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This is a petition for review^[1] under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision dated 2 September 1998 of the Court of Appeals in CA-G.R. CV No. 45050.^[2] The Court of Appeals set aside the Order dated 10 February 1994 of the Regional Trial Court of Quezon City, Branch 101 in Civil Case Nos. Q-90-7224 and 90-7439.

The Facts

On 6 August 1988, spouses Jose and Visitacion Caminas (spouses Caminas) bought a 54-square meter lot with a two-storey townhouse, designated as townhouse No. 8, from Trans-American Sales and Exposition represented by its developer Jesus Garcia (Garcia). Townhouse No. 8 is located at No. 65 General Lim Street, Heroes Hill, Quezon City and is on a portion of the land covered by TCT No. 195187. Spouses Caminas paid Garcia P850,000 as evidenced by a contract of sale^[3] and provisional receipt.^[4] According to spouses Caminas, they took possession of townhouse No. 8 upon completion of its construction.

In December of 1988, Garcia bought from Marcial and Elizabeth Vargas (spouses Vargas) various construction materials. As payment to spouses Vargas, Garcia executed an absolute Deed of Sale over townhouse No. 12.^[5] However, on 1 March 1990, spouses Vargas and Garcia executed a Deed of Exchange with Addendum^[6] whereby spouses Vargas transferred to Garcia townhouse No. 12, and in exchange Garcia transferred to spouses Vargas townhouse No. 8.

The contracts executed by Garcia with spouses Caminas and spouses Vargas were not registered with the Register of Deeds. This was because TCT No. 195187 was still being reconstituted and it was only on 17 August 1989 that TCT No. 7285 was issued in its stead.

On 10 May 1990, Garcia and his wife Lorelei (spouses Garcia) executed a Deed of Real Estate Mortgage^[7] over townhouse No. 8 in favor of spouses Rodolfo and Rosario Angeles De Guzman (spouses De Guzman) as security for a loan. The mortgage was annotated at the back of TCT No. 7285. As spouses Garcia failed to pay their indebtedness, spouses De Guzman foreclosed the mortgage on 12 October 1990. At the public auction, spouses De Guzman were the highest bidder.

On 13 November 1990, spouses Caminas filed a complaint^[8] against spouses Garcia, spouses De Guzman, and spouses Vargas before the Regional Trial Court of Quezon City, docketed as Civil Case No. Q-90-7224 for the declaration of nullity of deed of mortgage and deed of sale, for the declaration of absolute ownership, for the delivery of title or in the alternative for refund of purchase price and damages.

On 6 December 1990, spouses Vargas filed a case against spouses Garcia and spouses De Guzman, also before the Regional Trial Court of Quezon City, for specific performance, declaration of nullity of the mortgage contract, damages or in the alternative for sum of money and damages, docketed as Civil Case No. Q-90-7439.^[9]

The two cases were consolidated before the Regional Trial Court, Branch 101, as they involved interrelated issues.^[10]

In their Rejoinder dated 27 February 1993, spouses Vargas raised the lack of jurisdiction of the trial court on the ground that the subject matter falls within the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB).^[11] Spouses Vargas further stated that the HLURB had already rendered a decision in HLURB Case No. REM-021291-4730 dated 28 June 1991 awarding the property in their favor.^[12]


On 20 April 1993, the trial court rendered a decision upholding the rights of the spouses Caminas as the first buyer of the property:

WHEREFORE, premises above considered, judgment is hereby rendered in favor of plaintiffs Visitacion Caminas and Jose V. Caminas against defendants Sps. Jesus Garcia and Lorelei A. Garcia, Sps. Rosario Angeles K. de Guzman and Rodolfo de Guzman and Sps. Elizabeth and Marcial Vargas, declaring said plaintiffs as the absolute owners of the subject property and ordering the Register of Deeds of Quezon City to divest defendants spouses Rosario Angeles K. de Guzman and Rodolfo P. de Guzman and spouses Elizabeth Vargas and Marcial Vargas of the title to the subject property and to cancel Transfer Certificate of Title No. 72646 issued in the name of spouses Rosario Angeles K. de Guzman and Rodolfo de Guzman and to invest title thereto in favor of plaintiffs Visitacion Caminas and Jose V. Caminas by issuing another transfer certificate of title in their names.

Ordering defendants Jesus Garcia and Lorelei A. Garcia to pay defendants Elizabeth Vargas and Marcial Vargas the amount of P700,000.00 and defendants Rosario Angeles K. de Guzman the amount of P562,500.00 with legal rate of interest thereof.

