“Exaggeration is truth that has lost its temper,” said Lebanese poet Khalil Gibran.
Thus, exaggerating facts in relation to, for example, the sale of land may be considered fraudulent, which could invalidate it. Philippine law states that fraud has been employed when, through the insidious words or machinations of one of the contracting parties, the other is induced to enter into the contract, which, without them, he would not have agreed to.
Nevertheless, usual exaggerations in trade, when the other party has had the opportunity to know the facts, are not in themselves fraudulent.
In Trinidad v. Intermediate Appellate Court, Vicente Francisco took upon Laureta Trinidad’s offer to buy his house and lot. Trinidad then inspected the premises, examined a vicinity map which indicated drainage canals along therewith, and paid a portion of the purchase price.
Upon settling in the house, Trinidad overheard her neighbors talking that its two previous owners had left because the premises were prone to flooding. Upon confronting Francisco, Trinidad was assured that the house would never be flooded again since it had been fixed. Afterwards, they executed a contact of conditional sale over the subject property.
Trinidad refused to continue paying the amortizations because the house was flooded on more than one instance, with waters rising as high as five feet. Moreover, upon consulting with the Office of the City Engineer, she was told that the lot was low and was a narrowed portion of the creek.
This constrained Trinidad to file against Francisco a complaint for the annulment of their contract. In this regard, Trinidad alleged that she was induced to enter into the contract because of Francisco’s misrepresentations and sought, among others, the refund of the payments previously made and expenses incurred for installing the “annexes and decorations” on the house.
In his answer, Francisco denied having misrepresented to Trinidad the state of his property. He argued that Trinidad had thoroughly inspected the property before deciding to buy it, and the floods were common within the area, more so the entire Luzon island.
The trial court ruled in favor of Trinidad, which was reversed by the then Intermediate Appellate Court (IAC).
The Supreme Court affirmed the IAC’s decision and held that the fraud alleged by Trinidad had not been satisfactorily established to necessitate the annulment of the contract.
To be sure, Trinidad approached Francisco, who neither advertised his property nor offered to sell it to her. She also had the full opportunity to inspect the premises, including the drainage canals indicated in the vicinity map, before executing the contract with Francisco. In this regard, the Supreme Court found that she appraised the property with her expertise as a licensed real estate broker, and not with the “untrained eye of the ordinary prospective buyer.”
While Trinidad was forewarned of the property being prone to flooding when she inspected the premises, she still decided to buy it. She even had “annexes and decorations” of a permanent nature installed in the house, for which she had been claiming reimbursement from Francisco.
Assuming that Francisco misrepresented the state of his property, Trinidad was deemed to have accepted them at her own risk and must be responsible for the consequences of her carelessness.
Thus the law allows considerable latitude to a seller’s statements, also known as dealer’s talk, and that it is exceedingly risky to accept them at face value. Certainly, assertions concerning the sale of property, or its 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.
In this regard, a person who relies upon this affirmation by the seller whose interest might so readily prompt him to exaggerate the value of his property does so at his own peril, and must take the consequences of his own imprudence.
Meanwhile, one who contracts for the purchase of real property after having relied on the seller’s statements as to its character and value, and had the means and opportunity to verify them, cannot avoid the contract because they are exaggerated and false.