32)QUIRONG VS. DBP

G.R. No. 173441 : December 3, 2009

FACTS:

When the late Emilio Dalope died, he left a 589-square meter untitled lot in Sta. Barbara, Pangasinan, to his wife, Felisa Dalope and their nine children, one of whom was Rosa Dalope-Funcion. To enable Rosa and her husband Antonio Funcion get a loan from respondent Development Bank of the Philippines (DBP), Felisa sold the whole lot to the Funcions. With the deed of sale in their favor and the tax declaration transferred in their names, the Funcions mortgaged the lot with the DBP. On February 12, 1979, after the Funcions failed to pay their loan, the DBP foreclosed the mortgage on the lot and consolidated ownership in its name on June 17, 1981. Four years later or on September 20, 1983 the DBP conditionally sold the lot to Sofia Quirong for the price of P78,000.00. In their contract of sale, Sofia Quirong waived any warranty against eviction. The contract provided that the DBP did not guarantee possession of the property and that it would not be liable for any lien or encumbrance on the same. Quirong gave a down payment of P14,000.00. Two months after that sale or on November 28, 1983 Felisa and her eight children filed an action for partition and declaration of nullity of documents with damages against the DBP and the Funcions before the Regional Trial Court (RTC) of Dagupan City.

On December 16, 1992 the RTC rendered a decision, declaring the DBP's sale to Sofia Quirong valid only with respect to the shares of Felisa and Rosa Funcion in the property. The DBP resisted the writ by motion to quash, claiming that the decision could not be enforced because it failed to state by metes and bounds the particular portions of the lot that would be assigned to the different parties in the case.

The RTC denied the DBP's motion. The Court of Appeals (CA) reversed the RTC decision and dismissed the heirs' action on the ground of prescription. Hence, this petition.

ISSUE:

a. Whether or not the Quirong heirs' action for rescission of respondent DBP's sale of the subject property to Sofia Quirong was already barred by prescription; and

b. Whether or not the heirs of Quirong were entitled to the rescission of the DBP's sale of the subject lot to the late Sofia Quirong as a consequence of her heirs having been evicted from it.

RULING:

On the first issue, the court find that the incident did not affect the finality of the decision, the prescriptive period remained to be reckoned from January 28, 1993, the date of such finality.

On the second issue, the remedy of "rescission" is not confined to the rescissible contracts enumerated under Article 1381. Article 1191 of the Civil Code gives the injured party in reciprocal obligations, such as what contracts are about, the option to choose between fulfillment and "rescission." "Rescission" is a subsidiary action based on injury to the plaintiff's economic interests as described in Articles 1380 and 1381. "Resolution," the action referred to in Article 1191, on the other hand, is based on the defendant's breach of faith, a violation of the reciprocity between the parties. As an action based on the binding force of a written contract, therefore, rescission (resolution) under Article 1191 prescribes in 10 years. Ten years is the period of prescription of actions based on a written contract under Article 1144.

The supreme court conclusion is that the Court has reached respecting the first issue presented in this case, it would serve no useful purpose for it to further consider the issue of

whether or not the heirs of Quirong would have been entitled to the rescission of the DBP's sale of the subject lot to Sofia Quirong as a consequence of her heirs having been evicted from it. As the Court has ruled, their action was barred by prescription. The CA acted correctly in reversing the RTC decision and dismissing their action.

In view of the case, the supreme court denied the petition and affirm the decision of the CA.

33)

LEE VS. BANGKOK BANK PUBLIC COMPANY

G.R. No. 173349, February 09, 2011

FACTS:

Midas Diversified Export Corporation (MDEC) and Manila Home Textile, Inc. (MHI) entered into two separate Credit Line Agreements (CLAs) with Respondent Bangkok Bank Public Company, Limited (Bangkok Bank) on November 29, 1995 and April 17, 1996, respectively. MDEC and MHI are owned and controlled by the Lee family: Thelma U. Lee, Maybelle L. Lim, Daniel U. Lee and Samuel U. Lee (Samuel). Both corporations have interlocking directors and management led by the Lee family; and engaged in the manufacturing and export of garments, ladies' bags and apparel.

On July 25, 1996, MDEC was likewise granted a loan facility by Asiatrust Development Bank, Inc. (Asiatrust). This facility had an available credit line of forty million pesos (PhP 40,000,000) for letters of credit, advances on bills and export packing; and a separate credit line of two million dollars (USD 2,000,000) for bills purchase.

In the meantime, in May 1997, Samuel bought several parcels of land in Cupang, Antipolo, and later entered into a joint venture with Louisville Realty and Development Corporation to develop the properties into a residential subdivision, called Louisville Subdivision.  These properties in Cupang, Antipolo are the subject properties in the instant case (Antipolo properties) and are covered by Transfer Certificate of Title.

MDEC and MHI initially had made payments with their CLAs until they defaulted and incurred aggregate obligations to Bangkok Bank in the amount of USD 1,998,554.60 for MDEC and USD 800,000 for MHI. Similarly, the Lee corporations defaulted in their obligations with other creditors

On February 16, 1998, MDEC, MHI, and three other corporations owned by the Lee family filed before the Securities and Exchange Commission (SEC) a Consolidated Petition for the Declaration of a State of Suspension of Payments and for Appointment of a Management Committee/Rehabilitation Receiver.

On February 20, 1998, the SEC issued a Suspension Order enjoining the Lee corporations from disposing of their property in any manner except in the ordinary course of business, and from making any payments outside the legitimate expenses of their business during the pendency of the petition.

On July 20, 1999, Bangkok Bank filed the instant case before the RTC. The RTC dismissed the case. However, the CA granted the appeal, and reversed and set aside the RTC decision. Hence, this petition.

ISSUE:

Whether or not Bangkok Bank can maintain an action to rescind the REM on the subject Antipolo properties despite its failure to exhaust all legal remedies to satisfy its claim.

RULING:

The Supreme Court ruled that under Sec. 5.2 of RA 8799, the SEC's original and exclusive jurisdiction over all cases enumerated under Sec. 5 of PD 902-A was transferred to the appropriate RTC.  RA 8799, Sec. 5.2, however, expressly stated as an exception, that the "the Commission shall retain jurisdiction over pending suspension of payment/rehabilitation cases filed as of 30 June 2000 until finally disposed."  Accordingly, the Consolidated Petition for the Declaration of a State of Suspension of Payments and for Appointment of a Management Committee/Rehabilitation Receiver filed on February 16, 1998 by MDEC, MHI and three other corporations owned by the Lee family, remained under the jurisdiction of the SEC until finally disposed of pursuant to the last sentence of Sec. 5.2 of RA 8799.

