[ G.R. No. 200991, March 18, 2021 ]
SPOUSES WILFREDO AND DOMINICA ROSARIO, PETITIONERS, VS. GOVERNMENT SERVICE INSURANCE SYSTEM, RESPONDENT.
CONCURRING OPINION
CAGUIOA, J.:
I concur with the ponencia's finding that petitioners' intervention in the ex parte possessory writ proceeding is merited as an exception to the ministerial nature of the issuance of a writ of posession under Section 33, Rule 39 of the Rules of Court (Rules). The ponencia characterizes individuals who purchase condominium units or subdivision lots from developers such as petitioners in this case as similarly situated with co-owners, usufructuaries and agricultural tenants, who are considered third-party possessors who possess the property subject of the writ adversely to the judgment obligor.1
I agree with the ponencia's characterization of petitioners as adverse third-party possessors. In particular, it addresses the concern that is central to this controversy, as that which pertains to the unfairness attending herein petitioners' situation, specifically the lack of notice to them that the condominium unit in their possession, Unit 205, was already foreclosed and sold at an auction, with the Government Service Insurance System (GSIS) as the sole bidder. As applied to the facts of the instant case, it is observable that even with petitioners' resort to the Housing and Land Use Regulatory Board (HLURB) for an annulment of the mortgage and foreclosure of the property in their possession, such resort would still not afford them with an adequate and timely remedy against a dispossession unless they are allowed to intervene in the possessory writ proceeding.
This is the factual scenario that is precisely what Republic Act No. (R.A) 65522 or the "Realty Installment Buyer Act" (Maceda Law) contemplates. Concurringly, I submit that Section 18 of Presidential Decree No. (P.D.) 9573 or the "Subdivision and Condominium Buyers' Protective Decree" and the related and analogous provisions in the Maceda Law should be the proper guideposts which the Court is called upon to follow towards a reasonably anchored conclusion that allows petitioners, and those similarly situated, to intervene in the possessory writ ex parte proceeding, as an exception under Section 33, Rule 39 of the Rules.
I expound.
I agree with the ponencia and Associate Justice Rosmari D. Carandang's consistent observations that a resort to Section 18 of P.D. 957 is the remedial route for herein petitioners. However, this resort to the HLURB, while proper in theorem, will not prevent the inequitable dispossession of the third-person buyers/possessors such as petitioners in this case, unless they are allowed to intervene in the proceeding for the issuance of a writ of possession over the property in their possession.
Section 18 of P.D. 957 provides:
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 thereto[.]
To be sure, the above provision addresses the inherent concern that petitioners here, as buyers in a contract to sell with New San Jose Builders, Inc. (NSJBI), should have been informed of the mortgage involving Unit 205. More specifically, Section 18 of P.D. 957 addresses what would otherwise have been an unfair situation on the part of the buyers, when it provides that buyers must be notified before the release of the loan, and that said buyers must be given the option to pay directly to the mortgagee the installments for the loan which is secured by the property in their possession. Section 18 provides for this requirement of notice and option to pay directly to the mortgagee, in order to enable buyers such as herein petitioners to obtain title over the lot and avoid a situation wherein the mortgagee consolidates ownership over properties in the possession of third-person buyers/possessors.
On this score, Section 34(g) of the Implementing Rules and Regulations of the Department of Human Settlements and Urban Development Act4 in relation to Section 16(a)(7) of R.A. 112015 provides that the said action to annul a mortgage in violation of Section 18 of P.D. 957 may be filed with HLURB's Regional Adjudicators:
SECTION 34. Jurisdiction of Regional Adjudicators. - The Regional Adjudicators shall exercise original and exclusive jurisdiction to hear and decide cases involving the following:
34.1 x x x.
x x x x
(g) Actions to annul mortgages executed in violation of Section 18 of [P.D.] 957 filed by a subdivision lot or condominium unit buyer against the project owner and/or developer and the mortgagee;
x x x x.
In addition, HLURB Resolution No. 980 Series of 2019 on its Revised Rules of Procedure (Revised Rules) correspondingly provides under Section 2(g) thereof that said Revised Rules cover the clearance for mortgage as provided in Section 18 of P.D. 957:
Section 2. Coverage. - This Rules shall be applicable to the following disputes or controversies:
x x x x
(g) Suits filed in opposition to an application for certificate of registration and license to sell, development permit for condominium projects, clearance to mortgage, and, when issued by the Regional Field Office of HLURB in appropriate cases, locational clearances, zoning certifications or permits, including suits for the revocation or cancellation thereof[.]
x x x x. (Emphasis supplied)
Under the foregoing Revised Rules, third-person buyers/possessors may file a verified complaint6 for annulment of a mortgage which did not comply with Section 18 of P.D. 957 with the Regional Field Office which has jurisdiction over the area where the project is located,7 in order to enforce their right or otherwise prevent or redress a wrong.8
However, as earlier intimated, even with the above remedy availed of, unless petitioners are allowed to intervene in the possessory writ proceeding, still nothing remains in the way of the foreclosing mortgagee or highest auction bidder in obtaining a writ of possession as a ministerial result of nonredemption, and ultimately ousting the third-person buyers/possessors of the foreclosed properties.
