G.R. No. 182128, February 19, 2014
PHILIPPINE NATIONAL BANK, Petitioner, v. TERESITA TAN DEE, ANTIPOLO PROPERTIES, INC., (NOW PRIME EAST PROPERTIES, INC.) AND AFP–RSBS, INC., Respondents.
D E C I S I O N
WHEREFORE, premises considered, judgment is hereby rendered as follows:chanroblesvirtuallawlibraryThe HLURB decision was affirmed by its Board of Commissioners per Decision dated March 15, 2004, with modification as to the rate of interest.10
- Directing [the petitioner] to cancel/release the mortgage on Lot 12, Block 21–A, Village East Executive Homes covered by Transfer Certificate of Title No. –619608– (TCT No. –619608–), and accordingly, surrender/release the title thereof to [Dee];
- Immediately upon receipt by [Dee] of the owner’s duplicate of Transfer Certificate of Title No. –619608– (TCT No. –619608–), respondents PEPI and AFP–RSBS are hereby ordered to deliver the title of the subject lot in the name of [Dee] free from all liens and encumbrances;
- Directing respondents PEPI and AFP–RSBS to pay [the petitioner] the redemption value of Lot 12, Block 21–A, Village East Executive Homes covered by Transfer Certificate of Title No. –619608– (TCT No. –619608–) as agreed upon by them in their Real Estate Mortgage within six (6) months from the time the owner’s duplicate of Transfer Certificate of Title No. –619608– (TCT No. –619608–) is actually surrendered and released by [the petitioner] to [Dee];
- In the alternative, in case of legal and physical impossibility on the part of [PEPI, AFP–RSBS, and the petitioner] to comply and perform their respective obligation/s, as above–mentioned, respondents PEPI and AFP–RSBS are hereby ordered to jointly and severally pay to [Dee] the amount of FIVE HUNDRED TWENTY THOUSAND PESOS ([P]520,000.00) plus twelve percent (12%) interest to be computed from the filing of complaint on April 24, 2002 until fully paid; and
- Ordering [PEPI, AFP–RSBS, and the petitioner] to pay jointly and severally [Dee] the following sums:
a) The amount of TWENTY FIVE THOUSAND PESOS ([P]25,000.00) as attorney’s fees; b) The cost of litigation[;] and c) An administrative fine of TEN THOUSAND PESOS ([P]10,000.00) payable to this Office fifteen (15) days upon receipt of this decision, for violation of Section 18 in relation to Section 38 of PD 957.
WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision dated August 4, 2004 rendered by the Office of the President in O. P. Case No. 04–D–182 (HLURB Case No. REM–A–030724–0186) is hereby AFFIRMED.chanroblesvirtualawlibraryIts motion for reconsideration having been denied by the CA in the Resolution dated March 13, 2008, the petitioner filed the present petition for review on the following grounds:chanRoblesvirtualLawlibrary
SO ORDERED. 12ChanRoblesVirtualawlibrary
The petitioner claims that it has a valid mortgage over Dee’s property, which was part of the property mortgaged by PEPI to it to secure its loan obligation, and that Dee and PEPI are bound by such mortgage. The petitioner also argues that it is not privy to the transactions between the subdivision project buyers and PEPI, and has no obligation to perform any of their respective undertakings under their contract.14
- THE HONORABLE COURT OF APPEALS ERRED IN ORDERING OUTRIGHT RELEASE OF TCT NO. 619608 DESPITE PNB’S DULY REGISTERED AND HLURB[–] APPROVED MORTGAGE ON TCT NO. 619608.
- THE HONORABLE COURT OF APPEALS ERRED IN ORDERING CANCELLATION OF MORTGAGE/RELEASE OF TITLE IN FAVOR OF RESPONDENT DEE DESPITE THE LACK OF PAYMENT OR SETTLEMENT BY THE MORTGAGOR (API/PEPI and AFP–RSBS) OF ITS EXISTING LOAN OBLIGATION TO PNB, OR THE PRIOR EXERCISE OF RIGHT OF REDEMPTION BY THE MORTGAGOR AS MANDATED BY SECTION 25 OF PD 957 OR DIRECT PAYMENT MADE BY RESPONDENT DEE TO PNB PURSUANT TO THE DEED OF UNDERTAKING WHICH WOULD WARRANT RELEASE OF THE SAME.13
Sec. 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith.It must be stressed that the mortgage contract between PEPI and the petitioner is merely an accessory contract to the principal three–year loan takeout from the petitioner by PEPI for its expansion project. It need not be belaboured that “[a] mortgage is an accessory undertaking to secure the fulfillment of a principal obligation,”28 and it does not affect the ownership of the property as it is nothing more than a lien thereon serving as security for a debt.29
However, the transferee BANK is bound by the Contract to Sell and has to respect Enriquez’s rights thereunder. This is because the Contract to Sell, involving a subdivision lot, is covered and protected by PD 957. x x x.More so in this case where the contract to sell has already ripened into a contract of absolute sale.
