Short answer. Either, but only because the sale was at a rate per unit of measure. Article 1539 gives the buyer a proportional reduction of the price or rescission of the contract, with rescission available where the lack in the area is not less than one tenth of that stated.
What the law says
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
Civil Code, Article 1539 — Sale of Realty by Unit of Measure. Read the full provision →
First demand what the contract says
Where real estate is sold with a statement of its area at the rate of a certain price for a unit of measure, the seller must deliver everything stated in the contract if the buyer demands it. Only where that is not possible does the choice arise, and then 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. So the sequence matters: ask for the full area first, and let the seller's inability to produce it be established before you elect a remedy.
The one-tenth threshold, and the way around it
Price reduction is always available for any shortfall; rescission needs the deficiency to reach a tenth of the stated area. The same scheme applies where the area is correct but part of the land is not of the quality specified, and there rescission is at the buyer's will only when the inferior value exceeds a tenth of the price agreed. There is one further route out. Article 1539 adds that if the buyer would not have bought the immovable at all had he known of its smaller area or inferior quality, he may rescind, whatever the arithmetic shows.
None of this applies to a lump-sum sale
Check how the price was expressed before anything else. Article 1542 provides that in a sale of real estate made for a lump sum, and not at the rate of a certain sum for a unit of measure, there is no increase or decrease of the price although the area turns out greater or less than stated. A deed that recites a total price and then mentions the area in passing is a very different bargain from one that multiplies a rate by square metres, and buyers regularly assume they have the second when the document gives them the first.
Six months, counted from delivery
This is the detail that decides most of these disputes. Article 1543 provides that the actions arising from articles 1539 and 1542 prescribe in six months, counted from the day of delivery. That is a short window and it runs from delivery, not from the day the discrepancy was discovered, so a relocation survey commissioned a year after you took possession may arrive too late to found the claim. If you have any reason to doubt the area, have the property surveyed against the technical description immediately and date everything.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Cebu Windland Development Corporation vs. Ong Siao Hua, G.R. No. 173215, May 21, 2009 — read the decision on LawPhil →
- Rudolf Lietz, Inc., vs. The Court of Appeals, et al, G.R. No. 122463, December 19, 2005 — read the decision on LawPhil →
- Spouses Lucia A. Orozco and Cresente R. Orozco (deceased), substituted by his heirs, namely:, G.R. No. 222616, April 3, 2019 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1539 — Sale of Realty by Unit of Measure
- Civil Code, Article 1540 — Excess Area in a Unit-Price Sale
- Civil Code, Article 1542 — Sale of Realty for a Lump Sum (Cuerpo Cierto)
- Civil Code, Article 1543 — Prescription of Area Actions