Asiain vs. Jalandoni

A contract for the sale of realty for a lump sum, with a statement of area qualified by “more or less,” does not insulate the vendor from rescission where the actual area falls grossly short of the stated quantity and the shortfall results from a mutual mistake that goes to the essence of the contract. The phrase “more or less” covers only a reasonable excess or deficiency; a material deficiency entitles the vendee, at his option, either to a proportionate reduction of the price or to annulment of the contract.

Luis Asiain owned Hacienda “Maria” in La Carlota, Occidental Negros, comprising about 106 hectares. Benjamin Jalandoni owned the adjoining hacienda. In May 1920, Asiain offered to sell a portion of Hacienda Maria to Jalandoni for P55,000, indicating a tract of land that Asiain estimated to contain between 25 and 30 hectares and to yield not less than 2,000 piculs of sugar. Jalandoni repeatedly voiced doubts about the area and the crop. To allay those doubts, Asiain wrote a letter on May 26, 1920, “assuring” a crop of 2,000 piculs and offering to sell on that basis, even undertaking to make up any shortfall in sugar. The parties later met in Iloilo in July 1920, where they prepared and signed a memorandum-agreement describing the land as containing “25 hectares more or less” with an estimated crop of 2,000 piculs, the total price being P55,000. A formal promise-to-sell instrument was executed on July 12, 1920, incorporating the memorandum by reference. Jalandoni paid P30,000 of the price and took possession. After milling, the cane produced only 800 piculs and 23 cates of centrifugal sugar. A survey conducted at Jalandoni’s behest revealed the parcel’s area to be only a little over 18 hectares, not 25. Asiain sued to recover the unpaid balance of P25,000; Jalandoni counterclaimed for annulment and damages.

• The Offer and the Assurances: In May 1920, Asiain orally offered to sell a portion of Hacienda Maria to Jalandoni for P55,000, stating the tract contained between 25 and 30 hectares and would yield not less than 2,000 piculs of sugar. Jalandoni, skeptical of both area and crop, received a letter from Asiain dated May 26, 1920, in which Asiain “assured” the crop at 2,000 piculs, wagered on the area, and proposed to sell on the basis of that output, undertaking to make up any shortfall in sugar while retaining any excess.

• The Memorandum-Agreement: In July 1920, Asiain and Jalandoni met in Iloilo and executed a handwritten memorandum stating: “Purchase of land … containing 25 hectares more or less … with its corresponding crop, estimated at 2,000 piculs, the total value of which is 55 thousand.” The price structure was P30,000 upon signing and P25,000 within one year at 10% interest. The vendor was obliged to care for the plantation until the crop was finished, with any excess over 2,000 piculs belonging to Asiain.

• The Formal Promise to Sell: On July 12, 1920, the parties executed a notarized document by which Asiain promised to sell, and Jalandoni promised to buy, the parcel “upon certain conditions specified in a memorandum … in the hands of Attorneys Padilla & Treñas.” The instrument provided for a P15,000 penalty if the vendor withdrew, and forfeiture of amounts already paid if the purchaser withdrew.

• Performance and Discovery of Deficiency: Jalandoni took possession, paid P30,000, and had the sugar cane milled. The output was only 800 piculs and 23 cates of centrifugal sugar. A survey obtained by Jalandoni using Asiain’s certificate of title showed that the parcel contained only a little over 18 hectares—not 25—as contrasted with the “25 hectares more or less” stated in the memorandum.

• Lower Court’s Findings: The trial court found that throughout the negotiations the parties had a difference of opinion about the area and crop; that Asiain’s representations had not been made fraudulently, but that both parties were mistaken as to the essential facts regarding the extent and productive capacity of the land. It concluded that the contract should be rescinded due to mutual mistake, ordering restitution and dismissing Asiain’s claim for the balance and Jalandoni’s claim for damages.

• Validity of Lump-Sum Sale: Asiain maintained that the contract was for the sale of a specific tract of land for a lump sum, not by unit measure, and that under Article 1471 of the Civil Code no increase or decrease of the price could be demanded even if the area turned out to be more or less than stated.

• Reliance on Irureta Goyena vs. Tambunting: Asiain argued that the ruling in Irureta Goyena vs. Tambunting (1 Phil. 490)—that an agreement to purchase a specific lot at a fixed price is enforceable regardless of an area shortfall—governed the case and precluded annulment.

• “More or Less” as Assumption of Risk: Asiain contended that the phrase “more or less” qualified the stated area and signified that the parties intended a contract of hazard, in which the purchaser assumed the risk of any deficiency without recourse.

• Gross Deficiency and Mutual Mistake: Jalandoni countered that the deficiency was not minor but gross—the actual area was only about 18 hectares against the stated 25, and the crop fell far short of the 2,000 piculs assured. He argued that both parties acted under a mutual mistake of fact that went to the essence of the contract and that the contract would not have been made had the truth been known.

• Proper Construction of Article 1471: Jalandoni insisted that under the second paragraph of Article 1471, where a sale for a lump sum designates the area and the vendor cannot deliver all that was understood to be within the boundaries, the vendee has the option either to demand a proportionate reduction of the price or to seek rescission.

