i.

Home bankers Savings vs CA

Doctrine: 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.

Facts:Respondent Pablo N. Arevalo purchased the portion of land denominated as Unit No. 5for the
amount of P750,000.00 on August 21, 1988 and had already fully paid the purchase price on September
3, 1988;Respondent Alfredo Lim purchased the portion of land denominated as Unit No. 1for the amount
of P800,000.00 on December 22, 1988 and fully paid the same upon execution of the agreement on the
same day;Respondent Francisco A. Uy purchased the portion of land denominated as Unit No. 6 on
October 29, 1988 in the amount of P800,000.00 payable in installments and had allegedly made a total
payment of P581,507.41. He ordered to stop the payment of all [postdated] checks from September
1990 to November 1995 on the ground of non-completion of his unit and had later learned of the
foreclosure of the property;

Respondent spouses Leandro A. Soriano, Jr. and Lilian Soriano purchased the portion of land
denominated as Unit No. 3 on00,000.00 and had allegedly made a payment of P669,960.00. They had
stopped paying because February 15, 1990 in the amount of P1,6 of non-completion of the project and
had later learned of the foreclosure of the property;

Respondents Alfredo Lim and Santos Lim purchased the portion of land denominated as Unit No.
7for P700,000.00 on October 1988 and had been fully paid as of March 18, 1989; Santos Lim
subsequently sold and assigned his share of the property to private respondent Felisa Chi Lim on May
12, 1989.

It is stipulated in their respective contracts that their individual townhouses will be fully completed and
constructed as per plans and specifications and the respective titles thereto shall be delivered and
transferred to private respondents free from all liens and encumbrances upon their full payment of the
purchase price. However, despite repeated demands, Garcia/TransAmerican failed to comply with their
undertakings.

On May 30, 1989, Engr. Garcia and his wife Lorelie Garcia obtained from petitioner Home Bankers
Savings and Trust Company (formerly Home Savings Bank and Trust Company) a loan in the amount
of P4,000,000.00 and without the prior approval of the Housing and Land Use Regulatory Board
(HLURB), the spouses mortgagedeight lots covered by TCT Nos. 3349 to 3356 as collateral. Petitioner
registered its mortgage on these titles without any other encumbrance or lien annotated therein. The
proceeds of the loan were intended for the development of the lots into an eight-unit townhouse project.
However, five out of these eight titles turned out to be private respondents townhouses subject of the
contracts to sell with Garcia/TransAmerican.

When the loan became due, Garcia failed to pay his obligation to petitioner. Consequently, petitioner
instituted an extrajudicial foreclosureon the subject lots and being the highest bidder in the public
auction, a certificate of salein its favor was issued by the sheriff on February 26, 1990. Subsequently,
the sheriffs certificate of sale was registered and annotated on the titles of the subject lots in the
Register of Deeds of Quezon City.
Issue: WON HLURB has power to declare the mortgage contract over real property executed between a
real estate developer and petitioner?

Ruling: Yes.

Petitioner’s argument is untenable.

HLURB has jurisdiction to declare invalid the mortgage contract executed between
Garcia/TransAmerican and petitioner over the subject lots insofar as private respondents are concerned.

It correctly relied on Union Bank of the Philippines vs. HLURB, et al. where we squarely ruled on the
question of HLURBs jurisdiction to hear and decide a condominium buyers complaint for:

(a) annulment of a real estate mortgage constituted by the project owner without the consent of the
buyer and without the prior written approval of the NHA;

(b) annulment of the foreclosure sale; and

(c) annulment of the condominium certificate of title that was issued to the highest bidder at the
foreclosure sale, thus:

. . . The issue in HLURB Case is the validity of the real estate mortgage of Davids 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 mortgage banks acquired as highest bidder
therefore in the extrajudicial foreclosure sale. The applicable provisions of P.D. No. 957, otherwise
known as The Subdivision and Condominium Buyers 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.

Section 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 to include the
following:

Sec. 1. In the exercise of its function 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, broker or salesman.

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 Decree Nos. 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:

...

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

...

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.

Executive Order No. 90 changed the name of the Human Settlements Regulatory Commission to
Housing and Land Use Regulatory Board (HLURB).

Clearly, FRDCs 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 the 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.
ENRIQUETA M. LOCSIN vs. BERNARDO HIZON et al

Doctrine: Principle of Caveat Emptor; Innocent purchaser for value are those who inquire the status of
the title of the property in order to protect their rights

Facts:
Locsin is the registered owner of a parcel of land subject in this case. She filed an ejectment case
against Aceron where eventually a compromise agreement was reached and was approved by the
MTC. Locsin then went to the US without knowing whether Aceron had complied with the bargain under
the compromise agreement. She continued to pay property tax despite her absence. When he
discovered that the TCT was missing, she applied for an administrative reconstitution in order to secure
a new one it was then she discovered that the said parcel was already sold to Bernardo Hizon, titled
under Carlos Hizon sold by Marylou Bolos which in turn purchased it allegedly from Locson as borne by
the records of the Registry of Deeds. At present the property is occupied and is up for sale. Carlos, in a
letter sent through Locsin’s counsel denied that there was forgery and that it was obtained in good faith
and for value. It was later established that Carlos had the property sold to spouses Guevarra which in
turn mortgaged to Damar Ctedit Corporation (DCC). Hence Locson filed for a reconveyance, annulment
and cancellation of the mortgage.