Verily, petitioners' situation is not entirely unique. The 2013 case of Philippine Bank of Communications v. Pridisons Realty Corporation9 (PBCOM) illustrates how the aggrieved third-person buyers/possessors therein availed of the proper remedy when the mortgage which covered the property in their possession violated Section 18 of P.D. 957. PBCOM similarly involved a condo unit which was mortgaged by the developer in favor of PBCOM in order to secure the former's loan. When the developer defaulted, PBCOM foreclosed the mortgaged properties, and the buyers thereof filed an action for specific performance with damages with the HLURB. In turn, the HLURB issued a preliminary injunction over the public auction of the foreclosed properties in view of the buyers' action before it.
The petitioners' situation, therefore, is precisely the above situation that triggers the protective substantive rights provided by the Maceda Law and P.D. 957.
The Maceda Law primarily deals with the rights of real estate investors or real estate buyers paying in installments. As a clear expression of its purpose of protecting installment buyers against oppressive conditions that negate their right over properties purchased in installments, Section 3 thereof provides:
SECTION 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer h as paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.
The protected substantive right of installment buyers of condominium units and subdivision lots is further illustrated in the case of Orbe v. Filinvest Land, Inc.,10 where the Court expounded on the intent of the Maceda Law, viz.:
Republic Act No. 6552, the Realty Installment Buyer Act or more popularly referred to as the Maceda Law, named after its author, the late Sen. Ernesto Maceda, was adopted with the purpose of "protect[ing] buyers of real estate on installment payments against onerous and oppressive conditions." It "delineat[es] the rights and remedies of [x x x] buyers and protect[s] them from one-sided and pernicious contract stipulations":
Its declared public policy is to protect buyers of real estate on installment basis against onerous and oppressive conditions.ℒαwρhi৷ The law seeks to address the acute housing shortage problem in our country that has prompted thousands of middle and lower class buyers of houses, lots and condominium units to enter into all sorts of contracts with private housing developers involving installment schemes. Lot buyers, mostly low income earners eager to acquire a lot upon which to build their homes, readily affix their signatures on these contracts, without an opportunity to question the onerous provisions therein as the contract is offered to them on a "take it or leave it" basis. Most of these contracts of adhesion, drawn exclusively by the developers, entrap innocent buyers by requiring cash deposits for reservation agreements which oftentimes include, in fine print, onerous default clauses where all the installment payments made will be forfeited upon failure to pay any installment due even if the buyers had made payments for several years. Real estate developers thus enjoy an unnecessary advantage over lot buyers who[m] they often exploit with iniquitous results. They get to forfeit all the installment payments of defaulting buyers and resell the same lot to another buyer with the same exigent conditions. To help especially the low income lot buyers, the legislature enacted R.A. No. 6552 delineating the rights and remedies of lot buyers and protect[ing] them from one-sided and pernicious contract stipulations.
