Jurisprudence - HLURB
Jurisprudence - HLURB
Jurisprudence - HLURB
DECISION
LEONEN, J.:
Banks are required to observe a high degree of diligence in their affairs. This
encompasses their dealings concerning properties offered as security for loans. A bank
that wrongly advertises the area of a property acquired through foreclosure because it
failed to dutifully ascertain the property's specifications is grossly negligent as to
practically be in bad faith in offering that property to prospective buyers. Any sale made
on this account is voidable for causal fraud. In actions to void such sales, banks cannot
hide under the defense that a sale was made on an as-is-where-is basis. As-is-where-is
stipulations can only encompass physical features that are readily perceptible by an
ordinary person possessing no specialized skills.
This resolves a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
1
Procedure praying that the assailed November 15, 2012 Decision and February 12, 2013
2
Resolution of the Court of Appeals in CA-G.R. CV No. 95369 be reversed and set aside
3
and that judgment be rendered annulling or rescinding the Contract to Sell between
petitioner Joseph Harry Walter Poole-Blunden (Poole-Blunden) and respondent Union
Bank of the Philippines (UnionBank).
The assailed Court of Appeals Decision affirmed the April 20, 2010 Decision of the
Regional Trial Court, Branch 65, Makati City which dismissed the Complaint for
Rescission of Contract and Damages filed by Poole-Blunden against respondent
UnionBank. The assailed Court of Appeals Resolution denied Poole-Blunden's Motion
4
for Reconsideration.5
The Unit was advertised to have an area of 95 square meters. Thinking that it was
sufficient and spacious enough for his residential needs, Poole-Blunden decided to
register for the sale and bid on the unit.
8
About a week prior to the auction, Poole-Blunden visited the unit for inspection. He was
accompanied by a representative of UnionBank. The unit had an irregular shape; it was
neither a square nor a rectangle and included a circular terrace. Poole-Blunden did not
doubt the unit's area as advertised. However, he found that the ceiling was in bad
condition, that the parquet floor was damaged, and that the unit was in need of other
substantial repairs to be habitable.
9
On the day of the auction, Poole-Blunden inspected the Master Title of the project owner
to the condominium in the name of Integrated Network (TCT No. 171433) and the
Condominium Certificate of Title of UnionBank (CCT No. 36151) to verify once again the
details as advertised and the ownership of the unit. Both documents were on display at
the auction venue. 10
Poole-Blunden placed his bid and won the unit for ₱2,650,000.00. On May 7, 2001,
11
Poole-Blunden entered into a Contract to Sell with UnionBank. This Contract stipulated
that Poole-Blunden would pay 10% of the purchase price as down payment and that the
12
balance shall be paid over a period of 15 years in equal monthly instalments, with interest
of 15% per annum starting July 7, 2001. 13
Poole-Blunden started occupying the unit in June 2001. By July 20, 2003, he was able to
fully pay for the Unit, paying a total amount of ₱3,257,142.49. 14
In late 2003, Poole-Blunden decided to construct two (2) additional bedrooms in the Unit.
Upon examining it, he noticed apparent problems in its dimensions. He took rough
measurements of the Unit, which indicated that its floor area was just about 70 square
meters, not 95 square meters, as advertised by UnionBank. 15
Poole-Blunden got in touch with an officer of UnionBank to raise the matter, but no action
was taken. On July 12, 2004, Poole-Blunden wrote to UnionBank, informing it of the
16
discrepancy. He asked for a rescission of the Contract to Sell, along with a refund of the
amounts he had paid, in the event that it was conclusively established that the area of the
unit was less than 95 square meters. 17
inquiring with the Housing and Land Use Regulatory Board (HLURB), the Homeowners'
Association of T-Tower Condominium, and its appraisers, the Unit was confirmed to be
95 square meters, inclusive of the terrace and the common areas surrounding it. 19
independent geodetic engineer, Engr. Gayril P. Tagal (Engr. Tagal) of the Filipinas Dravo
Corporation, to survey the Unit and measure its actual floor area. Engr. Tagal issued a
certification stating that the total floor area of the Unit was only 74.4 square
meters. Poole-Blunden gave UnionBank a copy of Engr. Tagal's certification on July 12,
21
2005. 22
[T]he total area of the subject unit based on the ratio allocation maintenance cost
submitted by the developer to HLURB is 98 square meters (60 square meters as unit
area and 38 square meters as share on open space). On the other hand, the actual area
thereof based on the measurements made by its surveyor is 74.18 square meters which
was much higher than the unit area of 60 square meters that was approved by HLURB. 23
On April 20, 2010, the Regional Trial Court dismissed Poole-Blunden's complaint for lack
of merit. The dispositive portion of its Decision read:
WHEREFORE, premises considered, the instant complaint for rescission of contract and
damages is hereby DISMISSED for lack of merit. The counterclaim is likewise DENIED.