SO ORDERED.^[13]

Spouses De Guzman filed a Motion for Reconsideration. The trial court granted the motion for reconsideration and issued an order^[14] dated 10 February 1994, this time awarding ownership of the property to spouses De Guzman:

IN VIEW OF THE FOREGOING, the decision of this Court dated April 20, 1993 is hereby reconsidered and set aside and in lieu thereof, judgment is hereby rendered in favor of defendants spouses Rosario Angeles K. de Guzman and Rodolfo de Guzman against plaintiffs spouses Visitacion Caminas and Jose V. Caminas and plaintiffs spouses Elizabeth and Marcial Vargas, declaring said defendants as the absolute owners of the subject property embraced in TCT No. 72646.

Ordering defendants Jesus Garcia and Lorelei A. Garcia to pay plantiffs spouses Visitacion Caminas and Jose V. Caminas the amount of P850,000.00 and plaintiffs Elizabeth Vargas and Marcial Vargas the amount of P700,000.00 with legal interest thereof.

SO ORDERED.

Spouses Caminas and spouses Vargas filed an appeal before the Court of Appeals.


In its decision dated 2 September 1998, the Court of Appeals set aside the order of the trial court dated 10 February 1994. The appellate court reinstated the trial court's original decision dated 20 April 1993 upholding the ownership of spouses Caminas:

Premises Considered, the Order of the Regional Trial Court dated February 10, 1994 is REVERSED AND SET ASIDE, and the original decision dated April 20, 1993 is REINSTATED.

SO ORDERED.^[15]

The appellate court stated that as between spouses Caminas and spouses Vargas, spouses Caminas have a better right to the property. The appellate court ruled that as neither of the sales were registered, spouses Caminas have a better right being the first possessor in good faith. The appellate court likewise ruled that spouses Caminas have a better right than spouses De Guzman over the property. According to the appellate court, the registration of the mortgage cannot defeat the right of spouses Caminas since the mortgage was executed by one who was no longer owner of the property. The appellate court further noted that spouses De Guzman failed to prove that they were mortgagees in good faith.

On the issue of jurisdiction, the appellate court ruled that spouses Vargas are estopped from raising the issue of jurisdiction since they filed the complaint and they took active part during the trial of the case.

Hence, this appeal.

The Issues

The issues raised by the parties may be summarized as follows:

1. Whether the Court of Appeals committed reversible error in not setting aside the decision and order of the Regional Trial Court since the case is within the exclusive jurisdiction of the HLURB;
   
   
2. Whether the Court of Appeals committed reversible error in finding that spouses Caminas have a superior right, over spouses Vargas, to the property being the first possessors in good faith; and
   
   
3. Whether the Court of Appeals committed reversible error in finding that spouses Caminas have a superior right over spouses De Guzman despite the registration of the mortgage since the property was mortgaged by one who was no longer the owner of the property.
   

We find the appeal meritorious.

Presidential Decree No. 1344 dated 2 April 1978 expanded the jurisdiction of the National Housing Authority (NHA), the precursor of the HLURB, to include adjudication of the following cases:

Sec. 1. In the exercise of its function 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:

1. Unsound real estate business practices;
   
   
2. 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
   
   
3. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, broker or salesman. (Emphasis ours)
   

Executive Order No. 648 created the Human Settlements Regulatory Commission (HSRC) to assume the regulatory and adjudicatory functions of the NHA, among other purposes. Executive Order No. 90 later renamed the HSRC the HLURB.

The HLURB has jurisdiction over cases arising from (1) unsound real estate business practices; (2) claims for refund or other claims filed by subdivision lot or condominium unit buyers against the project owner, developer, dealer, broker or salesman; and (3) demands for specific performance of contractual and statutory obligations filed by buyers of subdivision lots or condominium units against the owner, developer, broker, or salesman.^[16]

The controversies in this case revolve around the following transactions:

1. The sale of townhouse No. 8 by spouses Garcia to spouses Caminas;
   
   
2. The sale of townhouse No. 8 by spouses Garcia to spouses Vargas; and
   
   
3. The mortgage of townhouse No. 8 by spouses Garcia to spouses De Guzman.
   

There is no dispute that spouses Garcia are in the real estate business under the name Trans-American Sales and Exposition and that townhouse No. 8 is part of its Trans-American Sales and Exposition II project. Clearly, the validity of the questioned transactions entered into by spouses Garcia, as the owner and developer of Trans-American Sales and Exposition, falls within the jurisdiction of the HLURB.

