Tayengco v.

Court of Appeals
15 SCRA 306

ISSUE:

Whether or not the price of Php 12,000 for a parcel of land paid by the highest bidder in
a public auction is valid.

SALIENT FACTS:

A parcel of land, co-owned by 5 individuals, was to be sold at a public auction to the

highest bidder for cash with the proceeds to be divided among the owners.

During the auction, a lawyer placed a bid of Php 11,250 for the parcel of land. With no
other person bidding higher than that, he was deemed as the highest bidder. However,
the Sheriff found out that the lawyer did not have enough money with him and
consequently, gave him 2 extensions within the day. But still, he failed to produce the
amount needed.

When the Sheriff reopened the proceedings, a man placed a bid of Php 8,100 making
him the highest bidder in the auction. Unlike the first one, the subsequent highest bidder
was able to give the bidding price immediately in cash.

The owners of the parcel of land are now assailing the sale based on the inadequacy of
the price paid by the subsequent highest bidder.

SUPREME COURT HELD:

The sale with the bidding price of Php 8,100 was affirmed. They cited Moran, who in
turn, provided a list of cases where properties in an auction were sold at a price
considerably lower than their true value.

The Court ruled that the inadequacy of price, unless shocking to the conscience, is not
a sufficient ground for setting aside a sale specifically if there is a showing that, in the
event of a resale, a better price may be obtained.
CRITIQUE AND ANALYSIS:

Given the facts surrounding this case, the Supreme Court appropriately applied the
longstanding principle that the inadequacy of price is generally not enough to set aside
a contract of sale. In public auctions, an open and free-for-all environment is fostered
where individuals are in liberty to offer a price in exchange for the object being
auctioned. This comes with the responsibility that if one becomes the highest bidder, it
is incumbent upon him to follow the conditions set in place for the sale to be finalized.

In this case, the initial highest bidder already had the opportunity to acquire the property
for himself. However, it slipped through his fingers when he was not able to produce the
amount that he voluntarily offered up as a price he was willing to pay. Prudence and
common sense dictate that a responsible bidder should first make sure that he is
capable of paying the bidding price he put up in the event that he wins. Clearly, the
initial bidder failed to exercise this.

The subsequent highest bidder, on the other hand, won the second round of bidding fair
and square. He should not be prejudiced just because the initial highest bidder offered
up a greater amount than him. The owners of the parcel of land, knowing very well the
unpredictable nature of a public auction, do not have any cause to assail the validity of
the sale on the basis of inadequacy of price. For this, they must uphold the sale on the
basis of common decency, public policy and the principles of law.