Rudolf Lietz, Inc. v CA G.R. No. 122463 Doctrine Syllabus: Real Estate Sale; Price per unit; Delivery of the units sold is imperative. Non-delivery results to reduction of purchase price. Delivery of units more than agreed upon allows the buyer to (1) accept only the amount originally agreed, or (2) pay for the additional units delivered. Same; Lump sum sale; No reduction in the purchase price is allowed, even if what was delivered is not what was specifically agreed upon. PROVIDED, that there be no substantial discrepancy between the estimate and what was actually delivered BUT MERE reasonable excess or deficiency. Moreover, the boundaries are what make lands determinate. Thus, boundaries are controlling even if there was a specification as to unit area. The obligation, then, is to deliver what is within the boundaries.
Simple Story: This is the story of someone selling ‘five’ (5) hectares of his land to a buyer, based only on their estimation as to the actual area of the subject land. The deed of absolute sale mentioned that the subject land consists of, more or less, five (5) hectares, and it also included therein the boundaries of said land. Incidentally, one (1) hectare of this land was leased to three Italians, who were then planning to introduce improvements thereon. The buyer soon discovered that the seller actually owned only four (4) hectares of land, and with one hectare being leased, the buyer can only obtain three (3) hectares. Buyer then sues seller and the Italian lessees, claiming that according to Art. 1539, buyer is entitled to a reduction of the purchase price – the principle on unit price sales when the subject land cannot be delivered as stipulated in the contract. The Court disagreed, ruling that the sale was made for a lump sum because the sale was for the entire five (5) hectares, as estimated by the parties. Thus, absent any stipulation as to price per unit, this cannot be a unit price sale. Hence, there can be no reduction to the purchase price according to Art. 1542. The only condition, though, is that in lump sum sales, the discrepancy between the estimation and the actual area must not be substantial – the phrase, “more or less” or similar words covers only a reasonable excess or deficiency that must be adjudged according to the facts of any given case. Additionally, if and even when the area of the land is specified along with its boundaries (as in this case), such stipulated area is not controlling. It is the boundaries which define the limits of a land and which makes it determinate. As such, in a mass or lump sum sale of real estate, it is not vital to be mathematically accurate as to the area. It is sufficient if it can be identified among other lands. The obligation, thus, is to deliver what is within the boundaries – not the area allegedly sold.
The Actual Case:
Petitioner-buyer Rudolf Lietz, Inc. wanted to buy the lot of Respondent-Seller Agapito Buriol, the year was 1987. The Deed of Sale mentioned that it was for 5 hectares, more or less, including therein the boundaries of said land and for P30,000.
The land is at Capsalay Island, San Vicente, Palawan. One (1) hectare of this land was leased to the other Italian-respondents, Turatello and Sani, in 1986. The boundaries mentioned are mere descriptions: such as in the North, Sec. 01-017; the remaining property of the seller in the East; seashore in the South; and Sec. 01-018 in its West. Petitioner-buyer soon found out about the lease, and demanded that the purchase price be reduced. In 1989, petitioner-buyer thus filed for an annulment of lease with recovery of possession with injunction and damages, seeking to annul the lease of the Italians, prevent them from introducing improvements on the land, and for respondent-seller to restore the excess payment. RTC dismissed petitioner’s complaint. The CA upheld the trial court, ruling that the applicable rule is Art. 1542, which means that the sale was for a lump sum and that the purchase price may not be reduced. On appeal to the SC, petitioner raised these issues: 1. WoN Art. 1542 on lump sum sales, or Art. 1539 on unit price sales, is applicable. 2. WoN the boundaries are intelligible enough to be more controlling than the area stipulated Ruling: 1. The Court upheld the CA ruling that Art. 1542 governs. Ratio: because the Deed of Absolute Sale evinces a lump sum sale (i.e., five (5) hectares of land, more or less, for P30,000). There is no stipulation as to price per unit, thus, it cannot be a unit price sale. 2. The Court also upheld the boundaries mentioned. Ratio: because (1) it was proved that, at the ocular inspection before the sale, respondent-seller physically motioned and pointed to the subject land for petitioner-buyer to confirm and see; (2) the fact that petitioner-buyer assented to the deed of absolute sale, confirming thereby the correctness and intelligibility of the boundary description. Doctrinal Value: 1. The discrepancy between the estimation of the land area and what it actually consists of must not be substantial. But only reasonable excess or deficiency may be allowed depending on the factual milieu of each case. 2. In case a lump sum sale included not only the boundaries but also its area, the boundary description trumps over the area stipulated because boundaries makes land a determinate object. The obligation is to deliver what is within said boundaries, even if the stipulated area sold turns out to be more than the area within said boundaries. 3. The intelligibility of boundaries, so as to defeat its primacy over stipulated area size, cannot be questioned when the party claiming it is estopped by either having personal knowledge of the land estimated or by assenting to the deed of sale containing such boundary description.