However, spouses De Guzman argue that (1) the HLURB has no jurisdiction over cases involving the declaration of nullity of a mortgage contract filed against the mortgagee alone; and (2) Section 18 of Presidential Decree No. 957 (PD 957) merely requires the project owner or developer to seek prior authority from NHA before mortgaging the subdivision lot or condominium unit but the law does not grant the HLURB the authority to invalidate the mortgage contract if the requisite authority from the NHA is not obtained.

On the other hand, spouses Caminas contend that spouses Vargas are (1) estopped from raising the issue of jurisdiction of the trial court since spouses Vargas filed the case and actively participated in the proceedings before the trial court, and (2) guilty of forum shopping.

The Court finds no merit in the arguments raised by spouses De Guzman and spouses Caminas.

The complaints filed before the trial court by spouses Caminas and spouses Vargas clearly show that the cases are against spouses Garcia, the developer of townhouse No. 8. Hence, the case filed before the trial court was not against the mortgagee alone. The mere fact that spouses Garcia were declared in default does not change the parties to the case or the nature of the action.

On spouses De Guzman's claim that Section 18 of PD 957 does not grant the HLURB the authority to invalidate the mortgage contract if the requisite authority from the NHA is not obtained, this Court has previously ruled that the HLURB has jurisdiction over cases involving the annulment of a real estate mortgage constituted by the project owner without the consent of the buyer and without the prior written approval of the NHA.

In Union Bank of the Philippines v. HLURB,^[17] the Court held that a realty company's act of mortgaging a condominium project without the knowledge and consent of the buyer of one of the condominium units, and without obtaining the prior approval of the NHA, constitutes unsound real estate business practice. Accordingly, the action for the annulment of such mortgage and mortgage foreclosure sale falls within the exclusive jurisdiction of the HLURB, thus:

Clearly, FRDC's act of mortgaging the condominium project to Bancom and FEBTC, without the knowledge and consent of David as buyer of a unit therein, and without the approval of the NHA (now HLURB) as required by P.D. No. 957, was not only an unsound real estate business practice but also highly prejudicial to the buyer. David, who has a cause of action for annulment of the mortgage, the mortgage foreclosure sale, and the condominium certificate of title that was issued to the UBP and FEBTC as [the] highest bidders at the sale. The case falls within the exclusive jurisdiction of the NHA (now HLURB) as provided in P.D. No. 957 of 1976 and P.D. No. 1344 of 1978.

The Court reiterated this ruling in Home Bankers Savings and Trust Co. v. Court of Appeals^[18] which involves a mortgage entered into by the same Trans-American Sales and Exposition that is a party in this case, thus:

The CA did not err in affirming the decision of the Office of the President that HLURB has jurisdiction to declare invalid the mortgage contract executed between Garcia/TransAmerican and petitioner over the subject lots insofar as private respondents are concerned. It correctly relied on Union Bank of the Philippines vs. HLURB, et al. where we squarely ruled on the question of HLURB's jurisdiction to hear and decide a condominium buyer's complaint for: (a) annulment of a real estate mortgage constituted by the project owner without the consent of the buyer and without the prior written approval of the NHA; (b) annulment of the foreclosure sale; and (c) annulment of the condominium certificate of title that was issued to the highest bidder at the foreclosure sale, x x x

On the contention that spouses Vargas are estopped from raising the issue of jurisdiction, the well-settled rule is that the jurisdiction of a court may be questioned at any stage of the proceedings. An examination of the records of the trial court will reveal that in its Rejoinder dated 27 February 1993, spouses Vargas raised the issue of lack of jurisdiction of the trial court since the case properly falls within the jurisdiction of the HLURB.

However, the trial court failed to address the issue of jurisdiction in its decision as well as in its order granting the motion for reconsideration of spouses De Guzman.

Clearly, the trial court erred in not dismissing the case before it. Under the Rules of Court, it is the duty of the court to dismiss an action whenever it appears that the court has no jurisdiction over the subject matter.^[19]

In De Rossi v. NLRC,^[20] citing La Naval Drug Corporation v. Court of Appeals,^[21]the Court stated:

Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the court has no jurisdiction over the subject matter, the action shall be dismissed. This defense may be interposed at any time, during appeal or even after final judgment. Such is understandable, as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to themselves determine or conveniently set aside.

