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Bank of The Philippine Islands vs. Sanchez
Bank of The Philippine Islands vs. Sanchez
Bank of The Philippine Islands vs. Sanchez
CASES REPORTED
SUPREME COURT REPORTS ANNOTATED
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* THIRD DIVISION.
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SUPREME COURT REPORTS ANNOTATED VOLUME 741 1/16/18, 10:41 PM
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that the project has no permit from the HLURB and that
construction has been stopped because of the CDO. Had VTCI done
the inspection and investigation, then it would not have entered
into the deeds of absolute sale with Garcia and TSEI. Thus,
respondent VTCI cannot be considered as a purchaser in good faith.
From the foregoing, the fact that all the intervenors turned a blind
eye to the flaws and defects in the ownership of TSEI over the
property and miserably failed to undertake measures required of a
reasonably prudent man to investigate the title of the pseudo owner
and the legality of the townhouse project constitutes bad faith for
which there is no available relief under the law.
Same; Contracts; Rescission of Contracts; Article 1191 of the
Civil Code states that rescission is available to a party in a
reciprocal obligation where one (1) party fails to comply therewith.·
Article 1191 of the Civil Code states that rescission is available to a
party in a reciprocal obligation where one (1) party fails to comply
therewith: Article 1191. The power to rescind obligations is
implied in reciprocal ones, in case one of the obligors should
not comply with what is incumbent upon him. The injured
party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the latter
should become impossible. The court shall decree the rescission
claimed, unless there be just cause authorizing the fixing of a
period. This is understood to be without prejudice to the rights of
third persons who have acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage Law.
Same; Same; Same; Article 1385 of the Civil Code does provide
that rescission shall not take place if the subject matter of the prior
agreement is already in the hands of a third party who did not act in
bad faith.·Article 1385 of the Civil Code does provide that
rescission shall not take place if the subject matter of the prior
agreement is already in the hands of a third party who did not act
in bad faith, to wit: Article 1385. Rescission creates the obligation to
return the things which were the object of the contract, together
with their fruits, and the price with its interest; consequently, it can
be carried out only when he who demands rescission can return
whatever he may be obliged to restore. Neither shall rescission
take place when the things which are the object of the
contract are
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VELASCO, JR., J.:
The Case
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The Facts
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The offer was good for only seven (7) days. The period
elapsed with the parties failing to come to an agreement.
Sometime in the third week of October 1988, Felisa Yap
(Yap), the widow of Kenneth Nereo Sanchez, and Garcia
had a meeting at the Quezon City Sports Club wherein the
parties agreed to the sale of the subject property under the
following terms and conditions:
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4 Id.
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16 Id., at p. 167.
17 Id., at p. 171.
18 Id., at pp. 168-169.
19 Id., at p. 174.
20 Id., at pp. 176-177.
21 Id., at pp. 178-179.
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28 Id., at p. 183.
29 Id., at p. 192.
30 Id., at p. 193.
31 Id., at pp. 1-21.
32 Records, Vol. II, pp. 89-90.
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The Issues
V.
Grounds for this Appeal
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ii. Rescission cannot take place because the property was already
acquired by third person who acted in good faith.
iii. Sanchez, et al. should bear all the losses arising from their
own negligence.
B. The Court of Appeals erred in ordering the annulment of TCT
No. 383697 in a collateral action.
C. The Court of Appeals erred in ordering the annulment of TCT
No. 383697 notwithstanding that it had no jurisdiction to do so,
since such relief was never prayed for in the complaint.
D. The Court of Appeals erred in decreeing rescission,
notwithstanding that it would result in the unjust enrichment of
plaintiffs Sanchez, et al., at the expense of BPI.
E. Assuming that Article 448 of the Civil Code is applicable, the
Court of Appeals erred in not ruling that BPI already acquired the
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bad faith.
As explained by the CA:
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anyone to enter the same. The latter also caused the demolition of
the old house standing thereon and advertised the same for sale by
placing a large billboard in front of the subject property. In fact, had
it not been for persistent efforts of plaintiffs-appellants/appellees,
the Agreement which eventually protected the latterÊs rights over
the subject property, could not have been executed.51
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they were not as yet fully paid of the purchase price on the subject
property and no contract of sale has been executed by them in
defendantsÊ favor. Under these circumstances, the provision of
Article 453 of the Civil Code should have been applied by the trial
court.53
Article 453. If there was bad faith, not only on the part of the
person who built, planted or sowed on the land of another, but also
on the part of the owner of such land, the rights of one and the
other shall be the same as though both had acted in good faith.
It is understood that there is bad faith on the part of the
landowner whenever the act was done with his knowledge
and without opposition on his part. (emphasis supplied)
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The Court agrees with both the RTC and the CA that
Garcia and/or TSEI are builders in bad faith. They knew
for a fact that the property still belonged to the Sanchezes
and yet
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54 Rollo, p. 86.
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65 G.R. No. 152267, September 16, 2005, 470 SCRA 99, 107-108.
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SO ORDERED.
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