SECOND DIVISION

Respondent filed before the Regional Trial Court of Manila a

RIDGEWOOD ESTATE, INC. G.R. No. 166751 complaint for damages against Camella Homes for encashing the
(Erroneously sued as Camella postdated checks despite repeated demands to return them and
Homes), Present:
Petitioner, refrain from encashing them in view of the recission of the
PUNO, J., Chairman, contract to sell.
SANDOVAL-GUTIERREZ,
CORONA,
- versus - AZCUNA, and
Petitioner filed a motion to dismiss. It argued that Camella Homes is
GARCIA, JJ.
not a real party-in-interest and the complaint states no cause of action
Promulgated:
EXPEDITO BELAOS, as the contract to sell was entered into by and
Respondent. June 8, 2006 between Expedito L. Belaos and Ridgewood Estate, Inc. It further
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
-x argued that the complaint was defective since Camella Homes is not a
natural or juridical person, hence, it is not an entity authorized by law
DECISION to be a party to a civil suit.

PUNO, J.:
The trial court denied the motion to dismiss. It applied the doctrine on
corporation by estoppel under Section 21 of the Corporation Code
This is a petition for review of the decision of the Court of Appeals
which states:
dated July 28, 2004 and its resolution dated January 19, 2005 in CA-
Section 21. Corporation by estoppel.All persons who
G.R. SP No. 77836. The Court of Appeals affirmed the order of the
assume to act as a corporation knowing it to be without
Regional Trial Court of Manila in Civil Case No. 02-103764 denying authority to do so shall be liable as general partners for all
debts, liabilities and damages incurred or arising as a result
the motion to dismiss filed by herein petitioner Ridgewood Estate, thereof: Provided, however, That when any such ostensible
Inc. corporation is sued on any transaction entered by it as a
corporation or on any tort committed by it as such, it shall not
be allowed to use as a defense its lack of corporate
Petitioner is a subdivision developer that sells properties under personality.

the trade One who assumes an obligation to an ostensible corporation

as such, cannot resist performance thereof on the ground
name Camella Homes. Respondent Expedito Belaos entered into
that there was in fact no corporation.
a contract to sell with petitioner for the purchase of a house and
lot at Tierra Nevada, Gen. Trias, Cavite. Pursuant thereto,
Petitioner filed a petition for certiorari before the Court of Appeals. In
respondent issued several postdated checks in favor of petitioner as
addition to its contention that Camella Homes was not a real party-in-
amortization for the property. Petitioner, however, failed to construct
interest, petitioner also raised the argument that the trial court had no
the house. Thus, respondent, in a letter dated April 16, 2000,
jurisdiction over the suit, as the subject matter of the complaint was
rescinded the contract to sell and demanded the return of the
within the exclusive jurisdiction of the Housing and Land Use
amounts he had paid to petitioner, as well as the postdated
Regulatory Board (HLURB).
checks. Petitioner remitted to respondent the sum of P299,908.00,
equivalent to the down payment and six monthly amortizations
In its decision dated July 28, 2004, the Court of Appeals dismissed the
previously paid by respondent, but it nonetheless continued
petition. It held:
to encash the other postdated checks, to the prejudice of respondent.
Private respondents complaint contains allegations that
Ridgewood Estates (sic) deliberately and First, the trial court correctly assumed jurisdiction over the complaint
intentionally encashed the postdated checks despite filed by respondent against petitioner.
knowledge of the contracts recission. Respondent prayed for
the award of actual, moral and exemplary damages due to
his humiliation and loss of credibility with the banking Section 1 of Presidential Decree No. 1344 provides for the jurisdiction
community and among his colleagues caused by petitioners
alleged malicious acts. of HLURB (then National Housing Authority), thus:

Respondent Belaos is not claiming refund or any other claim Sec. 1. In the exercise of its function to regulate the real
from a subdivision developer. He does not demand for estate trade and business and in addition to its powers
specific performance of contractual and statutory obligations provided for in Presidential Decree No. 957, the National
of delivering the property to him. In the cases that reached Housing Authority shall have exclusive jurisdiction to hear
the Supreme Court, the ruling has consistently been that the and decide the cases of the following nature:
NHA or the HLURB has jurisdiction over complaints arising
from contracts between the subdivision developer and the lot a. Unsound real estate business practices;
buyer or those aimed at compelling the subdivision developer
to comply with its contractual and statutory obligations to b. Claims involving refund and any other claims filed by
make the subdivision a better place to live in. It has already subdivision lot or condominium unit buyer against the project
been admitted by both parties that the contract has already owner, developer, dealer, broker or salesman; and
been rescinded and that Ridgewood returned
the downpayment [sic] and some of the postdated c. Cases involving specific performance of contractual and
checks. Hence, the Court a quo has jurisdiction over the statutory obligations filed by buyers of subdivision lot or
action for damages.[1] condominium unit against the owner, developer, dealer,
broker or salesman.

