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LUZON
DEVELOPMENT
BANK,
petitioner,
ANGELES CATHERINE ENRIQUEZ, respondent.
vs.
DELTA
DEVELOPMENT
and
MANAGEMENT
SERVICES, INC., petitioner, vs. ANGELES CATHERINE
ENRIQUEZ and LUZON DEVELOPMENT BANK,
respondents.
Subdivisions and Condominiums The Subdivision and
Condominium Buyers Protective Decree (P.D. No. 957) A
mortgage con
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*** Designated as an additional member in lieu of Associate Justice Jose
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absolute sale), and anyone who wishes to deal with the said
property will be held bound by such prior right.
Same Same Same Same Despite the nonregistration of the
contract to sell, the mortgagee bank cannot be considered, under
the circumstances, an innocent purchaser for value of the lot when
it accepted the latter (together with other assigned properties) as
payment for the mortgagor developers obligationthe bank was
well aware that the assigned properties were subdivision lots and
therefore within the purview of Presidential Decree (PD) 957.
While DELTA, in the instant case, failed to register Enriquezs
Contract to Sell with the Register of Deeds, this failure will not
prejudice
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Adao, 473 SCRA 372 (2005), we held that a bank dealing with a
property that is already subject of a contract to sell and is
protected by the provisions of PD 957, is bound by the contract to
sell (even if the contract to sell in that case was not registered). In
the Courts words: It is true that persons dealing with registered
property can rely solely on the certificate of title and need not go
beyond it. However, x x x, this rule does not apply to banks.
Banks are required to exercise more care and prudence than
private individuals in dealing even with registered properties for
their business is affected with public interest. As master of its
business, petitioner should have sent its representatives to check
the assigned properties before signing the compromise agreement
and it would have discovered that respondent was already
occupying one of the condominium units and that a contract to
sell existed between [the vendee] and [the developer]. In our view,
petitioner was not a purchaser in good faith and we are
constrained to rule that petitioner is bound by the contract to sell.
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assumed the risk that some of the assigned properties are covered
by contracts to sell which must be honored under PD 957.
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Factual Antecedents
The BANK is a domestic financial corporation that
extends loans to subdivision developers/owners.5
Petitioner DELTA is a domestic corporation engaged in
the business of developing and selling real estate
properties, particularly Delta Homes I in Cavite. DELTA is
owned by Ricardo De Leon (De Leon),6 who is the
registered owner of a parcel of land covered by Transfer
Certificate of Title (TCT) No. T6371837 of the Registry of
Deeds of the Province of
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1 Pilipinas Kao, Inc. v. Court of Appeals, 423 Phil. 834, 858 372 SCRA
548, 572 (2001).
2 Rollo of G.R. No. 168646, pp. 327.
3 Rollo of G.R. No. 168666, pp. 316.
4 CA Decision, pp. 910 id., at pp. 125126.
5 Petition in G.R. No. 168646, p. 3 Rollo of G.R. No. 168646, p. 5.
6 Id., at pp. 34 id., at pp. 56.
7 Id., at p. 60.
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8 The loan contract itself was not attached to the parties pleadings
only the promissory notes covering the said loan were attached. The
promissory notes contained the condition that the loan proceeds shall be
used only for the purpose of subdivision development, particularly the
development of Delta Homes I, Aniban, Bacoor, Cavite (CA Rollo, pp. 50
55).
9 Id., at pp. 5759.
10 Id., at p. 70. The amendment to the real estate mortgage was dated
November 8, 1995.
11 Rollo of G.R. No. 168646, p. 60.
12 CA Rollo, p. 81. Pertinent portions of the registration certificate
dated September 22, 1995 read as follows:
BE IT KNOWN:
That DELTA HOMES I x x x is hereby REGISTERED pursuant to
Section 21 of BP 220 and its rules and regulations.
THAT any misrepresentation or material falsehood made in connection
with the application for this registration or the forgery or falsification of
any of the supporting documents thereof and other legal grounds provided
by law shall be a valid cause for the revocation of this Registration.
xxxx
AND THAT the project owner(s), RICARDO S. DE LEON and the
developer(s) DELTA DEVELOPMENT AND MANAGEMENT SERVICES,
INC. take the solidary responsibilities of complying with
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Promulgate
Different
Levels
of
Standards
and
Technical
342
suit and
6. Respondent DELTA to pay administrative fine of
P10,000.0022 for violation of Section 18 of P.D. 95723 and another
P10,000.00 for violation of Section 22 of P.D. 957.24
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22 Section38.Administrative Fines.The [HLURB] may prescribe and
impose fines not exceeding ten thousand pesos for violations of the provisions of
this Decree or of any rule or regulation thereunder. Fines shall be payable to the
[HLURB] and enforceable through writs of execution in accordance with the
provisions of the Rules of Court. (PD 957, as amended)
23 Section18.Mortgages.No mortgage on any unit or lot shall be made by
the owner or developer without prior written approval of the [HLURB]. 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 thereto. [Emphasis
supplied.]
