Title
Jumalon vs. Court of Appeals
Case
G.R. No. 127767
Decision Date
Jan 30, 2002
De Leon purchased a property from Jumalon, later discovering it was under hazardous high-tension wires and lacked permits. Courts upheld rescission due to fraud, ruling the sale void and refunds due.
annulment of sale
fraud
refund
A

Case Summary (G.R. No. 75112)

Factual Background

The factual narrative, as adopted by the Court of Appeals, began with the Conditional Sales Agreement executed on 16 July 1991, under which De Leon purchased from Jumalon the subject house and lot for a total price of P500,000.00. Subsequently, on 24 July 1991, Jumalon executed in De Leon’s favor a Deed of Absolute Sale; the title to the property was transferred to De Leon on 29 July 1991.

From the total purchase price of P500,000.00, De Leon paid P135,000.00 in cash through several occasions. De Leon also obtained a loan of P280,000.00 from Majalco Finance and Investments Inc. using the house and lot as collateral. Majalco’s interest in the loan and its collateral was later assigned and transferred to the National Home Mortgage Finance Corporation (NHMFC). The loan proceeds, less interest, amounted to P62,294.36, after which De Leon issued a check of P11,705.64 to complete an intended payment of P80,000.00, and another check for P5,000.00. De Leon, however, was unable to deposit sufficient funds to cover the checks, which led to a criminal case for violation of BP 22.

After becoming aware from neighboring residents that high-tension wires produced substantial static electricity and emitted electric sparks during rain, De Leon made inquiries. On 13 March 1992, she asked MERALCO about the danger posed by the wires over the property. By letter dated 3 April 1992, MERALCO informed her that the high-tension electrical wires were erected sometime in 1930, and that a thirty (30)-meter right-of-way had been secured from the landowner at that time, although the document evidencing the grant had been burned or destroyed during World War II. MERALCO further stated that construction 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 sought guidance from the HLURB Enforcement Center. She was informed that construction of houses or buildings of whatever nature was strictly prohibited within the right-of-way of the transmission line, and that HLURB required subdivision owners or developers to first secure clearance from the National Power Corporation (NPC) before HLURB would act on applications for subdivision projects within MERALCO’s right-of-way easement. She was also told that Jumalon’s subdivision project was not registered with the Board, and that Jumalon had never applied for a development permit project or secured an approved subdivision plan.

Proceedings Before the RTC and the HLURB Complaint

Sometime in November 1992, De Leon filed a case for declaration of nullity or annulment of the sale of the real property before the Regional Trial Court (RTC). That case was dismissed on 18 August 1993.

Meanwhile, within the same general period, on 16 March 1993, De Leon filed a complaint before the HLURB seeking rescission of the Conditional Sales Agreement and the Absolute Deed of Sale. The complaint alleged that the vendor, Jumalon, committed fraud and acted with evident bad faith by misrepresenting: first, that the property was free from liens and encumbrances despite being situated within MERALCO’s 30-meter right-of-way; second, that the existence of the high-tension wires posed no serious risks despite MERALCO’s certification that the line was hazardous to life and property; and third, that Jumalon had the necessary license to sell from HLURB though he allegedly had none.

HLURB and Office of the President Dispositions

The HLURB Arbiter, Paras, rendered judgment in favor of De Leon. The dispositive portion declared the rescission of the contract of sale between the parties and ordered Jumalon, among others: to refund De Leon P130,000.00 representing downpayment and partial payments, with legal interest; to refund P280,000.00 representing the loan proceeds obtained from Majalco and assigned to NHMFC, with interest, penalties, and other charges imposed by NHMFC; to pay P10,000.00 as moral damages; to pay P5,000.00 as an administrative fine for violation of Sections 4 and 5 of P.D. No. 957; and to return specified checks to De Leon. The order further required De Leon, after Jumalon satisfied the amounts, to settle her account with NHMFC and to cause the Register of Deeds to transfer the title back to Jumalon.

The decision was affirmed by the Board of Commissioners of HLURB. On further appeal to the Office of the President, the decision was likewise affirmed with modification: the award of moral damages was deleted for lack of basis.

Appeal to the Court of Appeals and Issues Raised

Petitioner filed a petition for review with the Court of Appeals on November 23, 1995. On 15 May 1996, the Court of Appeals promulgated a decision affirming the decision of the Office of the President in all respects, thereby sustaining the rescission ordered by the HLURB. Petitioner thereafter elevated the matter to the Supreme Court.

The Supreme Court identified two issues: whether the Court of Appeals erred in affirming the Executive Secretary and the HLURB declaring the rescission of the sale between petitioner and private respondent; and whether De Leon’s right to demand rescission had prescribed.

The Parties’ Contentions and the Court’s Treatment of the Issues

The Supreme Court treated the issues raised as primarily factual. It emphasized that in an appeal via certiorari, it could not review the factual findings of the Court of Appeals. It reiterated the general rule that, when supported by substantial evidence, the Court of Appeals’ findings of fact are conclusive and binding on the parties and are not reviewable by the Supreme Court, except when recognized exceptions apply. The Court did not find the case to fall within any exception that would warrant a departure.

Even while acknowledging the procedural limitation, the Court agreed with the Court of Appeals that De Leon was entitled to annul the sale. It held that the sale involved fraud, and that the house was not safely habitable because it was built in a subdivision area subject to MERALCO’s 30-meter right-of-way with high-tension wires over the property, posing a danger to life and property. The Court reasoned that construction of houses underneath the high-tension wires was prohibited due to the line’s 115,000 volts, which allegedly generated static electricity and produced electric sparks during rain.

On prescription, the Court found that De Leon’s action to annul the sale was filed one year and four months from the execution of the contract. It ruled that the suit was therefore within the prescriptive period provided by the Civil Code, expressly referencing Article 1391, Civil Code, and related jurisprudence.

Ruling of the Supreme Court

The Supreme Court denied the petition for lack of merit and affirmed the Court of Appeals’ decision in toto, with no costs. The Court upheld the rescission of the contract of sale and rejected petitioner’s challenge to the timeliness of De Leon’s action.

Legal Basis and Reasoning

The Court’s disposition relied on two principal legal propositions. First, it adhered to the settled limitation on review in appeals via certiorari: absent recognized exceptions, it could not re-examine factual findings of the Court of Appeals. Substantial evidence support was the controlling premise for conclusive fact-finding.

Second, the Court grounded rescission (annulment) on fraud and on the hazardous character of the property arising from its placement within MERALCO’

...continue reading

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster, building context before diving into full texts. AI-powered analysis, always verify critical details.

About Privacy Terms