Jose B. Tiongco vs. Philippine Veterans Bank, GR No. 82782 August 5, 1992

Alicia Arnaldo mortgaged to the Philippine Veterans Bank (PVB) three (3) lots to secure the loan amounting to PhP 290,000.  Upon default, the mortgaged was foreclosed and said lots were sold at public auction, with Tiongco as the highest bidder.  When the property was not redeemed, Tiongco requested PVB for the delivery of the owner's duplicate copy, having been unheeded, petitioner filed with the RTC a petition to require PVB to surrender such document.  PVB denied the allegations in the petition, averred that it was not served with a notice of the auction sale, it then set up the defense that the sale of the property was irregular and that the right of petitioner over the property as a purchaser may be respected only upon the release of the mortgage and that the property was sold for a scandalously low amount and thus, it is shocking to the corresponds to the delinquent taxes to be recovered; considering that there is a subsisting mortgage obligation of PhP 290,000 plus interest, annotated on the title, the auction sale was the product of an illicit machination and actionable collusion between city officials and the purchaser.

ISSUE: WON inadequancy of price would invalidate the sale?

HELD:

It is well-settled that "while in ordinary sales for reasons of equity  a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks one's conscience as to justify the court to interfere, such does not follow when the law gives to the owner the right to redeem, as when a sale is made at public auction, upon the theory that the lesser the price the easier it is for the owner to effect redemption."

Then too, petitioner purchased the property fully cognizant of the risk that he could eventually lose it in a foreclosure sale conducted to satisfy the mortgage, unless he was prepared to pay PhP 290,000 more, with interest due them, as well as the other charges and penalties which the contract of mortgage or the promissory note secured by it has stipulated, without any hope of seeking reimbursement from the mortgagor.