UNION BANK OF THE PHILIPPINES, PETITIONER, VS. HOUSING AND LAND USE REGULATORY BOARD, MARTHA S. DAVID AND TERESITA T. QUAZON, ASSISTED BY HER HUSBAND, ALFONSO MARIA QUAZON, RESP…

The issue presented by this petition for certiorari and
prohibition with preliminary injunction is whether or not the Housing and Land
Use Regulatory Board (HLURB for brevity) has jurisdiction to hear and decide a
condominium buyer’s complaint for:

(a)  
annulment of a real estate mortgage constituted by the project
owner without his consent and without the prior written consent of the National
Housing Authority:

(b)  
for annulment of the foreclosure sale; and

(c)  
for annulment of the condominium certificate of title that was
issued to the highest bidder at the foreclosure sale.

In 1973, Martha David purchased from Fereit Realty Development
Corporation (FRDC) a condominium unit, Lorraine Flat. 552, which was in the
process of completion, with parking space No. S-12 in the condominium project
known as “Europa Condominium Villas” in Baguio City.

The agreed purchase price
was P217,000. Martha David made a 20%
downpayment of P43,400 on the price, leaving a balance of 173,600 (including
interest of 1% per month) which was payable in 60 equal monthly installments of
P3,861.64 per installment.

In 1975, Martha David took possession, as owner, of the
condominium unit, with notice to the management. As of October, 1976, she had paid at least twenty-two (22) monthly
installments or the price or the condominium unit.

On January 2, 1978, FRDC, without the knowledge of the
condominium buyer David, and without the prior approval of the National Housing
Authority, mortgaged the condominium project to Bancom Development Corporation
(Bancom), predecessor-in-interest of the petitioner Union Bank of the
Philippines (UBP), as security for a loan of P40,000,000 (pp. 58-59, Rollo),

As FRDC failed to pay its obligation which, as computed by
Bancom, amounted to P42,075,134.84 as of June 30, 1979, Bancom foreclosed the
mortgage on 45 condominium units, including the unit of Martha David.

On March 4, 1980, the Sheriff executed a Certificate of Sale to
Bancom and the Far East Bank and Trust Company (FEBTC) as the highest bidder
for the total price of P19,324,000. After the expiration of the redemption period, UBP held out the units
for sale (pp. 58-59, Rollo).

On June 26, 1989, Martha David and Teresita Quazon, the latter
assisted by her husband, Alfonso Maria Quazon, who had in the meantime,
purchased Martha David’s unit, filed a complaint in the HLURB, against FRDC,
UBP and FEBTC to annul the title of UBP and FEBTC over David’s condominium unit
and to order the issuance of a new certificate of title in the name of Teresita
Quazon. The complaint sought the
following reliefs:

“a. Upon the filing of this complaint an order
be issued allowing the complainants to deposit on consignation the amount of
P200,000,00 (to be deposited by and/or in the name of Teresita T. Quazon) to be
paid to respondents Union Bank and Far East Bank according to their respective
interests:

“b.     After hearing judgment be rendered –

“i.      considering complainants to have fully
paid the total purchase price of the condominium unit originally purchased by
the complainant David and assigned and/or sold to complainant Quazon;

“ii.     ordering
the cancellation of Condominium Certificate of Title No. 1117 in the name of
Union Bank and Far East Bank; and

“iii.     ordering the issuance of a new Condominium
Certificate of Title over the same condominium unit covered by CCT No. 1117 in
the name of complainant Teresita T. Quazon as the assignee of the unit from
complainant David.

“Complainants further pray for such other reliefs as maybe
deemed just and proper in the premises.” (pp. 20-21, Rollo.)

On July 17, 1989, UBP and FEBTC filed their answer questioning
the HLURB’s jurisdiction over the case. UBP filed a motion to dismiss on the same ground.

In an Order dated August 27, 1990, HLURB Arbiter, Cesar Manuel,
denied the motion of UBP, on the ground that the “motion will render
nugatory the summary nature of proceedings before this Office” (Annex D,
p. 40, Rollo). HLURB ordered the
parties to file their respective position papers within fifteen (15) days and
thereafter the case would be deemed submitted for resolution.

In due time, this petition for certiorari and prohibition
with injunction was filed by UBP.

UBP’s main argument is that the HLURB has no jurisdiction over
the complaint for consignation which should have been filed in the regular
trial courts. Furthermore, as the HLURB
was created in 1981 (E.O. No. 641), it has no jurisdiction over contracts that
took effect prior to 1981.

Those arguments deserve scant consideration. The issue in HLURB Case No. REM-062689-4077
is the validity of the real estate mortgage of David’s condominium unit that
FRDC executed in favor of the Union Bank and Far East Bank without prior
approval of the National Housing Authority and the legality of the title which
the mortgagee banks acquired as highest bidder therefor in the extrajudicial
foreclosure sale. The applicable
provisions of P.D. No. 957, otherwise known as “The Subdivision and Condominium,
Buyer’s Protective Decree” are quoted hereunder as follows:

“Sec. 3. NATIONAL
HOUSING AUTHORITY. -The National
Housing Authority shall have exclusive jurisdiction to regulate
the real estate trade and business in accordance with the provisions of this
decree.” (Underlining supplied.)

