Tang Ah Chan v. Gonzalez
REITERATIONFacts
The Antecedents: Plaintiffs-appellants, Tang Ah Chan and his wife Kwong Kam Koon, filed an action for rescission of a contract of sale against defendants Eduardo B. Gonzalez and Helen Dahlke and her husband A.H. Dahlke, alleging deceit. The defendant Gonzalez filed a general denial and a cross-complaint for foreclosure of mortgage. On July 28, 1924, Gonzalez sold three parcels of land to Tang Ah Chan for P106,000. Tang Ah Chan paid P6,000 in cash and mortgaged the conveyed land and another property to secure the balance of P100,000. Interest was paid until December 1924, after which Tang Ah Chan defaulted. The land sold was described as being at the southern point of a tongue of land south of Fort San Antonio Abad, bounded by Manila Bay, Estero San Antonio Abad, and public land, registered under the Torrens system. It was partly covered by water at high tide, requiring a retaining wall for permanent construction. Tang Ah Chan claimed he was shown a different tract of land by the broker, Mrs. Dahlke, which he thought he was buying. Procedural History: The trial court rendered judgment absolving the defendants from the complaint and sentencing the plaintiffs on the cross-complaint to pay P124,750 with interest, collection expenses, and attorney's fees, ordering the foreclosure of the mortgage. The plaintiffs appealed. The Petition: The plaintiffs appealed the trial court's decision, assigning thirteen errors, eleven of which pertained to findings of fact.
Issue(s)
Whether the contract of sale can be rescinded on the ground of deceit. Whether the plaintiffs-appellants ratified the contract of sale.
Ruling
The Supreme Court affirmed the judgment of the trial court, holding that the contract of sale was validly ratified by the plaintiffs-appellants, thus extinguishing any right to rescind the contract based on alleged deceit.
Ratio Decidendi
On the issue of rescission due to deceit: The Court found that while there might have been conflicting testimony regarding the exact location of the land shown to the vendee, the evidence demonstrated negligence on the part of the vendee, a waiver of rights, and ratification of the sale. The vendee was provided with blueprint plans of the land during negotiations and at the consummation of the sale. He had the plan with him during the meeting with the notary public, and the notary testified that there was no discussion about the situation of the land, only the terms and conditions of the contract. Furthermore, the vendee applied for a building permit describing the property's location and initiated negotiations for the construction of a sea wall, actions consistent with the condition of the land as purchased. The Court emphasized that the vendee had every opportunity to inform himself about the true location of the property before the sale, and his failure to exercise ordinary care and attention indicated either acquiescence or negligence. The law is clear that ratification purges the contract of defects from its inception, terminating the right to rescind. On the issue of ratification: The Court found ample evidence of implied ratification. The vendee, Tang Ah Chan, had the blueprint plan of the land during negotiations and at the consummation of the sale. He applied for a building permit on September 16, 1924, describing the property's location. He also entered into negotiations for the construction of a sea wall and hired surveyors to stake the land, all of which were acts consistent with ownership of the land as described in the deed of sale. Crucially, after the sale on July 28, 1924, Tang Ah Chan paid the interest on the mortgage debt for August, September, October, November, and December 1924, without protest, before initiating the action for rescission on December 19, 1924. These payments, made with knowledge of the alleged defect or with the means to ascertain it, constituted implied ratification under Article 1311 of the Civil Code. Such ratification, according to Article 1313, purges the contract of all defects as from the moment it was entered into, rendering the action for annulment based on original defects unavailable.
Main Doctrine
A contract may not be rescinded on the ground of deceit if the party alleging deceit has, with knowledge of the facts or the means to ascertain them, ratified the contract through subsequent acts or omissions, as ratification purges the contract of defects from its inception.