Case Summary (G.R. No. 128354)
Background of the Case
The case arises from a series of separate contracts to sell between the private respondents and the developer, TransAmerican Sales and Exposition, concerning specific parcels of land and associated townhouse units. The agreements stipulated that titles to the properties would be delivered free of liens upon full payment. Each respondent made payments but faced issues with the non-completion of their properties, leading to disputes concerning the mortgage executed by the developer without the consent of the buyers.
Mortgage and Foreclosure Proceedings
Engr. Jesus Garcia, along with his wife, secured a loan from the petitioner, using several lots (including those sold to the private respondents) as collateral, without the required approval from the Housing and Land Use Regulatory Board (HLURB). The petitioner later foreclosed on the mortgage when the loan went into default. The foreclosure proceedings elicited complaints from the private respondents regarding the non-delivery of titles and completion of their units.
Initial Ruling by HLURB
The HLURB examined the claims, finding that due to the lack of written approval from HLURB for the mortgage, the mortgage was unenforceable and therefore ordered the cancellation of the mortgage and the certificate of sale in favor of the petitioner. It directed the delivery of the properties to the private respondents, effectively voiding the mortgage under Section 18 of P.D. No. 957.
Court of Appeals Decision
The Court of Appeals upheld the HLURB's ruling, emphasizing the importance of prior written approval for any mortgages on subdivision properties. The court recognized that the existence of contracts to sell affected the validity of the subsequent mortgage agreement. It reaffirmed that the HLURB had jurisdiction over these matters and correctly ruled that the actions of the developer were in violation of the law.
Supreme Court's Stance
The Supreme Court dismissed the petition of the Home Bankers Savings and Trust Company, supporting the lower courts' findings. It reiterated that the mortgage executed with the developer was invalid as it violated applicable legislation meant to protect buyers in real estate transactions. The court emphasized that the petitioner could not claim to be an innocent purchaser as it failed to conduct due diligence on the properties used as collateral.
Negligence of the Petitioner
The Supreme Court noted that the petitioner could not solely rely on the certificates of title and must examine whether the developer had authority to mortgage the properties. The court highlighted the importance of protecting buyers from unscrupulous developers and held that a lender should inquire further when there are indications of existing buyer interests in the properties being mortgaged.
Conclusion on Claims and Registration
The
...continue readingCase Syllabus (G.R. No. 128354)
Case Background
- The case revolves around a petition for review on certiorari filed by Home Bankers Savings and Trust Company against the Court of Appeals' decision regarding real estate transactions involving several private respondents and a developer, TransAmerican Sales and Exposition.
- The private respondents had entered into separate contracts to sell with TransAmerican regarding portions of land covered by Transfer Certificate of Title (TCT) No. 19155 in Quezon City, which included townhouses to be constructed on each lot.
Contracts and Payments
- Each private respondent entered into contracts to sell:
- Pablo N. Arevalo: Purchased Unit No. 5 for P750,000, fully paid by September 3, 1988.
- Alfredo Lim: Purchased Unit No. 1 for P800,000, fully paid on December 22, 1988.
- Francisco A. Uy: Purchased Unit No. 6 for P800,000, paid P581,507.41 but stopped payments due to non-completion of the unit.
- Spouses Leandro A. Soriano, Jr. and Lilian Soriano: Purchased Unit No. 3 for P1,600,000, paid P669,960 but stopped payments due to non-completion.
- Alfredo Lim and Felisa Chi Lim: Purchased Unit No. 7 for P700,000, fully paid by March 18, 1989.
- Contracts stipulated completion of townhouses and delivery of titles free from liens upon full payment.
Mortgage and Foreclosure Issue
- Engr. Jesus Garcia and his wife obtained a loan of P4,000,000 from Home Bankers and mortgaged eight lots as collateral, including five lots that were subject to the private respondents' contracts.
- The bank regist