SO ORDERED. 25
On appeal, the Court of Appeals affirmed the ruling of the Regional Trial Court. It noted
26
that the sale was made on an "as-is-where-is" basis as indicated in Section 12 of the
Contract to Sell. Thus, Poole-Blunden supposedly waived any errors in the bounds or
27
description of the unit. The Court of Appeals added that Poole-Blunden failed to show,
28
by clear and convincing evidence that causal fraud can be attributed to UnionBank. It 29
added that the sale was made for a lump-sum amount and that, in accordance with
Article 1542, paragraph 1 of the Civil Code, Poole-Blunden could not demand a
30
Following the denial of his Motion for Reconsideration, Poole-Blunden filed the present
Petition before this Court.32
Poole-Blunden charges UnionBank with fraud in failing to disclose to him that the
advertised 95 square meters was inclusive of common areas. With the vitiation of his
33
consent as to the object of the sale, he asserts that the Contract to Sell may be voided.
He insists that UnionBank is liable for breach of warranty despite the "as-is-where-is"
clause in the Contract to Sell. Finally, he assails the Court of Appeals' application of
34
For resolution is the sole issue of whether or not respondent Union Bank of the
Philippines committed such a degree of fraud as would entitle petitioner Joseph Harry
Walter Poole-Blunden to the voiding of the Contract to Sell the condominium unit
identified as Unit 2C, T-Tower Condominium, 5040 P. Burgos corner Calderon Streets,
Makati City.
No longer in dispute at this juncture is how the Unit's interior area is only 74.4 square
meters. While respondent has maintained that the Unit's total area is in keeping with the
advertised 95 square meters, it has conceded that these 95 square meters is inclusive of
outside spaces and common areas.
petitioner that, following inquiries with the HLURB, the Homeowners' Association of T-
Tower Condominium, and its appraisers, it had confirmed that the Unit's 95 square
meters was inclusive of "the terrace and the common areas surrounding it." 37
During trial, respondent's former Assistant Vice President of the Asset and Recovery
Group, Atty. Elna N. Cruz (Atty. Cruz), testified on how there would have been
documents (such as an appraisal report) relating to inspections made by respondent's
personnel at the time the unit was being offered as a collateral to a loan. These would
have concerned the unit's area. She affirmed respondent's statements in its December
38
6, 2004 letter and indicated that, based on an appraisal report, the declared 95 square
meters was not exclusive to the Unit's interiors but included common areas:
A: Yes, sir.
Q: But you do not know what was the actual area as found by your
inspector?
A: Yes, sir.
Q: Do you have now with you that appraisal report showing that the actual
area of the unit is indeed 95 square meters?
A: We gathered the appraisal report and in the December 06, 2004 letter
that we gave Mr. Blunden, we consulted the appraiser of the Bank and
we were informed that the area was indeed 95 square meters. But that
area was brought about by measuring not just the inside of the unit, sir,
but including also the terrace, and the common area. (Emphasis 39
supplied)
Respondent has not disavowed Atty. Cruz's testimony. In its Comment, it merely
asserted that the "[e]xtensive reference to the [transcript of stenographic notes] is
unmistakable proof that the litigated issue is one of fact, not of law" and insisted that this
Court should not take cognizance of the present Petition. 40
Section 6(a) of the Condominium Act specifies the reckoning of a condominium unit's
bounds. It also specifies that areas of common use "are not part of the unit":
Thus, the unit sold to petitioner was deficient in relation to its advertised area. This
advertisement having been made by respondent, it is equally settled there was a falsity in
the declarations made by respondent prior to, and with the intention of enticing buyers to
the sale. What remains in issue is whether or not this falsity amounts to fraud warranting
the voiding of the Contract to Sell.
