LAW ON SALES
Ref. book: Law on Sales, by Hector De Leon.
SECTION 3. — Conditions and Warranties
ART. 1545. Where the obligation of either party to a
contract of sale is subject to any condition which is not
performed, such party may refuse to proceed with the
contract or he may waive performance of the condition. If
the other party has promised that the condition should
happen or be performed, such first mentioned party may
also treat the nonperformance of the condition as a
breach of warranty.
Where the ownership in the thing has not passed, the
buyer may treat the fulfillment by the seller of his
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
perform his promise to accept and pay for the thing.
Meaning of condition.
A condition, as used in Article 1545, means an uncertain event or
contingency on the happening of which the obligation (or right) of the
contract depends. In such a case, the obligation of the contract does
not attach until the condition is performed. (see Art. 1462)
Effect of nonfulfillment of condition.
A contract of sale may be absolute or conditional. (Art. 1458.)
(1) If the obligation1 of either party is subject to any condition and
such condition is not fulfilled, such party may either:
(a) refuse to proceed with the contract; or
(b) proceed with the contract, waiving the performance of the
condition.
(2) If the condition is in the nature of a promise that it should
happen, the nonperformance of such condition may be treated by the
other party as a breach of warranty. (see Art. 1546.)
ART. 1546. Any affirmation of fact or any promise by
the 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 buyer
purchases the thing relying thereon. No affirmation of the
value of the thing, nor any statement purporting to be a
statement of the seller’s opinion only, shall be construed
as a warranty, unless the seller made such affirmation or
statement as an expert and it was relied upon by the
buyer. (n)
Effect of express warranty.
Warranties by the seller may be express, as in the above article,
or implied, as in Article 1547. An express warranty is any affirmation
of fact or any promise by the seller relating to the thing, the natural
tendency of which is to induce the buyer to purchase the thing and the
buyer thus induced, does purchase the same.
Effect of expression of opinion.
A mere expression of opinion, no matter how positively asserted,
does not import a warranty unless the seller is an expert and his
opinion was relied upon by the buyer. Thus, assertions that things are
fine or valuable or better than products of rival manufacturers are in
their nature so dependent on individual opinion that no matter how
positive the seller’s assertion may be, they are not held to create a
warranty.
ART. 1547. In a contract of a sale, unless a contrary
intention appears, there is:
(1) An implied warranty on the part of the seller that he
has a right to sell the thing at the time when the
ownership is to pass, and that the buyer shall from that
time have and enjoy the legal and peaceful possession of
the thing;
(2) An implied warranty that the thing shall be free
from any hidden faults or defects, or any charge or
encumbrance not declared or known to the buyer.
 This article shall not, however, be held to render liable
a sheriff, auctioneer, mortgagee, pledgee, or other person
professing to sell by virtue of authority in fact or law, for
the sale of a thing in which a third person has a legal or
equitable interest. (n)
Implied warranties in sale.
The term implied warranty is reserved for cases where the law
attaches an obligation to the seller which is not expressed in any
words. (1 Williston, op. cit., p. 498.) Implied warranties under Articles
1547 and 1562 are:
(1) Implied warranty as to seller’s title. — that the seller
guarantees that he has a right to sell the thing sold and to transfer
ownership to the buyer who shall not be disturbed in his legal and
peaceful possession thereof (Art. 1548.);
(2) Implied warranty against hidden defects or unknown
encumbrance. — that the seller guarantees that the thing sold is free
from any hidden faults or defects or any charge or encumbrance not
declared or known to the buyer (Art. 1561.);
(3) Implied warranty as to fitness or merchantability. — that the
seller guarantees that the thing sold is reasonably fit for the known
particular purpose for which it was acquired by the buyer or, where it
was bought by description, that it is of merchantable quality. (Art.
1562.)
SUBSECTION 1. — Warranty in Case of Eviction
ART. 1548. Eviction shall take place whenever by a final
judgment based on a right prior to the sale or an act imputable to
the vendor, the vendee is deprived of the whole or of a part of the
thing purchased.
The vendor shall answer for the eviction even though nothing
has been said in the contract on the subject.
The contracting parties, however, may increase, diminish, or
suppress this legal obligation of the vendor.
Meaning of eviction.
Eviction may be defined as the judicial process, whereby the
vendee is deprived of the whole or part of the thing purchased by
virtue of a final judgment based on a right prior to the sale or an act
imputable to the vendor.
Essential elements of warranty
against eviction.
The essential elements are:
(1) The vendee is deprived in whole or in part of the thing
purchased;
(2) He is so deprived by virtue of a final judgment (Art. 1557.);
(3) The judgment is based on a right prior to the sale or an act
imputable to the vendor;
(4) The vendor was summoned in the suit for eviction at the
instance of the vendee (Art. 1558.);
(5) There is no waiver on the part of the vendee.
Warranty against eviction refers to
trespass in law.