The SEC's jurisdiction is evident from the statutorily vested power of jurisdiction, supervision and control by the SEC over all corporations, partnerships or associations, which are grantees of primary franchise, license or permit issued by the government to operate in the Philippines, and its then original and exclusive jurisdiction over petitions for suspension of payments of said entities.  Secs. 3 and 5 of PD 902-A pertinently provides:

Sec. 3.  The Commission shall have absolute jurisdiction, supervision and control over all corporations, partnerships or associations, who are the grantees of primary franchise and/or a license or permit issued by the government to operate in the Philippines; and in the exercise of its authority, it shall have the power to enlist the aid and support of any and all enforcement agencies of the government, civil or military.

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: (d)  Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree.

In sum, the Supreme Court granted the petition.

34)

EQUATORIAL REALTY DEVELOPMENT, INC. V. MAYFAIR THEATER, INC.G.R. No. 136221 May 12, 2000

FACTS:

Carmelo & Bauermann, Inc. (Carmelo) used to own a parcel of land, together with two two-storey buildings constructed thereon. On June 1, 1967, Carmelo entered into a lease with Mayfair Theater, Inc. (Mayfair) for a period of 20 years. The lease covered a portion of the second floor and mezzanine. Two (2) years later, Mayfair entered into a second lease with Carmelo for the lease of another property, a part of the second floor and two spaces on the ground floor. The lease was also for a period of twenty (20) years. Both leases contained a provision granting Mayfair a right of first refusal to purchase the said properties. However, on July 30, 1978, within the 20-year-lease term, Carmelo sold the subject properties to Equatorial Realty Development, Inc. (Equatorial) for the sum of P11.3M without their first being offered to Mayfair.

As a result, Mayfair filed a complaint for specific performance and damages. After trial, the court ruled in favor of Equatorial. On appeal, the Court of Appeals (CA) reversed and set aside the judgment of the lower court. On November 21, 1996, the Supreme Court denied Equatorial’s petition for review and declared the contract between Carmelo and Equatorial rescinded. The decision became final and executory and Mayfair filed a motion for its execution, which the court granted on April 25, 1997. However, Carmelo could no longer be located thus Mayfair deposited with the court its payment to Carmelo. The lower court issued a deed of reconveyance in favor of Carmelo and issued new certificates in the name of Mayfair.

On September 18, 1997, Equatorial filed an action for the collection of sum of money against Mayfair claiming payment of rentals or reasonable compensation for the defendant’s use of the premises after its lease contracts had expired. The lower court debunked the claim of the petitioner for unpaid rentals, holding that the rescission of the Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual proprietary rights, even in expectancy.

ISSUE:

Whether or not Equatorial may collect rentals or reasonable compensation for Mayfair’s use of subject premises after its lease contracts had expired.

RULING:

Equitorial may not collect rentals or reasonable compensation for Mayfair’s use of the subject premises after its lease contracts had expired. Rent is a civil fruit that belongs to the owner of the property producing it by right of accession. Consequently and ordinarily, the rentals that fell due from the time of the perfection of the sale to petitioner until its rescission by final judgment should belong to the owner of the property during that period.

Petitioner never took actual control and possession of the property sold, in view of the respondent’s timely objection to the sale and continued actual possession of the property. The objection took the form of a court action impugning the sale that was rescinded by a judgment rendered by the Court in the mother case. It has been held that the execution of a contract of sale as a form of constructive delivery is a legal fiction. It holds true only when there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. When there is such impediment, fiction yields to reality; the delivery has not been effected. Hence, respondent’s opposition to the transfer of property by way of sale to Equatorial was a legally sufficient impediment that effectively prevented the passing of the property into the latter’s hands.

Article 1386 of the Civil Code provides rescission, which creates the obligation to return the things, which were the object of the contract, together with their fruits, and the price with its interest, but also the rentals paid, if any, had to be returned by the buyer.

35)SIGUAN V. LIM

G.R. No. 134685, November 19, 1999

FACTS:Lim issued two Metrobank checks in the sums of P300,000 and P241,668, respectively,

payable to "cash." Upon presentment by petitioner with the drawee bank, the checks were dishonored for the reason "account closed." Demands to make good the checks proved futile. As a consequence, a criminal case for violation of Batas Pambansa were filed by petitioner against Lim.

The court a quo convicted Lim as charged. The case is pending before this Court for review and docketed as G.R. No. 134685. It also appears that on 31 July 1990, Lim was convicted of estafa by the RTC of Quezon City in Criminal Case No. Q-89-22162 filed by a certain Victoria Suarez. This decision was affirmed by the Court of Appeals. On appeal, however, the Supreme Court, in a decision promulgated on 7 April 1997, acquitted Lim but held her civilly liable in the amount of P169,000, as actual damages, plus legal interest.

Meanwhile, on 2 July 1991, a Deed of Donation conveying parcels of land and purportedly executed by Lim on 10 August 1989 in favor of her children, Linde, Ingrid and Neil, was registered with the Office of the Register of Deeds of Cebu City. New transfer certificates of title were thereafter issued in the names of the donees.

On 23 June 1993, petitioner filed an accion pauliana against Lim and her children before Branch 18 of the RTC of Cebu City to rescind the questioned Deed of Donation and to declare as null and void the new transfer certificates of title issued for the lots covered by the questioned Deed. The complaint was docketed as Civil Case No. CEB-14181. Petitioner claimed therein that sometime in July 1991, Lim, through a Deed of Donation, fraudulently transferred all her real property to her children in bad faith and in fraud of creditors, including her; that Lim conspired and confederated with her children in antedating the questioned Deed of Donation, to petitioner's and other creditors' prejudice; and that Lim, at the time of the fraudulent conveyance, left no sufficient properties to pay her obligations. On the other hand, Lim denied any liability to petitioner. She claimed that her convictions in Criminal Cases Nos. 22127-28 were erroneous, which was the reason why she appealed said decision to the Court of Appeals. As regards the questioned Deed of Donation, she maintained that it was not antedated but was made in good faith at a time when she had sufficient property. Finally, she alleged that the Deed of Donation was registered only on 2 July 1991 because she was seriously ill.