II
For there to be a valid contract, all the three (3) elements of consent, subject matter, and
price must be present. Consent wrongfully obtained is defective. The party to a contract
41
whose consent was vitiated is entitled to have the contract rescinded. Accordingly, Article
1390 of the Civil Code stipulates that a contract is voidable or annullable even if there is
42
Under Article 1338 of the Civil Code "[t]here 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." However, not all instances of
fraud enable the voiding of contracts. Article 1344 clarifies that in order to make a
contract voidable, the fraud "should be serious and should not have been employed by
both contracting parties." 43
Thus, Tankeh v. Development Bank of the Philippines explained, "There are two types
44
required to annul or avoid a contract "must be so material that had it not been present,
the defrauded party would not have entered into the contract." The fraud must be "the
46
determining cause of the contract, or must have caused the consent to be given." 47
Petitioner's contention on how crucial the dimensions and area of the Unit are to his
decision to proceed with the purchase is well-taken. The significance of space and
dimensions to any buyer of real property is plain to see. This is particularly significant to
buyers of condominium units in urban areas, and even more so in central business
districts, where the scarcity of space drives vertical construction and propels property
values. It would be immensely guileless of this Court to fail to appreciate how the
advertised area of the Unit was material or even indispensable to petitioner's consent. As
petitioner emphasized, he opted to register for and participate in the auction for the Unit
only after determining that its advertised area was spacious enough for his residential
needs. 48
III
The significance of the Unit's area as a determining cause of the Contract to Sell is
readily discernible. Falsity on its area is attributable to none but to respondent, which,
however, pleads that it should not be considered as having acted fraudulently given that
petitioner conceded to a sale on an as-is-where-is basis, thereby waiving "warranties
regarding possible errors in boundaries or description of property." 49
Section 12 of the Contract to Sell spells out the "as-is-where-is" terms of the purchase:
Reliance on Section 12's as-is-where-is stipulation is misplaced for two (2) reasons. First,
a stipulation absolving a seller of liability for hidden defects can only be invoked by a
seller who has no knowledge of hidden defects. Respondent here knew that the Unit's
area, as reckoned in accordance with the Condominium Act, was not 95 square meters.
Second, an as-is-where-is stipulation can only pertain to the readily perceptible physical
state of the object of a sale. It cannot encompass matters that require specialized
scrutiny, as well as features and traits that are immediately appreciable only by someone
with technical competence.
A seller is generally responsible for warranty against hidden defects of the thing sold. As
stated in Article 1561 of the New Civil Code:
Article 1561. The vendor shall be responsible for warranty against the
hidden defects which the thing sold may have, should they render it unfit
for the use for which it is intended, or should they diminish its fitness for
such use to such an extent that, had the vendee been aware thereof, he
would not have acquired it or would have given a lower price for it; but
said vendor shall not be answerable for patent defects or those which
may be visible, or for those which are not visible if the vendee is an expert
who, by reason of his trade or profession, should have known.
Article 1566, paragraph 2 states the seller's liability for hidden defects shall be
inapplicable if there is a stipulation made to the contrary. However, a mere stipulation
does not suffice. To be fully absolved of liability, Article 1566, paragraph 2 also requires a
seller to be unaware of the hidden defects in the thing sold.
Article 1566. The vendor is responsible to the vendee for any hidden
faults or defects in the thing sold, even though he was not aware thereof.
This provision shall not apply if the contrary has been stipulated, and the
vendor was not aware of the hidden faults or defects in the thing
sold. (Emphasis supplied.)
It is clear from the records that respondent fully knew that the Unit's area, reckoned
strictly in accordance with the Condominium Act, did not total 95 square meters.
