Case Digest (G.R. No. 182133) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
This case involves a Petition for Review on Certiorari filed by United Overseas Bank of the Philippines, Inc. (petitioner) against the Board of Commissioners of the Housing and Land Use Regulatory Board (HLURB), J.O.S. Managing Builders, Inc. (respondent), and Eduplan Philippines, Inc. (respondent). The events unfolded leading to the Decision dated February 27, 2006, and Resolution dated March 5, 2008, of the Court of Appeals (CA) in CA-G.R. SP No. 86401. Respondent J.O.S. Managing Builders, Inc. developed a condominium project known as the Aurora Milestone Tower. On December 16, 1997, it entered into a Contract with Eduplan Philippines, Inc. for the sale of Condominium Unit E, located on the 10th Floor, measuring 149.72 square meters. Eduplan made full payment by August 1998, leading to the execution of a Deed of Absolute Sale in December 1998. However, despite this, J.O.S. Managing Builders failed to issue a Condominium Certificate of Title in Eduplan's name. It was discovered Case Digest (G.R. No. 182133) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Background of the Transaction
- Respondents’ Involvement
- J.O.S. Managing Builders, Inc. (JOS) is the registered owner and developer of Aurora Milestone Tower, a condominium project.
- EDUPLAN Philippines, Inc. (EDUPLAN) contracted with JOS to purchase Condominium Unit E on the 10th Floor of the said project.
- Sale and Payment
- On December 16, 1997, JOS and EDUPLAN executed a contract to sell covering Unit E (with an area of approximately 149.72 square meters).
- Full payment was effected by EDUPLAN in August 1998.
- In December 1998, a Deed of Absolute Sale was executed; however, JOS failed to cause the issuance of an individual Condominium Certificate of Title in favor of EDUPLAN.
- The Mortgage and Its Impact
- Mortgage Execution
- Earlier, JOS had executed a real estate mortgage in favor of United Overseas Bank of the Philippines (UOB) covering several parcels of land (identified by various Transfer Certificates of Title).
- This mortgage was executed without obtaining the mandatory prior written approval from the Housing and Land Use Regulatory Board (HLURB) as required by Section 18 of Presidential Decree (P.D.) No. 957.
- Foreclosure Proceedings
- JOS defaulted on its loan obligations with UOB.
- UOB foreclosed the mortgage, and the properties were sold at public auction, with UOB subsequently being declared the highest bidder.
- The Administrative Proceedings
- EDUPLAN’s Complaint Before HLURB
- Due to the non-issuance of the Condominium Certificate of Title and discovery of the unapproved mortgage, EDUPLAN filed a complaint for specific performance and damages against JOS and UOB before the HLURB.
- Relief sought included:
- Declaration that the mortgage was null and void;
- Order compelling the release of the Certificate of Title;
- Additional remedies such as provision of emergency power and refund of telephone carrier charges.
- HLURB Decisions
- On August 15, 2001, an HLURB Arbiter ruled in favor of EDUPLAN declaring the mortgage (and the subsequent foreclosure) null and void for violating Section 18 of P.D. No. 957.
- The HLURB decision was later affirmed, with modifications, by the HLURB Board of Commissioners on August 20, 2004.
- The Appeal and Legal Challenge
- Petition for Review and Exhaustion of Remedies Issue
- UOB filed a petition for review (and later a motion for reconsideration) with the Court of Appeals challenging the HLURB ruling, focusing particularly on:
- The application of the doctrine of exhaustion of administrative remedies; and
- The propriety of nullifying the entire mortgage when EDUPLAN’s interest was limited to Unit E only.
- The Court of Appeals dismissed UOB’s petition on two grounds:
- UOB’s failure to exhaust all available administrative remedies (by not appealing to the Office of the President), and
- The argument regarding a purely legal question as being an exception to the exhaustion rule.
- Subsequent Issues Raised
- UOB argued that the question on the nullity of the mortgage—given that EDUPLAN is concerned only with a specific unit—is a legal question.
- The contention centered on whether the entire mortgage should be annulled or only the portion affecting EDUPLAN, based on principles such as the divisibility (or indivisibility) of mortgage contracts and the protection afforded to buyers under P.D. No. 957.
Issues:
- Exhaustion of Administrative Remedies
- Does the doctrine of exhaustion of administrative remedies apply when the controversy involves a purely legal question, specifically the nullification of a mortgage executed without HLURB approval?
- Can UOB invoke the exception to exhaustion because the issue ultimately calls for a judicial interpretation of law rather than the assessment of factual evidence?
- Proper Scope of Nullification
- Should the HLURB’s decision to declare the entire mortgage null and void be sustained, or should the nullity be limited only to the interest of EDUPLAN—the buyer of one condominium unit?
- Does a unit buyer, who has an actionable interest only over the unit purchased (and not the entire property), lack standing to seek the annulment of the entire mortgage?
- Divisibility versus Indivisibility of Mortgage Contracts
- In view of Section 18 of P.D. No. 957 and relevant jurisprudence (e.g., Far East Bank v. Marquez and Philippine National Bank v. Lim), is the mortgage contract divisible such that only the portion affecting the buyer’s unit should be rendered void?
- Conversely, does the doctrine of mortgage indivisibility (under Article 2089 of the Civil Code) necessitate that a mortgage is either entirely valid or entirely null, thereby affecting all the properties covered?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)