Petitioner filed a motion for reconsideration which was denied by the

The Court held in Roxas v. Court of Appeals[3] that the mere
Court of Appeals in its resolution dated January 19, 2005.
relationship between the parties, i.e., that of being subdivision
owner/developer and subdivision lot buyer, does not automatically vest
Petitioner raises the following arguments in the case at bar:
jurisdiction in the HLURB. For an action to fall within the exclusive
1. That the honorable court failed to consider that the lower jurisdiction of the HLURB, the decisive element is the nature of the
court acted with grave abuse of discretion when the latter
assumed jurisdiction over a matter which the law already action as enumerated in Section 1 of P.D. No. 1344. The HLURB has
vests with the Housing and Land Use Regulatory Board.
jurisdiction over complaints aimed at compelling the subdivision
2. That a perusal of the order of the lower court reveals that developer to comply with its contractual and statutory obligations.
it committed grave abuse of discretion when it anchored itself
on an erroneous finding that Camella Homes allegedly is a
corporation by estoppel. The complaint filed by respondent against petitioner was one for
3. That the Honorable Court of Appeals failed to consider that damages. It prayed for the payment of moral, actual and exemplary
the lower court committed grave abuse of discretion when it damages by reason of petitioners malicious encashment of the checks
failed to consider that the complaint filed by private
respondent has no cause of action for failure to implead the even after the rescission of the contract to sell between
real party in interest.
them. Respondent claimed that because of petitioners malicious and
4. That the Honorable Court of Appeals failed to consider that fraudulent acts, he suffered humiliation and embarrassment in several
the lower court committed grave abuse of discretion when it
ordered Camella Homes, which has no legal capacity to be banks, causing him to lose his credibility and good standing among his
sued[,] to submit an answer.[2] colleagues.[4] Such action falls within the jurisdiction of regular courts,
not the HLURB.
We affirm the decision of the Court of Appeals.

Second, we observe that respondents complaint was actually directed

against herein petitioner, Ridgewood Estate, Inc., although it
named Camella Homes as respondent therein. The complaint itself
referred to Ridgewood Estate, Inc. as the authorized representative
REYNATO S. PUNO
of Camella Homes. Petitioner cannot use the lack of juridical
Associate Justice
personality by Camella Homes as reason to evade its liability, if any, to
petitioner. Petitioner admittedly uses the name Camella Homes as its WE CONCUR:
business name. Hence, to the buyers, CamellaHomes and Ridgewood
Estate, Inc. are one and the same. A reading of the complaint would
show that respondent was essentially suing petitioner, it being the
seller of the house and lot he intended to purchase. We agree with the ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

Court of Appeals ruling that the remedy in this case is not the dismissal
of the case but the joinder of the proper party.[5] The appellate court
correctly explained:

Dismissal of the complaint is not the remedy since the

Court a quo properly acquired jurisdiction [over] the action for
RENATO C. CORONA ADOLFO S. AZCUNA
damages. In its pleadings before the trial court,
Associate Justice Associate Justice
defendant CamellaHomes alleges that it is not a juridical
entity, not the real party in interest and pointed to Ridgewood
Estates [sic], Inc. as the party liable to Belaos. In its petition
before [u]s, Ridgewood Estates [sic], Inc. erroneously sued
as Camella Homes presented itself as one of the developers
of Camella Homes, specifically that of Tierra Nevada
Subdivision of which respondent Belaos is a buyer, then it CANCIO C. GARCIA
claims to be the real party in interest in the controversy by Associate Justice
admitting it entered into a Contract to Sell with Belaos, [then]
tries to exculpate Camella Homes by alleging that the latter
is not a juridical entity and alleges that it is the HLURB which
ATTESTATION
has jurisdiction over the controversy.

The Regional Trial Court did not commit grave abuse of I attest that the conclusions in the above Decision were reached in
discretion in denying the motion to dismiss and ordering
defendant Camella Homes to file an consultation before the case was assigned to the writer of the opinion
answer. Assuming arguendo that petitioner Ridgewood is a
separate entity from Camella Homes, of the Courts Division.
defendant Camella Homes may implead the former. Private
respondent Belaos may file a motion to amend his complaint
so as to implead the real party in interest. Parties may be
dropped or added by order of the court on motion of any party REYNATO S. PUNO
or on its own initiative at any stage of the action and on such Associate Justice
terms as are just.(Sec. 11, Rule 3 of the 1997 Rules of Civil Chairman
Procedure)[6]

CERTIFICATION
We, therefore, find that the trial court did not err in denying petitioners
motion to dismiss.
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairmans Attestation, it is hereby certified that the conclusions in the
IN VIEW WHEREOF, the petition is DENIED.
above Decision were reached in consultation before the case was

SO ORDERED. assigned to the writer of the opinion of the Courts Division.