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Brainstorm: The Next Generation | Earthquake Liability: Jurisdiction?

In my article last week, I already discussed the liability of developers, contractors, engineers and architects in relation to damages suffered by homeowners or condominium owners from the total or partial destruction of their housing or condominium units arising from an earthquake.

In summary, I wrote that while an act of God, like an earthquake, is a viable defense against liability, this is true only if the developer, contractor, etc, is free from any kind of negligence in the preparation of the building plan or construction of the damaged structure. Otherwise, the defense is not applicable and liability for damages can be enforced.

One important thing that I did not discuss, however, was, assuming that the developer, contractor, etc was negligent, WHAT KIND OF CASE TO FILE AND WHERE TO FILE IT?

I decided to expound on my previous article because I have been hearing about cases intended to be filed IN COURT, some even talking about a CLASS SUIT to be filed by the homeowners. I’m not even really sure if those talking about it are talking hypothetically or about real cases.

What is a class suit, and is it applicable to the situation?

In simple terms, a class suit is a case filed by some members of a large group, too many for all of them to join as plaintiffs, representing the entire group to claim or enforce something that is of COMMON or GENERAL interest to all of the members of a group.

For example, if a company begins to build a dam that threatens to cause the flooding of a village, some of the residents of the village can file a case in behalf of all the residents to stop the construction of the dam because stopping the construction is of common or general interest to all of them.

My opinion, and I’d like to be clear that this is just my opinion, is that this is NOT applicable for homeowners wishing to sue the developer of a condominium on the ground of negligence resulting to damages triggered by an earthquake.

This is because each and every homeowner would be claiming compensation for the damages he suffered which is of interest to him alone and not in common with the other homeowners. The basis of the case, in short, is not of common or general interest to all of them. The Supreme Court emphasized this in the leading case of Sulo ng Bayan, Inc. v. Araneta (72 SCRA 347)

What the homeowners CAN do is to join together in a single complaint against the developer but this is, technically, NOT a class suit. The technical term for this is “joinder of causes of action” which would be allowed since the claims of all the homeowners would have arisen from the same, or similar, facts. However, they ALL have to join as claimants in the case, whether directly or through an attorney-in-fact, they cannot just be represented by a few homeowners.

The next ticklish issue is WHERE, or in what institution, should the case be filed?

I said that this is ticklish because from what I have been hearing, it seems that many cases are intended to be filed in COURT and this could prove to be dangerous.

This is an important issue because filing such a case will possibly involve the payment of substantial filing fees, not to mention attorney’s fees, which would go to waste if filed in the wrong forum.

The fact of the matter is that, based on the general facts, I believe that it would be the Housing and Land Use Regulatory Board (HLURB) that would have jurisdiction over such a case since it has exclusive jurisdiction over, among others “claims involving refunds and any other claims filed by subdivision lot or condominium unit buyers against the project owner, developer, dealer, broker or salesman” under Section 1 of Presidential Decree No. 1344.

The Supreme Court, in the past, has ruled the HLURB has jurisdiction over claims arising from defective housing units such as in the case of HLC Construction and Development Corp. v. EHSHA (G.R. No. 139360, [September 23, 2003])

The issue of jurisdiction could even be further complicated by the stipulations in the contracts between the homeowners and the developers because if the contract includes an arbitration clause, it is quite possible that the case could fall within the jurisdiction, instead, of the Construction Industry Arbitration Commission (CIAC).

Of course, nitty gritty details could still complicate the issue of jurisdiction even further such as if there is a need to implead third persons who are not parties to the contract or if there are other causes of action or claims that will be included or even the possibility of filing a case based on criminal negligence, but, based on general assumptions, I stand by with what I have stated above.

What I am trying to say is that the determination of what kind of case to file and where to file it is not as simple as it would seem and I would hate to see homeowners who have already suffered great losses due to an earthquake suffer even more just because of having chosen the wrong remedy or if the case is erroneously filed in the wrong forum.

Again, the foregoing is just my opinion. Take it, or reject it, as you will.

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