24 Section22.Alteration of Plans.No owner or developer shall change or
alter the roads, open spaces, infastructures, facilities
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SO ORDERED.25
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on the object of the sale and the purchase price. Absent any
circumstance vitiating Enriquez consent, she was
presumed to have willingly and voluntarily agreed to the
higher purchase price hence, she was bound by the terms
of the contract.
The Board, however, deleted the arbiters award of
damages to Enriquez on the ground that the latter was not
free from liability herself, given that she was remiss in her
monthly amortizations to DELTA.
The dispositive portion of the Boards Decision reads:
Wherefore, in view of the foregoing, the Office belows decision
dated June 01, 2000 is hereby modified to read as follows:
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Issues
The following are the issues raised by the two petitions:
1.Whether the Contract to Sell conveys ownership
2.Whether the dacion en pago extinguished the loan
obligation, such that DELTA has no more obligations to the
BANK
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57 Banks Memorandum in G.R. No. 168646, pp. 178186 Banks
Memorandum in G.R. No. 168666, pp. 159167.
58 Id., at pp. 190192 id., at pp. 171173.
59 Compliance and Comment in G.R. No. 168646, pp. 7778
Compliance and Comment in G.R. No. 168666, pp. 6566.
60 Manifestation in G.R. No. 168646, p. 193 Manifestation in G.R. No.
168666, p. 177.
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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 x65
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xxxx
THAT, the ASSIGNOR acknowledges to be justly indebted to
the ASSIGNEE in the sum of ELEVEN MILLION EIGHT
HUNDRED SEVENTYEIGHT THOUSAND EIGHT HUNDRED
PESOS (P11,878,800.00), Philippine Currency as of August 25,
1998. Therefore, by virtue of this instrument, ASSIGNOR hereby
ASSIGNS, TRANSFERS, and CONVEYS AND SETS OVER [TO]
the ASSIGNEE that real estate with the building and
improvements existing thereon, more particularly described as
follows:
xxxx
of which the ASSIGNOR is the registered owner being evidenced
by TCT No. x x x issued by the Registry of Deeds of Trece
Martires City.
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69 Tolentino, Commentaries on the Civil Code (1987), Vol. IV, p. 294, citing
Manresa.
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The vendor shall answer for the eviction even though nothing has been
said in the contract on the subject.
The contracting parties, however, may increase, diminish, or suppress
this legal obligation of the vendor. (Civil Code)
73 Andaya v. Manansala, 107 Phil. 1151, 11541155 (1960) J.M.
Tuason & Co., Inc. v. Court of Appeals, 183 Phil. 105, 113114 93 SCRA
146, 151152 (1979).
74 Article2231.In quasidelicts, exemplary damages may be granted
if the defendant acted with gross negligence.
Article 2232.In contracts and quasicontracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner.
Article 2233.Exemplary damages cannot be recovered as a matter of
right the court will decide whether or not they should be adjudicated.
(Civil Code)
75 Article 2208.In the absence of stipulation, attorneys fees and
expenses of litigation, other than judicial costs, cannot be recovered,
except:
(1)When exemplary damages are awarded
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(5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiffs plainly valid, just and demandable claim
(6)In actions for legal support
(7)In actions for the recovery of wages of household helpers, laborers
and skilled workers
(8)In actions for indemnity under workmens compensation and
employers liability laws
(9)In a separate civil action to recover civil liability arising from a
crime
(10)When at least double judicial costs are awarded
(11) In any other case where the court deems it just and equitable
that attorneys fees and expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be
reasonable. (Civil Code)
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SO ORDERED.
Corona (C.J., Chairperson), Velasco, Jr., LeonardoDe
Castro and Perez, JJ., concur.
Judgment and resolution affirmed with modifications.
Notes.P.D. Nos. 902A and 957, as far as both are
concerned with corporations, are laws in pari materiathe
former relates to all corporations, while the latter pertains
to corporations engaged in the particular business of
developing subdivisions and condominiums. (Arranza vs.
B.F. Homes, Inc., 333 SCRA 799 [2000])
The conveyance by a subdivision developer of its
ownership over the property to the individual homeowners
does not unavoidably mean its having lost altogether any
interest in respect theretothe developer can rightly seek
to ensure that the property continues to meet the
conditions and requirements, like building specifications
and easement provisions, stipulated in, and made part of,
the individual contracts with its buyers. (Fajardo, Jr. vs.
Freedom to Build, Inc., 347 SCRA 474 [2000])
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