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Sales Notes

1. The document discusses conditions and warranties in contracts of sale under Philippine law. It defines conditions as uncertain events that must occur for the contractual obligation to attach, while warranties are representations made by the seller to induce the buyer to purchase. 2. There are two types of warranties - express warranties, which are any affirmations or promises made by the seller, and implied warranties, which are imposed by law, such as warranties as to the seller's title and against hidden defects. 3. Implied warranties do not apply in "as is" sales, sales of secondhand goods unless certified otherwise, or sales made by authorities such as sheriffs or auctioneers.

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0% found this document useful (0 votes)
58 views13 pages

Sales Notes

1. The document discusses conditions and warranties in contracts of sale under Philippine law. It defines conditions as uncertain events that must occur for the contractual obligation to attach, while warranties are representations made by the seller to induce the buyer to purchase. 2. There are two types of warranties - express warranties, which are any affirmations or promises made by the seller, and implied warranties, which are imposed by law, such as warranties as to the seller's title and against hidden defects. 3. Implied warranties do not apply in "as is" sales, sales of secondhand goods unless certified otherwise, or sales made by authorities such as sheriffs or auctioneers.

Uploaded by

Aze
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Sales

Judge Eduardo Bellosillo


2 UNITS
Title V, Chapter 3, Section 3
Conditions and Warranties
Ex. If seller promises or warrants the shipment
Art. 1545. Where the obligation of either party to a
or arrival of the goods, the non-arrival
contract of sale is subject to any condition which is
constitutes breach of contract.
not performed, such party may refuse to proceed
with the contract or he may waive performance of the
Presence of Conditions and Warranties
condition. If the other party has promised that the
condition should happen or be performed, such first  conditions may be waived
mentioned party may also treat the nonperformance
 conditions may be considered as warranties
of the condition as a breach of warranty.
Recoupment refers to the reduction or extinction of
Where the ownership in the thing has not passed,
the price of the same item, unit, transaction, or
the buyer may treat the fulfillment by the seller of his
contract upon which a plaintiff’s claim is founded.
obligation to deliver the same as described and as
warranted expressly or by implication in the contract
of sale as a condition of the obligation of the buyer to Art. 1546. Any affirmation of fact or any promise by
perform his promise to accept and pay for the thing. seller relating to the thing is an express warranty if
the natural tendency of such affirmation or promise is
to induce the buyer to purchase the same, and if the
Condition means an uncertain event or contingency
buyer purchase the thing relying thereon. No
on the happening of which the obligation of the
affirmation of the value of the thing, nor any
contract depends. In such case, the obligation of the
statement purporting to be a statement of the seller's
contract does not attach until the condition is
opinion only, shall be construed as a warranty,
performed.
unless the seller made such affirmation or statement
as an expert and it was relied upon by the buyer.
Effect of Non-Fulfillment of Condition

1. Conditional. If the obligation of either party is Art. 1547. In a contract of sale, unless a contrary
subject to any condition and such condition is intention appears, there is:
not fulfilled, such party may:
(1) An implied warranty on the part of the seller that
a) Refuse to proceed with the contract he has a right to sell the thing at the time when
the ownership is to pass, and that the buyer shall
b) Proceed with contract, but waive the from that time have and enjoy the legal and
performance as a condition peaceful possession of the thing;