Having been adopted with the explicit objective of protecting buyers against what it recognizes to be disadvantageous and onerous conditions, the Maceda Law's provisions must be liberally construed in favor of buyers. Within the bounds of reason, fairness, and justice, doubts in its interpretation must be resolved in a manner that will afford buyers the fullest extent of its benefits.11
Four years after the Maceda Law came P.D. 957 which, for its part, likewise directed every intendment towards the protection of innocent lot buyers from scheming developers or onerous arrangements. The case of Metropolitan Bank and Trust Company v. SLGT Holdings, Inc.,12 enlightens in this respect:
As it were, [P.D.] 957 aims to protect innocent subdivision lot and condominium unit buyers against fraudulent real estate practices. Its preambulatory clauses say so and the Court need not belabor the matter presently. Section 18, supra, of the decree directly addresses the problem of fraud and other manipulative practices perpetrated against buyers when the lot or unit they have contracted to acquire, and which they religiously paid for, is mortgaged without their knowledge, let alone their consent. The avowed purpose of [P.D.] 957 compels, as the OP correctly stated, the reading of Section 18 as prohibitory and acts committed contrary to it are void. Any less stringent construal would only accord unscrupulous developers and their financiers unbridled discretion to follow or not to follow [P.D.] 957 and thus defeat the very lofty purpose of that decree. It thus stands to reason that a mortgage contract executed in breach of Section 18 of the decree is null and void.13
In the same vein, the Court in Philippine National Bank v. Office of the President14 expounded on the rationale behind P.D. 957, as a tool to protect condominium unit and/or subdivision lot buyers against developers and mortgaging banks, to wit:
x x x [T]he unmistakable intent of the law [is] to protect innocent lot buyers from scheming subdivision developers.ℒαwρhi৷ 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. Indeed, the petitioner bank had at its disposal vast resources with which it could adequately protect its loan activities, and therefore is presumed to have conducted the usual "due diligence" checking and ascertaining x x x the actual status, condition, utilization and occupancy of the property offered as collateral. x x x On the other hand, private respondents obviously were powerless to discover the attempt of the land developer to hypothecate the property being sold to them. It was precisely in order to deal with this kind of situation that P.D. 957 was enacted, its very essence and intendment being to provide a protective mantle over helpless citizens who may fall prey to the razzmatazz of what P.D. 957 termed "unscrupulous subdivision and condominium sellers."15
Proceeding from the foregoing, if in the Maceda Law, a buyer who defaults after a threshold of installment payments (i.e., at least two years) is given the right to pay the unpaid balance free of additional interests within a grace period equivalent to one month for every year of installment to be exercised every five years, as well as the right to be refunded the cash surrender value of the payments on the property equivalent to 50% of the total payments made in case of cancellation of the contract by a notarial act, then much more latitude should be rightly afforded a buyer on installment such as petitioners in this case, who have not been shown to have defaulted, but instead have been proven to have had possession of Unit 205 since 1998, and had been religiously paying installments for their purchase thereof.
Stated differently, if the defaulting buyers are afforded significant elbow room to ensure that they are given every opportunity to retain the property they are paying installments for, it is even more reasonably conceivable that a requirement of proper and effective notice to nondefaulting buyers/possessors such as herein petitioners is but a meager condition on the part of the mortgagor (i.e., NSJBI) and mortgagee (i.e., GSIS), when viewed in accordance with the overarching protective animus behind the Maceda Law and P.D. 957.
The Maceda Law and P.D. 957, thus, clearly grant installment buyers such as petitioners in this case substantive rights which are positively assertible against the developer/seller and other parties, including mortgagees of the latter.
Undoubtedly, this characterization is also consistent with the operative definition of "adverse" in the context of adverse possession under Section 33, Rule 39 of the Rules, which primarily means a possession that is in the possessor's own right, such that the third-party possessor may pursue a cause of action against the judgment debtor in order to preserve his possession over the property in dispute. The logic behind the nature of "adverse" possession in this conceptual context dovetails with the Court's elucidation of the same in the case of Gallent, Sr. v. Velasquez:16
In China Banking Corporation v. Spouses Lozada, it was held that for the court's ministerial duty to issue a writ of possession to cease, it is not enough that the property be held by a third party, but rather the said possessor must have a claim thereto adverse to the debtor/mortgagor:
Where a parcel levied upon on execution is occupied by a party other than a judgment debtor, the procedure is for the court to order a hearing to determine the nature of said adverse possession. Similarly, in an extrajudicial foreclosure of real property, when the foreclosed property is in the possession of a third party holding the same adversely to the defaulting debtor/mortgagor, the issuance by the RTC of a writ of possession in favor of the purchaser of the said real property ceases to be ministerial and may no longer be done ex parte. For the exception to apply, however, the property need not only be possessed by a third party, but also held by the third party adversely to the debtor/mortgagor.
Specifically, the Court held that to be considered in adverse possession, the third party possessor must have done so in his own right and not merely as a successor or transferee of the debtor or mortgagor.17
Given the foregoing, since herein petitioners' possession of Unit 205 in this case affords them under the Maceda Law and P.D. 957 with substantive rights which are clearly assertible against the developer/seller and other parties, including mortgagees of the developer/seller, in order that they may be preserved in their possession of the same, such a nuanced statutory configuration effectively sets them apart from the operatively constrained "transferee" of the debtor or mortgagor, in that as opposed to mere transferees who obtain no better right to the property than that which the mortgagor had, petitioners here are granted specific protective substantive rights in order that they may not be expediently ousted from the property they possess by the mere fact that they purchased and are paying for the same in installments.
In fine, by reason of these protective statutory rights under the Maceda Law and P.D. 957, the buyers such as herein petitioners have been accorded third-party status, which they can assert against both the developer-seller mortgagor and the mortgagee. Thus, the sole exception under Section 33, Rule 39 of the Rules squarely applies in the instant case.
