Case Summary (G.R. No. 205469)
Antecedents
On December 10, 1997, NSJBI secured a loan of Php600 million from GSIS, mortgaging multiple properties as collateral. This included residential units and condominium units. The loan agreement prohibited NSJBI from transferring any interest in the mortgaged properties without GSIS's consent, while allowing the sale of these properties provided the proceeds were applied towards the loan repayment. Despite these conditions, NSJBI sold some units to individuals, including the petitioners, who were subsequently unaware of the underlying mortgage.
Foreclosure Proceedings
NSJBI defaulted on the loan, leading GSIS to initiate an extrajudicial foreclosure on March 31, 2003. GSIS secured ownership at an auction held on June 17, 2003, leading to the cancellation of titles in favor of GSIS. GSIS sought to evict NSJBI and the new unit owners, prompting a legal challenge by the latter.
Petitioner Arguments
The petitioners intervened in the case arguing they were bona fide purchasers of their respective condominium units who had entered their acquisitions without notice of the mortgage. They claimed that GSIS did not establish their legal right to dispossess them of their units, asserting their entitlement to legal protections as property purchasers under relevant laws.
Lower Court Rulings
The Regional Trial Court (RTC) initially granted the petitioners' motions to intervene and ruled in favor of GSIS for units not occupied by purchasers. The RTC refused to issue a writ of possession against the petitioners, stating it would contravene the rights of parties in possession with claims of ownership under Article 433 of the Civil Code.
Court of Appeals Decision
The Court of Appeals reversed the RTC's decision, asserting that the petitioners were not considered third-party possessors, and their remedy lay in pursuing claims before the Housing and Land Use Regulatory Board (HLURB) rather than allowing their intervention in the ex-parte proceeding for the writ of possession.
Supreme Court Decision and Legal Principles
The Supreme Court determined that the CA erred in denying the petitioners' intervention. It referred to established precedents emphasizing that condominium and subdivision unit buyers possess rights that can be independent and adverse to the mortgagor, providing them protection against summary dispossession. The ruling reinforced the doctrine that judicial proceedings concerning possession should allow all parties with actual possession to defend their ownership claims.
The Court highlighted the provisions of Presidential Decree (PD) No. 957, which governs the protection of subdivision and condominium buyers. It asserted that the
...continue readingCase Syllabus (G.R. No. 205469)
Case Overview
- This case involves consolidated petitions for review on certiorari filed by various parties against the Government Service Insurance System (GSIS).
- The principal issue at stake is the legality of the writ of possession issued in favor of GSIS against the properties mortgaged by New San Jose Builders, Inc. (NSJBI), particularly concerning the rights of individual condominium unit buyers.
- The Supreme Court's ruling highlights the importance of due process in property disputes, especially for buyers who may be adversely affected by foreclosure actions.
Antecedents
- On December 10, 1997, NSJBI entered into a loan agreement with GSIS, borrowing Php600 million to finance housing projects.
- As security, NSJBI mortgaged three parcels of land and rights over additional condominium units.
- The loan agreement prohibited NSJBI from selling or encumbering the mortgaged properties without GSIS's consent but allowed the sale of properties under the condition that proceeds would be used to recoup the loan.
- NSJBI defaulted on the loan, leading GSIS to initiate an extrajudicial foreclosure, resulting in an auction where GSIS emerged as the highest bidder.
Proceedings Before the RTC
- GSIS filed a petition for a writ of possession against NSJBI and all occupants of the foreclosed properties after NSJBI failed to vacate.
- NSJBI opposed the petition, asserting that GSIS did not properly include the individual buyers as parties-in-interest and that the issuance of an ex-parte writ o