In its decision of 31 December 1994 the trial court ordered the rescission of the questioned deed of donation; (2) declared null and void the transfer certificates of title issued in the names of private respondents Linde, Ingrid and Neil Lim; (3) ordered the Register of Deeds of Cebu City to cancel said titles and to reinstate the previous titles in the name of Rosa Lim; and (4) directed the LIMs to pay the petitioner, jointly and severally, the sum of P10,000 as moral damages; P10,000 as attorney's fees; and P5,000 as expenses of litigation.

On appeal, the Court of Appeals, in a promulgated on 20 February 1998, reversed the decision of the trial court and dismissed petitioner's accion pauliana. It held that two of the requisites for filing an accion pauliana were absent, namely, (1) there must be a credit existing prior to the celebration of the contract; and (2) there must be a fraud, or at least the intent to commit fraud, to the prejudice of the creditor seeking the rescission.

According to the Court of Appeals, the Deed of Donation, which was executed and acknowledged before a notary public, appears on its face to have been executed on 10 August 1989. Under Section 23 of Rule 132 of the Rules of Court, the questioned Deed, being a public document, is evidence of the fact which gave rise to its execution and of the date thereof. No antedating of the Deed of Donation was made, there being no convincing evidence on record to indicate that the notary public and the parties did antedate it.

Since Lim's indebtedness to petitioner was incurred in August 1990, or a year after the execution of the Deed of Donation, the first requirement for accion pauliana was not met.

Anent petitioner's contention that assuming that the Deed of Donation was not antedated it was nevertheless in fraud of creditors because Victoria Suarez became Lim’s creditor on 8 October 1987, the Court of Appeals found the same untenable, for the rule is basic that the fraud must prejudice the creditor seeking the rescission.ISSUE:

Whether or not the deed of donation is valid.

RULING:

The Supreme Court upheld the validity of the deed of donation.

Article 1381 of the Civil Code enumerates the contracts which are rescissible, and among them are "those contracts undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them."

The action to rescind contracts in fraud of creditors is known as accion pauliana. For this action to prosper, the following requisites must be present:

(1) the plaintiff asking for rescission has a credit prior to the alienation, although demandable later; (2) the debtor has made a subsequent contract conveying a patrimonial benefit to a third person; (3) the creditor has no other legal remedy to satisfy his claim; (4) the act being impugned is fraudulent; (5) the third person who received the property conveyed, if it is by onerous title, has been an accomplice in the fraud.

The general rule is that rescission requires the existence of creditors at the time of the alleged fraudulent alienation, and this must be proved as one of the bases of the judicial pronouncement setting aside the contract. Without any prior existing debt, there can neither be injury nor fraud. While it is necessary that the credit of the plaintiff in the accion pauliana must exist prior to the fraudulent alienation, the date of the judgment enforcing it is immaterial. Even if the judgment be subsequent to the alienation, it is merely declaratory, with retroactive effect to the date when the credit was constituted.

In the instant case, the alleged debt of Lim in favor of petitioner was incurred in August 1990, while the deed of donation was purportedly executed on 10 August 1989.

The Supreme Court is not convinced with the allegation of the petitioner that the questioned deed was antedated to make it appear that it was made prior to petitioner's credit. Notably, that deed is a public document, it having been acknowledged before a notary public. As such, it is evidence of the fact which gave rise to its execution and of its date, pursuant to Section 23, Rule 132 of the Rules of Court.

In the present case, the fact that the questioned Deed was registered only on 2 July 1991 is not enough to overcome the presumption as to the truthfulness of the statement of the date in the questioned deed, which is 10 August 1989. Petitioner's claim against Lim was constituted only in August 1990, or a year after the questioned alienation. Thus, the first two requisites for the rescission of contracts are absent.

Even assuming arguendo that petitioner became a creditor of Lim prior to the celebration of the contract of donation, still her action for rescission would not fare well because the third requisite was not met. Under Article 1381 of the Civil Code, contracts entered into in fraud of creditors may be rescinded only when the creditors cannot in any manner collect the claims due them. Also, Article 1383 of the same Code provides that the action for rescission is but a subsidiary remedy which cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the same. The term "subsidiary remedy" has been defined as "the exhaustion of all remedies by the prejudiced creditor to collect claims due him before rescission is resorted to." It is, therefore, essential that the party asking for rescission prove that he has exhausted all other legal means to obtain

satisfaction of his claim. Petitioner neither alleged nor proved that she did so. On this score, her action for the rescission of the questioned deed is not maintainable even if the fraud charged actually did exist." The fourth requisite for an accion pauliana to prosper is not present either.

36)KHE HONG CHENG, alias FELIX KHE, SANDRA JOY KHE and RAY STEVEN KHE,

petitioners, vs.COURT OF APPEALS, HON. TEOFILO GUADIZ, RTC 147, MAKATI CITY and

PHILAM INSURANCE CO., INC., respondents.G.R. No. 144169 March 28, 200

FACTS:

Petitioner Khe Hong Chang is the owner of the vessel which said vessel shipped 3,400 bags of copra at Masbate owned by the Philippine Agricultural Trading Corporation. The shipment of copra was covered by an insurance issued by American Home Insurance Company. The vessel sank while at sea which resulted to the loss of bags of copra. The insurer paid the amount of Php 345,000.00 to the consignee.

The American Home filed a case for the recovery of the money paid to the consignee, based on breach of contract of carriage. During the pendency of the case, petitioner executed deed of donation in favor of his children Sandra and Ray.

The trial court rendered its deciusion in favor of the plaintiff however when the Sheriff executed the writ of executuin they found out that petitioner no longer had any property and that he conveyed the subject propertiues to his children.Respondent Philam filed a complaint for the rescission of the deeds of donation executed by petitioner Khe Hong Cheng in favor of his children and for the nullification of their titles. Respondent Philam alleged, inter alia, that petitioner Khe Hong Cheng executed the aforesaid deeds in fraud of his creditors, including respondent Philam.The RTC rendered its decision in favoir of Philam. The Ca affirmed the decision of RTC.

ISSUE:

When does accion pauliano accrues?