Respondent admits that the only way the Unit's area could have amounted to 95 square
meters was if some areas for common use were added to its interior space. It
acknowledged knowing this fact through the efforts of its appraisers and even conceded
that their findings were documented in their reports.
pertaining to the "physical condition" of the thing sold and "not to [its] legal situation." As
52
further explained in National Development Company v. Madrigal Wan Hai Lines
Corporation: 53
In Hian vs. Court of Tax Appeals, we had the occasion to construe the
phrase "as is, where is" basis, thus:
The phrase "as is, where is" basis pertains solely to the physical condition
of the thing sold, not to its legal situation. In the case at bar, the US tax
liabilities constitute a potential lien which applies to NSCP's legal
situation, not to its physical aspect. Thus, respondent as a buyer, has no
obligation to shoulder the same. 54
understood as one which "merely describes the actual state and location of the
machinery and equipment sold," and nothing else. Features that may be physical but
56
which can only be revealed after examination by persons with technical competence
cannot be covered by as-is-where-is stipulations. A buyer cannot be considered to have
agreed "to take possession of the things sold 'in the condition where they are found and
from the place where they are located'" if the critical defect is one which he or she
57
In inspecting the Unit prior to the auction sale, petitioner took note of its actual state: "he
noticed that the ceilings were down, [that] there was water damage from the leaks
coming from the unit above, and [that] the parquet floor was damaged." He also took
58
note of its irregular shape and the circular terrace outside it. These observations
represent the full extent of what was readily perceptible to petitioner. The precise
measurement of the Unit's area, in contrast, could only be determined by someone with
specialized or technical capabilities. While ordinary persons, such as petitioner, may hold
such opinions that the Unit looks small, their perception could not be ascertained until
after an examination by someone equipped with peculiar skills and training to measure
real property. Indeed, petitioner's suspicions were not roused until years after he had
occupied the Unit and confirmed until after a certification was issued by a surveyor.
Any waiver of warranties under Section 12 of the Contract to Sell could have only been
concerned with the readily apparent subpar condition of the Unit. A person not equipped
with technical knowledge and expertise to survey real property could not reasonably be
expected to recognize deficiencies in measurement at the first instance especially if that
property was of "irregular shape," "neither square nor rectangle," and having a "circular
terrace."59
IV
Contrary to the Court of Appeals' assertion, Article 1542 of the Civil Code does not bar
the voiding of the Contract to Sell.
Article 1542. In the sale of real estate, made for a lump sum and not at
the rate of a certain sum for a unit of measure or number, there shall be
no increase or decrease of the price, although there be a greater or less
area or number than that stated in the contract.
The same rule shall be applied when two or more immovables are sold
for a single price; but if, besides mentioning the boundaries, which is
indispensable in every conveyance of real estate, its area or number
should be designated in the contract, the vendor shall be bound to deliver
all that is included within said boundaries, even when it exceeds the area
or number specified in the contract; and, should he not be able to do so,
he shall suffer a reduction in the price, in proportion to what is lacking in
the area or number, unless the contract is rescinded because the vendee
does not accede to the failure to deliver what has been stipulated.
(Emphasis supplied.)
Article 1542 has nothing to do with annulling fraudulently made sales. What it is
concerned with is the proportionate reduction of the purchase price in relation to the
measurable units of the thing sold. Petitioner does not seek a reduction of the purchase
price. He seeks judicial relief to have the entirety of his purchase annulled, his consent
having been fraudulently obtained. By filing an action under Article 1390 of the Civil
Code, petitioner declared that his consent to the entire subject matter of the contract was
vitiated. What suffices as relief is the complete annulment of the sale, not the partial
reimbursement upon which Article 1542 is premised.
Likewise, Article 1542 does not contemplate the seller's delivery to the buyer of things
other than the agreed object of the sale. While it is true that petitioner did not buy the unit
on a per-square-meter basis, it remains that what he bought was a condominium unit. A
condominium unit's bounds are reckoned by "the interior surfaces of [its] perimeter walls,
floors, ceilings, windows and doors." It excludes common areas. Thus, when petitioner
60
In any case, for Article 1542 to operate, "the discrepancy must not be
substantial." Article 1542 remains anchored on a sense of what is reasonable. An
61
estimate given as a premise for a sale should be "more or less" the actual area of the
thing sold. Here, the area advertised and stipulated in the Contract to Sell was 95
62
square meters but the actual area of the unit was only 74.4 square meters. By no stretch
63
By definition, fraud presupposes bad faith or malicious intent. It transpires when insidious
words or machinations are deliberately employed to induce agreement to a contract.