Ex. Buyer entered into a contract with seller for (2) An implied warranty that the thing shall be free
the purchase of certain machinery wherein from any hidden faults or defects, or any charge
the arrival of goods from Japan was made or encumbrance not declared or known to the
a condition. Because seller did not buyer.
promised its arrival, he would not be guilty
of breach of contract if said goods do not This Article shall not, however, be held to render
arrive. liable a sheriff, auctioneer, mortgagee, pledgee, or
other person professing to sell by virtue of authority
2. Absolute. If the condition is in the nature of a in fact or law, for the sale of a thing in which a third
promise that it should happen, the non- person has a legal or equitable interest.
performance of such condition may be treated
by the other party as a breach of warranty
Warranty is any representation made by the seller of  If purchaser has ample opportunity to
the thing with respect to its quality, character or investigate the thing before purchase, and the
ownership, by which he induces the buyer to seller did not prevent such investigation
purchase the same relying on said representation.
 If the seller did not deliberately violated the
NOTE: Warranty is part of the contract of sale truth when he stated his belief
therefore, immaterial whether the seller didn’t know
that it was false or true, to make him liable for his Implied Warranties in Sale
warrant
 Implied warranty as to seller’s title. That the
Two Kinds of Warranty seller guarantees that he has a right to sell the
thing sold and to transfer ownership into the
1) Express Warranty is any affirmation of fact or buyer who shall not disturbed in his legal and
any promise by the seller relating to the thing, peaceful possession thereof (Art. 1548).
the natural tendency of which is to induce the
buyer to purchase the thing. It may take the  Implied warranty against hidden defects of
form of an affirmation, promise, or unknown encumbrances. That the seller
representation. guarantees that the thing sold is free from any
hidden faults or defects or any charge or
NOTE: Mere expression of opinion, no matter encumbrance not declared or known to buyer
how positively asserted, does not (Art. 1561).
import warranty unless the seller is an
expert and said opinion was relied  Implied warranty as to fitness or
upon by the buyer. merchantibility. That the seller guarantees
that the thing sold is reasonably fit for the
NOTE: Dealer’s talk or sales talk is not an known particular purpose for which it was
express warranty, as it is allowed in acquired by the buyer, or where it was bought
law as a concession to human nature. by description, that it is of merchantible quality
This is in accordance with the maxim (Art. 1562).
simplex commendatio non-obligat
and the principle of caveat emptor When Implied Warranty is not applicable?
(let the buyer beware).
 “As is and where is” sale. That the vendor
2) Implied Warranty is reserved for cases where makes no warranty as to the quality or
the law attaches an obligation to the seller workable condition of the goods, and that the
which is not expressed in any words. vendee takes them in the conditions in which
that they are found and from the place where
NOTE: Actions based on implied warranties they ar located.
prescribe in 10yrs since these
obligations are imposed by law.  Sale of secondhand articles. But if the
Special provisions found in the vendore issues a certification that said
succeeding articles will naturally prevail. secondhand article was in A-1 condition,
constitutes as an express warranty.
When is there Warranty?
 Sale by virtue of authority in fact or law. It
 If the buyer is ignorant, there is warranty does not apply to a sheriff, auctioneer,
mortgagee, pledgee or other person who sells.
 If the buyer is expected to have an opinion and
the seller has no special opinion
Title V, Chapter 3, Section 3, Subsection 1
Warranty in case of Eviction
Elements of Eviction
Art. 1548. Eviction shall take place whenever by a
final judgment based on a right prior to the sale or an 1) There is final judgment
act imputable to the vendor, the vendee is deprived
of the whole or of a part of the thing purchased. 2) Buyer is deprived in whole or in part of the
thing sold
The vendor shall answer for the eviction even though
nothing has been said in the contract on the subject. 3) The deprivation was by virtue of a right prior to
the sale or an act imputable to the seller
The contracting parties, however, may increase,
diminish, or suppress this legal obligation of the 4) Seller was summoned in the suit for eviction at
vendor. the instance of the buyer

Eviction may be defined as the judicial process Types of Eviction


whereby the vendee is deprived of the whole or part a. Total Eviction when the vendee is deprived of
of the thing purchased by virtue of a final judgment the whole of the thing purchased
based on a right prior to the sale or an act imputable
to the vendor. b. Partial Eviction when:
Ex. Right of a third person prior the sale.  Vendee is deprived of part of the thing
S sells land to B. Subsequently, C files an purchased
action claiming that he was the owner
thereof. At the insatnce of B, S was  Vendee is deprived of some items that
summoned. Court declared that C has were jointly sold with other items
better right. B is evicted. Here, S is liable to
B for failure to comply with his warranty  If the immovable sold should be
against eviction. encumbered with any non-apparent
burden or servitude, not mentioned in the
Act imputable to the vendor. agreement, of such a nature that it must
Suppose S was the real owner but B did be presumed that vendee would not have
not register the land. S sold the same to C acquired it had he been aware thereof
who then registered the land in good faith.
Here, the right of C was posterior the sale. Referring to trespass in law
B can sue S for damages because of
breach of warranty against eviction. Mere trespass in fact does not give rise to the
application of the doctrine of eviction. There is a
NOTE: Warranty in case of eviction is a natural MERE ACT OF TRESPASS when the trespasser
element in the contract of sale hence, the seller claims no right whatever. The seller is not liable
answers for eviction even if the contract be silent on therefor. In such case, the buyer has a direct action
this point. against the trespasser.