It is additionally observed that the GSIS as the mortgagee in this case may not feign unintended disregard or lack of awareness of whether or not the requirement of notice under Section 18 of P.D. 957 was complied with, and instead insist that it may proceed with taking possession of the mortgaged properties which were sold by NSJBI to innocent buyers. On the contrary, GSIS as the creditor in this case would have known precisely whether the buyers including petitioners were notified of said mortgage, since Section 18 of P.D. 957 requires such notice before the loan applied for by the developer may be released.
In this light, notwithstanding the fact that herein petitioners had already instituted a case before the HLURB which is presently pending with the Office of the President, and pursuant to a fair disposition of the instant case, I fully join the ponencia's determination that petitioners should be allowed to intervene in the otherwise ex parte proceeding for the possessory writ, as these substantive laws governing sales of condominium units bring petitioners squarely within the contemplation of adverse third-person party possessors under Section 33, Rule 39 of the Rules.
This is only consistent with the Court's repeated exhortation that the procedural rules cannot be used to defeat the ends of justice, or upend substantive rights.18 Towards this end, I therefore fully agree with the ponencia's conclusion, thus:
Thus, in keeping with the avowed purpose of [P.D.] 957, the rule should now be that the issuance of a writ of possession ceases to be ministerial if a condominium or subdivision lot buyer intervenes to protect [his/her] rights against a mortgagee bank or financial institution. The court must order a hearing to determine the nature and source of the buyer's supposed right to the foreclosed property. Should the judge be satisfied that the oppositors to the issuance of the writ are bona fide condominium or subdivision buyers, the writ should thus be issued excluding the aforesaid buyers from its implementation. It should, however, be clarified that exclusion of such buyers is without prejudice to the outcome of cases concerning the validity of mortgage between the developer and the mortgagee financial institution or bank under Section 18 of [P.D.] 957.
Finally, it is submitted that a disposition otherwise would result in a remedial gap that effectively circumvents the singular objective of both the Maceda Law and P.D. 957. For in the final analysis, carving out this route would genuinely afford the most just and equitable remedy for petitioners in this case, who otherwise and despite resort to an action before the HLURB, must still fear an impending eviction by reason of a writ of possession which was issued as an ultimate consequence of a defaulted loan they had no hand in taking out or satisfying.
For these reasons, I vote to GRANT the petition.
Footnotes
1 Ponencia, pp. 4-7.
2 AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS, August 26, 1972.
3 REGULATING THE SALE OF SUBDIVISION LOTS AND CONDOMINIUMS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF, July 12, 1976.
4 Entitled, "THE IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO. 11201, OTHERWISE KNOWN AS THE DEPARTMENT OF HUMAN SETTLEMENTS AND URBAN DEVELOPMENT ACT" issued by the Housing and Urban Development Coordinating Council and the Housing and Land Use Regulatory Board on July 19, 2019.
5 AN ACT CREATING THE DEPARTMENT OF HUMAN SETTLEMENTS AND URBAN DEVELOPMENT, DEFINING ITS MANDATE, POWERS AND FUNCTIONS AND APPROPRIATING FUNDS THEREFOR, February 14, 2019.
6 In accordance with Rule 5 of the Revised Rules.
7 Sec. 7 of Revised Rules provides:
Section 7. Venue. - All complaints or actions shall be filed in the Regional Field Office which has jurisdiction over the area where the project involved is located or, in cases of homeowners suits, in the Regional Field Office where the homeowners association is registered.
8 Id. Sec. 5 provides:
Section 5. Actions and Proceedings. - An action or proceedings means any suit filed with HLURB by which one party sues another for the enforcement or protection of a right or for the prevention or redress of a wrong.
9 G.R. No. 155113, January 9, 2013, 688 SCRA 200.
10 G.R. No. 208185, September 6, 2017, 893 SCRA 72.
11 Id. at 89-90 citing Active Realty & Development Corporation v. Daroya, 431 Phil. 753 (2002). Emphasis supplied.
12 G.R. Nos. 175181-82 and G.R. Nos. 175354 & 175387-88, September 14, 2007, 533 SCRA 516.
13 Id. at 526. Emphasis supplied.
14 G.R. No. 104528, January 18, 1996, 252 SCRA 9.
15 Id. at 10-11. Emphasis supplied.
16 G.R. No. 203949, April 6, 2016, 788 SCRA 518.
17 Id. at 535-536 citing China Banking Corporation v. Spouses Lozada, 579 Phil. 454 (2008).
18 Fajardo, Jr. v. Freedom To Build, Inc., G.R. No. 134692, December 8, 2000, 347 SCRA 474, 478.
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