Thus, one could conceivably claim that respondent could not be guilty of fraud as it does
not appear to have crafted a deceptive strategy directed specifically at petitioner.
However, while petitioner was not a specific target, respondent was so callously remiss
of its duties as a bank. It was so grossly negligent that its recklessness amounts to a
wrongful willingness to engender a situation where any buyer in petitioner's shoes would
have been insidiously induced into buying a unit with an actual area so grossly short of its
advertised space.
In Spouses Carbonell v. Metropolitan Bank and Trust Company, this Court considered
64
Banks assume a degree of prudence and diligence higher than that of a good father of a
family, because their business is imbued with public interest and is inherently
66
fiduciary. Thus, banks have the obligation to treat the accounts of its clients
67
"meticulously and with the highest degree of care." With respect to its fiduciary duties,
68
The law imposes on banks high standards in view of the fiduciary nature
of banking. Section 2 of Republic Act No. 8791 ("RA 8791"), which took
effect on 13 June 2000, declares that the State recognizes the "fiduciary
nature of banking that requires high standards of integrity and
performance." This new provision in the general banking law, introduced
in 2000, is a statutory affirmation of Supreme Court decisions, starting
with the 1990 case of Simex International v. Court of Appeals, holding
that "the bank is under obligation to treat the accounts of its depositors
with meticulous care, always having in mind the fiduciary nature of their
relationship.
omitted)
The high degree of diligence required of banks equally holds true in their dealing with
mortgaged real properties, and subsequently acquired through foreclosure, such as the
Unit purchased by petitioner. In the same way that banks are "presumed to be familiar
with the rules on land registration," given that they are in the business of extending loans
secured by real estate mortgage, banks are also expected to exercise the highest
70
degree of diligence. This is especially true when investigating real properties offered as
security, since they are aware that such property may be passed on to an innocent
purchaser in the event of foreclosure. Indeed, "the ascertainment of the status or
condition of a property offered to it as security for a loan must be a standard and
indispensable part of a bank's operations": 71
omitted)
Credit investigations are standard practice for banks before approving loans and
admitting properties offered as security. It entails the assessment of such properties: an
appraisal of their value, an examination of their condition, a verification of the authenticity
of their title, and an investigation into their real owners and actual possessors. Whether
73
it was unaware of the unit's actual interior area; or, knew of it, but wrongly thought that its
area should include common spaces, respondent's predicament demonstrates how it
failed to exercise utmost diligence in investigating the Unit offered as security before
accepting it. This negligence is so inexcusable; it is tantamount to bad faith.
Even the least effort on respondent's part could have very easily confirmed the Unit's true
area. Similarly, the most cursory review of the Condominium Act would have revealed the
proper reckoning of a condominium unit's area. Respondent could have exerted these
most elementary efforts to protect not only clients and innocent purchasers but, most
basically, itself. Respondent's failure to do so indicates how it created a situation that
could have led to no other outcome than petitioner being defrauded.
VI
The Regional Trial Court and the Court of Appeals gravely erred in finding that causal
fraud is not attendant in this case. Quite the contrary, it is evident that respondent
orchestrated a situation rife for defrauding buyers of the advertised unit. Therefore, the
assailed Decision and Resolution must be reversed, the Contract to Sell between
petitioner and respondent be annulled, and petitioner be refunded all the amounts he
paid to respondent in respect of the purchase of the Unit.
Under Article 2232, in relation to Article 2229 of the Civil Code, "[i]n contracts and quasi-
contracts, the court may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner," "by way of example or
correction for the public good." By awarding exemplary damages to petitioner, this case
shall serve as an example and warning to banks to observe the requisite care and
diligence in all of their affairs.
Consistent with Article 2208 of the Civil Code, respondent is equally liable to petitioner
74
WHEREFORE, the Petition is GRANTED. The assailed November 15, 2012 Decision
and February 12, 2013 Resolution of the Court of Appeals in CA-G.R. CV No. 95369
are REVERSEDand SET ASIDE.