NOTE: Seller’s liability is waivable as warranty is not The disturbance referred in the case of eviction is a
an essential element of contract of sale. However, disturbance in law which requires that a person fo
any stipulation exempting the seller from the to courts of justice claiming the thing sold, or part
obligation to answer for eviction shall be void if thereof, and giving reasons.
he acted in bad faith.
Plaintiff in Suit RATIONALE: Vendee could have easily
interrupt the running of the prescriptive
Generally, only the buyer in good faith may sue for
period by bringing the necessary action.
breach of warranty against eviction. If he knew of
possible dangers, then he assumed the risked of
eviction. Art. 1551. If the property is sold for nonpayment of
taxes due and not made known to the vendee before
Defendant in Suit the sale, the vendor is liable for eviction.
GR: Suit for the breach can be directed only
against the immediate seller, not the
sellers of the seller Art. 1552. The judgment debtor is also responsible
for eviction in judicial sales, unless it is otherwise
XPNs: (1) sellers had promised to warrant in favor decreed in the judgment.
of later buyers
NOTE: This article is based on the principle that a
(2) immediate seller has expressly person may not enrich himself at the expense of
assigned to the buyer his own right to sue another.
his own seller
Eviction in case of Judicial Sales
Art. 1549. The vendee need not appeal from the A purchaser in good faith at a judicial sale is entitled
decision in order that the vendor may become liable to recover the purchase money from the judgment
for eviction. debtor or officer if the funds are still in his hands.

Vendee’s right against the vendor is not lost because But if the judgment debtor has already assigned or
he did not appeal. However, the decision must be transferred the property to another before the levy on
final. execution, said purchaser can no longer acquire the
purchase money.

Art. 1550. When adverse possession had been NOTE: A buyer in execution sale is in bad faith when
commenced before the sale but the prescriptive he had prior knowledge of a third party claim filed
period is completed after the transfer, the vendor with the sheriff before the scheduled execution sale.
shall not be liable for eviction.

Art. 1553. Any stipulation exempting the vendor from


NOTE: This rule only applies if there was reasonable the obligation to answer for eviction shall be void, if
opportunity to interrupt the prescription. he acted in bad faith.

NOTE: This does not apply if the property sold is


land registered under the Torrens system because Effect of Stipulation Waiving Liability for Eviction
ownership of of lands under it are not subject to
 Seller was in good faith. The exemption is
prescription.
valid but without prejudice to Art. 1554
Effect of Prescription
 Seller was in bad faith. Seller cannot be
a) Completed before sale. When prescription exempt from warranty against eviction
has commenced to run against the vendor and
was already completed before the sale, the  Buyer was in bad faith. Buyer is not entitled
vendee can enforce warranty against eviction. to warranty against eviction nor right to recover
damages
b) Completed after sale. Even if the prescription
started before the sale but has reached the
limit prescribed by law after the sale, the
vendor is not liable for eviction.
What the Seller must give in case of Eviction
Art. 1554. If the vendee has renounced the right to
warranty in case of eviction, and eviction should take  V - value
place, the vendor shall only pay the value which the  I - income or fruits
thing sold had at the time of the eviction. Should the
 C - costs of suit
vendee have made the waiver with knowledge of the
risks of eviction and assumed its consequences, the  E - expenses of contract
vendor shall not be liable.  D - damages and interests and ornamental
expenses (must be in bad faith)
Two Kinds of Waiver of Eviction (by buyer)
NOTES: If the court did not order the
1. Waiver Consciente or when the waiver was buyer to deliver the income/fruits,
made without the knowledge of risk of eviction said buyer is entitled to them

Effect: vendor shall only pay the value Costs of suit doesn’t include
which the thing sold had at the time of transportation and other
eviction (solutio indebiti) incidental expenses

2. Waiver Intencionada or when the waiver was Interest here covers the interests
made with knowledge of risk of eviction on costs, expenses or damages

Effect: vendor is exempted from the Why is Rescission not a remedy in case of
obligation to answer for eviction, provided Total Eviction?
he did not act in bad faith
Law on sales does not make rescission a remedy in
NOTE: Presumption that waiver is one in consciente case the vendee is totally evicted from the thing sold,
thus, to say that it was one in intencionada, it must for he can no longer restore the subject matter of the
be clearly proved. sale to the vendor.

