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Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 97929 December 17, 1991

BENJAMIN DY, petitioner,


vs.
HON. COURT OF APPEALS, BIENVENIDO MANALO AND PARAMOUNT DEVELOPMENT
BANK, respondents.

Gregorio M. Albino for petitioner.

Adelaida J. Rivera for Bienvenido Manalo.

Belasa, Reyes & Associates for Urban Development Bank.

CRUZ, J.:p

The original controversy was between the private respondents only. It was complicated when the
petitioner herein entered the picture as intervenor and claimed ownership of the properties in dispute.

These properties were two lots located in Pandan, Angeles City, each consisting of 180 square meters.
They are designated as Lots 2 and 3 of Block 8 of the subdivision plan (LRC) Psd 31467.

It appears that on June 30, 1983, Bienvenido Manalo purchased Lot 2 for P9,000.00 from Paramount
Development Bank, the herein other private respondent. The bank expressly warranted valid title to and
peaceful possession of the property and that it was free from all liens and encumbrances. On August 1,
1983, the Deed of Absolute Sale 1 was duly registered and TCT No. 61529 in the Registry of Deeds of Angeles City was issued in the
name of Manalo.

Also on June 30, 1983, Manalo and Paramount entered into another agreement pursuant to which the
latter committed itself to sell Lot 3 to Manalo for the sum of P9,000.00. P3,000.00 was to be paid in
advance and the balance in specified installments. The Contract to Sell 2 stipulated that the mortgagor of Lot 3 having
defaulted, Paramount would institute foreclosure proceedings and allow Manalo to take possession of the lot upon its purchase thereof at the auction
sale. The bank also agreed to execute a Deed of Absolute Sale once it acquired title to the lot and upon full payment of the balance by Manalo.

Manalo alleges that when he went to occupy the said lots pursuant to the above-mentioned contracts, he
found that they had been fenced by Benjamin Dy, who claimed to be the owner of the properties. Manalo
then demanded from Paramount that it eject Dy pursuant to its express warranty under the Deed Absolute
Sale. He also informed the bank that he would su pend the amortizations on Lot 3 until the land was
cleared of occupants.

The bank having failed to comply with Manalo's demand, the latter filed a complaint against it in the
Regional Trial Court Angeles City. Manalo demanded that the defendant make good its warranty under
the Deed of Absolute Sale, eject the occupants of Lot 3, and execute a Deed of Absolute Sale thereof
upon his full payment of the agreed purchase price. He also demanded actual, moral and exemplary
damages as well as litigation expenses, including attorney's fees.

In its answer, the defendant denied the claims of the plaintiff and set up special and affirmative defenses.

Enter now the petitioner, as plaintiff-intervenor.

Benjamin Dy averred that the real owner of Lots 2 and 3 wa he and none other, having purchased them
on February 2, 1972 from his father, Dy Hong, for P14,000.00. Dy Hong had acquired these lots from the
Doa Agripina Subdivision on September 4, 1964, as evidenced by two receipts issued to him by the
seller. The intervenor claimed he had been in possession o the lots since 1964 and that both Manalo and
the bank knew he was the owner of these properties.

After trial, Judge Cesar V. Alejandria rendered judgment 3 in favor of Manalo, to whom Dy was
ordered to surrender the object lots. The defendant bank was required to execute in Manalo's
favor a Deed of Absolute Sale over Lot 3 if or once it had already acquired title thereto, upon
payment by Manalo of the purchase price in full. The defendant was also sentenced to pay the
plaintiff damages in the amount of P10,000.00 an attorney's fees in the amount of P5,000.00,
plus the costs.

The trial court held that the defendant was bound to place plaintiff in peaceful possession of Lot 2 in
accordance with th ex ress warrant in the Deed of Absolute Sale.

Regarding Lot 3, the decision held that the plaintiff had the right to suspend payment of the balance of the
purchase price because the conditions of the contract violated Art. 1461 of the Civil Code, and especially
since the land was occupied by Dy. It added that unless the bank could transfer title and peaceful
possession of the lot to Manalo, as promised, it should refund the P3,000.00 advance payment, with
interest, and pay Manalo damages.