The RTC rendered a decision dismissing the complaint, ruling that there is insufficient evidence of
forgery of Locsin’s signature, the questioned deed is notarized and hence enjoy the presumption of
regularity; the subsequent transfers are valid and the subsequent buyers are acting in good faith. The
CA ruled that it was erroneous for the RTC to hold that Locsin failed to prove that her signature was
forged. In its appreciation of the evidence, the CA found that, indeed, Locsin’s signature in the Deed of
Absolute Sale in favor of Bolos differs from her signatures in the other documents offered as evidence.
The CA however affirmed the RTC’s finding that herein respondents are innocent purchasers for value.
The Hizons having dealt with property registered under the Torrens System, need not go beyond the
certificate of title, but only has to rely on the said certificate. Moreover, as the CA added, any notice of
defect or flaw in the title of the vendor should encompass facts and circumstances that would impel a
reasonably prudent man to inquire into the status of the title of the property in order to amount to bad
faith.

Locsin argued that when Bernardo was about to purchase the property, he knows of the defect since he
knew another person was occupying, Aceron. As a matter of fact he even moved for the execution of the
compromise agreement in order to oust Aceron from his possession. Bernardo, knowing as he did the
incidents involving the subject property, should have acted as a reasonably diligent buyer in verifying the
authenticity of Bolos’ title instead of closing his eyes to the possibility of a defect therein.

Bernardo et al argued that they had the right to rely solely upon the face of Bolos’ clean title, considering
that it was free from any lien or encumbrance. They are not even required, so they claim, to check on
the validity of the sale from which they derived their title. Bernardo et al’s their knowledge of Aceron’s
possession cannot be the basis for an allegation of bad faith, for the property was purchased on an "asis
where-is" basis.

Issue:
WON Carlo Hizon is an innocent purchase for value?
WON the Spouses Guevarra are innocent purchaser for value?

Held:
No. Carlos is not an innocent purchaser for value. Bernardo negotiated with Bolos for the property as
Carlos’ agent. This is bolstered by the fact that he was the one who arranged for the saleand eventual
registration of the property in Carlos’ favor.
Consistent with the rule that the principal is chargeable and bound by the knowledge of, or notice to, his
agent received in that capacity, any information available and known to Bernardo is deemed similarly
available and known to Carlos: Bernardo knew that Bolos purchase of the property, the Deed of Sale of
Bolos was earlier than the ejectment of Aceron by Locsin.
Having knowledge of the foregoing facts, Bernardo and Carlos, to our mind, should have been impelled
to investigate the reason behind the arrangement. They should have been pressed to inquire into the
status of the title of the property in litigation in order to protect Carlos’ interest. It should have struck
them as odd that it was Locsin, not Bolos, who sought the recovery of possession by commencing an
ejectment case against Aceron, and even entered into a compromise agreement with the latter years
after the purported sale in Bolos’ favor.
No. The existence of the sale highly suspicious. For one, there is a dearth of evidence to support the
Spouses Guevarra’s position that the sale was a bona fide transaction. Furthermore, and noticeably
enough,the transfer from Carlos to the spouses Guevara was effected only fifteen(15) days after Locsin
demanded the surrender of the property from Carlos. Also, the fact that Lourdes Guevara and Carlos
are siblings, and that Carlos’ agent in his dealings concerning the property is his own father, renders
incredible the argument that Lourdes had no knowledge whatsoever of Locsin’s claim of ownership at
the time of the purported sale.
Indeed, the fact that the spouses Guevara never intended to be the owner in good faith and for value of
the lot is further made manifest by their lack of interest in protecting themselvesin the case. It does not
even appear in their testimonies that they, at the very least, intended to vigilantly protect their claim over
the property and prevent Locsin take it away from them. What they did was to simply appoint Bernardo
as their attorney-in-fact to handle the situation and never bothered acquainting themselves with the
developments in the case.28 To be sure, respondent Jose Manuel Guevara was not even presented
asa witness in the case. The mortgage in favor of DCC was a mere ploy tomake it appear that the Sps.
Guevara exercised acts of dominion over the subject property. This is so considering the proximity
between the property’s registration in their names and its being subjected to the mortgage.
These circumstances, taken altogether, strongly indicate that Carlos and the spouses Guevara failed to
exercise the necessary level of caution expected of a bona fide buyer and even performed acts that are
highly suspect. Consequently, this Court could not give respondents the protection accorded to innocent
purchasers in good faith and for value.