G.R. No. 147964 - Far East Bank and Trust Co. vs. Marquez

On March 13, 1989, respondent Arturo L. Marquez executed a Contract to Sell with Transamerican Sales and Exposition (TSE), represented by its Owner/General Manager, Engr. Jesus Garcia.
The contract involved a 52.5-square-meter lot in Diliman, Quezon City, which included a three-storey townhouse unit (Unit No. 10) to be constructed on the lot, for a total consideration of ₱800,000.00.
Although the property was a part of a larger parcel represented by Transfer Certificate of Title (TCT) No. 156254 (later TCT No. 383697), the lot was specifically described and segregated in the Contract to Sell.

On May 22, 1989, TSE obtained a loan amounting to ₱7,650,000.00 from petitioner Far East Bank and Trust Company (FEBTC), using the entire parcel of land covered by TCT No. 156254 as collateral.
The mortgage loan was executed by TSE, which later became a ground for dispute due to non-compliance with regulatory requirements under Presidential Decree (PD) 957.

Due to TSE’s failure to meet its payment obligations, petitioner FEBTC initiated an extrajudicial foreclosure on the mortgage.
FEBTC subsequently emerged as the highest bidder in the resulting auction sale, where the bid amounted to ₱15.7 million.
Respondent had already paid a total of ₱600,000.00 towards his purchase when the construction of his townhouse unit began to slacken, eventually leading him to halt payments after discovering that foreclosure proceedings had been conducted.

On January 29, 1991, respondent instituted a case before the Office of Appeals, Adjudication and Legal Affairs (OAALA) of the Housing and Land Use Regulatory Board (HLURB), docketed as HLRB Case No. REM-012991-4712.

The case sought to compel TSE to complete the construction of the townhouse unit.
It also aimed to prevent the enforceability of petitioner FEBTC’s extrajudicial foreclosure.
Additionally, respondent requested the declaration of the mortgage as invalid on the ground that it was executed in violation of Section 18 of PD 957.

On November 11, 1991, the OAALA rendered a Decision in favor of respondent, declaring the mortgage unenforceable against him and ordering FEBTC to compute the remaining loan balance and other remedial measures, including the cancellation of annotations on the title.
Petitioner FEBTC sought relief by elevating the case through a Petition for Review to the HLURB’s Board of Commissioners (HLRB Case No. REM-A-1126), which on July 18, 1994, affirmed the OAALA decision in its entirety.
Subsequently, petitioner appealed the HLURB decision to the Office of the President, which dismissed the appeal and upheld the 1994 Decision.
Finally, petitioner elevated the matter to the Court of Appeals via a Petition for Review under Rule 43, and the issue eventually reached the Supreme Court for review under Rule 45.

Whether the mortgage contract, by being executed without the prior written approval of the HLURB as mandated by Section 18 of PD 957, violated the decree and is therefore void against third persons, specifically respondent Marquez.

Assuming the mortgage contract contravened Section 18 of PD 957, whether the remedial measures granted by the HLURB, as sustained by the Office of the President and the Court of Appeals, were proper and equitable in addressing respondent’s situation.

Whether the failure of the petitioner to have the Certification against forum shopping executed under oath—specifically, the absence of the notary public’s signature—warrants the dismissal of the appeal.