Consing v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Merlin Consing, owner of a parcel of land, subdivided it into thirty-eight (38) lots and obtained approval for a simple subdivision plan. He voluntarily granted rights of way on several lots, including those later sold. Spouses Consing, doing business as Mearle Homes, sold these lots. Private respondent Caridad Santos entered into a Contract of Sale with the Consings for two lots (Lot No. 26 and Lot No. 25) with a bungalow, including the voluntary right of way, for P110,000.00, payable in installments. Santos paid some installments but defaulted starting May 1972. Despite demands, she offered to settle on the condition that the Consings comply with subdivision laws and pay damages for the use of a portion of her lot as a subdivision road. Procedural History: The Consings filed an ejectment case against Santos, winning in the Municipal Court. However, while the ejectment case was pending, Santos filed a complaint for specific performance with damages in the Court of First Instance (CFI). The CFI issued a restraining order against the Municipal Court. A criminal complaint for violation of a municipal ordinance against Consing for selling lots without municipal council approval was dismissed. The Municipal Council, referring the subdivision plan to the Department of Local Government and Community Development (DLGCD), received a recommendation that existing roads be indicated as road lots and excluded from sale. The CFI ruled in favor of Santos, ordering a proportionate reduction of the purchase price for the area used as a right of way (168 sq.m.) and awarding attorney's fees. The Court of Appeals affirmed the CFI decision with modification on the computation of the reduced purchase price. The Petition: The Consings filed a petition for review, assailing the Court of Appeals' decision for non-compliance with constitutional requirements, for arbitrarily holding that the voluntary right of way became a road lot they could not sell, for misinterpreting the nature of the right of way and the subdivision plan, for erroneous computation of the price reduction, and for awarding attorney's fees.
Issue(s)
Whether the Court of Appeals failed to comply with the certification requirement under Article VIII, Section 13 of the 1987 Constitution. Whether the portions of Lots 25 and 26 designated as a voluntary right of way became subdivision roads which the Consings had no right to sell. Whether the Court of Appeals arbitrarily concluded that these portions were used as streets or roads, contrary to the titles, plans, and contract of sale; and whether the Consings had the right to sell the portions designated as right of way. Whether the Court of Appeals erred in computing the reduction of the purchase price and awarding attorney's fees.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals. The Court held that the Consings failed in their duty as subdivision lot sellers by including the value of the subdivision road in the purchase price, entitling Santos to a proportionate reduction. The Court also found the award of attorney's fees justified due to the Consings' gross and evident bad faith.
Ratio Decidendi
On the constitutional requirement for certification: The Court clarified that while the certification requirement under Article VIII, Section 13 of the 1987 Constitution is new, its absence does not automatically invalidate a decision. The regular performance of official duty is presumed, and the lack of certification primarily serves as evidence of failure to observe the requirement, potentially holding the responsible official accountable, but not invalidating the decision itself. On the nature of the voluntary right of way and the Consings' right to sell: The Court found the Consings' contention that the voluntary right of way did not become a road lot to be without merit. Despite the subdivision plan being approved as a 'simple subdivision plan' without explicit road lots, the evidence showed that the 'right of way' was positioned in a manner that provided access to the subdivision lots. Furthermore, recommendations from the DLGCD and the Municipal Council's resolution, which Consing admitted to, indicated that these areas were intended as road lots. Consing's admission that "the road lots as shown in the plan originally approved by the Land Registration Commission are the Right-of-way which are annotated in the corresponding transfer Certificate of Titles" further supported this conclusion. The Court held that the Consings had no right to sell the portions of Lots 25 and 26 designated as a right of way, as these were effectively subdivision roads. Although Consing claimed these were not included in the sale, the transfer certificates of title and the subdivision plan, when compared, revealed that the seller had indeed sold the portion covered by the right of way to the buyer. The Contract of Sale explicitly included the voluntary right of way. The Court reiterated the principle that a seller's duty is to deliver the thing sold in a condition suitable for its enjoyment, and proper access is essential to this enjoyment, thus shifting the burden of providing access to Santos was a failure in this duty. On the use of the portions as streets and the right to sell: The Court found the Consings' contention that the voluntary right of way did not become a road lot to be without merit. Despite the subdivision plan being approved as a 'simple subdivision plan' without explicit road lots, the evidence showed that the 'right of way' was positioned in a manner that provided access to the subdivision lots. Furthermore, recommendations from the DLGCD and the Municipal Council's resolution, which Consing admitted to, indicated that these areas were intended as road lots. Consing's admission that "the road lots as shown in the plan originally approved by the Land Registration Commission are the Right-of-way which are annotated in the corresponding transfer Certificate of Titles" further supported this conclusion. The Court held that the Consings had no right to sell the portions of Lots 25 and 26 designated as a right of way, as these were effectively subdivision roads. Although Consing claimed these were not included in the sale, the transfer certificates of title and the subdivision plan, when compared, revealed that the seller had indeed sold the portion covered by the right of way to the buyer. The Contract of Sale explicitly included the voluntary right of way. The Court reiterated the principle that a seller's duty is to deliver the thing sold in a condition suitable for its enjoyment, and proper access is essential to this enjoyment, thus shifting the burden of providing access to Santos was a failure in this duty. On the reduction of the purchase price and the award of attorney's fees: The Court found the reduction in the purchase price justified because the Consings had included the value of the subdivision road in the total purchase price, thereby shifting the burden of providing access to the buyer. The Court upheld the Court of Appeals' method of computation, which assumed that one-half of the purchase price corresponded to the bungalow and the other half to the land. This approach was deemed just and fair given the absence of separate valuations for the land and the house in the evidence presented, and it avoided undue delay in the disposition of the case. The Court affirmed the award of P10,000.00 in attorney's fees. It found that the Consings acted in gross and evident bad faith. Although they secured subdivision licenses, they did so only after Santos filed her complaint. Crucially, they designated a significant portion of the lots sold to Santos as a right of way, which was intended to be a subdivision road, demonstrating a lack of fairness and good faith in the transaction.
Main Doctrine
A subdivision lot seller has a duty to deliver the thing sold in a condition suitable for its enjoyment by the buyer for the purposes contemplated, and proper access to a residence is essential to its enjoyment. Failure to provide such access, particularly when a portion of the sold lot is used as a subdivision road, justifies a proportionate reduction in the purchase price.