NOTE: In case of partial eviction, rescission may be


Art. 1555. When the warranty has been agreed upon or allowed with respect to the subject matter that
nothing has been stipulated on this point, in case remains.
eviction occurs, the vendee shall have the right to
demand of the vendor:
Art. 1556. Should the vendee lose, by reason of the
(1) The return of the value which the thing sold had at eviction, a part of the thing sold of such importance,
the time of the eviction, be it greater or less than in relation to the whole, that he would not have
the price of the sale; bought it without said part, he may demand the
rescission of the contract; but with the obligation to
(2) The income or fruits, if he has been ordered to return the thing without other encumbrances that
deliver them to the party who won the suit against those which it had when he acquired it.
him;
He may exercise this right of action, instead of
(3) The costs of the suit which caused the eviction, and, enforcing the vendor's liability for eviction.
in a proper case, those of the suit brought against
the vendor for the warranty; The same rule shall be observed when two or more
things have been jointly sold for a lump sum, or for a
(4) The expenses of the contract, if the vendee has paid
separate price for each of them, if it should clearly
them;
appear that the vendee would not have purchased
(5) The damages and interests, and ornamental one without the other.
expenses, if the sale was made in bad faith.
NOTE: Art. 1555 contemplates total eviction
Art. 1560. If the immovable sold should be
while Art. 1556 contemplates partial eviction.
encumbered with any non-apparent burden or
servitude, not mentioned in the agreement, of such a
Remedy in case of Partial Eviction
nature that it must be presumed that the vendee
a) enforcement of warranty would not have acquired it had he been aware
thereof, he may ask for the rescission of the contract,
NOTE: If the circumstances set forth in
unless he should prefer the appropriate indemnity.
par. 1 are not present, the only remedy is
Neither right can be exercised if the non-apparent
to enforce the warranty
burden or servitude is recorded in the Registry of
Property, unless there is an express warranty that
b) rescission
the thing is free from all burdens and encumbrances.
NOTE: If this remedy is chosen, there
should be no new encumbrances Within one year, to be computed from the execution
(eg. mortgage) of the deed, the vendee may bring the action for
rescission, or sue for damages.
This Rule is applicable when --
One year having elapsed, he may only bring an
 When vendee is deprived of a part of a thing action for damages within an equal period, to be
sold, and such part is of such importance to the counted from the date on which he discovered the
whole that he would not have bought the thing burden or servitude.
without said part

 When two or more things are jointly sold NOTE: This Article is applicable whether the sale be
whether for a lump sum or for a separate price in a public or private instrument, or made orally.
for each, and the vendee would not have
purchased one without the other Servitude (or easement) is an encumbrance
imposed upon an immovable for the benefit of
another immovable belonging to a different owner
Art. 1557. The warranty cannot be enforced until a (ex. right of way establishing a permanent passage).
final judgment has been rendered, whereby the
vendee loses the thing acquired or a part thereof. NOTE: Lack of knowledge of the vendor is nor a
defense, as the contract can be invalidated on the
ground of mistake.
Art. 1558. The vendor shall not be obliged to make
good the proper warranty, unless he is summoned in Remedies (if made within a year)
the suit for eviction at the instance of the vendee.
 rescission

RATIONALE: To give the vendor opportunity to  damages


show that the action against the buyer is unjust; and  If prescriptive period elapsed; action for
to defend his title that he has transferred. damages within 1yr from discovery of non-
apparent burden or servitude
NOTE: In case of land registration proceedings, it is
sufficient that the buyer notifies the seller of his NOTE: There is no remedy if the burden or
application and any opposition thereto. easement is registered, except when there is an
express warranty that the things is free from all
Art. 1559. The defendant vendee shall ask, within burdens and encumbrances.
the time fixed in the Rules of Court for answering the
complaint, that the vendor be made a co-defendant.

NOTE: This article applies only when the buyer


is the defendant.
When rights of vendee do not apply --
3) If the vendee had knowledge of the
1) If the burden or servitude is apparent encumbrance whether it is registered or not
(made known and is continually kept in view by
external signs)

