Jumalon v. Court of Appeals
REITERATIONFacts
The Antecedents: Complainant Ma. Asuncion De Leon purchased a house and lot from petitioner Nilo R. Jumalon through a Conditional Sales Agreement and a Deed of Absolute Sale. De Leon paid a downpayment and secured a loan, using the property as collateral, to complete the purchase price. Subsequently, De Leon discovered that the property was situated within a 30-meter right-of-way of MERALCO, with high-tension electrical wires posing a hazard to life and property, a fact prohibited for construction. MERALCO confirmed the danger and the prohibition of building structures under the wires. De Leon also learned that Jumalon's subdivision project was not registered with HLURB, and he had no license to sell. Procedural History: De Leon filed a case for annulment of sale before the RTC, which was dismissed. She then filed a complaint before the HLURB seeking rescission of the sale, alleging fraud and bad faith by Jumalon for misrepresenting the property as free from liens and encumbrances, safe for occupancy, and for selling without the necessary license. HLURB Arbiter Paras ruled in favor of De Leon, ordering rescission and refunds. This decision was affirmed by the HLURB Board of Commissioners and the Office of the President, though the award for moral damages was deleted. The Petition: Petitioner Jumalon filed a petition for review with the Court of Appeals, which affirmed the decision of the Office of the President. This led to the present appeal via certiorari to the Supreme Court.
Issue(s)
Whether the Court of Appeals erred in affirming the decision declaring the rescission of the contract of sale due to fraud and lack of vendor's license. Whether the private respondent's right to demand rescission has prescribed.
Ruling
The petition is denied for lack of merit. The decision of the Court of Appeals is affirmed in toto.
Ratio Decidendi
On the issue of affirming the rescission of the contract of sale: The Court held that the Court of Appeals did not err in affirming the rescission. The Court found that there was fraud in the sale because the property was not safely habitable, being situated within a 30-meter right-of-way of MERALCO with high-tension wires overhead, posing a danger to life and property. MERALCO certified that building structures underneath these wires is prohibited. These facts constitute misrepresentation by the vendor, Jumalon, who failed to disclose the hazardous condition and the prohibition on construction, thereby vitiating the consent of the vendee, De Leon. The Court also noted that Jumalon lacked the necessary license to sell, further supporting the grounds for rescission. On the issue of prescription of action: The Court ruled that the action to annul the sale had not prescribed. The private respondent filed the case for rescission approximately one year and four months after the execution of the contract, which is within the prescriptive period provided by law for actions based on fraud or mistake, as stipulated in Article 1391 of the Civil Code. Therefore, the respondent's right to seek rescission was still valid at the time the complaint was filed.
Main Doctrine
A contract of sale of real property may be rescinded on the ground of fraud and misrepresentation when the property sold is found to be within a hazardous right-of-way of high-tension electrical wires, rendering it unsafe for habitation and construction, and the vendor failed to disclose this material fact.