RULING:

An accion pauliana accrues only when the creditor discovers that he has no other legal remedy for the satisfaction of his claim against the debtor other than an accion pauliana. The accion pauliana is an action of a last resort. For as long as the creditor still has a remedy at law for the enforcement of his claim against the debtor, the creditor will not have any cause of action against the creditor for rescission of the contracts entered into by and between the debtor and another person or persons. Indeed, an accion pauliana presupposes a judgment and the issuance by the trial court of a writ of execution for the satisfaction of the judgment and the failure of the Sheriff to enforce and satisfy the judgment of the court. It presupposes that the creditor has exhausted the property of the debtor. The date of the decision of the trial court against the debtor is immaterial. What is important is that the credit of the plaintiff antedates that of the fraudulent alienation by the debtor of his property. After all, the decision of the trial court against the debtor will retroact to the time when the debtor became indebted to the creditor.WHEREFORE, premises considered, the petition is hereby DENIED for lack of merit.

37)RAFAEL G. SUNTAY, substituted by his heirs, namely: ROSARIO, RAFAEL, JR., APOLINARIO, RAYMUND, MARIA VICTORIA, MARIA ROSARIO and MARIA

LOURDES, all surnamed SUNTAY, petitioners, vs.THE HON. COURT OF APPEALS and FEDERICO C. SUNTAY, respondents.

G.R. No. 114950 December 19, 1995 FACTS:

Federico Suntay was the registered owner of a parcel of land in dispute. He applied as a miller contractor of the National Rice and Corn Corporation (NARIC) but the same was disapproved by NARIC because he was tied up with several unpaid loans. For purposes of circumvention, he asked his nephew-lawyer, Rafael to prepare an absolute deed of sale of the said land in dispute in consideration of Php 20,000.00 in favor of Rafael. Less that 3 months after his conveyance, the same parcel of land was sold back to Federico for the same consideration. However on the second sale there was irregularity because it appears that said land was not sold but was mortgaged in favor of the Hagonoy Rural Bank. Moreover, after the execution of the deed, Federico remained in possession of the property sold.

Federico requested Rafael to deliver his copy of TCT no. T-36714 so that Federico could have the counter deed of sale in his favor registered on his name but Rafael refuses.

Federico filed a complaint for reconveyance and damages against Rafael. The trial court rendered its decision that Rafael is the owner of the property in dispute but not to the extent of ordering Federico to pay back rentals for the use of the propert.

The CA rendered its decision in favor of Federico.

ISSUE:

Whether or not said second deed of absolute sale is null and void.

RUKING:

The cumulative effect of the evidence on record as chronicled aforesaid identified badges of simulation proving that the sale by Federico to his deceased nephew of his land and rice mill, was not intended to have any legal effect between them. Though the notarization of the deed of sale in question vests in its favor the presumption of regularity, it is not the intention nor the function of the notary public to validate and make binding an instrument never, in the first place, intended to have any binding legal effect upon the parties thereto. The intention of the parties still and always is the primary consideration in determining the true nature of a contract.The SC hold that the deed of sale executed by Federico in favor of his now deceased nephew, Rafael, is absolutely simulated and fictitious and, hence, null and void, said parties having entered into a sale transaction to which they did not intend to be legally bound. As no property was validly conveyed under the deed, the second deed of sale executed by the late Rafael in favor of his uncle, should be considered ineffective and unavailing.

38)

MANGAHAS VS. BROBIO

G.R. No. 183852 : October 20, 2010

FACTS:

On January 10, 2002, Pacifico S. Brobio died intestate, leaving three parcels of land. He was survived by his wife, respondent Eufrocina A. Brobio, and four legitimate and three illegitimate children; petitioner Carmela Brobio Mangahas is one of the illegitimate children.

On May 12, 2002, the heirs of the deceased executed a Deed of Extrajudicial Settlement of Estate of the Late Pacifico Brobio with Waiver. In the Deed, petitioner and Pacificos other children, in consideration of their love and affection for respondent and the sum of P150,000.00, waived and ceded their respective shares over the three parcels of land in favor of respondent. According to petitioner, respondent promised to give her an additional amount for her share in her fathers estate. Thus, after the signing of the Deed, petitioner demanded from respondent the promised additional amount, but respondent refused to pay, claiming that she had no more money.

A year later, while processing her tax obligations with the Bureau of Internal Revenue (BIR), respondent was required to submit an original copy of the Deed. Left with no more original copy of the Deed, respondent summoned petitioner to her office on May 31, 2003 and asked her to countersign a copy of the Deed. Petitioner refused to countersign the document, demanding that respondent first give her the additional amount that she promised. Considering the value of the three parcels of land (which she claimed to be worth P20M), petitioner asked for P1M, but respondent begged her to lower the amount. Petitioner agreed to lower it to P600,000.00. Because respondent did not have the money at that time and petitioner refused to countersign the Deed without any assurance that the amount would be paid, respondent executed a promissory note. Petitioner agreed to sign the Deed when respondent signed the promissory note.

When the promissory note fell due, respondent failed and refused to pay despite demand. Petitioner made several more demands upon respondent but the latter kept on insisting that she had no money. On January 28, 2004, petitioner filed a Complaint for Specific Performance with damagesaw against respondent.

The Regional Trial Court (RTC) rendered a decision in favor of petitioner. The CA reversed the RTC decision and dismissed the complaint. Hence, this petition.

ISSUE:

The Honorable Court of Appeals erred in the appreciation of the facts of this case when it found that intimidation attended the execution of the promissory note subject of this case.

RULING:

The Supreme Court ruled that contracts are voidable where consent thereto is given through mistake, violence, intimidation, undue influence, or fraud. In determining whether

consent is vitiated by any of these circumstances, courts are given a wide latitude in weighing the facts or circumstances in a given case and in deciding in favor of what they believe actually occurred, considering the age, physical infirmity, intelligence, relationship, and conduct of the parties at the time of the execution of the contract and subsequent thereto, irrespective of whether the contract is in a public or private writing. It is alleged that mistake, violence, fraud, or intimidation attended the execution of the promissory note. Still, respondent insists that she was "forced" into signing the promissory note because petitioner would not sign the document required by the BIR. The fact that respondent may have felt compelled, under the circumstances, to execute the promissory note will not negate the voluntariness of the act. As rightly observed by the trial court, the execution of the promissory note in the amount of P600,000.00 was, in fact, the product of a negotiation between the parties. Respondent herself testified that she bargained with petitioner to lower the amount. The remedy suggested by the CA is not the proper one under the circumstances. An action for partition implies that the property is still owned in common. Considering that the heirs had already executed a deed of extrajudicial settlement and waived their shares in favor of respondent, the properties are no longer under a state of co-ownership; there is nothing more to be partitioned, as ownership had already been merged in one person.