2) If the non-apparent burden or servitude is


registered
Title V, Chapter 3, Section 3, Subsection 2
Warranty against Hidden Defects of,
or Encumbrances upon, the thing sold
judgment (whether he be the grower or
Art. 1561. The vendor shall be responsible for
manufacturer or not), there is an implied
warranty against the hidden defects which the thing
warranty that the goods shall be reasonably fit
sold may have, should they render it unfit for the use
for such purpose;
for which it is intended, or should they diminish its
fitness for such use to such an extent that, had the
(2) Where the goods are brought by description from
vendee been aware thereof, he would not have
a seller who deals in goods of that description
acquired it or would have given a lower price for it;
(whether he be the grower or manufacturer or
but said vendor shall not be answerable for patent
not), there is an implied warranty that the goods
defects or those which may be visible, or for those
shall be of merchantable quality.
which are not visible if the vendee is an expert who,
by reason of his trade or profession, should have
known them. Warranty of Merchantibility is a warranty that
goods are reasonably fit for the general purpose for
which they are sold.
Requisites for warranty against Hidden Defects
1. Defect must be hidden (not known or could not Warranty of Fitness is a warranty that the goods
have been known to vendee) are suitable for the special purpose of the buyer
which will not be satisfied by mere fitness for general
2. Defect must exist at the time of the sale purposes.
3. Defect must ordinarily have been excluded Implied Warranties of Quality
from the contract
a) Implied warranty of fitness. There is no
4. Defect must be important implied warranty as to the fitness under a
(unfit or decreases fitness) contract of sale, except:
5. Action must be instituted within the statute of
limitations  Buyer expressly or by implication,
manifests to the seller the particular
Proper Period purpose for which the goods are acquired

The actions for rescission or reduction of the price  Buyer relies upon the seller’s skill or
must be brought within proper period - 6 months judgment whether he be the grower or
from the delivery of the thing sold or within 40 days manufacturer or not
from the date of delivery in case of animals.
b) Implied warranty of merchantibility. Where
the goods are bought by description, the seller
Art. 1562. In a sale of goods, there is an implied
impliedly warrants that the goods are of
warranty or condition as to the quality or fitness of
merchantible quality.
the goods, as follows:
NOTE: If a foreign substance is found in a can of
(1) Where the buyer, expressly or by implication,
beans, there is a breach of warranty.
makes known to the seller the particular purpose
for which the goods are acquired, and it appears
that the buyer relies on the seller's skill or
Art. 1563. In the case of contract of sale of a Art. 1566. The vendor is responsible to the vendee
specified article under its patent or other trade for any hidden faults or defects in the thing sold,
name, there is no warranty as to its fitness for any even though he was not aware thereof.
particular purpose, UNLESS there is a stipulation to
the contrary. 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.
GR: There is no warranty as to the article’s
fitness for any particular purpose.
NOTE: The objective of this is reparation, not
XPN: Buyer relied upon the seller’s judgment punishment.
rather than the patent or trade name.
Caveat Venditor
Art. 1564. An implied warranty or condition as to the This was adopted by the old Civil Code in
quality or fitness for a particular purpose may be accordance with the Roman Law. This doctrine is
annexed by the usage of trade. based on the principle that a sound price warrants
a sound article.
RATIONALE: Parties are presumed to be
acquainted with the usage of trade. Art. 1567. In the cases of Articles 1561, 1562, 1564,
1565 and 1566, the vendee may elect between
NOTE: If there is no usage, the parties would withdrawing from the contract and demanding a
naturally express their intention. proportionate reduction of the price, with damages
in either case.
Art. 1565. In the case of a contract of sale by
sample, if the seller is a dealer in goods of that kind, NOTE: This warranty in slaes is applicable to lease.
there is an implied warranty that the goods shall be
free from any defect rendering them unmerchantable Alternative Remedies of Buyer to
which would not be apparent on reasonable enforce warranty:
examination of the sample.
1. Accion Rehibitoria. To withdraw from the
contract or rescission.
Merchantability of goods sold by Sample
2. Accion Quanti Minoris. To demand a
1) Where sample not merchantible. As a
proportionate reduction of the price.
general rule, all the buyer is entitled to is that
the goods be like the sample. Thus, he has no
NOTE: Buyer has the right to damages in both
right to have the goods merchantible if the
remedies.
sample which he has inspected is not.
NOTE: The same right is given to vendee in the sale
2) Where sample subject to latent defect. If the
of animals with redhibitory defects.
sample is subject to a latent defect, and the
buyer reasonably relies on the seller’s skill or
judgment, the buyer is entitled to goods like
those which the sample seems to represent,
that is, merchantible goods of that kind and
character.
CASES:
The BABASAS insisted on the unilateral rescission
Babasa v. CA and demanded that SHELL vacate the lots.