In Mangaliag v. Catubig-Pastoral,^[22]the Court ruled that a party who files a suit before a court that lacks jurisdiction is not necessarily estopped from raising the issue of jurisdiction, thus:

It is neither fair nor legal to bind a party by the result of a suit or proceeding which was taken cognizance of in a court which lacks jurisdiction over the same irrespective of the attendant circumstances. The equitable defense of estoppel requires knowledge or consciousness of the facts upon which it is based. The same thing is true with estoppel by conduct which may be asserted only when it is shown, among others, that the representation must have been made with knowledge of the facts and that the party to whom it was made is ignorant of the truth of the matter (De Castro vs. Gineta, 27 SCRA 623). The filing of an action or suit in a court that does not possess jurisdiction to entertain the same may not be presumed to be deliberate and intended to secure a ruling which could later be annulled if not favorable to the party who filed such suit or proceeding. Instituting such an action is not a one-sided affair. It can just as well be prejudicial to the one who file the action or suit in the event that he obtains a favorable judgment therein which could also be attacked for having been rendered without jurisdiction. The determination of the correct jurisdiction of a court is not a simple matter. It can raise highly debatable issues of such importance that the highest tribunal of the land is given the exclusive appellate jurisdiction to entertain the same. The point simply is that when a party commits error in filing his suit or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of estoppel. It could have been the result of an honest mistake or of divergent interpretations of doubtful legal provisions. If any fault is to be imputed to a party taking such course of action, part of the blame should be placed on the court which shall entertain the suit, thereby lulling the parties into believing that they pursued their remedies in the correct forum. Under the rules, it is the duty of the court to dismiss an action whenever it appears that court has no jurisdiction over the subject matter. (Section 2, Rule 9, Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction (Sec.30, Rule 132, Ibid.), within ten (10) years from the finality of the same (Art. 1144, par. 3, Civil Code). (Emphasis supplied)

In Metromedia Times Corporation v. Pastorin,^[23]the Court expounded on the issue of estoppel on the question of jurisdiction:

The rulings in Lozon v. NLRC addresses the issue at hand. This Court came up with a clear rule as to when jurisdiction by estoppel applies and when it does not:

Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the court has no jurisdiction over the subject matter, the action shall be dismissed (Section 2, Rule 9, Rules of Court). This defense may be interposed at any time, during appeal (Roxas vs. Rafferty, 37 Phil. 957) or even after final judgment (Cruzcosa vs. Judge Concepcion, et al., 101 Phil. 146). Such is understandable, as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to themselves determine or conveniently set aside. In People vs. Casiano (111 Phil. 73, 93-94), this Court, on the issue of estoppel, held:

The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same `must exist as a matter of law, and may not be conferred by consent of the parties or by estoppel' (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position that the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction is conferred by law, and does not depend upon the will of the parties, has no bearing thereon.

Verily, Lozon, Union Motors, Dy and De Rossi aptly resolve the jurisdictional issue obtaining in this case. Applying the guidelines in Lozon, the labor arbiter assumed jurisdiction when he should not. In fact, the NLRC correctly reversed the labor arbiter's decision x x x. (Emphasis supplied)

In this case, the trial court clearly had no jurisdiction over the subject matter. Hence, spouses Vargas are not barred from assailing the jurisdiction of the trial court and the principle of estoppel does not apply.

The appellate court, however, ruled that spouses Vargas are estopped from raising the issue of jurisdiction based on the doctrine in Tijam v. Sibonghanoy.^[24]

The Court finds that Tijam is not applicable in the present case. The general rule is that lack of jurisdiction of a court may be raised at any stage of the proceedings. In Calimlim v. Ramirez,^[25] the Court stated that Tijam is an exception to the general rule because of the presence of laches:

A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of [Tijam]. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstance involved in [Tijam] which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in [Tijam]not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.

In Tijam, the lack of jurisdiction was raised for the first time in a motion to dismiss filed almost fifteen (15) years after the questioned ruling had been rendered. Hence, the Court ruled that the issue of jurisdiction may no longer be raised for being barred by laches.

The circumstances of the present case are different from Tijam. Spouses Vargas raised the issue of jurisdiction before the trial court rendered its decision. They continued to raise the issue in their appeal before the Court of Appeals and this Court. Hence, it cannot be said that laches has set in. The exception in Tijam finds no application in this case and the general rule must apply, that the question of jurisdiction of a court may be raised at any stage of the proceedings. Spouses Vargas are therefore not estopped from questioning the jurisdiction of the trial court.