“Sec. 18. MORTGAGES. –
No mortgage on any unit or lot shall be made by the owner or developer without
prior written approval of the Authority. Such approval shall not be granted unless it
is shown that the proceeds of the mortgage loan shall be used for the development
of the condominium or subdivision project and effective measures
have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be
determined and the buyer thereof, if any, shall be notified before
the release of the loan. The buyer may, at his option, pay his
installment for the lot or unit directly to the mortgagee who shall apply the
payments to the corresponding mortgage indebtedness secured by the particular
lot or unit being paid for, with a view to enabling said buyer to obtain title
over the lot or unit promptly after full payment thereof.”

P.D. No. 1344 of April 2, 1978 expanded the jurisdiction of the
National Housing Authority (NHA) to include the following:

“Sec. 1. In the
exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the
National Housing Authority shall have exclusive jurisdiction to
hear and decide cases of the following nature:

“A. Unsound real
estate business practices:

“B. Claims involving refund and any other
claims filed by subdivision lot or condominium
unit buyer against the project owner, developer, dealer, broker,
or salesman; and

“C.    Cases involving specific performance
of contractual and statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer, broker, or
salesman.” (VLD Vol. 52, pp. 51?52.)

On February 7, 1981, Executive Order No. 648 transferred the
regulatory and quasi-judicial functions of the NHA to the Human Settlements
Regulatory Commission.

“Sec. 8. TRANSFER OF FUNCTIONS. – The regulatory
functions of the National Housing Authority pursuant to Presidential Decrees
No. 957, 1216, 1344 and other related laws are hereby transferred to the
Commission, together with such applicable personnel, appropriation, records,
equipment and property necessary for the enforcement and implementation of such
functions. Among these regulatory
functions are:

“1.     Regulation of the real estate trade and
business;

“2.     Registration of subdivision lots and
condominium projects;

“3.     Issuance of license to sell subdivision
lots and condominium units in the registered units;

“4.     Approval of performance bond and the
suspension of license to sell;

“5.     Registration of dealers, brokers, and
salesmen engaged in the business of selling subdivision lots or condominium
units;

“6.     Revocation of registration of dealers,
brokers and salesmen;

“7.     Approval of mortgage on any subdivision lot
or condominium unit made by the owner or developer;

“8.     Granting of permits for the alteration of
plans and the extension of period for completion of subdivision or condominium
projects;

“9.     Approval of the conversion to other
purposes of roads and open spaces found within the project which have been
donated to the city or municipality concerned;

“10.   Regulation of the relationship between
lessors and lessees; and

“11.   Hear and decide cases on unsound real estate
business practices; claims involving refund filed against project owners,
developers, dealers, brokers or salesmen and cases of specific
performance.” (VLD Vol. 81, pp. 108-109.)

Executive Order No. 90 dated December 17, 1986 changed the name
of the Human Settlements Regulatory Commission to “Housing and Land Use
Regulatory Board (HLURB).

Clearly, FRDC’s act of mortgaging the condominium project to
Bancom and FEBTC, without the knowledge and consent of David as buyer of a unit
therein, and without the approval of the NHA (now HLURB) as required by P.D.
No. 957, was not only an unsound real estate business practice but also highly
prejudicial to the buyer. David, who
has a cause of action for annulment of the mortgage, the mortgage foreclosure
sale, and the condominium certificate of title that was issued to the UBP and
FEBTC as highest bidders at the sale. The case falls within the exclusive jurisdiction of the NHA (now (HLURB)
as provided in P.D. No. 957 of 1976 and P.D. No. 1344 of 1978.

The allegations of UBP that the contract between FRDC and David
had been rescinded, that the installment payments made by David had been
forfeited, that it is FRDC who should refund the said installment payments to
David, are mere matters of defense which are not proper in a petition for certiorari
(Planters Products Inc. vs. CA, 193 SCRA 563: Commercial Corp. vs. PNB, 175 SCRA 1).

In Solid Homes Inc. vs. Payawal,
177 SCRA 72), we struck down the exercise of jurisdiction by the Regional Trial
Court of Quezon City over a lot buyer’s complaint for delivery of title against
the subdivision owner.

In Antipolo Realty Corporation vs. NHA,
153 SCRA 399, this Court, citing PD Nos. 957 and 1344, upheld the jurisdiction
of the National Housing Authority to determine the rights of the parties under
the contract to sell a subdivision lot.

In the more recent case of CT Torres Enterprises
vs. Hibionada, 191 SCRA 268, we affirmed the HLURB’s jurisdiction
to hear and decide a complaint for specific performance of the seller’s
obligation to deliver the title of a subdivision lot to the buyer, with
damages.

We hold that the jurisdiction of the HLURB to regulate the real
estate trade is broad enough to include jurisdiction over complaints for
specific performance of the sale, or annulment of the mortgage, of a
condominium unit, with damages.

WHEREFORE, the instant petition is DISMISSED with costs
against the petitioner.

SO ORDERED.

Cruz, (Chairman), Medialdea, and
Bellosillo, JJ., concur.