FACTS: Arcaina is the owner of Lot No. 3230 (property). Arcaina’s attorney-in-fact, Banta, entered into a contract with Ingram for the sale of the property. Banta showed Ingram and the latter’s attorney-in-fact, the metes and bounds of the property and represented that Lot No. 3230 has an area of more or less 6,200 square meters (sq. m.) per the tax declaration covering it. The contract price was P1,860,000.00, with Ingram making installment payments for the property. They also separately executed deeds of absolute sale over the property in Ingram’s favor, dated March 21, 2005 by Banta, and April 13, 2005 by Arcaina. Subsequently, Ingram caused the property to be surveyed and discovered that Lot No. 3230 has an area of 12,000 sq. m. Upon learning of the actual area of the property, Banta allegedly insisted that the difference of 5,800 sq. m. remains unsold. This was opposed by Ingram who claims that she owns the whole lot by virtue of the sale.
ISSUE: Was Lot 3230 sold for a lump sum or for a unit price contract? To what extent of lot area is Ingram entitled to?
HELD: Lot No. 3230 was sold for a lump sum. Ingram is entitled only to 6,200 square meters.
In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., P1,000.00 per sq. m.) or a lump sum contract which states a full purchase price for an immovable the area of which may be declared based on an estimate or where both the area and boundaries are stated (e.g., P1 million for 1,000 sq. m., etc.). Here, the Deed of Sale executed by Banta on March 21, 2005 and the Deed of Sale executed by Arcaina on April 13, 2005 both show that the property was conveyed to Ingram at the predetermined price of P1,860,000.00. There was no indication that it was bought on a per-square-meter basis. Thus, Article 1542 of the Civil Code governs the sale.
In a lump sum contract, a vendor is generally obligated to deliver all the land covered within the boundaries, regardless of whether the real area should be greater or smaller than that recited in the deed. However, in case there is conflict between the area actually covered by the boundaries and the estimated area stated in the contract of sale, he/she shall do so only when the excess or deficiency between the former and the latter is reasonable.
Applying Del Prado to the case before us, we find that the difference of 5,800 sq. m. is too substantial to be considered reasonable. We note that only 6,200 sq. m. was agreed upon between petitioners and Ingram. Declaring Ingram as the owner of the whole 12,000 sq. m. on the premise that this is the actual area included in the boundaries would be ordering the delivery of almost twice the area stated in the deeds of sale. Surely, Article 1542 does not contemplate such an unfair situation to befall a vendor — that he/she would be compelled to deliver double the amount that he/she originally sold without a corresponding increase in price. In Asiain v. Jalandoni, we explained that “[a] vendee of a land when it is sold in gross or with the description ‘more or less’ does not thereby ipso facto take all risk of quantity in the land. The use of ‘more or less’ or similar words in designating quantity covers only a reasonable excess or deficiency.” Therefore, we rule that Ingram is entitled only to 6,200 sq. m. of the property. An area of 5,800 sq. m. more than the area intended to be sold is not a reasonable excess that can be deemed included in the sale.