2014 Case Digest: Bignay Ex-Im Philippines v. Union Bank

BIGNAY EX-IM PHILIPPINES, INC., Petitioner,

vs.

UNION BANK OF THE PHILIPPINES, Respondent.

G.R. No. 171590               February 12, 2014

PONENTE: Del Castillo, J.

TOPIC: Negligence

FACTS:

                In 1988, Rosario filed against Alfonso and Union Bank, Civil Case No. Q-52702 for annulment of the 1984 mortgage, claiming that Alfonso mortgaged the property without her consent, and for reconveyance.

                In a September 6, 1989 Letter-Proposal, Bignay Ex-Im Philippines, Inc. (Bignay), through its President, Milagros Ong Siy (Siy), offered to purchase the property.

                On December 20, 1989, a Deed of Absolute Sale6 was executed by and between Union Bank and Bignay whereby the property was conveyed to Bignay for P4 million. The deed of sale was executed by the parties through Bignay’s Siy and Union Bank’s Senior Vice President Anthony Robles (Robles). One of the terms of the deed of sale is quoted below:

                Section 1. The VENDEE hereby recognizes that the Parcel/s of Land with improvements thereon is acquired through foreclosure proceedings and agrees to buy the Parcel/s of Land with improvements thereon in its present state and condition. The VENDOR therefore does not make any x x x representations or warranty with respect to the Parcel/s of Land but that it will defend its title to the Parcel/s of Land with improvements thereon against the claims of any person whomsoever.

                On December 12, 1991, a Decision8was rendered in Civil Case No. Q-52702 in favor of Alfonso. Union Bank appealed the above Decision with the CA. It likewise sought a new trial of the case, which the trial court denied. The CA appeal was dismissed for failure to file appellant’s brief; the ensuing Petition for Review with this Court was similarly denied for late filing and payment of legal fees.

                Union Bank next filed with the CA an action to annul the trial court’s December 12, 1991 judgment. In a September 9, 1993 Resolution, however, the CA again dismissed the Petition for failure to comply with Supreme Court Circular No. 28-91. The bank’s Motion for Reconsideration was once more denied.

                This time, Bignay filed a Petition for annulment of the December 12, 1991 Decision, docketed as CA-G.R. SP No. 33901. In a July 15, 1994 Decision, the CA dismissed the Petition. Bignay’s resultant Petition for Certiorari with this Court suffered the same fate.

                Meanwhile, as a result of the December 12, 1991 Decision in Civil Case No. Q-52702, Bignay was evicted from the property; by then, it had demolished the existing structure on the lot and begun construction of a new building.

ISSUE:

                Whether or not Union Bank was grossly negligent in this case.

HELD:

                YES. The Court held that the gross negligence of the seller in defending its title to the property subject matter of the sale – thereby contravening the express undertaking under the deed of sale to protect its title against the claims of third persons resulting in the buyer’s eviction from the property, amounts to bad faith, and the buyer is entitled to the remedies afforded under Article 1555 of the Civil Code.

                The record reveals that Union Bank was grossly negligent in the handling and prosecution of Civil Case No. Q-52702. Its appeal of the December 12, 1991 Decision in said case was dismissed by the CA for failure to file the required appellant’s brief. Next, the ensuing Petition for Review on Certiorari filed with this Court was likewise denied due to late filing and payment of legal fees. Finally, the bank sought the annulment of the December 12, 1991 judgment, yet again, the CA dismissed the petition for its failure to comply with Supreme Court Circular No. 28-91. As a result, the December 12, 1991 Decision became final and executory, and Bignay was evicted from the property. Such negligence in the handling of the case is far from coincidental; it is decidedly glaring, and amounts to bad faith. “Negligence may be occasionally so gross as to amount to malice [or bad faith].” Indeed, in culpa contractual or breach of contract, gross negligence of a party amounting to bad faith is a ground for the recovery of damages by the injured party.