Laureta Trinidad v.

IAC and Vicente Francisco

Facts
Trinidad offered to buy the house in QC which belonged to the late Francisco. Trinidad inspected the
house and lot and examined a vicinity map which indicated drainage canals along the property. Trinidad paid
Francisco P5,000.00 as earnest money and entered into the possession of the house. She heard from her new
neighbors that two buyers had previously vacated the property because it was subject to flooding. Assured that
the problem has already been fixed by Francisco, she completed her down payment and they signed the
Contract of Conditional Sale. about this matter and that he told her everything had been fixed and the house
would never be flooded again. Thus assured, she gave him P12,500.00 to complete the down payment. They
signed the Contract of Conditional Sale. The contract contains a condition that should Trinidad failed to make
any of the payments, the contract shall be rescinded and cancelled without the necessity of notice and all sums
paid shall be considered rents and damages and that Trinidad shall vacate the property. After some time,
Trinidad decided not to continue paying because the house was flooded again and was rising as high as 5 ft.
Trinidad filed a complaint against Francisco alleging that she was induced to enter into the contract of sale
because of his misrepresentations. She asked that the agreement be annulled and her payments refunded to her,
together with the actual expenses she had incurred for the "annexes and decorations" she had made on the
house. Francisco denied the charge of misrepresentation and stressed that Trinidad had thoroughly inspected the
property before she decided to buy it. He also claimed that the floods were fortuitous events not imputable to
him. He asked for the rescission of the contract and the forfeiture of payments.

Issue
Whether or not there was misrepresentation on the part of Francisco to justify the rescission of the sale
and the award damages to Trinidad

Ruling
No.
"One who contracts for the purchase of real estate in reliance on the representations and statements of
the vendor as to its character and value, but after he has visited and examined it for himself and has had the
means and opportunity of verifying such statements, cannot avoid the contract on the ground that they were
false and exaggerated."
The pertinent provisions of the Civil Code on fraud are the following:
Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the
other is induced to enter into a contract which, without them, he would not have agreed to.
Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by
confidential relations, constitutes fraud.
Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not
in themselves fraudulent.
The fraud alleged by Trinidad has not been satisfactorily established to call for the annulment of the contract.
This finding is based on the following considerations.
1. It was Trinidad who admittedly approached Francisco, who never advertised the property nor offered it for
sale to her.
2. Francisco had full opportunity to inspect the premises, including the drainage canals indicated in the vicinity
map that was furnished her, before she entered into the contract of conditional sale.
3. It is assumed that she made her appraisal of the property not with the untrained eye of the ordinary
prospective buyer but with the experience and even expertise of the licensed real estate broker that she was. If
she minimized the presence of the drainage canals, she has only her own negligence to blame.
4. Seeing that the lot was depressed and there was a drainage lot abutting it, she cannot say she was not
forewarned of the possibility that the place might be flooded. Notwithstanding the obvious condition of the
property, she still decided to buy it.
5. There is no evidence except her own testimony that two previous owners of the property had vacated it
because of the floods and that Francisco assured her that the house would not be flooded again. The supposed
previous owners were not presented as witnesses and neither were the neighbors. Francisco himself denied
having made the alleged assurance.
6. Trinidad paid amortizations even if, according to her Complaint, "since 1969 said lot had been under floods
of about 1 ft deep," and despite the floods of September and November 1970.
7. It is also curious that notwithstanding the said floods, the petitioner still "made annexes and decorations on
the house," all of a permanent nature, for which she now claims reimbursement from the private respondent.
Assuming that he did make such representations, Trinidad is deemed to have accepted them at her own
risk and must therefore be responsible for the consequences of her careless credulousness. Assertions
concerning the property which is the subject of a contract of sale, or in regard to its qualities and characteristics,
are the usual and ordinary means used by sellers to obtain a high price and are always understood as affording
to buyers no ground for omitting to make inquiries. A man who relies upon such an affirmation made by a
person whose interest might so readily prompt him to exaggerate the value of his property does so at his peril,
and must take the consequences of his own imprudence. What we see here is a bad bargain, not an illegal
transaction vitiated by fraud.
The Contract of Conditional Sale was maintained between the parties except that the petitioner shall not
return the house to the private respondents. But, she will have to pay the balance of the purchase price.