As for Dy, the trial court said that his evidence of ownership was insufficient, consisting as it did only of
the two receipts and the deed of sale from his father. No deed of sale from the Doa Agripina Subdivision
was submitted. The deed of sale signed by his father, who supposedly acquired the land from the
subdivision, was by itself alone a "worthless document." There was no proof either that the disputed lots
belonged to the subdivision as the evidence of record showed that the land was originally owned by one
Eusebio Lopez, who mortgaged it to Paramount.

The defendant and the intervenor both appealed the decision to the Court of Appeals, which affirmed it in
toto on April 10, 1989. 4 The intervenor then filed this petition for review with this Court on the following submissions:

1. The RTC erred in assuming jurisdiction over the case as only the
Housing and Land Use Regulatory Board has the authority and exclusive
jurisdiction over the case due to the nature of the action.

2. Without the approval of the HLURB, the mortgage of the subdivision


lots in favor of the Bank is void and any subsequent transfer to other
persons, including the Bank and Manalo, is likewise null and void.
3. The mortgage of the subdivision lots to the Bank or its predecessor-in-
interest by the owner is null and void pursuant to a decision of the Court
dated November 11, 1981, involving the Fatima Subdivision and
Philippine Savings Bank, because a bank should know that when the
property was mortgaged to it, lots had been sold or were being sold to
the public, and should the company fail to liquidate the loan, the lot
buyers would be affected.

4. Petitioner is the owner of the two lots. Article 1358 does not state that
the sale is void and non-existing just because the sale was not done in a
public instrument. The requirements of said article are intended only to
insure enforcement of the contract.

5. Manalo was in bad faith when he purchased the lots from the Bank
because he knew that petitioner had already purchased the lots from the
subdivision.

It is contended by the petitioner that the nature of the action places it under the jurisdiction of the Housing
and Land Use Regulatory Board, conformably to PD 957 as amended by PD 1344, providing as follows:

Section 1. In the exercise of its function to regulate the real estate trade and business
and in addition to its powers provided for in Presidential Decree No. 957, the National
Housing Authority shall have exclusive jurisdiction to hear and decide cases of the
following nature:

A. Unsound real estate business practices.

B. Claims involving refund and other claims filed by subdivision, lot or


condominium buyer against the project owner, develope dealer, broker or
salesman; and

C. Cases involving specific performance of contractual and statutory


obligations filed by buyers of subdivision, lot or condominium unit against
the owner, developer, dealer, broker or salesman.

Exclusive jurisdiction over these cases was originally vested in the National Housing Authority but was
transferred by EO 648 dated February 7, 1981, to the Human Settlements Regulatory Commission, which
was renamed Housing and Land Use Regulatory Board by EO 90 on December 17, 1986.

The above-quoted provision clearly shows that the petitioner's contention is untenable. Civil Case No.
4209 was an action for specific performance brought by Manalo as vendee of the lots to enforce the
warranty contained in the Deed of Absolute Sale and to compel performance of the Contract to Sell by
Paramount as vendor. The bank sold Lot 2 as mortgagee-owner after having acquired title thereto by
virtue of a foreclosure sale an promised to sell Lot 3 under certain conditions in its capacity a mortgagee.
It was not acting as subdivision owner, developer, broker or salesman, nor was it engaged in the real
estate business when it entered into the two contracts with Manalo. Hence, PD 957 as amended. is not
applicable. What is applicable is Section 19 of BP 129, which vests in the Regional Trial Courts exclusive
original jurisdiction over civil actions involving title to or possession of real property or any interest therein.
It must be added that the attack on the jurisdiction of the trial court was made by the petitioner for the first
time only when the case was already in the Court of Appeals. In Tijam v. Sibonghanoy, 5 the Court said that "we
frown upon the "undesirable practice" of a party submitting his case for decision and then accepting the judgment only if favorable, and attacking it for
lack of jurisdiction, when adverse."

In his second and third assignments of error, the petitioner alleges that the mortgages constituted over the
lots in favor of the bank are null and void for lack of "approval by the National Housing Authority pursuant
to Section 18 of PD 957. He also invokes the decision of the Court in a case "involving the Fatima
Subdivision and the Philippine Savings Bank" but does not give any citation of that case. The argument is
that if the mortgages in favor of the bank are void, then the foreclosure sales and the subsequent
transfers of the lots are likewise void.