• “More or Less” Does Not Cover Gross Discrepancy: Jalandoni maintained that the phrase “more or less” covers only reasonable or inconsiderable variations, not a shortfall of nearly one-third of the represented area and more than half of the represented crop.

• Rescission for Deficiency: Whether a vendee of real property sold for a lump sum, with the area stated as “25 hectares more or less,” may obtain rescission of the contract on the ground of mutual mistake when the actual area and crop yield are grossly deficient relative to the stated quantities.

• Applicability of Irureta Goyena vs. Tambunting: Whether the precedent in Irureta Goyena vs. Tambunting barred rescission under the circumstances of the case.

• Effect of the Phrase “More or Less”: Whether the phrase “more or less” in the statement of quantity operated to make the contract one of hazard, thereby precluding any relief for deficiency.

• Rescission for Deficiency: The sale was not a contract of hazard; it was a sale in gross in which there was a mutual mistake as to the quantity of land and the amount of the standing crop. The mistake was so material that, without it, the agreement would not have been made. Under Article 1471 of the Civil Code, when a lump-sum sale designates the area and the vendor cannot deliver what was contemplated within the boundaries, the vendee has the option either to reduce the price proportionately or to annul the contract. Because the deficiency was gross—approximately 18 hectares instead of 25, and 800 piculs instead of 2,000—the vendee was entitled to elect rescission.

• Applicability of Irureta Goyena vs. Tambunting: The precedent was distinguished. In Irureta Goyena, the contract concerned a specific lot identified by street address, with no statement of superficial area and no indication that either party was misled. There, the object was a determinate thing sold for a fixed price, and no issue of mutual mistake arose. Here, the agreement expressly stated the area and the estimated crop, both of which were substantially incorrect, and the record demonstrated that the parties were mutually mistaken.

• Effect of the Phrase “More or Less”: The phrase “more or less” or similar terms added to a statement of quantity covers only reasonable or inconsiderable differences; it does not insulate a contract from rescission when the deficiency is gross. Such words relieve the vendor from exactness, but not from a shortfall of the magnitude present in this case. Mutual mistake as to quantity, where the variance is material, remains a ground for equitable relief.

• Doctrine on “More or Less” in Sales of Realty — The phrase “more or less,” when appended to a statement of area in a contract of sale, is understood to cover only a reasonable or slight excess or deficiency, not a gross one. A gross disparity between the stated and actual area may entitle the injured party to rescission or a proportionate reduction of the price, provided the mistake is mutual and goes to the essence of the contract.

• Rescission for Mutual Mistake under Article 1471, Spanish Civil Code — Where real property is sold for a lump sum but the contract designates the area, and the vendor cannot deliver all that was understood to be comprised within the stated boundaries, the vendee has the option to demand a proportional reduction of the price or to seek annulment of the contract. The rule applies even if the sale is in gross and even if the discrepancy was not fraudulently induced, so long as the mistake was mutual and material.

• Distinction between Contract of Hazard and Ordinary Sale in Gross — A contract of hazard exists where the parties intend to risk the contingency of quantity, whatever the variance. In contrast, an ordinary sale in gross with an estimated quantity does not allocate the entire risk of a gross discrepancy to the purchaser; relief may be granted if the variance is unreasonable and the mistake bilateral.

• “A vendee of 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.”

• “Mutual mistake of the contracting parties to sale in regard to the subject-matter of the sale which is so material as to go to the essence of the contract, is a ground for relief and rescission.”

• “The mistake with reference to the subject-matter of the contract is such that, at the option of the purchaser, it is rescindable. Without such mistake the agreement would not have been made and since this is true, the agreement is inoperative and void.”

• “This was not a contract of hazard. It was a sale in gross in which there was a mutual mistake as to the quantity of land sold and as to the amount of the standing crop.”

• Irureta Goyena vs. Tambunting (1902), 1 Phil. 490 — Distinguished. The case involved a sale of a specific lot identified by location, with no mention of area and no evidence of mutual mistake. The present case, by contrast, included an express area representation and a demonstrated bilateral mistake, justifying rescission.

• Belknap vs. Sealey (1856), 14 N.Y. 143; 67 Am. Dec. 120 — Followed as persuasive authority. That case held that equity will rescind a contract for the sale of land for a lump sum where a mutual mistake as to quantity is material, and that the phrase “more or less” does not bar relief. The decision’s exhaustive review of American and English jurisprudence was adopted to support the principle that gross deficiency entitles the purchaser to rescind.

• Article 1471, Spanish Civil Code — This article governs the sale of real property for a lump sum and provides that where both boundaries and area are stated, the vendor must deliver all the land within those boundaries; if unable to do so, the vendee may demand a proportionate reduction of the price or rescind. The Court applied the second paragraph of this article, reading it to give the vendee an option when the area within the boundaries is substantially less than represented.

• Articles 1265, 1266, and 1269, Spanish Civil Code — These articles, concerning consent vitiated by error and deceit, were noted as relevant background but not the primary basis for the decision, which rested on the specific provisions of Article 1471 and the equitable doctrine of mutual mistake.

Johnson, Avanceña, Villamor, and Romualdez, JJ., concurred. Johns, J., concurred in the result.

• Street, J., dissented. The dissenting opinion is not reproduced in the source material; its specific grounds are therefore not available for summary.