Cinco filed a complaint for specific performance with damages against petitioners Tempus Place Realty Management Corporation and Pablo T. Tolentino. The complaint alleged that respondents purchased from petitioners a condominium unit in Tempus Place Condominium II at Katarungan St., Diliman, Quezon City. Despite, however, the execution of the Deed of Absolute Sale and the delivery of the owners copy of the condominium certificate of title, petitioners failed to deliver possession of the unit because they have allegedly leased it to a third party. The complaint further alleged that petitioners refused to pay the corresponding capital gains tax and documentary stamp tax on the transaction, and execute the necessary board resolution for the transfer of the property, thus preventing respondents from registering the Deed of Absolute Sale and transferring the title to the unit in their names. The respondents claimed that because petitioners refused to deliver possession of the unit and instead leased it to a third party, they are entitled to a reasonable rental value in the amount of P20,000.00 a month from May 1994 until the time the possession of the unit is delivered to them. They also claimed moral damages in the amount of P1,000,000.00 and exemplary damages in the amount of P1,000,000.00 plus attorneys fees in the amount ofP1,000,000.00.
[1]

As petitioners failed to file their answer to the complaint, Hon. Oscar Leviste, Presiding Judge, RTC, Branch 97, Quezon City, issued an order on January 17, 1997 granting respondents motion to declare petitioners in default. He also appointed the Branch Clerk of Court to act as commissioner to receive respondents evidence ex parte. After reception of evidence, the trial court, on April 15, 1997, issued a decision for the respondents. It stated:
[2]

This Court after considering the oral and documentary evidences presented by the plaintiff finds that the allegation contained in their pleadings are all true facts and are entitled to the relief as prayed for, to wit:

1) To deliver to the plaintiffs the possession of the condominium unit covered by CCT No. 5002 of the Register of Deeds of Quezon City; 2) To pay the corresponding capital gains tax and documentary stamps tax on the transaction, and deliver the receipts thereof to the plaintiffs; 3) To execute and deliver to the plaintiffs the necessary Board Resolution; 4) Jointly and severally, to pay plaintiffs the following: a. Actual damages in the amount of P20,000.00 a month from May 1994, up to the time possession of the condominium units (sic) is delivered to the plaintiffs representing the reasonable rental value of the unit; Moral damages in the amount of P1,000,000.00; Exemplary damages in the amount of P1,000,000.00; Attorneys fees in the amount of P1,000,000.00.[3]

b. c. d.

Petitioners thereafter filed a motion for new trial. They contended that their right to fair and impartial trial had been impaired by reason of accident, mistake or excusable negligence of their former counsel, a certain Atty. Villamor. The trial court denied the motion for new trial for lack of merit.
[4] [5]

On November 3, 1997, petitioners, through their new counsel, Atty. Ricardo A. Santos, filed a notice of appeal of the April 15 decision of the trial court. The Court of Appeals, however, dismissed the appeal on February 26, 1999 on the ground of abandonment as petitioners failed to submit the required appeal brief. The decision became final and executory on March 26, 1999 and was recorded in the Book of Entries of Judgment.
[6] [7] [8]

On July 4, 2000, petitioners filed with the Court of Appeals an action for annulment of judgment based on the following grounds:
1. The judgment in default granted reliefs in excess of what is prayed for in the complaint in gross violation of the clear provisions of the 1997 Rules of Civil Procedure. 2. The judgment in default awarded unliquidated damages in palpable violation of the mandatory provision of Section 3[,] Rule 9, 1997 Rules of Civil Procedure. 3. The judgment in default is in gross violation of Section 14, Article VIII, 1987 Constitution and Section 1, Rule 36, 1997 Rules of Civil Procedure. 4. The judgment in default was rendered in violation of the rights of the petitioner to substantive and procedural due process. 5. Corrollarily, the gargantuan award for damages by the court a quo in patent and blatant violation of the law and settled jurisprudence [is] unconscionable and clearly violative of substantial justice and equities of the case. 6. Petitioners have good and substantial defenses in respect of private respondents claims. 7. A fortiori, the court has no jurisdiction and/or authority and has committed a grave abuse of discretion in awarding amounts in excess of what is prayed for in the complaint nor proved by the evidence as well as in palpable violation of the mandatory provisions of the Civil Code and the Rules of Court and applicable decisions of the Supreme Court. Consequently, the challenged judgment in default is an absolute nullity.[9]