In any case, spouses Caminas cannot invoke the principle of estoppel to prevent the Court from taking up the issue of jurisdiction.^[26] In Dy v. NLRC,^[27] the Court held:

The failure of the appellees to invoke anew the aforementioned solid ground of want of jurisdiction of the lower court in this appeal should not prevent this Tribunal to take up that issue as the lack of jurisdiction of the lower court is apparent upon the face of the record and it is fundamental that a court of justice could only validly act upon a cause of action or subject matter of a case over which it has jurisdiction and said jurisdiction is one conferred only by law; and cannot be acquired through, or waived by, any act or omission of the parties; hence may be considered by this court motu proprio. (citations omitted)

The Court shall no longer dwell on the issue of forum shopping. Even if spouses Vargas were guilty of forum shopping, the fact remains that the trial court had no jurisdiction over the case. Spouses Caminas only raised the issue of forum shopping in their opposition to the Motion for Reconsideration (filed by the spouses Vargas) dated 22 October 1998 before the Court of Appeals.^[28] In Young v. Keng Seng,^[29] the Court ruled that the violation of the rule on forum shopping should be raised at the earliest opportunity in a motion to dismiss or a similar pleading. The fact that spouses Vargas filed a case before the HLURB was made known to the spouses Caminas before the trial court rendered its decision. Yet, spouses Caminas failed to question the alleged forum shopping before the trial court or in their appeal brief before the Court of Appeals.

Having concluded that it is the HLURB and not the trial court which has jurisdiction over the present controversy, the Court deems it unnecessary to discuss the other issues raised by the parties.

WHEREFORE, we SET ASIDE the Decision of the Court of Appeals dated 2 September 1998 in CA-G.R. CV No. 45050. We DISMISSCivil Case Nos. Q-90-7224 and 90-7439 without prejudice to the parties seeking relief, if so minded, in the proper forum.

SO ORDERED.


Puno, C.J., Corona, Azcuna, and Leonardo-De Castro, JJ., concur.

---

^[1] G.R. Nos. 137869 and 137940 were consolidated by the Court in its resolution in G.R. No. 137869 dated 9 August 1999.

^[2] Penned by Associate Justice Eloy R. Bello, Jr. and concurred in by Associate Justices Salome A. Montoya and Ruben T. Reyes.

^[3] Records, Vol. I, pp. 7-9.

^[4] Id. at 163.

^[5] Id. at 38-40.

^[6] Id. at 41-42.

^[7] Id. at 10-14.

^[8] Id. at 1-6.

^[9] Records, Vol II, pp. 1-15.

^[10] Id. at 77.

^[11] Records, Vol. I, pp. 301-305.

^[12] HLURB Case No. REM-021291-4730 involved only spouses Marcial and Elizabeth Vargas as complainants and Jesus Garcia and/or Trans-American Sales and Exposition as respondent. Spouses Jose and Visitacion Caminas and spouses Rodolfo and Rosario Angeles De Guzman were not impleaded in said case.

^[13] Records, Vol. II, pp. 409-414.

^[14] Id. at 464-465.

^[15] Rollo (G.R. No. 137940), p. 19.

^[16] Delos Santos v. Sarmiento, G.R. No. 154877, 27 March 2007, 519 SCRA 62.

^[17] G.R. No. 95364, 29 June 1992, 210 SCRA 558, 564.

^[18] G.R. No. 128354, 26 April 2005, 457 SCRA 167, 177-178.

^[19] Section 2, Rule 9.

^[20] 373 Phil. 17, 26-27 (1999).

^[21] G.R. No. 103200, 31 August 1994, 236 SCRA 78.

^[22] G.R. No. 143951, 25 October 2005, 474 SCRA 153, 163-164 citing Calimlim v. Ramirez, G.R. No. L-34362, 19 November 1982, 118 SCRA 399.

^[23] G.R. 154295, 29 July 2005, 465 SCRA 320, 335-336 citing Lozon v. NLRC, 310 Phil.1 (1995) and People v. Casiano, 111 Phil. 73 (1961).

^[24] 131 Phil. 556 (1968).

^[25] 204 Phil. 25, 34-35 (1982).

^[26] Union Motors Corporation v. NLRC, 373 Phil. 310 (1999).

^[27] 229 Phil. 234, 244 (1986) citing Free Telephone Workers Union v. PLDT,199 Phil. 137 (1982).

^[28] CA rollo, pp. 193-196.

^[29] 446 Phil. 823 (2003).