Development Bank of the Philippines v. Clarges Realty Corporation

Summary

Development Bank of the Philippines sold a 12,355-square-meter Makati property to Clarges Realty Corporation under a Deed of Absolute Sale with express obligation to deliver clean title free from liens by December 15, 1987. DBP delivered title with mortgage and tax lien annotations still intact, breaching its contractual obligation. When Clarges sued for specific performance, DBP sought to implead Asset Privatization Trust as third-party defendant, claiming APT assumed liability for the tax lien under Proclamation No. 50. The trial court denied the third-party complaint motion to avoid unnecessary delay. All courts ruled DBP breached its contractual obligation and must remove the remaining tax lien. The Supreme Court affirmed, holding DBP could pay the tax liability itself without awaiting contribution from Asset Privatization Trust, that Articles 1266-1267 don't apply to obligations to give, and that the third-party complaint was properly denied. The case establishes that contractual obligations cannot be avoided by claiming third-party assumption of liability, and that mortgagees acquire liabilities attached to foreclosed properties.