G.R. No. 254976 - Lingganay vs. Del Monte Land Transport Bus Company, Inc.

Parties and nature of the controversy
Petitioner Nilo R. Jumalon sold a house and lot to private respondent Ma. Asuncion De Leon.
The controversy arose from the rescission of the sale of the subject house and lot, as declared by HLURB, affirmed by the Board of Commissioners of HLURB, and affirmed with modification by the Executive Secretary (Office of the President), later upheld by the Court of Appeals.
Respondents in this appeal included Hon. Ruben D. Torres, in his capacity as Executive Secretary, Housing and Land Use Regulatory Board, and Ma. Asuncion De Leon.

Execution of the sales instruments and transfer of title
On 16 July 1991, De Leon and Jumalon executed a Conditional Sales Agreement for a house and lot located at Block 20, Lot 24-A, Bathaluman St., Dona Amada Subdivision, Rosario, Pasig, consisting of 102 square meters, with a stated price of PHP 500,000.00.
On 24 July 1991, Jumalon executed in favor of De Leon a Deed of Absolute Sale.
Title was transferred to De Leon on 29 July 1991.

Payments made and financing used for the purchase price
De Leon paid PHP 135,000.00 in cash on different occasions as part of the PHP 500,000.00 purchase price.
De Leon also obtained a loan of PHP 280,000.00 using the house and lot as collateral from Majalco Finance and Investments Inc. (Majalco).
Majalco’s rights and interest in the loan and its collateral were later assigned and transferred to National Home Mortgage Finance Corporation (NHMFC), a government financing institution.
The proceeds of the loan minus interest amounted to PHP 62,294.36.
De Leon further issued a check in the amount of PHP 11,705.64 to complete the amount of PHP 80,000.00.
Another check in the amount of PHP 5,000.00 was also issued.
De Leon was not able to deposit sufficient funds to cover the checks, leading to a criminal case for violation of BP 22.

Discovery of alleged danger and misrepresentations
De Leon learned from neighboring residents that high-tension wires generated static electricity and produced electric sparks whenever it rained.
On 13 March 1992, De Leon inquired with MERALCO regarding the danger posed by the wires over the property.
In a letter dated 3 April 1992, MERALCO informed De Leon that:

The high-tension electrical wires were erected sometime in 1930.
A 30-meter wide right-of-way had been secured from the landowner at that time.
The right-of-way document had been burned or destroyed during World War II.
The building of any structures underneath the high tension wires was prohibited because the line carried 115,000 volts, which was hazardous to life and property.

De Leon then made inquiries with the HLURB Enforcement Center, where she was informed that:

Construction of houses and buildings of whatever nature was strictly prohibited within the right-of-way of the transmission line.
HLURB required subdivision owners/developers to first secure clearance from the National Power Corporation (NPC) before HLURB could act on an application for a subdivision project within MERALCO’s right-of-way easement.
Jumalon’s subdivision project was not, per HLURB records, registered with the Board.
Jumalon never applied for a development permit project, nor secured an approved subdivision plan.

Parallel attempts to challenge the sale and the filing in HLURB
Sometime in November 1992, De Leon filed a case for declaration of nullity or annulment of sale of real property before the RTC, which was dismissed on 18 August 1993.
Within the same period, on 16 March 1993, De Leon filed a complaint before HLURB seeking the rescission of the Conditional Sales Agreement and the Absolute Deed of Sale.
The HLURB complaint alleged that Jumalon committed fraud and evident bad faith in misrepresenting that:

The property was free from all liens and encumbrances, even though it lay within MERALCO’s 30-meter right-of-way.
The existence of the high-tension wires posed no serious risks to the property and/or its occupants, despite MERALCO’s certification that the wires were hazardous to life and property.
Jumalon had the necessary license to sell from HLURB when he allegedly had none.

Administrative rulings before HLURB and appeals to the Office of the President
HLURB Arbiter Paras rendered judgment in favor of De Leon, declaring the rescission of the contract of sale ...(Subscriber-Only)

Whether the Court of Appeals erred in affirming the Executive Secretary and HLURB in declaring rescission of the contract of sale
Whether the rescission of the sale of the house and lot between petitioner and private respondent was properly affirmed by the Court of Appeals.