Wherefore, the decision of the CA is reversed and set aside and the decision of the RTC is reinstated.

39)HERNANDEZ VS. HERNANDEZG.R. No. 158576, March 09, 2011

FACTS:

This case involves the controversy between the parties which began when the Republic of the Philippines, through the Department of Public Works and Highways (DPWH), offered to purchase a portion of a parcel of land with an area of 80,133 square meters, covered by the Registry of Deeds for Tanauan, Batangas, located at San Rafael, Sto. Tomas, Batangas,  for use in the expansion of the South Luzon Expressway.  The land is pro-indiviso owned by Cornelia M. Hernandez petitioner herein, Atty. Jose M. Hernandez, deceased father of respondent Cecilio F. Hernandez represented by Paciencia Hernandez and Mena Hernandez, also deceased and represented by her heirs. The initial purchase price that was offered by the government was allegedly at Thirty-Five pesos (P35.00) per square meter for 14,643 square meters of the aforementioned land. The Hernandez family rejected the offer.  After a series of negotiations with the DPWH, the last offer stood at Seventy Pesos (P70.00) per square meter. They still did not accept the offer and the government was forced to file an expropriation case. On 9 August 1993, an expropriation case was filed by the Republic of the Philippines, through the DPWH, before the Regional Trial Court, Tanauan, Batangas.

During the course of the expropriation proceedings, an Order dated 13 September 1996 was issued by the RTC Branch 83, informing the parties of the appointment of commissioners to help determine the just compensation.

On 18 October 1996, Cornelia, and her other co-owners who were also signatories of the 11 November 1993 letter, executed an irrevocable Special Power of Attorney (SPA) appointing Cecilio Hernandez as their "true and lawful attorney" with respect to the expropriation of the subject property. The SPA stated that the authority shall be irrevocable and continue to be binding all throughout the negotiation.  It further stated that the authority shall bind all successors and assigns in regard to any negotiation with the government until its consummation and binding transfer of a portion to be sold to that entity with Cecilio as the sole signatory in regard to the rights and interests of the signatories therein.  There was no mention of the compensation scheme for Cecilio, the attorney-in-fact.

Cecilio, despite the service of summons and copy of the complaint failed to file an answer.  The trial court explained further that Cecilio was present in the address supplied by the petitioner but refused to receive the copy.  The trial court even gave Cecilio ten (10) more days, from his refusal to accept the summons, to file his answer. Upon the motion of the petitioner, respondent Cecilio was declared in default.

The RTC denied the motion and nullified the quitclaim in favor of Cecilio. Cecilio appealed the Decision of the trial court. The appellate court, in its Decision dated 29 May 2003 reversed and set aside the ruling of the trial court. Hence, this petition.

ISSUE:

Whether or not the CA erred in holding the validity of the receipt and quitclaim document contrary to law and jurisprudence.

RULING:

The supreme court ruled that a contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. In determining whether consent is vitiated by any of the circumstances mentioned, courts are given a wide latitude in weighing the facts or circumstances in a given case and in deciding in their favor what they believe to have actually occurred, considering the age, physical infirmity, intelligence, relationship, and the conduct of the parties at the time of the making of the contract and subsequent thereto, irrespective of whether the contract is in public or private writing. And, in order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or those conditions which have principally moved one or both parties to enter the contract.

It was the rejection likewise of the last offer that led to the filing of the expropriation case on 9 August 1993. Clear as day, the conditions that moved the parties to the contract were the base price at P70.00 per square meter, the increase of which would be compensated by 20% of whatever may be added to the base price; and the ceiling price of P300.00 per square meter, which was considerably high reckoned from the base at P70.00, which would therefore, allow Cecilio to get all that which would be in excess of the elevated ceiling.  The ceiling was, from the base, extraordinarily high, justifying the extraordinary grant to Cornelio of all that would exceed the ceiling.

In view of this case, the decision of the CA is reversed and set aside. The decision of the RTC is reinstated with modification.

40)FUENTES V ROCA

G.R. NO. 178902, 21 APRIL 2010

 

FACTS:

                On October 11, 1982, Sabrina Taroza sold to her own son Tarciano T. Roca her titled of 358 sq.m lot located at canelar, zamboanga under a deed of absolute sale. Six years later,  Tarciano T. Roca offered to the spouses Fuentes the same titlle of land bought to her mother with stipulations that Fuentes should pay a downpayment of 60,000.00 php for the trnasfer of lot to them and within 6 months Tarciano would have to vacate the lot of structures , occupants and secure the consent of his stranged wife. upon compliance, Fuentes spouses must have to pay Tarciano the amount of 140,000.00 php.

                On January 11, 1989 a document of absolute sale as issued to the Fuentes. One year after, Tarciano T. Roca died, which was followed  by his wife 9 months after. the children of Roca filed for an action of annulment of sale and reconveynace of the land against the Fuentes on the ground that tarciano's wife didn't gave  her consent upon her husband and that fraud and forgery. Spouses Fuentes denied such allegations and claim that the forgery case is personal to Rosario the wife of Tarciano and she alone could  claim it besaides the  4-year prescriptive period for nullifying the sale on the ground of fraud had already elapsed.  The RTC ruled in favor of the Fuentes, however the Court of Appelas reversed the decision of the RTC.

 ISSUE :

                Whether or not Rosario's signature was forged.

                Whether or not, Roca's action for declaration nullity of that sale to the spouses Fuentes had alreadry prescribed.

 HELD:

                Yes, the Supreme Court agrees with CA's observation that Rosario's signature strokes on the affidavit apperas heavy, deliberate and forced. Her specimen signature on the other hand are, consitently of a lighter stroke and more fluid. The way the letter "R" and "S" were written is also remarkably different. The variance is obvious even to the untrained eye.

