Sales Notes
Sales Notes
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
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.
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.
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
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.
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.