Case Digest (G.R. No. 198745)
Facts:
The case involves Banco de Oro Unibank, Inc. (formerly Banco de Oro-EPCI, Inc.) as the petitioner and Sunnyside Heights Homeowners Association, Inc. (SHHA) as the respondent. The events leading to this case began in March 1988 when Mover Enterprises, Inc. (Mover), the owner and developer of the Sunnyside Heights Subdivision in Batasan Hills, Quezon City, mortgaged Lot 5, Block 10 of Phase I of the subdivision to the Philippine Commercial International Bank (PCIB) to secure a loan of P1,700,000.00. Mover defaulted on the loan, leading PCIB to foreclose on the mortgage. The Registry of Deeds of Quezon City subsequently issued Transfer Certificate of Title (TCT) No. 86389 to PCIB on May 17, 1993.
In mid-1994, PCIB advertised the lot for sale, prompting SHHA to file a complaint with the Housing and Land Use Regulatory Board (HLURB) to declare the mortgage void, arguing that the property had been designated as open space in accordance with the law. PCIB countered that the mortga...
Case Digest (G.R. No. 198745)
Facts:
Background of the Case
- Mover Enterprises, Inc. (Mover) owned and developed the Sunnyside Heights Subdivision in Batasan Hills, Quezon City.
- In March 1988, Mover mortgaged Lot 5, Block 10 of Phase I (5,764 sqm) to Philippine Commercial International Bank (PCIB) to secure a loan of P1,700,000.00.
- Mover defaulted on the loan, leading PCIB to foreclose on the mortgage. PCIB consolidated the title, and Transfer Certificate of Title (TCT) No. 86389 was issued to PCIB on May 17, 1993.
SHHA's Complaint
- In mid-1994, PCIB advertised the lot for sale, prompting Sunnyside Heights Homeowners Association (SHHA) to file a letter-complaint with the Housing and Land Use Regulatory Board (HLURB).
- SHHA sought to declare the mortgage void, arguing that the property was designated as open space under the law and should be reconveyed to SHHA.
PCIB's Defense
- PCIB argued that the mortgaged lot was different from the one claimed by SHHA and that the title bore no annotation indicating it was reserved as open space.
- PCIB claimed to be an innocent mortgagee in good faith and asserted that the complaint should have been filed in regular courts.
HLURB Arbiter's Decision
- On August 28, 1995, the HLURB Arbiter dismissed SHHA's complaint, finding no evidence that the mortgaged property (TCT No. 366219) was the same as the open space (TCT No. 223475).
HLURB Board of Commissioners' Decision
- SHHA appealed to the HLURB Board of Commissioners, presenting a certification that the open space (Block 10) had been renamed Block 7 in an altered subdivision plan approved on May 18, 1987.
- The HLURB Board ruled that the mortgaged property (Block 7) was indeed the designated open space and declared the mortgage and foreclosure null and void. It ordered the cancellation of PCIB's title and the return of the property to Mover, with Mover ordered to repay PCIB P1,700,000.00.
Appeal to the Office of the President (OP)
- PCIB appealed to the OP, which affirmed the HLURB's decision, ruling that the HLURB had jurisdiction over the case.
Merger and Name Change
- In 2000, PCIB merged with Equitable Banking Corporation, becoming Equitable PCI Bank. In 2001, it merged with Banco de Oro Universal Bank, becoming Banco de Oro-EPCI, Inc. (now Banco de Oro Unibank, Inc. or BDO).
Appeal to the Court of Appeals (CA)
- BDO appealed to the CA, arguing that the HLURB lacked jurisdiction, that it was a mortgagee in good faith, and that new evidence was improperly admitted on appeal.
- The CA affirmed the OP's decision but modified it to include interest on the P1,700,000.00 loan.
Issue:
- Whether the HLURB has jurisdiction over the annulment of the mortgage.
- Whether BDO is a mortgagee in good faith, and thus, its title over the property cannot be annulled.
- Whether the admission of new evidence on appeal violated BDO's right to due process.
- Whether Mover is liable to pay interest on the loan in addition to the principal amount.
Ruling:
- The Supreme Court denied BDO's petition and affirmed the CA's decision with clarification.
- The HLURB has jurisdiction over the case as it involves the annulment of a mortgage over a subdivision's open space, which is within its regulatory powers.
- BDO is not a mortgagee in good faith because the property was designated as open space and is inalienable.
- The admission of new evidence on appeal did not violate BDO's right to due process, as the HLURB has the authority to consider such evidence to confirm its jurisdiction.
- Mover is liable to pay BDO the principal amount of P1,700,000.00 plus legal interest at 12% per annum from September 14, 1994, reduced to 6% per annum starting July 1, 2013, until full payment.
Ratio:
- (Unlock)