                For the second issue, the SC held its decision based on Art. 173  which provides that inorder that the wife may bring an action for annulment of sale on the ground of lack os spousal consent during the marriage within 10 years from the transaction. Consequently, the action that the Rocas, her heirs, brought in 1997 fell within ten years of the January 11, 1989 sale. Therefore it did not yet prescribe. Even if the claim of the spouses for prescription was based on fraud and forgery and that the prescriptive period to be applied is 4 years, the answer is still No, because the sale was void from the beginning and thus the land remained the property of Tarciano and Rosario despite that sale. When the two died, they passed on the ownership to their heirs, namely the Rocas, and as lawful owners thaey had the right to exclude any  person from its enjoyment and disposal (Art 429 of the Civil Code). In fairness to the Fuentes, the SC held that they should

be entitled among other things, to be recovered from the Tarciano's heirs the amount of 200, 000.00php with legal interest until fully paid chargeable against his estate. They are also to be entitled to a reimbursement with the improvements they inroduced with a right of retention until reimbursement is made (Art. 448).

41)ASSOCIATED BANK V MONTANO ET.AL.

G.R.NO. 166383, 16 OCTOBER, 2009

 

FACTS:

                In 1964 spouse Monatano owned 3 parcels of land situated in Tanza, Cavite hich was utilized as an integrated farm and a stud farm used for raising horses. Respondent Monatano went on self exile in USA to avoid the harrasment of Pres. Marcos during the Martial Law regime, upon which they transfered said properties to Tres Cruces Agro- Industrial Corporation(TCAIC) in exchange for shares of stocks in the company with a 98% control over TCAIC.

                After a year, the TCAIC sold the properties to Inetrenational Country Club Incorporation (ICCI)for 6,000,000.09 php, thus the title of properties were now transfered to the ICCI. The ICCI then mortgaged the parcels of land to the Citizens bank and Trust corporation now Associated Bank for an amount of 2,000,000.00 php. The mortgaged  become mature but remain unpaid thereby promting the Associated Bank to forclosed the mortgaged and put in in a public auction. Associated Bank as the higgest bidder then buy the property with an amount of 5,7000,000.00 php.

                Meanwhile, the Montano returned to the country and after discovering the transfer of the properties the Montano immediately took physical possession of the same and began cultivating it. They also filed for a petition of reconveyance and pray for the declaration of nullity upon transfer of CTC. On the other hand, the associated bank filed its Motion for Preliminary Hearing on the affirmative defense and motion to dismiss  for the complaint stated no cause of action, and that the case was already barred by the statute of limitations.

 ISSUES:

                Whether or not motion to dismiss is on its propriety.

                Whether or not the complaint for reconveynace should be dismissed.

HELD:

                As to the first issue, Yes the motion to dismiss was on its propriety. The SC held  that  the rule is  based on practicality, as when the issues involved in a particular case can be disposed of in a preliminary hearing and if there is no motion to dismiss was filed then the  pleading gorund as affirmative defenses can be heard in a preliminary hearing as that of the motion to dismiss. Respondent on the other hand fails to oppose the motion to dismiss despite having been given the opportunity to do so, any right to contest the same was already waived by them.

                As to the second issue, It is true that the action for reconveyance of property resulting from fraud may be barred by the statute of limitations which requires that the action shall be filed within 4 years from discovery of fraud, but be it noted that the basis of reconveyance by the respondent is threat, duress and intimidation. As provided in Art. 1391 of the civil code an action

for annulment for it shall be brought within four years, thus when Marcos ouster from power on February 21, 1986  and since the respondents filed its complaint for reconveynace on  September 15, 1989 the four years prescriptive period was not prescribed. The SC denied for the dismissal of reconveyance and remitted the case to the RTC for trial with cost against the petitioner.

42)WILLIAM ALAIN MIAILHE, petitioner,

vs. COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES, respondents.G.R. No. 108991            March 20, 2001

FACTS:

Petitioner, William Alain Miailhe, on his own behalf and on behalf of Victoria Desbarats-Miailhe, Monique Miailhe-Sichere and Elaine Miailhe-Lencquesaing filed a Complaint for Annulment of Sale, Reconveyance and Damages against [Respondent] Republic of the Philippines and defendant Development Bank of the Philippines.The petitioner alleged that DBP forged, threatened and intimidated petitioner to sell the property to DBP for the grossly low price. The RTC and CA rendered their decision in favor of DBP and that the action is already prescribed.

ISSUE:

Whether or not extrajudicial demands did not interrupt prescription.

RULING:

In the present case, there is as yet no obligation in existence. Respondent has no obligation to reconvey the subject lots because of the existing Contract of Sale. Although allegedly voidable, it is binding unless annulled by a proper action in court.12 Not being a determinate conduct that can be extrajudically demanded, it cannot be considered as an obligation either. Since Article 1390 of the Civil Code states that voidable "contracts are binding, unless they are annulled by a proper action in court," it is clear that the defendants were not obligated to accede to any extrajudicial demand to annul the Contract of Sale.13

43)

FIRST PHILIPPINE HOLDINGS CORPORATION V TRANS MIDDLE EAST EQUITIES INC.

G.R. NO. 179505, 04 DECEMBER 2009

 FACTS:

                FHPC  formerly known as Meralco Securities Corporation incorporated on 30 June 1961 by Filipino Entreprenuers led by Eugenio Lopez Sr. sold its 6,299,179.00 php shares of common stock in Philippine Commercial International Bank (PCIB), now Equitable PCIB to TMEE. Such shares according to the FHPC were obtained by the TMEE through fraud, acts contrary to Law, Morals, Good Customs and Public Policy and such acquisition is either voidable, void or un forceable. FHPC filed then its motion for leave to intervene and admit complaint in intervention and was granted by the court. On the otehr hand, TMEE filed its  motion to dismiss the complaint-in-intervention by the FHPC on the ground that the action of FHPC has already prescribed under Article 1391 of the Civil Code. Since the action was filed only on 28 December 1988 and the sale was 24 May 1984 the action was laready 7 months late from the date of prescription.

 ISSUE :

                Whether or not the sale of property is void and the prescriptive period had elapsed.

