Dy v. Court of Appeals
REITERATIONFacts
The Antecedents: Bienvenido Manalo purchased Lot 2 from Paramount Development Bank (Paramount) via a Deed of Absolute Sale and entered into a Contract to Sell for Lot 3. Upon attempting to occupy the lots, Manalo discovered Benjamin Dy fencing the properties and claiming ownership, asserting he purchased them from his father in 1972. Manalo demanded Paramount eject Dy and fulfill its warranties. Paramount failed to do so, prompting Manalo to file a complaint for specific performance, ejectment, damages, and attorney's fees. Procedural History: The Regional Trial Court (RTC) ruled in favor of Manalo, ordering Dy to surrender the lots and Paramount to execute a Deed of Absolute Sale for Lot 3 upon full payment, and awarding damages and attorney's fees to Manalo. The RTC found Dy's evidence of ownership insufficient and noted that Paramount was not acting as a subdivision owner but as a mortgagee-owner. Both Dy and Paramount appealed. The Court of Appeals (CA) affirmed the RTC decision in toto. The Petition: Benjamin Dy filed a petition for review, raising issues of jurisdiction (contending HLURB has exclusive jurisdiction), the validity of the mortgage and subsequent transfers due to lack of NHA approval, his ownership of the lots, and Manalo's alleged bad faith.
Issue(s)
Whether the Regional Trial Court (RTC) erred in assuming jurisdiction over the case, arguing that only the Housing and Land Use Regulatory Board (HLURB) has exclusive jurisdiction. Whether the mortgage of the subdivision lots in favor of the Bank is void for lack of National Housing Authority (NHA) approval, rendering subsequent transfers null and void. Whether petitioner Benjamin Dy is the owner of the two lots. Whether respondent Bienvenido Manalo acted in bad faith when he purchased the lots from the Bank.
Ruling
The petition is DENIED. The challenged decision of the Court of Appeals is affirmed, finding no reversible error and conforming to the evidence of record and applicable law and jurisprudence.
Ratio Decidendi
On the issue of jurisdiction: The Court held that the RTC correctly assumed jurisdiction. Presidential Decree No. 957, as amended by PD 1344, vests exclusive jurisdiction in the HLURB for cases involving unsound real estate business practices, claims by subdivision buyers against developers, and specific performance of contractual obligations filed by buyers against owners, developers, dealers, brokers, or salesmen. However, in this case, Paramount was not acting as a subdivision owner, developer, broker, or salesman when it entered into the contracts with Manalo. It acted as a mortgagee-owner after foreclosure and in its capacity as a mortgagee. Therefore, PD 957 is not applicable. Instead, Section 19 of BP 129, which grants Regional Trial Courts exclusive original jurisdiction over civil actions involving title to or possession of real property or any interest therein, is applicable. Furthermore, the Court reiterated the ruling in Tijam v. Sibonghanoy that it frowns upon the practice of a party submitting a case for decision and then attacking the jurisdiction of the court only when the judgment is adverse. On the validity of the mortgage and subsequent transfers: The Court found the petitioner's argument untenable. Section 18 of PD 957 requires prior written approval for mortgages on subdivision lots by the owner or developer. However, the evidence showed that the lots were mortgaged to Paramount by one Eusebio Lopez, not by the Doña Agripina Subdivision as contended by the petitioner. Moreover, the Court noted that the Deed of Absolute Sale and the Contract to Sell did not involve subdivision lots in the context of PD 957. Even if it did, the provision does not explicitly state that a mortgage executed without NHA approval is null and void. The petitioner's reliance on a supposed Fatima Subdivision decision was also dismissed for lack of citation and because it involved a subdivision lot, thus not applicable to the present case. On the ownership of the lots: The Court affirmed the findings of the CA and RTC that the petitioner failed to prove his ownership. His evidence consisted of a deed of sale from his father, two receipts allegedly from Doña Agripina Subdivision, and his own testimony. The RTC found that it was not even shown that the lots were owned by Doña Agripina Subdivision at the time of the alleged sale to the petitioner's father. The receipts were deemed private documents, and the testimony regarding their due execution was not sufficiently positive or categorical to authenticate them. The deed of sale from the father was considered a "worthless document" without proof of the father's title or the subdivision's ownership. On Manalo's alleged bad faith: The Court found no evidence to substantiate the petitioner's claim that Manalo acted in bad faith. While the doctrine holds that knowledge of an unregistered sale is equivalent to registration, the Court reviewed the transcript and found no basis for the petitioner's conclusion. Manalo testified that he was unaware of any occupants when he entered into the contracts and only discovered Dy's adverse claim when he went to occupy the properties. The trial court believed Manalo's testimony, and the Supreme Court deferred to this factual finding. Since Manalo learned of Dy's possession and claim only after purchasing the land, he could not be considered a purchaser in bad faith. The Court also noted that the Deed of Absolute Sale for Lot 2 was duly registered, and under Section 51 of PD 1529, registration is the operative act conveying or affecting the land concerning third persons. Section 44 of the same law states that a registered owner holding a certificate of title in good faith is free from encumbrances not noted on the certificate or specified by law.
Main Doctrine
The Regional Trial Court has jurisdiction over actions for specific performance involving title to or possession of real property, even if the property is part of a subdivision, as long as the transaction does not involve the seller acting as a subdivision owner, developer, dealer, broker, or salesman. Furthermore, the act of registration is the operative act that conveys or affects the land concerning third persons, and a registered owner holding a certificate of title in good faith is generally free from encumbrances not noted therein.