Mere trespass in fact does not give rise to the application of the
doctrine of eviction. (see Art. 1590.) In such case, the vendee has a
direct action against the trespasser in the same way as the lessee has
such right. (Art. 1664.)
The disturbance referred to in the case of eviction is a disturbance
in law which requires that a person go to the courts of justice claiming
the thing sold, or part thereof, and invoking reasons. If final judgment
is rendered depriving the vendee of the thing sold or any part thereof,
the doctrine of eviction becomes applicable.
Vendor’s liability is waivable.
Warranty is not an essential element of a contract of sale and
may, therefore, be increased, diminished, or suppressed by
agreement of the parties. (Art. 1548, par.3.)
Any stipulation, however, exempting the vendor from the
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obligation to answer for eviction shall be void if he acted in bad faith.
(Art. 1553.)
ART. 1549. The vendee need not appeal from the
decision in order that the vendor may become liable for
eviction.
Vendee has no duty to appeal from
judgment.
The vendee’s right against the vendor is not lost because he, the
vendee, did not appeal. With a judgment becoming final whatever be
the cause of finality, the requirement of the law is deemed satisfied.
Furthermore, the vendor, having been notified of the action, could
have very well followed up the case and made use of all possible
remedies. If he did not do that, he should suffer for his omission. In
reality, he does not have the right to demand of the vendee such
diligence that he himself did not have and which he was more obliged
to observe, especially if the cause of eviction was anterior to the sale.
ART. 1550. When adverse possession had been
commenced before the sale but the prescriptive period is
completed after the transfer, the vendor shall not be liable
for eviction.
Effect of prescription.
By prescription, one acquires ownership and other real rights
through the lapse of time in the manner and under the conditions
prescribed by law. In the same way, rights and actions are lost by
prescription. (Art. 1106.)
(1 ) Completed before sale. — The vendee may lose the thing
purchased to a third person who has acquired title thereto by
prescription. When prescription has commenced to run against the
vendor and was already complete before the sale, the vendee can
enforce the warranty against eviction.
(2) Completed after sale. — Even if prescription has started before
the sale but has reached the limit prescribed by law after the sale, the
vendor is not liable for eviction. The reason is that the vendee could
easily interrupt the running of the prescriptive period by bringing the
necessary action.
ART. 1551. If the property is sold for nonpayment of
taxes due and not made known to the vendee before the
sale, the vendor is liable for eviction. (n)
Deprivation for nonpayment of taxes.
If the vendee is deprived of the ownership of the property because
it is sold at public for nonpayment of taxes due from the vendor, the
latter is liable for eviction for an act imputable to him. It is required,
however, that at the time of the sale, the nonpayment of taxes was not
known to the vendee.
ART. 1552. The judgment debtor is also responsible
for eviction in judicial sales, unless it is otherwise
decreed in the judgment. (n)
Liability of judgment debtor.
While the rule on implied warranty does not apply to a sheriff who
sells by virtue of authority in law (Art. 1549, par. 2.), the judgment
debtor is responsible for eviction (Art. 1552.) and hidden defects (Art.
1570.) even in judicial sales, unless otherwise decreed in the
judgment.
Article 1552 is based on the general principle that a person may
not enrich himself at the expense of another.
ART. 1553. Any stipulation exempting the vendor from
the obligation to answer for eviction shall be void, if he
acted in bad faith.
Stipulation waiving warranty.
1. Effect of vendor’s bad faith. — The vendor’s bad faith under Article
1553 consists in his knowing beforehand at the time of the sale, of the
presence of the fact giving rise to eviction, and its possible
consequence.
2. Effect of vendee’s bad faith. — It is a requisite, however, that the
vendee is not himself guilty of bad faith in the execution of the sale. If
he knew the defect of title at the time of sale, or had knowledge of the
facts which should have put him upon inquiry and investigation as
might be necessary to acquaint him with the defects of the title of the
vendor, he cannot claim that the vendor has warranted his legal and
peaceful possession of the property sold on the theory that he
proceeded with the sale with the assumption of the danger of eviction.
ART. 1554. If the vendee has renounced the right to
warranty in case of eviction, and eviction should take
place, the vendor shall only pay the value which the thing
sold had at the time of the eviction. Should the vendee
have made the waiver with knowledge of the risks of
eviction and assumed its consequences, the vendor shall
not be liable.
Kinds of waiver of eviction.
Article 1554 treats of two kinds of waiver, namely:
(1) Consciente, that is, the waiver is voluntarily made by the vendee
without the knowledge and assumption of the risks of eviction; and
(2) Intencionada, that is, the waiver is made by the vendee with
knowledge of the risks of eviction and assumption of its
consequences.
Effect of waiver by vendee.
1. If the waiver was only conscious, the vendor shall pay only the
value which the thing sold had at the time of eviction.
2. In the second kind of waiver, the vendor is exempted from the
obligation to answer for eviction, provided he did not act in bad faith.