APR 11, 1981 JULY 19, 1983


There was a contract of sale of registered lands TABANGAO instituted an action for specific
Babasa sps (vendors) Tabanga Realty (vendee) performance with damages
Subj matter: 3 parcels of land in Batangas
Price: P2,121,920 Despite the pendency of the case the BABASAS put
up several structures within the area in litigation to
-300K upon signing impede the movements of persons and vehicles
- 1,821, 920 upon presentation of TCTs indicating therein, laid claim to twelve (12) heads of cattle
free from all liens an encumbrances belonging to intervenor SHELL and threatened to
collect levy from all buyers of liquefied petroleum gas
Deliverable within 20 mos from signing of (LPG) for their alleged use of the BABASA estate
contract
RTC ruled in favor of Tabangao
MAY 18, 1981
Tabangao leased the lots to Shell Gas Ph. w/c that the 20-month period
immediately started a Liquefied Petroleum Gas stipulated in the contract was never meant
Terminal Project to be its term such that upon its expiration
the respective obligations of the parties
** tabangao is the real estate arm of shell** would be extinguished. On the contrary,
the expiration thereof merely gave rise to
-- the right of TABANGAO to either rescind
the contract or to demand that the
Tabangao paid the 300K (1st installment), BABASAS comply with their contractual
disturbance compensation to tenants and owners, obligation to deliver to it clean titles and
monthly interest registerable documents of sale. The
notarial rescission executed by the
-- BABASAS was declared void and of no
legal effect
Babasas sps filed a civil case and petition for the
transfer of titled of lots to their names Babasas appealed but CA affirmed the RTC decision

DEC 31, 1982 (2days prior expiration of 20mos) ISSUE: w/n the babasas sps can rescind their
Babasas asked tabangao for an indefinite extension contract with Tabangao? NO.
within which to deliver CLEAN titles
+ continue the monthly interest RULING: Clearly then, the BABASAS' act of
unilaterally rescinding their contract with TABANGAO
Because the 2 cases has not yet been is unwarranted. Even without the abovequoted
resolved stipulation in the deed, the failure of petitioners to
deliver clean titles within twenty (20) months from the
Tabangao refused. signing of the contract merely gives TABANGAO the
Babasas executed a notarized unilateral rescission option to either refuse to proceed with the sale or to
waive the condition in consonance with Art. 1545 of
TABANGAO responded by reminding the the New Civil Code.
BABASAS that they were the ones who did
not comply hence, had no right to rescind
their contract.
Power Commercial and industrial Corp. v. CA PNB received a letter from petitioner saying that it
was to there understanding that said property was
Power Commercial & Industrial Development free and clear of problems. Thus the presence of ppl
Corporation, an industrial asbestos manufacturer, who were in physical occupancy thereof should be
needed a bigger office space and warehouse for its removed immediately (responsibility of prev owner)
products. For this purpose, on January 31, 1979, it
entered into a contract of sale with the spouses On March 17, 1982, petitioner filed Civil Case
Reynaldo and Angelita R. Quiambao, herein private against respondent spouses for rescission and
respondents damages

Subj matter: a parcel of land in Makati while this case was pending, the mortgage was
foreclosed. The property was subsequently bought
P108,000.00 as down payment, and the balance of by PNB during the public auction. Thus, an amended
P295,000.00 balance, upon the execution of the complaint was filed impleading PNB as party
deed of transfer of the title over the property defendant.

petitioner assumed, as part of the RTC: the trial court9 ruled that the failure of
purchase price, the existing mortgage on respondent spouses to deliver actual possession to
the land. In full satisfaction thereof, he paid petitioner entitled the latter to rescind the sale, and in
P79,145.77 to Respondent PNB view of such failure and of the denial of the latter's
assumption of mortgage, PNB was obliged to return
On June 1, 1979, respondent spouses mortgaged the payments made by the latter.
again said land to PNB to guarantee a loan of
P145,000.00 On appeal, CA reversed. that the deed of sale
between respondent spouses and petitioner did not
P80,000.00 of which was paid to respondent obligate the former to eject the lessees from the land
spouses. Petitioner agreed to assume payment of in question as a condition of the sale, nor was the
the loan. occupation thereof by said lessees a violation of the
warranty against eviction. Hence, there was no
On June 26, 1979, the parties executed a Deed of substantial breach to justify the rescission of said
Absolute Sale With Assumption of Mortgage contract or the return of the payments made.

General Manager of petitioner-corporation, submitted


to PNB said deed with a formal application for
assumption of mortgage.

On February 15, 1980, PNB informed respondent


spouses that, for petitioner's failure to submit the
papers necessary for approval, the application for
assumption of mortgage was considered withdrawn;
that the outstanding balance of P145,000.00 was
deemed fully due and demandable; and that said
loan was to be paid in full within fifteen (15) days
from notice.

Petitioner paid PNB P41,880 on June 24, 1980 and


P20,283.14 on December 23, 1980
Ang v. CA

Cebu Winland Dev. Corp. v. Ong Siao Hua

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