GR 182133 Brion (Digest)
G.R. No. 182133, June 23, 2015
UNITED OVERSEAS BANK OF THE PHILIPPINES, INC., PETITIONER, VS. THE BOARD OF COMMISSIONERS-HLURB, J.O.S. MANAGING BUILDERS, INC., AND EDUPLAN PHILS., INC., RESPONDENTS.
FACTS
The case involves a dispute over a mortgage contract. Petitioner United Overseas Bank (UOB) entered into a real estate mortgage contract with J.O.S. Managing Builders, Inc. (JOS), a developer. Respondent Eduplan Phils., Inc. (EDUPLAN) is a buyer of a unit in a condominium project developed by JOS. The mortgage was executed without the prior written approval of the Housing and Land Use Regulatory Board (HLURB) as required by Section 18 of Presidential Decree No. 957 (The Subdivision and Condominium Buyers’ Protective Decree). The ponencia (main decision) concluded that the nullity of the mortgage contract should be limited only to the interest of the complaining buyer, EDUPLAN. This dissenting opinion disagrees with that conclusion.
ISSUE
Whether the entire mortgage contract between UOB and JOS should be declared null and void for violation of Section 18 of P.D. 957, or whether its nullity should be limited only to the lot or unit purchased by the complaining buyer.
RULING
The dissenting opinion argues that the entire mortgage contract between UOB and JOS should be declared null and void. The ponencia’s reliance on Far East Bank v. Marquez to limit the nullity only to the buyer’s unit is flawed and retrogressive. Section 18 of P.D. 957 is a prohibitory law designed to protect innocent lot buyers from fraudulent schemes by developers. Its avowed purpose compels a reading that acts committed contrary to it are void. The interest of a condominium buyer extends beyond the individual unit to the completion of the entire project, which is protected by various provisions of P.D. 957, including the requirements for registration, financial viability, performance bonds, and the specific mandate that mortgage proceeds be used for project development. Allowing partial nullity divides opposition and undermines the law’s social justice objective of protecting helpless buyers against unscrupulous developers and financial institutions. Therefore, the dissenting opinion votes to DENY the petition, advocating for the nullity of the entire mortgage contract.