ART. 1555. When the warranty has been agreed upon
or nothing has been stipulated on this point, in case
eviction occurs, the vendee shall have the right to
demand of the vendor:
(1) The return of the value which the thing sold had at
the time of the eviction, be it greater or less than the price
of the sale;
(2) The income or fruits, if he has been ordered to
deliver them to the party who won the suit against him;
(3) The costs of the suit which caused the eviction
and, in a proper case, those of the suit brought against
the vendor for the warranty;
(4) The expenses of the contract, if the vendee has
paid them;
(5) The damages and interests and ornamental
expenses, if the sale was made in bad faith. (1478)
Rights and liabilities in case eviction
occurs.
The provisions of the above article specify in detail the rights and
liabilities of the vendor and the vendee in the event eviction takes
place “when the warranty has been agreed upon or nothing has been
stipulated on this point,” that is, in the absence of waiver of eviction by
the vendee. (Art. 1554.)
1. Return of value of thing. — If at the time of the eviction the value of
the property is really more or less than its value at the time of the sale,
by reason of improvements or deterioration, it is but just that the
vendor should pay the excess or not suffer the damage. All kinds of
improvements whether useful or necessary or even recreational
expense voluntarily incurred by the vendee (Arts. 546548.) or caused
by nature or time (Art. 551, ibid.) insofar as they may affect the value
of property, are taken into account in determining the increase in
value.
2. Income or fruits of thing. — The vendee is liable to the party who
won the suit against him for the income or fruits received only if so
decreed by the court. The obvious inference from this provision is that
to the vendee belongs the use, free of any liability, of the subject
matter of the sale. And this benefit is not by any means gratuitous. It
is offset by the use without interest of the money of the vendee by the
vendor.
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3. Costs of the suit. — The vendee is also entitled to recover the
expense of litigation resulting in eviction, including the costs of the
action brought against the vendor to enforce his warranty. “Costs of
the suit” mentioned in No. (3) does not include travelling expenses
incurred by the vendee in defending himself in the action. He is not
entitled to recover damages unless the sale was made by the vendor
in bad faith. (No. 5.)
4. Expenses of the contract. — In the absence of any stipulation to the
contrary, the expenses in the execution and registration of the sale
are borne by the vendor. However, if the vendee should have paid for
such expenses, he shall have the right to demand the same from the
vendor.
5. Damages and interests. — The right of the vendee to demand
“damages and interests and ornamental expenses” is qualified by the
condition that the sale was made in bad faith. If good faith is
presumed, the vendee is not entitled to recover damages unless bad
faith on the part of the vendor is shown in making the sale.
ART. 1556. Should the vendee lose, by reason of the
eviction, a part of thing sold of such importance, in
relation to the whole, that he would not have bought it
without said part, he may demand the rescission of the
contract; but with the obligation to return the thing
without other encumbrances than those which it had
when he acquired it.
He may exercise this right of action, instead of
enforcing the vendor’s liability for eviction.
The same rule shall be observed when two or more
things have been jointly sold for a lump sum, or for a
separate price for each of them, if it should clearly appear
that the vendee would not have purchased one without
the other.
Alternative rights of vendee in case of
partial eviction.
This article contemplates of partial eviction, while Article 1554
treats of total eviction. It states the rule that if there is partial eviction,
the vendee has the option either to enforce the vendor’s liability for
eviction (Art. 1555.) or to demand rescission of the contract. The
above rule is applicable —
(1) When the vendee is deprived of a part of the thing sold if such
part is of such importance to the whole that he would not have bought
the thing without said part (par. 1.); or
(2) When two or more things are jointly sold whether for a lump
sum or for a separate price for each, and the vendee would not have
purchased one without the other. (par. 2.)
ART. 1557. The warranty cannot be enforced until a
final judgment has been rendered, whereby the vendee
loses the thing acquired or a part thereof.
ART. 1558. The vendor shall not be obliged to make
good the proper warranty, unless he is summoned in the
suit for eviction at the instance of the vendee.
Formal summons to vendor essential.
Another essential requisite before a vendor may be legally
liable for eviction is that he should be summoned in the suit for
eviction at the instance of the vendee, to give the vendor an
opportunity to intervene and defend the title that he has transferred.
ART. 1559. The defendant vendee shall ask, within the
time fixed in the Rules of Court for answering the
complaint, that the vendor be made a codefendant.
ART. 1560. If the immovable sold should be
encumbered with any non-apparent burden or servitude,
not mentioned in the agreement, of such a nature that it
must be presumed that the vendee would not have
acquired it had he been aware thereof, he may ask for the
rescission of the contract, unless he should prefer the
appropriate indemnity. Neither right can be exercised if
the non-apparent burden or servitude is recorded in the
Registry of Property, unless there is an express warranty
that the thing is free from all burdens and encumbrances.
 Within one year, to be computed from the execution of
the deed, the vendee may bring the action for rescission,
or sue for damages.
One year having elapsed, he may only bring an action
for damages within an equal period, to be counted from
the date on which he discovered the burden or servitude.