Bank of the Philippine Islands v. Vicente Victor C. Sanchez

Summary

The Supreme Court affirmed the rescission of a property sale agreement after the buyer's checks were dishonored, rejecting claims by third-party purchasers and a mortgagee bank who acted in bad faith. The Sanchezes agreed to sell their Quezon City property to Garcia/TSEI for P1.85 million, but when the final P800,000 in checks bounced, they validly rescinded the contract. Garcia fraudulently obtained a new title and sold townhouse units to multiple buyers despite HLURB cease and desist orders. The Court found all intervenors and BPI acted in bad faith by ignoring obvious title defects and regulatory violations. The fraudulent title was cancelled, and the Sanchezes were given options under Articles 449-450 of the Civil Code to either appropriate the improvements without payment, demand demolition, or require payment for the land value. This case establishes important precedents on good faith in property transactions and the rights of landowners against builders in bad faith.