G.R. No. 73027 October 18, 1990
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. INTERMEDIATE APPELLATE COURT, and ANGEL L. BAUTISTA, respondents.

FACTS

The spouses Pedro and Matilde Lim owned two parcels of land mortgaged to the Development Bank of the Philippines (DBP). The mortgage contract required DBP’s consent for any transfer. The Lims sold the properties to the spouses Paguio, who assumed the mortgage, and DBP approved this transfer. Later, due to the Paguios’ failure to pay the balance of the purchase price, the Lims sued, resulting in a compromise agreement and a judgment ordering the Paguios to reconvey the lots to the Lims. Subsequently, on February 6, 1973, the Lims executed a “Deed of Sale with Assumption of Mortgage” over the same lots in favor of Angel Bautista. This sale was made without the prior consent of DBP. Bautista merely sent letters to DBP requesting approval and an extension to settle the mortgage debt. DBP, through its Branch Manager, informed Bautista by letter dated June 4, 1974, that his proposed assumption was not approved based on credit findings and that the Lim account was already with the Legal Division for foreclosure.

ISSUE

The core issue is whether the extrajudicial foreclosure of the mortgage by DBP was valid and whether Angel Bautista, as a subsequent buyer without DBP’s consent, acquired any legal right to challenge the foreclosure or to demand specific performance.

RULING

The Supreme Court ruled in favor of DBP, reversing the decision of the Intermediate Appellate Court. The legal logic is clear and multi-faceted. First, the sale from the Lims to Bautista was expressly subject to DBP’s consent under the mortgage contract. Since such consent was never obtained—and was in fact denied—the sale was ineffective against DBP. Bautista did not acquire any vested right in the property that could supersede the bank’s mortgage lien. Second, the foreclosure proceedings were entirely valid. DBP complied with all legal requirements for extrajudicial foreclosure, including proper notice to the mortgagors (the Lims and the Paguios) and publication. Bautista, not being a party to the mortgage contract, was not entitled to personal notice. His claim, based on an unapproved sale, gave him no legal standing to annul the foreclosure. Third, Bautista’s prolonged inaction for over five years after being informed of the disapproval of his assumption and the foreclosure constituted laches. He only filed his complaint in 1979 after learning of DBP’s impending sale to a third party (LAVCO), which is indicative of a claim asserted only when the property had appreciated in value. Finally, the Court condemned Bautista’s act of forum-shopping, having filed multiple actions in different courts involving the same cause, which is an abuse of judicial process. Therefore, DBP’s consolidated ownership following the foreclosure and redemption period was upheld as valid.