On April 23, 2002, the appellate court issued a decision modifying the trial court decision. It explained that the annulment of judgment may be based on the grounds of extrinsic fraud and lack of jurisdiction, and it is important that petitioner failed to move for

new trial, or appeal, or file a petition for relief, or take other appropriate remedies assailing the questioned judgment, final order or resolution through no fault attributable to him. The Court of Appeals found that the trial court decision may not be annulled on the ground of extrinsic fraud. It stated that the failure of petitioners counsel to file an appellants brief in the Court of Appeals did not amount to extrinsic fraud as to justify annulment of judgment, as it was not shown that their former counsels omission was tainted with fraud and/or deception tantamount to extrinsic or collateral fraud. Neither may it be annulled on the ground of lack of jurisdiction as the action for specific performance and damages was within the jurisdiction of the RTC. Nonetheless, the appellate court, in the interest of justice and in the exercise of its sound discretion in determining the amount of damages that may be awarded, held that the moral damages in the amount of one million pesos (P1,000,000.00) was excessive. It lowered the moral damages to P100,000.00. It also reduced the exemplary damages to P100,000.00, and the attorneys fees to P100,000.00.
[10]

Respondents filed a motion for reconsideration of the Decision of the Court of Appeals. On November 18, 2002, the Court of Appeals issued an Amended Decision, the dispositive portion of which reads: WHEREFORE, the Motion for Reconsideration is partly GRANTED in that the dispositive portion of the assailed decision is modified as follows: a) Actual damages in the amount of P10,000.00 a month from May 1994, up to the time possession of the condominium units [sic] is delivered to the plaintiffs (private respondents herein) representing the reasonable rental value of the unit. b) c) d) Moral damages in the amount of One Hundred Thousand Pesos (P100,000.00); Exemplary damages in the amount of One Hundred Thousand Pesos (P100,000.00); and, Attorneys fees in the amount of One [H]undred Thousand Pesos (P100,000.00).
[11]

SO ORDERED.

Petitioners filed the instant petition for review of the decision and amended decision of the Court of Appeals. They raise the following arguments:
1. The petitioners can avail of the remedy of annulment of judgment to annul the decision of the RTC in Civil Case No. 96-29707 as Hon. Judge Leviste had no jurisdiction and/or acted without jurisdiction in issuing the April 15, 1997 Decision because: a. b. c. d. The judgment in default granted reliefs in excess of what is prayed for in the complaint in gross violation of the clear provisions of the 1997 Rules of Civil Procedure. The judgment in default awarded unliquidated damages in palpable violation of the mandatory provision of Section 3[,] Rule 9, 1997 Rules of Civil Procedure. The judgment in default is in gross violation of Sec. 14, Art. VIII, 1987 Constitution and Sec. 1, Rule 36, 1997 Rules of Civil Procedure. The judgment in default was rendered in violation of the rights of the petitioner to substantive and procedural due process.

2. The petitioners were prevented from having their day in court because of the gross negligence of their former counsel, which gross negligence amounts to extrinsic fraud. 3. The remedies of appeal, petition for relief or other remedies are no longer available through no fault of petitioners. 4. The petitioners have valid and substantial defenses to respondents cause of action.[12]

The petition is without merit. The issue that needs to be resolved in this petition for review is whether the Court of Appeals erred in dismissing the petition for annulment of judgment filed by petitioners. The governing rule is Rule 47 of the 1997 Rules of Civil Procedure on Annulment of Judgments or Final Orders and Resolutions. Sections 1 and 2 of the Rule provide for its coverage and the grounds therefor, thus: Sec. 1. Coverage. - This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner. Sec. 2. Grounds for annulment. - The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction. Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief. Under the Rule, an action for annulment of judgments may only be availed of on the following grounds: (1) extrinsic fraud and (2) lack of jurisdiction. Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent. Fraud is regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured. The overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court.
[13]

