Case Digest: Poole-Blunden vs Union Bank, 847 SCRA 146 (2017)

Poole-Blunden vs Union Bank, 847 SCRA 146 (2017)

Subject: Obligations and Contracts

FACTS

Poole-Blunden came across an advertisement placed by Union Bank in the Manila Bulletin for the public auction of the subject condominium unit, “Unit” which was advertised to have an area of 95 square meters. Poole-Blunden placed his bid and won the unit. He entered into a Contract to Sell with Union Bank. After occupying it, he noticed apparent problems in its dimensions. He took rough measurements of the Unit, which indicated that its floor area was just about 70 square meters, not 95 square meters, as advertised by Union Bank. Poole-Blunden wrote to Union Bank, informing it of the discrepancy. He asked for a recission of the Contract to Sell, along with a refund of the amounts he paid, in the event that it was conclusively established that the area of the unit was less than 95 square meters.

He filed a Complaint of Recission of Contract and Damages before RTC which dismissed Poole-Blunden’s complaint for lack of merit. On appeal, the CA affirmed the ruling of the Regional Trial Court.

It noted that the sale was made on an “as-is-where-is” basis as indicated in Section 12 of the Contract to Sell. Thus Poole-Blunden supposedly waived any errors on the bounds or description of the unit. Poole-Blunden charges Union Bank with fraud in failing to disclose to him that the advertised 95 square meters was inclusive of common areas. With the vitiation of his consent as to the object of the sale, he asserts that the Contract to Sell may be voided. He insists that Union Bank is liable for breach of warranty despite the “as-is-where-is” clause in the Contract to Sell.

ISSUE

Whether or not respondent Union Bank of the Philippines committed such a degree of fraud as would entitle petitioner Joseph Harry Walter Poole-Blunden to the voiding of the Contract to Sell the condominium unit.

RULING

Yes, respondent Union Bank of the Philippines committed fraud as would entitle petitioner Poole-Blunden to the voiding of the Contract to Sell the condominium unit.

Under Article 1390 of the Civil Code stipulates that a contract is voidable or annullable even if there is no damage to the contracting parties where "consent is vitiated by mistake, violence, intimidation, undue influence or fraud."

In this case, SC held that a bank that wrongly advertises the area of a property acquired through foreclosure because it failed to dutifully ascertain the property’s specifications is grossly negligent as to practically be in bad faith in offering that property to prospective buyers. Any sale made on this account is voidable for casual fraud. In actions to void such sales, banks cannot hide under the defense that a sale was made on an as-is-where-is-basis. As-is-where-is stipulations can only encompass physical features that are readily perceptible by an ordinary person possessing no specialized skills. Reliance on Section 12’s as-is-where-is stipulation is misplaced for two (2) reasons. First, a stipulation absolving a seller of liability for hidden defects can only be invoked by a seller who has no knowledge of hidden defects. Respondent here knew that the unit’s area, as reckoned in accordance with the Condominium Act, was not 95 square meters. Second, an as-is-where-is stipulation can only pertain to the readily perceptible physical state of the object of a sale. It cannot encompass matters that require specialized scrutiny, as well as features and traits that are immediately appreciable only by someone with technical competence. A seller is generally responsible for warranty against hidden defects of the thing sold. It is clear from the records that respondent fully knew the Unit’s area, reckoned strictly in accordance with the Condominium Act, did not total 95 square meters.