GR 194983; (June, 2018) (Digest)
G.R. No. 194983 . June 20, 2018.
PHILIPPINE NATIONAL BANK, PETITIONER, V. ANTONIO BACANI, RODOLFO BACANI, ROSALIA VDA. DE BAYAUA, JOSE BAYAUA AND JOVITA VDA. DE BAYAUA, RESPONDENTS.
FACTS
Respondent Rodolfo Bacani and his wife (Spouses Bacani) obtained a loan from petitioner Philippine National Bank (PNB), secured by a mortgage on Rodolfo’s property. Upon default, PNB extrajudicially foreclosed the property, acquired it as the highest bidder, and consolidated title in its name. PNB subsequently issued a circular granting former owners priority to re-acquire foreclosed assets via negotiated sale. Pursuant to this, the Spouses Bacani, from 1991 to 1993, made several written offers to repurchase the property, which PNB rejected for being below the property’s appraised value. In January 1996, PNB notified the Spouses Bacani of a scheduled public auction. However, a day after this notice, PNB sold the property via a negotiated sale to a third party, Renato de Leon, for a price significantly lower than the auction’s set floor price. Renato then successfully sued to eject the respondents.
ISSUE
Whether the sale of the foreclosed property by PNB to Renato de Leon is void, warranting its annulment and the reconveyance of the property to the Spouses Bacani.
RULING
No. The Supreme Court reversed the lower courts and dismissed the complaint. The legal logic proceeds from the nature of ownership rights post-foreclosure. Upon consolidation of title after the redemption period, PNB became the absolute owner of the property. As the registered owner, PNB enjoyed the fundamental right to dispose of its property as it saw fit. The Court found no legal basis to nullify the sale to Renato de Leon. The PNB circular granting priority to former owners created no vested right in favor of the Spouses Bacani; it was merely an internal guideline that conferred no enforceable contractual obligation upon the bank. The respondents failed to prove that PNB and Renato de Leon were in collusion or that the sale was simulated or fraudulent. The mere fact that the sale was negotiated shortly after announcing a public auction does not, by itself, constitute bad faith. For a contract of sale to be annulled based on fraud, the fraud must have been employed prior to or simultaneous with the contract’s execution. Here, any alleged unfairness in PNB’s prior dealings with the Spouses Bacani was distinct from and did not vitiate the subsequent perfected contract with Renato. Absent clear evidence of a fraudulent scheme between PNB and the buyer to deprive the respondents, the sale remains valid.