Section 18 of PD 957 provides as follows:

Section 18. Mortgages No mortgage on any unit or lot shall be made by the owner or
developer without prior written approval of the authority. Such approval shall not be
granted unlws it is shovrn that the proceeds of the mortgage loan shall be used for the
development of the condominium or subdivision project and effective measures have
been provided to ensure such utilization. The loan value of each lot or unit covered by the
mortgage shall be determined and the buyer thereof, if any, shall be notified before the
release of the loan. The buyer may, at his option, pay his installment for the lot or unit
directly to the mortgagee who shall apply the payments to the corresponding mortgage
indebtedness secured by the particular lot or unit being paid for, with a view to enabling
said buyer to obtain title over the lot or unit promptly after full payment thereof.

As we have already held that the Deed of Absolute Sale and the Contract to Sell do not involve
subdivision lots, this section is clearly not applicable to the mortgages executed in favor of Paramount. In
fact, it has been shown that the lots were mortgaged to the bank by one Eusebio Lopez and not by the
Dora Agripina Subdivision as the petitioner contends. In any event, there is nothing in the said provision
which states that mortgage executed without the approval of the NHA (now th HLRUB) is null and void.

We have no copy of the supposed Fatima Subdivision decision nor does the petitioner tell us where to
find it, as he should. It does not matter much, though, for from what he tells us about it, it involves a
subdivision lot and so does not apply to the case before us.

The fourth and fifth assignments of errors will be jointly discussed as these involve the issue of ownership
of the lots in question.

We affirm the conclusion of the respondent court that petitioner has not proved that he is the owner of the
lots. His evidence on this matter consisted only of the deed of sale executed and signed by his father, the
two receipts supposedl issued by the Doa Agripina Subdivision, and his own testimony. As observed by
the trial court, it has not even been shown that at the time of the allgged sale in favor of the petitioner
father, the lots were owned by the Doa Agripina Subdivision.

The two receipts allegedly issued by the subdivision are private documents. In proving their due execution
and genuinness, it is not sufficient that the witness state in a general manner that the person whose
signature appears thereon the one who executed the document. The testimony of an eye witness
authenticating a private document must be positive, categorically stating that the document was actually
eye-witness by the person whose name is subscribed thereto. 6 The Court notes that in the case at bar, the details
surrounding execution of the petitioner's documentary evidence were even narrated.

Regarding Lot 2, it should be noted that the Deed of Absolute Sale dated June 30, 1983, was duly
registered, resulting in issuance of TCT No. 61529 in Manalo's name. Under Section of PD 1529, the act
of registration is the operative act to convey or affect the land insofar as third persons are
concerned. 7 Section 44 of the same law provides that every registered own receiving a certificate of title in pursuance of a decree of registration
shall hold the same free from all encumbrances except those noted in said certificate and those specifically mentioned by law. This rule applies to
every subsequent purchaser of registered land taking a certificate of title in good faith.

The petitioner contends that Manalo is a purchaser in bad faith as he knew Dy owned the lots in question
before he bought it. He argues that such knowledge of the unregistered sale is equivalent to registration
as held in the cases of Winkleman v. Veluz, 43 Phil. 604, and Gustilo v. Maravilla, 48 Phil. 442.

That is indeed the doctrine. Nevertheless, the Court has carefully reviewed the transcript of stenographic
notes and has found nothing to substantiate the petitioner's gratuitous conclusions. On the contrary,
Manalo testified that he was not aware that there were occupants of the lots when he entered into the
contracts with Planters, and that it was only when he went to clear the properties that he came to know of
Dy's adverse claim. The trial court believed him, and so do we, relying on its factual finding. We agree
that as Manalo came to know about the petitioner's possession and claim of ownership over the two lots
only after he had already bought the land, he cannot be considered a purchaser in bad faith.

It is clear to the Court that the challenged decision is not flawed by reversible error but, on the contrary,
conforms to the evidence of record and the applicable law and jurisprudence.

ACCORDINGLY, the petition is DENIED, with costs against the petitioner.

SO ORDERED.

Narvasa, C.J., Grio-Aquino and Medialdea, JJ., concur.

# Footnotes

1 Exhibit A.

2 Exhibit C.

3 Rollo, p. 29.

4 Penned by Nocon, P. J., with Paras and Cacdac, Jr., JJ., concurring.

5 23 SCRA 29.

6 Nolan v. Salas, 7 Phil. 1.

7 Egao v. Court of Appeals, 174 SCRA 484.