Government Service Insurance System v. Board of Commissioners (2nd Division)
REITERATIONFacts
The Antecedents: New San Jose Builders, Inc. (NSJBI) mortgaged several properties, including a condominium unit, to the Government Service Insurance System (GSIS) to secure a P600,000,000 loan. NSJBI subsequently defaulted on the loan, leading GSIS to foreclose on the mortgage and purchase the properties. The condominium unit in question was later sold by NSJBI to spouses Marcelino and Alma De los Reyes. Upon discovering the prior mortgage and foreclosure, the spouses De los Reyes filed a complaint against NSJBI and GSIS. Procedural History: The spouses De los Reyes filed a complaint with the Housing and Land Use Regulatory Board (HLURB), seeking the release of the condominium unit from the mortgage and other reliefs. They also sought a preliminary injunction and temporary restraining order to prevent GSIS from consolidating its title. The HLURB Arbiter granted the injunction. GSIS appealed to the HLURB Second Division, which affirmed the Arbiter's ruling, holding that the mortgage was void for lack of prior Board approval and that PD No. 385 did not apply to the consolidation of title. GSIS's motion for reconsideration was denied, prompting a petition for certiorari to the Court of Appeals. The Court of Appeals dismissed GSIS's petition, upholding the HLURB's jurisdiction and the issuance of the injunction. GSIS's motion for reconsideration was denied, leading to the present petition. The Petition: GSIS filed a petition for review with the Supreme Court, primarily arguing that the HLURB Second Division lacked the authority to entertain appeals. GSIS also contended that Presidential Decree (PD) No. 385 prohibited the issuance of a cease and desist order against government financial institutions in foreclosure actions. The Supreme Court affirmed the Court of Appeals' decision, finding that the HLURB Rules of Procedure allowed for decisions by divisions and that PD No. 385 did not preclude the issuance of an injunction in this case, as the act sought to be enjoined was the consolidation of title, not the mandatory foreclosure itself. The Court also affirmed the HLURB's broad jurisdiction to regulate the real estate business and issue cease and desist orders.
Issue(s)
Whether the HLURB Second Division had the authority to entertain GSIS's motion for reconsideration. Whether Presidential Decree No. 385 prohibits the issuance of a Cease and Desist Order (CDO) against GSIS from consolidating its title over the condominium unit. Whether the HLURB has jurisdiction over the complaint for annulment of foreclosure sale and mortgage and the grant of incidental reliefs.
Ruling
The Supreme Court affirmed the Court of Appeals Decision, upholding the HLURB's jurisdiction and the issuance of the Cease and Desist Order. The Court ordered the Housing and Land Use Arbiter to proceed with dispatch with the spouses De los Reyes's complaint.
Ratio Decidendi
On the authority of the HLURB Second Division: The Court held that the HLURB Board of Commissioners is mandated by Section 5 of Executive Order (E.O.) No. 648 to adopt rules of procedure for its business. This grant of power includes the authority to delegate functions. The 2004 HLURB Rules of Procedure provided that a motion for reconsideration shall be assigned to the Division from which the decision originated. Therefore, the HLURB Second Division's cognizance of GSIS's motion for reconsideration was in order, as practicality necessitates the establishment of procedures for cases to be decided by divisions, especially given the composition of the Board. On the applicability of PD No. 385: The Court clarified that the act sought to be enjoined was the consolidation of ownership by GSIS, not the mandatory foreclosure of the mortgage itself. Presidential Decree No. 385 prohibits the issuance of restraining orders or injunctions against government financial institutions in actions taken in compliance with mandatory foreclosure. However, the second paragraph of Section 2 of PD No. 385 recognizes the possibility of an injunction being issued, by obliging the borrower to liquidate arrearages to safeguard the lender's interests. Thus, the prohibition in PD 385 does not extend to the consolidation of title, which is a subsequent act. On the jurisdiction of the HLURB: The Court affirmed that the jurisdiction of the HLURB to regulate the real estate business is broad enough to include jurisdiction over a complaint for annulment of foreclosure sale and mortgage and the grant of incidental reliefs such as a CDO. Presidential Decree No. 957, "The Subdivision and Condominium Buyers Protective Decree," explicitly authorizes the HLURB to issue cease and desist orders in relevant cases where a violation of its provisions or rules occurs. In this case, the HLURB found that NSJBI violated Section 18 of PD No. 957 by mortgaging condominium units without prior written approval from the Board, rendering the mortgage and subsequent foreclosure void.
Main Doctrine
The prohibition under Presidential Decree No. 385 against the issuance of restraining orders or injunctions against government financial institutions applies only to actions taken in compliance with mandatory foreclosure proceedings, not to the consolidation of title thereafter. Furthermore, the Housing and Land Use Regulatory Board (HLURB) has jurisdiction to issue cease and desist orders in cases involving violations of Presidential Decree No. 957, such as mortgaging condominium units without prior board approval.