BPI vs Sanchez Case Digest GR 179518 Nov 19 2014 Facts: The Sanchezes entered into an agreement ith Garcia !doing "#siness in the name o$ TS%&' to se(( $or ) 1*850 mi((ion their +arce( o$ (and, ith an earnest mone- o$ 50.* The- agreed that Garcia Garcia sha(( sha(( +a- the +#rcha +#rchase se +rice +rice in cash cash once once the +ro+e +ro+ertrt- is vacate vacated* d* The Sanch Sancheze ezes s entr#sted to Garcia the oner/s co+- o$ TCT "eca#se it as agreed that he sha(( ta.e care o$ a(( the doc#mentations necessar- $or the transaction* transaction* &mmediate(- a$ter the +ro+ert- as vacated, Garcia too. +ossession and "egan constr#cting tonho#ses thereon itho#t the Sanchezes/ .no(edge and consent* hi(e these deve(o+ments ere ongoing, Garcia $ai(ed to +a- the +#rchase +rice* S#"se#ent(-, the Sanchezes ere given si chec.s re+resenting the amo#nt o$ the +#rchase +rice* 3o#r o$ these chec.s ere +ostdated, th#s $#rther de(a-ing their overd#e +a-ment* To +ro+er(- doc#ment the chec. +a-ments, themade an agreement sti+#(ating that i$ one o$ the chec.s ere dishonored, the Sanchezes marescind the contract* The (ast to chec.s ere dishonored, dishonored, so the Sanchezes rescinded rescinded the contract and demanded $rom Garcia the ret#rn o$ the TCT* oever, Garcia re$#sed to ret#rn the doc#ments and vacate the +ro+ert-* eanhi(e, the Sanchezes $o#nd o#t that Garcia6TS%& ere se((ing tonho#ses sit#ated in the +ro+ert-* So the- in$ormed the R, the Cit- #i(ding :;cia( and the RD in <#ezon Cit-, o$ the i((eg i((ega( a( const constr#c r#ctio tions ns "eing "eing made made there thereon* on* The The R R iss iss#ed #ed a Cease Cease and Deceas Decease e :rder :rder en=oining Garcia 6 TS%& $rom $#rther deve(o+ing and se((ing the tonho#ses* S#ch orders ere (e$t #nheeded* &n $act, Garcia ere a(read- a"(e to se(( man- o$ the #nits to di>erent individ#a(s and entities, and even mortgaged the +ro+ert-* Conse#ent(-, the Sanchezes ?(ed "e$ore the RTC a com+(aint $or rescission, restit#tion and damages ith TR:* The +#rchasers and mortgagee ho are the intervenors in this case ere $o#nd "- the co#rt to "e in "ad $aith* :n the other hand, the Sanchezes ere he(d to "e in good $aith and not neg(igent* Issue 1@ 1@ 6N rescission o$ the contract as "arred "- the s#"se#ent trans$er o$ the +ro+ertNo. nder nder Artic Artic(e (e 1191 1191 o$ the Civi( Civi( Code, Code, resci resciss ssion ion is avai(a avai(a"(e "(e to a +art+art- in a reci+ reci+ro roca( ca( o"(igation here one +art- $ai(s to com+(- ith it* As an ece+tion to this r#(e, Artic(e 1B85 +rovides that rescission sha(( not ta.e +(ace i$ the s#"=ect matter o$ the +rior agreement is a(read- in the hands o$ a third +art- ho did not act in "ad $aith* ere, the $ai(#re o$ Garcia6TS%& to +a- the consideration $or the sa(e o$ the +ro+ert- entit(ed the Sanchezes to rescind the Agreement* And in vie o$ the ?nding that the intervenors acted in "ad $aith in +#rchasing the +ro+ert- $rom Garcia, the s#"se#ent trans$er in their $avor did not and cannot "ar rescission* Issue 2: 6N Artic(e 449 450 o$ the Civi( Code is a++(ica"(e to the Sanchezes Yes. Yes. ad ad $aith on the +art o$ the +#rchasers (eads to the a++(ication o$ Art 449450* Conse Conse#e #ent( nt(-, -, the the Sanch Sancheze ezes s have have the $o((o $o((oing ing o+tion o+tions@ s@ !1' ac#i ac#ire re the the +ro+e +ro+ert rt- ith ith the tonho#ses and other "#i(dings and im+rovements that ma- "e thereon itho#t indemni$-ing TS%& or the