Paul Gabriel O.

Uy
150640

LAURETA TRINIDAD, petitioner,

Vs.
INTERMEDIATE APPELLATE COURT and VICENTE J. FRANCISCO, respondent.

G.R. No. L-65922 December 3, 1991

(Topic: Usual exaggerations in trade; opportunity to know the facts – Art. 1340 )

FACTS:
Respondent Vicente Francisco (Francisco) owned Bungalow No. 17, situated at Commonwealth Village in
Quezon City, petitioner Laureta Trinidad (Trinidad) offered to buy the property and Francisco was willing
to sell. Trinidad inspected the house and lot and examined a vicinity map which indicated drainage canals
along the property. The price agreed upon was P70,000.00 with a down payment of P17,500.00 to be paid
in five equal annual installments.

Trinidad paid Francisco P5,000.00 as earnest money and entered into the possession of the house. She
subsequently and allegedly heard from her new neighbors that two buyers had previously vacated the
property because it was subject to flooding. She talked to Francisco about this matter and he told her
everything had been fixed and the house would never be flooded again. After being reassured, she gave
him P12,500.00 to complete the down payment. They signed the Contract of Conditional Sale on August
8, 1969. 1

Trinidad paid the installment for 1970 and 1971 on time but she eventually decided not to continue paying
the amortizations because the house was flooded again, the waters rising to as high as five feet. She
requested an inspection of the premises to determine the cause of the flooding from City Engineer's office
of Quezon City. The finding of City Engineer was that "the lot is low and is a narrowed portion of the
creek." hence the regular flooding.

Trinidad filed a complaint against Francisco alleging that she was induced to enter into the contract of
sale because of his misrepresentations. Trinidad prayed for the annulment of the agreement, refunding
of her previous payments in installments, and payment of actual expenses and actual cost and losses
incurred due to the floods accompanied by a demand for moral and exemplary damages.

Francisco denied the charge and even stated that Trinidad had examined and inspected the subject property
prior to the agreement. Francisco also stated that the floods were fortuitous events which were beyond his
control. Francisco asked for the rescission of the contract and the forfeiture of payments made by the
Trinidad plus monthly rentals with interest of P700.00 for the property from July 2, 1972, until the property
is vacated by the Trinidad.

The Court of First Instance ruled in favor of the Trinidad, annulling the agreement and ordering the
defendant to pay accordingly. The Intermediate Appelate Court reversed this decision and ruled in favor
of the Francisco, hence this petition, pending litigation Vicente Francisco died and was substituted by his
heirs.
ISSUE: Whether there was misrepresentation on the part of Francisco to justify the annulment of agreement
and the awarding of damages to the Trinidad.

RULING: No the fraud alleged by Trinidad is not supported by clear and preponderant evident in order to
give basis for the annulment of the agreement.

The court took into consideration that:

- Trinidad had the unbridled opportunity to inspect the property before entering the contract.
- Trinidad has the experience of a licensed real estate broker and is presumed to have used such
expertise to appraise the property, her entry into the contract despite having knowledge of the
drainage canals is a result of her own negligence.
- Trinidad knew that the lot was depressed and that there was a drainage near it, these conditions
made it obvious that the property may be flooded and yet she still proceeded to buy it.
- There is no evidence except petitioner’s own testimony that two previous owners of the property
had vacated it because of the floods. The supposed previous owners were not presented as witnesses
and neither were the neighbors. Nor was there evidence supporting the allegation that Francisco
assured the petitioner that there would no longer be any floods, Francisco himself denied having
made the alleged assurance.
- Despite the 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.

The court cited the case of Songco vs Sellner stating that:

“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.”

Which is in accordance with Article 1340 of the Civil code:

Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the
facts, are not in themselves fraudulent.

The court holds that the case concerns a “bad bargain, not an illegal transaction vitiated by fraud.” which
the court may not interfere with given that the parties involved were not legally incompetent to constitute
the agreement. The contract of conditional sale is cancelled and the petitioner is ordered to vacate the
property.

DISPOSITIVE: WHEREFORE, the appealed decision is AFFIRMED as above modified, with no

pronouncement as to costs. It is so ordered.