The Contract to Sell entered into by petitioner Joseph Harry Walter Poole-Blunden and
respondent Union Bank of the Philippines is declared null and void. Respondent is
ordered to pay petitioner the amount of ₱3,257,142.49 to refund the amounts petitioner
has paid to purchase Unit 2C of T-Tower Condominium located at 5040 P. Burgos corner
Calderon Streets, Makati City. This refund shall earn legal interest at twelve percent
(12%) per annum from the date of the filing of petitioner's Complaint for Rescission of
Contract and Damages up to June 30, 2013; and six percent (6%) per annum, reckoned
from July 1, 2013 until fully paid.
SO ORDERED.
SECOND DIVISION
DECISION
TINGA, J.:
SO ORDERED.4
Petitioner later discovered that respondent Buriol owned only four (4)
hectares, and with one more hectare covered by lease, only three (3)
hectares were actually delivered to petitioner. Thus, petitioner instituted on
April 3, 1989 a complaint for Annulment of Lease with Recovery of Possession
with Injunction and Damages against respondents and Flavia Turatello before
the RTC. The complaint alleged that with evident bad faith and malice,
respondent Buriol sold to petitioner five (5) hectares of land when respondent
Buriol knew for a fact that he owned only four (4) hectares and managed to
lease one more hectare to Flavia Turatello and respondents Tiziana Turatello
and Paola Sani. The complaint sought the issuance of a restraining order and
a writ of preliminary injunction to prevent Flavia Turatello and respondents
Turatello and Sani from introducing improvements on the property, the
annulment of the lease agreement between respondents, and the restoration
of the amount paid by petitioner in excess of the value of the property sold to
him. Except for Flavia Turatello, respondents filed separate answers raising
similar defenses of lack of cause of action and lack of jurisdiction over the
action for recovery of possession. Respondents Turatello and Sani also prayed
for the award of damages and attorney's fees.7
After trial on the merits, the trial court rendered judgment on May 27, 1992,
dismissing both petitioner's complaint and respondents' counterclaim for
damages. Petitioner and respondents Turatello and Sani separately appealed
the RTC Decision to the Court of Appeals, which affirmed the dismissal of
petitioner's complaint and awarded respondents Turatello and Sani damages
and attorney's fees. The dispositive portion of the Court of
Appeals Decision reads:
SO ORDERED.8
Petitioner brought to this Court the instant petition after the denial of its
motion for reconsideration of the Court of Appeal Decision. The instant
petition imputes the following errors to the Court of Appeals.
I. IN DEFENDING AGAPITO BURIOL'S GOOD FAITH AND IN STATING THAT
ASSUMING THAT HE (BURIOL) WAS IN BAD FAITH PETITIONER WAS SOLELY
RESPONSIBLE FOR ITS INEXCUSABLE CREDULOUSNESS.
II. IN ASSERTING THAT ARTICLES 1542 AND 1539 OF THE NEW CIVIL CODE
ARE, RESPECTIVELY, APPLICABLE AND INAPPLICABLE IN THE CASE AT BAR.
Essentially, only two main issues confront this Court, namely: (i) whether or
not petitioner is entitled to the delivery of the entire five hectares or its
equivalent, and (ii) whether or not damages may be awarded to either party.
Art. 1539. The obligation to deliver the thing sold includes that of placing in
the control of the vendee all that is mentioned in the contract, in conformity
with the following rules:
If the sale of real estate should be made with a statement of its area, at the
rate of a certain price for a unit of measure or number, the vendor shall be
obliged to deliver to the vendee, if the latter should demand it, all that may
have been stated in the contract; but, should this be not possible, the vendee
may choose between a proportional reduction of the price and the rescission
of the contract, provided that, in the latter case, the lack in the area be not
less than one-tenth of that stated.
....
Art. 1542. In the sale of real estate, made for a lump sum and not at the rate
of a certain sum for a unit of measure or number, there shall be no increase
or decrease of the price, although there be a greater or lesser area or number
than that stated in the contract.
The same rule shall be applied when two or more immovables are sold for a
single price; but if, besides mentioning the boundaries, which is indispensable
in every conveyance of real estate, its area or number should be designated
in the contract, the vendor shall be bound to deliver all that is included within
said boundaries, even when it exceeds the area or number specified in the
contract; and, should he not be able to do so, he shall suffer a reduction in
the price, in proportion to what is lacking in the area or number, unless the
contract is rescinded because the vendee does not accede to the failure to
deliver what has been stipulated.