Petitioners in this case did not allege nor present evidence of fraud or deception employed on them by the respondents to deprive them of opportunity to present their case to the court. They, however, assert that the negligence of their former counsel in failing to file the appeal brief amounts to extrinsic fraud which would serve as basis for their petition for annulment of judgment. We disagree. The Court has held that when a party retains the services of a lawyer, he is bound by his counsels actions and decisions regarding the conduct of the case. This is true especially where he does not complain against the manner his counsel handles the suit. Such is the case here. When the complaint was filed before the trial court, summons was served upon the petitioners. They allegedly referred the matter to Atty. Villamor who was holding office at the building owned and managed by respondent Tempus Place Realty Management Corporation. However, after
[14] [15] [16]

they have endorsed the summons to said lawyer, they did not exert any effort to follow up the developments of the suit. Hence, they were declared in default and judgment was rendered against them. Even in the course of the appeal, they never bothered to check with their counsel, Atty. Ricardo Santos, the status of the appeal. The notice of appeal was filed on November 3, 1997 and petitioners learned of the dismissal of the appeal in October 1999, after petitioner Tolentino received notice of garnishment of his insurance benefits in connection with the judgment in Civil Case No. Q-96-29207. It was only at that time that they learned that Atty. Santos had migrated to Australia. This only shows that petitioners, as what happened during the pendency of the case before the trial court, never bothered to confer with their counsel regarding the conduct and status of their appeal. The Court stated in Villaruel, Jr. vs. Fernando:
[17]

xxx Litigants represented by counsel should not expect that all they need to do is sit back, relax and await the outcome of their case. To agree with petitioners stance would enable every party to render inutile any adverse order or decision through the simple expedient of alleging negligence on the part of his counsel. The Court will not countenance such ill-founded argument which contradicts long-settled doctrines of trial and procedure.
[18]

We reiterate the rule that a client is bound by the mistakes of his counsel except when the negligence of his counsel is so gross, reckless and inexcusable that the client is deprived of his day in court. Only when the application of the general rule would result in serious injustice should the exception apply. We find no reason to apply the exception in this case.
[19] [20]

In addition, it is provided in Section 2 of Rule 47 that extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief. In other words, it is effectively barred if it could have been raised as a ground in an available remedial measure. The records show that after petitioners learned of the judgment of default, they filed a motion for new trial on the ground of extrinsic fraud. It was however denied by the trial court. They filed a notice of appeal thereafter. Hence, they are now precluded from alleging extrinsic fraud as a ground for their petition for annulment of the trial court decision.
[21]

We are also not persuaded by petitioners assertion that the trial court judge lacked jurisdiction so as to justify the annulment of his decision in Civil Case No. Q-9629207. Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim. Jurisdiction over the person of the defendant or respondent is acquired by voluntary appearance or submission by the defendant or respondent to the court, or by coercive process issued by the court to him, generally by the service of summons. The trial court clearly had jurisdiction over the person of the defending party, the petitioners herein, when the latter received the summons from the court. On the other hand, jurisdiction over the subject matter of the claim is conferred by law and is determined from the allegations in the complaint. Under the law, the action for specific performance and damages is within the jurisdiction of the RTC. Petitioners submission, therefore, that the trial court lacked jurisdiction does not hold water.
[22]

We note that petitioners arguments to support their stand that the trial court did not have jurisdiction actually pertain to the substance of the decision. Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause, and not the decision rendered therein. Where there is jurisdiction over the person and the subject matter, the decision on all other questions arising in the case is but an exercise of the jurisdiction. And the errors which the court may commit in the exercise of jurisdiction are merely errors of judgment which are the proper subject of an appeal. The errors raised by petitioners in their petition for annulment assail the content of the decision of the trial court and not the courts authority to decide the suit. In other words, they relate to the courts exercise of its jurisdiction, but petitioners failed to show that the trial court did not have the authority to decide the case.
[23]

Based on the foregoing discussion, it is clear that petitioners petition for annulment of judgment had no basis and was rightly dismissed by the Court of Appeals. IN VIEW WHEREOF, the petition at bar is DENIED. SO ORDERED.