x x x
x x x Under these circumstances, the BANK knew or should have known of the possibility and risk that the assigned properties were already covered by existing contracts to sell in favor of subdivision lot buyers. As observed by the Court in another case involving a bank regarding a subdivision lot that was already subject of a contract to sell with a third party:chanRoblesvirtualLawlibrary“[The Bank] should have considered that it was dealing with a property subject of a real estate development project. A reasonable person, particularly a financial institution x x x, should have been aware that, to finance the project, funds other than those obtained from the loan could have been used to serve the purpose, albeit partially. Hence, there was a need to verify whether any part of the property was already intended to be the subject of any other contract involving buyers or potential buyers. In granting the loan, [the Bank] should not have been content merely with a clean title, considering the presence of circumstances indicating the need for a thorough investigation of the existence of buyers x x x. Wanting in care and prudence, the [Bank] cannot be deemed to be an innocent mortgagee. x x x”36 (Citation omitted)chanroblesvirtualawlibrary
[R]elease its mortgage lien on fully paid Mortgaged Properties upon issuance of the certificates of title over the Dacioned Properties in the name of the [petitioner]. The request for release of a Mortgaged Property shall be accompanied with: (i) proof of full payment by the buyer, together with a certificate of full payment issued by the Borrower x x x. The [petitioner] hereby undertakes to cause the transfer of the certificates of title over the Dacioned Properties and the release of the Mortgaged Properties with reasonable dispatch.39ChanRoblesVirtualawlibraryDacion en pago or dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation.40 It is a mode of extinguishing an existing obligation41 and partakes the nature of sale as the creditor is really buying the thing or property of the debtor, the payment for which is to be charged against the debtor’s debt.42 Dation in payment extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement – express or implied, or by their silence – consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished.43
As between these small lot buyers and the gigantic financial institutions which the developers deal with, it is obvious that the law—as an instrument of social justice—must favor the weak.46 (Emphasis omitted)chanroblesvirtualawlibraryFinally, the Court will not dwell on the arguments of AFP–RSBS given the finding of the OP that “[b]y its non–payment of the appeal fee, AFP–RSBS is deemed to have abandoned its appeal and accepts the decision of the HLURB.”47 As such, the HLURB decision had long been final and executory as regards AFP–RSBS and can no longer be altered or modified.48
1Rollo, pp. 28–50.
2 Penned by Associate Justice Arcangelita M. Romilla–Lontok, with Associate Justices Rodrigo V. Cosico and Mariano C. Del Castillo (now a member of this Court), concurring; id. at 53–64.
3 Id. at 66–67.
4 CA rollo, pp. 6–14.
5 Formerly Antipolo Properties, Inc.
6 Identified as Lot 12, Block 21–A.
7 CA rollo, p. 56.
8 Id. at 58–62.
9 Id. at 61–62.
10Rollo, p. 57.
11 Id. at 57–58.
12 Id. at 64.
13 Id. at 36–37.
14 Id. at 37–42.
15 Entitled, “The Subdivision and Condominium Buyers’ Protective Decree”.
16 Entitled “An Act to Regulate the Sale of Property under Special Powers Inserted In or Annexed to Real Estate Mortgages”.
17 In upholding the OP decision, the CA ruled that paragraph 6 of herein petitioner’s undertaking is a stipulation pour autrui, which is an exception to the principle of relativity of contracts under Article 1311 of the Civil Code. According to the CA, the provision should be read in conjunction with Section 25 of P.D. No. 957, which compels the owner/developer to redeem the mortgage on the property and deliver the title to the buyer; rollo, pp. 59–64.
18 Id. at 42–46.
19 Id. at 70–75.
20 Id. at 77.
21 See Memorandum of Agreement dated November 22, 2006, id. at 92–95.
22 Id. at 131–133.
23 CIVIL CODE, Article 1311, states in part, that contracts take effect only between the parties, their assigns and heirs.
24Spouses Borromeo v. Hon. Court of Appeals, 573 Phil. 400, 412 (2008).
25 Id. at 411–412.
26 CIVIL CODE, Article 1495.
27 CIVIL CODE, Article 1582.
28Situs Development Corporation v. Asiatrust Bank, G.R. No. 180036, July 25, 2012, 677 SCRA 495, 509.
29Typingco v. Lim, G.R. No. 181232, October 23, 2009, 604 SCRA 396, 401.
30Spouses Delfin O. Tumibay and Aurora T. Tumibay v. Spouses Melvin A. Lopez and Rowena Gay T. Visitacion Lopez, G.R. No. 171692, June 3, 2013.
31 579 Phil. 454 (2008).
32 Id. at 480.
33Philippine Bank of Communications v. Pridisons Realty Corporation, G.R. No. 155113, January 9, 2013, 688 SCRA 200, 214, citing Philippine National Bank v. Office of the President, 252 Phil. 5 (1996); Far East Bank & Trust Co. v. Marquez, 465 Phil. 276, 287 (2004).
34 G.R. No. 168646, January 12, 2011, 639 SCRA 332.
35 The contract to sell in Luzon Development Bank was not registered.
36 Supra note 34, at 352–353.
37Rollo, p. 90.
38 Id. at 92.
39 Id. at 93.
40Aquintey v. Sps. Tibong, 540 Phil. 422, 446 (2006), citing Vda. de Jayme v. Court of Appeals, 439 Phil. 192, 210 (2002).
41Dao Heng Bank, Inc. v. Spouses Laigo, 592 Phil. 172, 181 (2008).
42Bank of the Philippine Islands v. Securities and Exchange Commission, 565 Phil. 588, 596 (2007).
43Tan Shuy v. Maulawin, G.R. No. 190375, February 8, 2012, 665 SCRA 604, 614–615.
44GSIS v. The Province of Tarlac, 462 Phil. 471, 478 (2003).
45 Supra note 34, at 357.
46Philippine Bank of Communications v. Pridisons Realty Corporation, supra note 33.
47 CA rollo, p. 10.
48Eastland Construction & Development Corp. v. Mortel, 520 Phil. 76, 91 (2006).