Article 1539 governs a sale of immovable by the unit, that is, at a stated rate
per unit area. In a unit price contract, the statement of area of immovable is
not conclusive and the price may be reduced or increased depending on the
area actually delivered. If the vendor delivers less than the area agreed upon,
the vendee may oblige the vendor to deliver all that may be stated in the
contract or demand for the proportionate reduction of the purchase price if
delivery is not possible. If the vendor delivers more than the area stated in
the contract, the vendee has the option to accept only the amount agreed
upon or to accept the whole area, provided he pays for the additional area at
the contract rate.10
In some instances, a sale of an immovable may be made for a lump sum and
not at a rate per unit. The parties agree on a stated 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.
In the case where the area of the immovable is stated in the contract based
on an estimate, the actual area delivered may not measure up exactly with
the area stated in the contract. According to Article 1542 11 of the Civil Code,
in the sale of real estate, made for a lump sum and not at the rate of a
certain sum for a unit of measure or number, there shall be no increase or
decrease of the price although there be a greater or lesser area or number
than that stated in the contract. However, the discrepancy must not be
substantial. A vendee of land, when sold in gross or with the description
"more or less" with reference to its area, 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.12
Where both the area and the boundaries of the immovable are declared, the
area covered within the boundaries of the immovable prevails over the stated
area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area,
calculated with more or less certainty, mentioned in its description, but the
boundaries therein laid down, as enclosing the land and indicating its limits.
In a contract of sale of land in a mass, it is well established that the specific
boundaries stated in the contract must control over any statement with
respect to the area contained within its boundaries. It is not of vital
consequence that a deed or contract of sale of land should disclose the area
with mathematical accuracy. It is sufficient if its extent is objectively indicated
with sufficient precision to enable one to identify it. An error as to the
superficial area is immaterial.13 Thus, the obligation of the vendor is to deliver
everything within the boundaries, inasmuch as it is the entirety thereof that
distinguishes the determinate object.14
As correctly noted by the trial court and the Court of Appeals, the sale
between petitioner and respondent Buriol involving the latter's property is one
made for a lump sum. The Deed of Absolute Sale shows that the parties
agreed on the purchase price on a predetermined area of five hectares within
the specified boundaries and not based on a particular rate per area. In
accordance with Article 1542, there shall be no reduction in the purchase
price even if the area delivered to petitioner is less than that stated in the
contract. In the instant case, the area within the boundaries as stated in the
contract shall control over the area agreed upon in the contract.
SO ORDERED.
EN BANC
VILLAMOR, J.:
A motion for a new trial having been denied, this case was
brought up to this court through the proper bill of
exceptions.
chanroblesvirtualawlibrary chanrobles virtual law library
That the defendant knew that the area of the second parcel
was only about 70 hectares is shown by the fact that she
received the document Exhibit 4 before the execution of the
contract Exhibit A, as also Exhibit E-3 on September 30,
1920; which is the notification of the day for the trial of the
application for registratin of said parcel, wherein it appears
that it had an area of 60 hectares more or less, and by the
fact that she received from the plaintiff in the month of June
1924 the copy of the plans of the two parcels, wherein
appear their respective areas; and yet, in spite of all this,
she did not complain of the difference in the area of said
second parcel until the year 1926. Moreover, the record
contains several of the defendant's letters to the plaintiff in
the years 1921 to 1925, in which said defendant
acknowledges her debt, and confining herself to petitioning
for extentions of time within which to make payment for the
reasons given therein. But in none of these letters is there
any allusion to such lack of area, nor did she complain to
the plaintiff of the supposed deceit of which she believes she
is a victim. All of which, in our opinion, shows that no such
deceit was practised, as the trial court rightly found. chanroblesvirtualawlibrary chanrobles virtual law library
As to the alleged error to the effect that the trial court failed
to order the reduction from the price due on the second
parcel as stated in the contract of sale Exhibit A, the
proportional price of the area lacking, we are of the opinion
that said error has no legal ground. chanroblesvirtualawlibrary chanrobles virtual law library