De Vera, Jr. v. Court of Appeals
REITERATIONFacts
The Antecedents: Respondent Q. P. San Diego Construction, Inc. (QPSDCI) obtained a syndicate loan from several banks, including Asiatrust Development Bank, to finance the construction of the Lourdes I Condominium. As security, QPSDCI mortgaged the condominium property and its individual units. Petitioner Gregorio de Vera Jr. entered into a Condominium Reservation Agreement with QPSDCI to purchase Unit 211-2C. He made substantial down payments and secured an approved Pag-IBIG loan, though the amount was less than the remaining balance. QPSDCI agreed to defer the shortfall, and the unit was eventually turned over to petitioner. However, due to issues with the loan implementation and petitioner's equity payments not being remitted to the bank, the loan was ultimately disapproved for petitioner. Subsequently, QPSDCI defaulted on its loan obligations to the banks, leading to the extrajudicial foreclosure of the mortgage on various units, including petitioner's. Procedural History: Petitioner filed a complaint against the respondents for damages, injunction, annulment of mortgage, and specific performance before the Regional Trial Court (RTC) of Quezon City. The RTC ruled in favor of petitioner, ordering the respondents to pay damages and facilitate the release of the unit's title. The Court of Appeals (CA) affirmed the RTC's decision with modifications, ordering respondents to pay nominal damages but deleting the award for actual and exemplary damages. Petitioner's motion for reconsideration with the CA was denied for being filed out of time. This denial, and the CA's decision itself, are now under review. The Petition: This case is before the Supreme Court via a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court. Petitioner assails the Court of Appeals' Resolution denying his motion for reconsideration, arguing that the denial was based on a technicality and that his counsel was not properly notified of the CA's decision. Petitioner contends that the CA should have entertained his motion in the interest of justice. The core issue before the Supreme Court is the propriety of the award of damages, as the Court of Appeals deleted the awards for actual and exemplary damages granted by the trial court. Petitioner seeks to reinstate these damages and obtain a clean title to his condominium unit.
Issue(s)
Whether the Court of Appeals erred in denying petitioner's motion for reconsideration on the ground of being filed out of time. Whether the Court of Appeals erred in deleting the award of actual and exemplary damages and attorney's fees. Whether the mortgage foreclosure sale and the certificate of title issued in favor of ASIATRUST Development Bank over Unit 211-2C are valid. Whether Q. P. San Diego Construction, Inc. and ASIATRUST Development Bank are liable for damages to petitioner, and the proper remedy for the breach of obligations.
Ruling
The Supreme Court modified the decision of the Court of Appeals. The mortgage over Unit 211-2C and its foreclosure sale were declared NULL and VOID. Respondents Q. P. San Diego Construction, Inc. and ASIATRUST Development Bank were ordered to credit all payments made by petitioner Gregorio de Vera Jr. to his outstanding balance, and to deliver the certificate of title over Unit 211-2C upon full payment of the purchase price, free from all penalties, liens, and charges, except those accruing after the finality of the decision. The award of nominal damages in favor of petitioner in the amount of P50,000.00 was affirmed.
Ratio Decidendi
On the issue of the denial of the motion for reconsideration: The Court acknowledged petitioner's argument that service of the Court of Appeals' decision on him personally, instead of his counsel, rendered the notice invalid. The Court reiterated the rule that service must be made upon the counsel of record unless the court orders otherwise. While the Court noted that the petitioner was partly to blame for filing his complaint in the regular courts instead of the Housing and Land Use Regulatory Board (HLURB), it emphasized that it has the power to suspend its own rules when the purposes of justice require it. The Court found that the petitioner's arguments regarding the merits of the case warranted consideration, thus justifying the entertainment of the petition despite the technicality. On the issue of damages: The Court agreed with the Court of Appeals that petitioner failed to present proof of actual pecuniary loss suffered as a result of the breach of seller's warranty, thus actual damages were not in order. However, the Court found that petitioner was not liable for penalties, interests, and other charges that accrued due to the non-payment of the balance. The Court reasoned that ASIATRUST made representations that led petitioner to believe his loan was approved, and ASIATRUST could not use the Pag-IBIG loan release as an excuse for the bridge financing, as the essence of bridge financing is to provide interim funds. The trial court's finding that petitioner was a victim of circumstances and his failure to pay was not his fault was upheld. On the issue of the validity of the mortgage and foreclosure: Furthermore, the Court invoked Section 25 of PD 957, which mandates the owner or developer to deliver the title to the buyer upon full payment and to redeem any outstanding mortgage without cost to the buyer. The Court found QPSDCI negligent in failing to remit petitioner's payments to ASIATRUST. Consequently, QPSDCI should be liable for any charges, liens, or penalties. On the issue of liability for damages and the proper remedy: However, the Court found it erroneous for the trial court to award damages as a remedy. Instead, the Court determined that the proper remedy, as sought in petitioner's complaint and supported by jurisprudence like Union Bank of the Philippines v. HLURB, was to annul the mortgage foreclosure sale and the certificate of title issued in favor of ASIATRUST, as the mortgage was not registered with the NHA as required by PD 957, and QPSDCI violated its obligation to deliver a clean title. The Court also ordered QPSDCI to credit petitioner's payments and deliver a clean title upon full payment, as mandated by PD 957.
Main Doctrine
The mortgage foreclosure sale and the certificate of title issued in favor of the bank were declared null and void due to the failure of the owner/developer to register the mortgage with the National Housing Authority (NHA) as required by PD 957, and the owner/developer's breach of warranty to deliver a clean title to the buyer. The owner/developer and the bank were ordered to credit all payments made by the petitioner to his outstanding balance and to deliver the title to the unit upon full payment, free from all penalties, liens, and charges.