 HELD:

                No, the SC found that the sale is not void for a suit for the annulment of voidbale contract on account of fraud shall be filed within four years from the discovery of the same, here, from the time the questioned sale transaction on May 24, 1984 took place, FHPC didn't deny that it had actual knowledge of the same. Simply, petitioner was fully aware of the sale of the PCIB shares to TMEE and espite full knowledge petitioners did not question the said sale from its inception and sometime thereafter.  it was only four years and seven months had elapsed following the knowledge or discovery of the alleged fraudulent sale that the petitioner assailed the same, by then it was too late for the petitioners to beset same transaction, since the prescriptive period had already come into play.

                The SC therefore denied the instant petition and affirmed the resolution of the SB with cost against the petitioner.

44)

SANCHEZ vs. MAPALAD541 SCRA 397

FACTS:

Respondent Mapalad was the registered owner of four (4) parcels of land located along Roxas Boulevard, Baclaran, ParañaqueThe PCGG issued writs of sequestration for Mapalad and all its properties.Josef, Vice president/treasurer and General Manager of Mapalad discovered that the 4 TCTs were missing, however the four missing tcts turned out to be in possession of Nordelak Development Corporation. Nordelak came into possession of the 4 TCTs by deed of sale purportedly executed by Miguel Magsaysay in his capacity as President and Board Chairman of Mapalad.

Mapalad filed an action for annulment of deed of sale and reconveyance of title with damages against Nordelak.

RTC ruled in favour of Nordelak. The Ca reversed the decision of RTC.

ISSUE:

Whether or not there was a valid sale between Mapalad and Nordelak.

RULING:

In the present case, consent was purportedly given by Miguel Magsaysay, the person who signed for and in behalf of Mapalad in the deed of absolute sale dated November 2, 1989. However, as he categorically stated on the witness stand during trial, he was no longer connected with Mapalad on the said date because he already divested all his interests in said corporation as early as 1982. Even assuming, for the sake of argument, that the signatures purporting to be his were genuine, it would still be voidable for lack of authority resulting in his incapacity to give consent for and in behalf of the corporation.

Lack of consideration makes a contract of sale fictitious. A fictitious sale is void ab initio.The alleged deed of absolute sale dated November 2, 1989 notwithstanding, the contract of sale between Mapalad and Nordelak is not only voidable on account of lack of valid consent on the part of the purported seller, but also void ab initio for being fictitious on account of lack of consideration.

WHEREFORE, the petition is hereby DENIED and the appealed Court of Appeals decision AFFIRMED in toto.

45)OESMER, Petitioners,

vs PARAISO DEVELOPMENT CORPORATION, Respondent.G.R. No. 157493             February 5, 2007

FACTS:

Petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso Development Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of brokering the sale of petitioners’ properties to respondent corporation.A Contract to Sell was drafted. A check in the amount of P100,000.00, payable to Ernesto, was given as option money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said Contract to Sell. However, two of the brothers, Adolfo and Jesus, did not sign the document. However petitioners informed respondent corporation about their intention to rescind the Contract to Sell and to return the amount of Php 100,000.00. respondent did not respond to the aforesaid letter. Petitioners, therefore, filed a complaint for Declaration of Nullity or for Annulment of Option Agreement or Contract to Sell with damages.The RTC rendered its decision in favor to respondent. CA affirmed the decision of RTC with modification.

ISSUE:

Whether ot not Contract to Sell is void considering that on of the heirs did not sign it as to indicate its consent to be bound by its terms.

RULING:

It is well-settled that contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the offeror. From that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. To produce a contract, the acceptance must not qualify the terms of the offer. However, the acceptance may be express or implied. For a contract to arise, the acceptance must be made known to the offeror. Accordingly, the acceptance can be withdrawn or revoked before it is made known to the offeror.

In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to the respondent of their shares in the subject parcels of land by affixing their signatures on the said contract. Such signatures show their acceptance of what has been stipulated in the Contract to Sell and such acceptance was made known to respondent corporation when the duplicate copy of the Contract to Sell was returned to the latter bearing petitioners’ signatures.

46)PERPETUA VDA. DE APE, petitioner,

vs.THE HONORABLE COURT OF APPEALS and GENOROSA CAWIT VDA. DE LUMAYNO, respondents

G.R. No. 133638             April 15, 2005

FACTS:

Generosa Cawit de Lumayno (private respondent herein), joined by her husband, Braulio, instituted a case for "Specific Performance of a Deed of Sale with Damages" against Fortunato and his wife Perpetua (petitioner herein). 

She supposedly demanded that Fortunato execute the corresponding deed of sale and to receive the balance of the consideration.  However, Fortunato unjustifiably refused to heed her demands.  Private respondent, therefore, prayed that Fortunato be ordered to execute and deliver to her "a sufficient and registrable deed of sale involving his one-eleventh (1/11) share or participation in Lot No. 2319 of the Escalante Cadastre

Private respondent testified that Fortunato went to her store at the time when their lease contract was about to expire.  He allegedly demanded the rental payment for his land but as she was no longer interested in renewing their lease agreement, they agreed instead to enter into a contract of sale which Fortunato acceded to provided private respondent bought his portion of Lot No. 2319 for P5,000.00.  Thereafter, she asked her son-in-law Flores to prepare the aforementioned receipt. 

ISSUE:

Whether or not the receipt signed by Fortunato proves the existence of a contrct of sale between him and private respondent.

RULING:

Under Article 1332 of the Civil Code which provides that "[w]hen one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former."

As can be gleaned from Flores's testimony, while he was very much aware of Fortunato's inability to read and write in the English language, he did not bother to fully explain to the latter the substance of the receipt (Exhibit "G").  He even dismissed the idea of asking somebody else to assist Fortunato considering that a measly sum of thirty pesos was involved.  Evidently, it did not occur to Flores that the document he himself prepared pertains to the transfer altogether of Fortunato's property to his mother-in-law.  It is precisely in situations such as this when the wisdom of Article 1332 of the Civil Code readily becomes apparent which is "to protect a party to a contract disadvantaged by illiteracy, ignorance, mental weakness or some other handicap

47)JULIAN FRANCISCO petitioner,

vs.PASTOR HERRERA, respondent.G.R. No. 139982             November 21, 2002

FACTS:

Petitioner bought 2 parcels of land from Eligio Herrera Sr. The children of Eligio, Sr. conteneded that the contract price for the two parcels of land was grossly inadequate so they tried to negotiate with petitioner. However petitioner refused.

