Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82723:56547&catid=1580&Itemid=566
Timestamp: 2019-04-21 04:20:28+00:00

Document:
PHILIPPINE NATIONAL BANK, Petitioner, v. TERESITA TAN DEE, ANTIPOLO PROPERTIES, INC., (NOW PRIME EAST PROPERTIES, INC.) AND AFP–RSBS, INC., Respondents.
This is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the Decision2 dated August 13, 2007 and Resolution3 dated March 13, 2008 rendered by the Court of Appeals (CA) in CA–G.R. SP No. 86033, which affirmed the Decision4 dated August 4, 2004 of the Office of the President (OP) in O.P. Case No. 04–D–182 (HLURB Case No. REM–A–030724–0186).
Some time in July 1994, respondent Teresita Tan Dee (Dee) bought from respondent Prime East Properties Inc.5 (PEPI) on an installment basis a residential lot located in Binangonan, Rizal, with an area of 204 square meters6 and covered by Transfer Certificate of Title (TCT) No. 619608. Subsequently, PEPI assigned its rights over a 213,093–sq m property on August 1996 to respondent Armed Forces of the Philippines–Retirement and Separation Benefits System, Inc. (AFP–RSBS), which included the property purchased by Dee.
An administrative fine of TEN THOUSAND PESOS ([P]10,000.00) payable to this Office fifteen (15) days upon receipt of this decision, for violation of Section 18 in relation to Section 38 of PD 957.
THE HONORABLE COURT OF APPEALS ERRED IN ORDERING OUTRIGHT RELEASE OF TCT NO. 619608 DESPITE PNB’S DULY REGISTERED AND HLURB[–] APPROVED MORTGAGE ON TCT NO. 619608.
Sec. 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith.
However, the transferee BANK is bound by the Contract to Sell and has to respect Enriquez’s rights thereunder. This is because the Contract to Sell, involving a subdivision lot, is covered and protected by PD 957. x x x.
More so in this case where the contract to sell has already ripened into a contract of absolute sale.
There is nothing on record showing that the Memorandum of Agreement has been nullified or is the subject of pending litigation; hence, it carries with it the presumption of validity.44 Consequently, the execution of the dation in payment effectively extinguished respondent PEPI’s loan obligation to the petitioner insofar as it covers the value of the property purchased by Dee. This negates the petitioner’s claim that PEPI must first redeem the property before it can cancel or release the mortgage. As it now stands, the petitioner already stepped into the shoes of PEPI and there is no more reason for the petitioner to refuse the cancellation or release of the mortgage, for, as stated by the Court in Luzon Development Bank, in accepting the assigned properties as payment of the obligation, “[the bank] has assumed the risk that some of the assigned properties are covered by contracts to sell which must be honored under PD 957.”45 Whatever claims the petitioner has against PEPI and AFP–RSBS, monetary or otherwise, should not prejudice the rights and interests of Dee over the property, which she has already fully paid for.
WHEREFORE, the petition for review is DENIED for lack of merit. Consequently, the Decision dated August 13, 2007 and Resolution dated March 13, 2008 of the Court of Appeals in CA–G.R. SP No. 86033 are AFFIRMED.
2 Penned by Associate Justice Arcangelita M. Romilla–Lontok, with Associate Justices Rodrigo V. Cosico and Mariano C. Del Castillo (now a member of this Court), concurring; id. at 53–64.
4 CA rollo, pp. 6–14.
5 Formerly Antipolo Properties, Inc.
6 Identified as Lot 12, Block 21–A.
7 CA rollo, p. 56.
15 Entitled, “The Subdivision and Condominium Buyers’ Protective Decree”.
16 Entitled “An Act to Regulate the Sale of Property under Special Powers Inserted In or Annexed to Real Estate Mortgages”.
17 In upholding the OP decision, the CA ruled that paragraph 6 of herein petitioner’s undertaking is a stipulation pour autrui, which is an exception to the principle of relativity of contracts under Article 1311 of the Civil Code. According to the CA, the provision should be read in conjunction with Section 25 of P.D. No. 957, which compels the owner/developer to redeem the mortgage on the property and deliver the title to the buyer; rollo, pp. 59–64.
21 See Memorandum of Agreement dated November 22, 2006, id. at 92–95.
23 CIVIL CODE, Article 1311, states in part, that contracts take effect only between the parties, their assigns and heirs.
24Spouses Borromeo v. Hon. Court of Appeals, 573 Phil. 400, 412 (2008).
26 CIVIL CODE, Article 1495.
27 CIVIL CODE, Article 1582.
28Situs Development Corporation v. Asiatrust Bank, G.R. No. 180036, July 25, 2012, 677 SCRA 495, 509.
29Typingco v. Lim, G.R. No. 181232, October 23, 2009, 604 SCRA 396, 401.
30Spouses Delfin O. Tumibay and Aurora T. Tumibay v. Spouses Melvin A. Lopez and Rowena Gay T. Visitacion Lopez, G.R. No. 171692, June 3, 2013.
31 579 Phil. 454 (2008).
33Philippine Bank of Communications v. Pridisons Realty Corporation, G.R. No. 155113, January 9, 2013, 688 SCRA 200, 214, citing Philippine National Bank v. Office of the President, 252 Phil. 5 (1996); Far East Bank & Trust Co. v. Marquez, 465 Phil. 276, 287 (2004).
34 G.R. No. 168646, January 12, 2011, 639 SCRA 332.
35 The contract to sell in Luzon Development Bank was not registered.
36 Supra note 34, at 352–353.
40Aquintey v. Sps. Tibong, 540 Phil. 422, 446 (2006), citing Vda. de Jayme v. Court of Appeals, 439 Phil. 192, 210 (2002).
41Dao Heng Bank, Inc. v. Spouses Laigo, 592 Phil. 172, 181 (2008).
42Bank of the Philippine Islands v. Securities and Exchange Commission, 565 Phil. 588, 596 (2007).
43Tan Shuy v. Maulawin, G.R. No. 190375, February 8, 2012, 665 SCRA 604, 614–615.
44GSIS v. The Province of Tarlac, 462 Phil. 471, 478 (2003).
45 Supra note 34, at 357.
46Philippine Bank of Communications v. Pridisons Realty Corporation, supra note 33.
47 CA rollo, p. 10.
48Eastland Construction & Development Corp. v. Mortel, 520 Phil. 76, 91 (2006).

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