In Dasmariñas T. Arcaina and Magnani T. Banta v. Noemi L. Ingram, the Supreme Court clarified the application of Article 1542 of the Civil Code concerning lump sum sales of real estate. The Court ruled that while a vendor is generally obligated to deliver all land within the boundaries stated in the contract, this obligation applies only when the difference between the actual area and the estimated area is reasonable. In cases where the discrepancy is substantial, the vendee is entitled only to the area stated in the contract. This decision offers clarity on the rights and obligations of both buyers and sellers in real estate transactions, particularly when discrepancies in land area arise after the sale.

Navigating Land Sales: When ‘More or Less’ Means Just That

This case revolves around a dispute over the sale of a parcel of land located in Salvacion, Sto. Domingo, Albay. Arcaina, the owner of Lot No. 3230, through her attorney-in-fact Banta, entered into a contract with Ingram for the sale of the property. The deeds of sale described the property as having an area of approximately 6,200 square meters. After the sale, Ingram discovered that the actual area of the lot was closer to 12,000 square meters. This discrepancy led to a legal battle over who owned the additional 5,800 square meters.

The Municipal Circuit Trial Court (MCTC) initially dismissed Ingram’s claim, arguing that she failed to prove she paid for the surplus area, citing Article 1540 of the Civil Code. However, the Regional Trial Court (RTC) reversed this decision, declaring Ingram the owner of the entire lot based on Article 1542, which covers lump sum sales. The Court of Appeals (CA) affirmed the RTC’s ruling but deleted the award of attorney’s fees and costs of suit. This brought the case to the Supreme Court, where the central issue was whether the sale was based on a lump sum or per-square-meter basis, and how to address the significant discrepancy in land area.

The Supreme Court addressed the critical question of whether the sale of Lot No. 3230 was a lump sum contract or a unit price contract. A unit price contract determines the price by a stated rate per unit area, whereas a lump sum contract states a full purchase price for the property. The Court noted that the deeds of sale indicated a predetermined price of P1,860,000.00 for the property without any indication of a per-square-meter basis. Therefore, the Court concluded that the sale was indeed a lump sum contract, bringing Article 1542 of the Civil Code into play.

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 less area or number than that stated in the contract.

Article 1542 stipulates that in a lump sum sale, the price remains unchanged regardless of area discrepancies. However, the provision further states that if boundaries are mentioned in addition to the area, the vendor must deliver everything within those boundaries. The Supreme Court, however, clarified that this rule is not absolute and has exceptions.

Building on this principle, the Supreme Court referred to its decision in Del Prado v. Spouses Caballero, which addressed a similar factual scenario. In Del Prado, the Court clarified that the phrase “more or less” in designating quantity covers only a reasonable excess or deficiency. Quoting Black’s Law Dictionary, the Court emphasized that “more or less” is intended to cover slight or unimportant inaccuracies. In Del Prado, a discrepancy of 10,475 square meters was deemed too substantial to be considered a slight difference.

Applying this rationale to the Arcaina case, the Supreme Court found that the difference of 5,800 square meters was too substantial to be considered reasonable. To compel the vendors to deliver almost twice the area stated in the deeds of sale without a corresponding increase in price would be unfair. The Court emphasized that Article 1542 does not envision such a situation. As the Court explained in Asiain v. Jalandoni, the phrase “more or less” covers only a reasonable excess or deficiency, reinforcing that a vendee does not automatically assume all risks of quantity in the land.

Moreover, the Court noted that at the time of the sale, neither party was aware of the actual area within the boundaries of the property. Both relied on the tax declaration, which stated the area as “more or less 6,200 sq. m.” Therefore, the meeting of the minds was limited to a property of approximately 6,200 square meters. The deeds of sale merely documented what was already agreed upon. The Court quoted with approval the MCTC’s observation that the deeds of sale were clear and unambiguous regarding the area sold, and that extrinsic aids were unnecessary to ascertain the parties’ intent.

The Supreme Court ruled that Ingram was entitled only to 6,200 square meters of the property. The Court ordered Ingram to pay the remaining balance of P145,000.00, with interest, as the petitioners had already fulfilled their obligation by delivering the agreed-upon area. This decision reinforces the principle that contracts are the law between the parties and must be complied with in good faith.

FAQs

What was the key issue in this case?	The key issue was whether the sale of land was for a lump sum or per square meter, and how to address the discrepancy between the stated and actual land area.
What is a lump sum contract in real estate?	A lump sum contract is where a fixed price is agreed upon for a property, irrespective of its exact area. The total price remains the same, regardless of minor differences in size.
What is a unit price contract?	A unit price contract determines the final price based on a fixed rate per unit of area, such as per square meter. The total price adjusts depending on the actual area.
What does “more or less” mean in property sales?	“More or less” indicates that the stated area is approximate. It covers only reasonable excess or deficiency, not substantial discrepancies.
What is the significance of Article 1542 of the Civil Code?	Article 1542 applies to lump sum sales. It states that if boundaries are specified, the vendor must deliver everything within those boundaries, but this is subject to reasonable discrepancies.
How did the Supreme Court apply the “reasonable excess” rule?	The Court determined that a difference of 5,800 square meters was too substantial to be considered a reasonable excess. Therefore, the buyer was not entitled to the additional area.
What evidence did the Court consider in making its decision?	The Court considered the deeds of sale, the tax declaration, and the intent of the parties at the time of the sale. They also relied on prior case law to interpret the meaning of “more or less.”
What are the practical implications for property buyers and sellers?	Buyers and sellers must be clear about whether a sale is for a lump sum or per unit. They should verify land areas and understand that “more or less” has limitations, warranting an updated survey.

In conclusion, the Supreme Court’s decision in Arcaina v. Ingram provides important guidelines for interpreting contracts of sale involving real estate. The ruling underscores the significance of clearly defining the terms of the sale and understanding the limitations of phrases like “more or less” in describing property areas. Ultimately, this case serves as a reminder for parties to exercise due diligence and seek clarity in their agreements to avoid future disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Dasmariñas T. Arcaina and Magnani T. Banta, vs. Noemi L. Ingram, G.R. No. 196444, February 15, 2017