The children of Herrera filed a complaint for annulment of sale. The RTC rendered its decision in favor of the children that Ca affirmed the decision of RTC.

ISSUE:

Whether or not said contract is void.

RULING:

In the present case, it was established that the vendor Eligio, Sr. entered into an agreement with petitioner, but that the former’s capacity to consent was vitiated by senile dementia. Hence, we must rule that the assailed contracts are not void or inexistent per se; rather, these are contracts that are valid and binding unless annulled through a proper action filed in court seasonably.

An annullable contract may be rendered perfectly valid by ratification, which can be express or implied. Implied ratification may take the form of accepting and retaining the benefits of a contract. As found by the trial court and the Court of Appeals, upon learning of the sale, respondent negotiated for the increase of the purchase price while receiving the installment payments. It was only when respondent failed to convince petitioner to increase the price that the former instituted the complaint for reconveyance of the properties. Clearly, respondent was agreeable to the contracts, only he wanted to get more. Further, there is no showing that respondent returned the payments or made an offer to do so. This bolsters the view that indeed there was ratification. One cannot negotiate for an increase in the price in one breath and in the same breath contend that the contract of sale is void.

48)ROSARIO L. DE BRAGANZA, ET AL., petitioners,

vs.FERNANDO F. DE VILLA ABRILLE, respondent.G.R. No. L-12471             April 13, 1959

FACTS:

Rosario L. de Braganza and her sons Rodolfo and Guillermo petition for review of the Court of Appeal's decision whereby they were required solidarily to pay Fernando F. de Villa Abrille the sum of P10,000 plus 2 % interest from October 30, 1944. Because payment had not been made, Villa Abrille sued them in March 1949.

The RTC and CA rendered its decision in favor of Abrile despite the fact tht Guillermo and Rodolfo are minors.

ISSUE:

Whether or not Guillermo and Rodolfo can be held liable to pay the loan.

RULING:

The SC held that being minors, Rodolfo and Guillermo could not be legally bound by their obligation.These minors may not be entirely absolved from monetary responsibility. In accordance with the provisions of Civil Code, even if their written contact is unenforceable because of non-age, they shall make restitution to the extent that they have profited by the money they received. (Art. 1340) There is testimony that the funds delivered to them by Villa Abrille were used for their support during the Japanese occupation. Such being the case, it is but fair to hold that they had profited to the extent of the value of such money, which value has been authoritatively established in the so-called Ballantine Schedule: in October 1944, P40.00 Japanese notes were equivalent to P1 of current Philippine money.

49)MIGUEL KATIPUNAN, INOCENCIO VALDEZ, EDGARDO BALGUMA and

LEOPOLDO BALGUMA, JR., petitioners, vs.BRAULIO KATIPUNAN, JR., respondent.

G.R. No. 132415            January 30, 2002

FACTS:

Respondent Braulio Katipunan, Jr. is the owner of a 203 square meter lot and a five-door apartment constructed thereon located at 385-F Matienza St., San Miguel, Manila. Petitioner Miguel Katipunan, entered into a Deed of Absolute Sale4 with brothers Edgardo Balguma and Leopoldo Balguma, Jr. (co-petitioners), represented by their father Atty. Leopoldo Balguma, Sr., involving the subject property for a consideration of P187,000.00.

Respondent filed a complaint for annulment of the Deed of Absolute Sale. He contended that the said contract was obtained through insidious words and machinations.The TRC dismissed the complaint. The CA reversed the decision of RTC.

ISSUE:

Whether or not CA ered when it overturned the factual findings of the trial court which are amply supported by the evidence on record.

RULING:

The circumstances surrounding the execution of the contract manifest a vitiated consent on the part of respondent. Undue influence was exerted upon him by his brother Miguel and Inocencio Valdez (petitioners) and Atty. Balguma. It was his brother Miguel who negotiated with Atty. Balguma. However, they did not explain to him the nature and contents of the document. Worse, they deprived him of a reasonable freedom of choice. It bears stressing that he reached only grade three. Thus, it was impossible for him to understand the contents of the contract written in English and embellished in legal jargon.

A     contract where one of the parties is incapable of giving consent or where consent is vitiated by mistake, fraud, or intimidation is not void ab initio but only voidable and is binding upon the parties unless annulled by proper Court action. Since the Deed of Absolute Sale between respondent and the Balguma brothers is voidable and hereby annulled, then the restitution of the property and its fruits to respondent is just and proper. Petitioners should turn over to respondent all the amounts they received starting January, 1986 up to the time the property shall have been returned to the latter.

50)NILO R. JUMALON, petitioner,

vs.COURT OF APPEALS, HON. RUBEN D. TORRES, in his capacity as Executive Secretary, HOUSING AND LAND USE REGULATORY BOARD, and MA. ASUNCION

DE LEON, respondents.G.R. No. 127767            January 30, 2002

FACTS:

Complainant De Leon and herein petitioner, Nilo R. Jumalon, executed a conditional sales agreement whereby the former purchased from the latter a house and lot. Jumalon executed in favor of De Leon a Deed of Absolute Sale.

De Leon learned regarding the danger posed by the wires over the property. Also, De Leon was informed by HLURB Enforcement Center, that construction of houses and buildings of whatever nature is strictly prohibited within the right-of –way of the transmission line.

De Leon filed a case for declaration of nullity or annulment of sale of real property which was subsequently dismissed. De Leon then, filed a complaint before the HLURB seeking the rescission of the conditional sales agreement and the Absolute Deed of Sale.

HLURB arbiter rendered judgement in favor of De Leon. The Board of Commissioners of HLURB affirmed the decision of arbiter. The CA affirmed the appealed decision.

ISSUE:

Whether the Court of Appeals erred in affirming the decision of Executive Secretary Ruben D. Torres and the HLURB declaring the rescission of the contract of sale of a house and lot between the petitioner and private respondent

RULING:

The SC agree with the Court of Appeals that respondent de Leon was entitled to annul the sale. There was fraud in the sale of the subject house. It is not safely habitable. It is built in a subdivision area where there is an existing 30-meter right of way of the Manila Electric Company (Meralco) with high-tension wires over the property, posing a danger to life and property. The construction of houses underneath the high tension wires is prohibited as hazardous to life and property because the line carries 115,000 volts of electricity, generates tremendous static electricity and produces electric sparks whenever it rained.