intervenorsE intervenorsE !2' demand $rom TS%& TS%& or the intervenors to demo(ish demo(ish hat has "een "#i(t "#i(t on the +ro+ert- at the e+ense o$ TS%& or the intervenorsE or !B' as. the intervenors to +a- the +rice o$ the (and* As s#ch, the Sanchezes m#st choose $rom among these o+tions ithin B0 da-s $rom ?na(it- o$ the decision* Sho#(d the Sanchezes o+t to as. $rom the intervenors the va(#e o$ the (and, the case sha(( "e remanded to the RTC $or the so(e +#r+ose o$ determining the $air mar.et va(#e o$ the (ot at the the time time the same ere ta.en ta.en $rom $rom the Sanche Sanchezes zes** &$ the Sanchez Sanchezes es decide decide to a++ro+riate the tonho#ses, other str#ct#res and im+rovements as their on +#rs#ant to Art 449, 44 9, then then the the inte interv rven enor ors s+# +#rc rcha hase sers rs sha( sha((( "e orde orderred to vaca vacate te said said +rem +remis ises es ith ithin in a reasona"(e time $rom notice o$ the ?na(it- o$ the decision "- the Sanchezes* The- have a right to recover their investment in the tonho#ses $rom Garcia and TS%&* &$ the Sanchezes do not ant to ma.e #se o$ the tonho#ses and im+rovements on the s#"=ect (ot, then the +#rchasers can can "e orde orderred to demo demo(i (ish sh said said ton tonho ho#s #ses es or i$ thethe- don/ don/tt demo demo(i (ish sh the the same same ith ithin in
a reasona"(e time, then it can "e demo(ished at their e+ense* :n the Brd o+tion, i$ the Sanchezes do not ant to a++ro+riate the tonho#ses or have the same demo(ished, then thecan as. that the tonho#se +#rchasers +a- to them the $air mar.et va(#e o$ the res+ective areas a((otted to their res+ective tonho#ses s#"=ect o$ their deeds o$ sa(e* FF Relevant Provisions Rescission and Exceptions Article 1191. The
+oer to rescind o"(igations is im+(ied in reci+roca( ones, in case one o$ the o"(igors sho#(d not com+(- ith hat is inc#m"ent #+on him*
The in=#red +art- ma- choose "eteen the $#(?((ment and the rescission o$ the o"(igation, ith the +a-ment o$ damages in either case* e ma- a(so see. rescission, even a$ter he has chosen $#(?((ment, i$ the (atter sho#(d "ecome im+ossi"(e* The co#rt sha(( decree the rescission c(aimed, #n(ess there "e =#st ca#se a#thorizing the ?ing o$ a +eriod* This is #nderstood to "e itho#t +re=#dice to the rights o$ third +ersons ho have ac#ired the thing, in accordance ith Artic(es 1B85 and 1B88 and the ortgage a* Article 1385. Rescission
creates the o"(igation to ret#rn the things hich ere the o"=ect o$ the contract, together ith their $r#its, and the +rice ith its interestE conse#ent(-, it can "e carried o#t on(- hen he ho demands rescission can ret#rn hatever he ma- "e o"(iged to restore* Neither sha(( rescission ta.e +(ace hen the things hich are the o"=ect o$ the contract are (ega((- in the +ossession o$ third +ersons ho did not act in "ad $aith* &n this case, indemnit- $or damages ma- "e demanded $rom the +erson ca#sing the (oss* Builders in Bad Faith
Article 449. e
ho "#i(ds, +(ants or sos in "ad $aith on the (and o$ another, (oses hat is "#i(t, +(anted or son itho#t right to indemnit-*
Article 450. The
oner o$ the (and on hich an-thing has "een "#i(t, +(anted or son in "ad $aith ma- demand the demo(ition o$ the or., or that the +(anting or soing "e removed, in order to re+(ace things in their $ormer condition at the e+ense o$ the +erson ho "#i(t, +(anted or soedE or he ma- com+e( the "#i(der or +(anter to +a- the +rice o$ the (and, and the soer the +ro+er rent*
