LAW ON SALES

Implied warranties in a contract of sale

1. Warranty against eviction;
2. Warranty against hidden defects;
3. Warranty that the thing is fit for the purpose in the case where the
buyer expressly or by implication, manifests his particular
purpose;
4. Warranty of merchantability.
Warranty against eviction
•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 a part of the thing purchased.

•The vendee need not appeal from the decision in order that the vendor may
become liable for eviction.

•Warranty against eviction refers to trespass in law, not mere trespass in fact.
•Any stipulation exempting the vendor from the obligation to answer for eviction
shall be VOID, if he acted in bad faith.
Warranty against eviction

•When adverse possession has been commenced before the sale but the
prescriptive period is completed after the transfer, the vendor shall not be
liable for eviction.
Warranty against eviction
When 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: (VCEID)

1. The return of the value which the thing sold had at the time of eviction;
2. The cost of the suit;
3. The expenses of the contract, if the vendee has paid them;
4. Income or fruits, if he has been ordered to deliver them to the party who won the suit
against him;
5. Damages and interest and ornamental expenses, if the sale was made in bad faith.
Warranty against eviction

▪Warranty cannot be enforced until a final judgment has been rendered,

whereby the vendee loses the thing acquired or part thereof.

▪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.
Warranty against hidden defects,
requisites
1. The defect is hidden;
2. The defect is important or serious;

3. The defect exists at the time of sale (1561)

4. Notice of the defect must be given by the vendee to the vendor within a reasonable time
5. There was no waiver on the part of the vendee and the vendor was not aware of the
hidden faults or defects in the thing sold. (1566)

The actions for rescission or reduction of the price must be brought within the proper period:
6 months from the delivery in case of animals.
Rights of buyer in case the seller is guilty
of warranty against hidden defects
1. Withdrawal or rescission (accion redhibitoria) plus damages;

2. Reduction in the price (accion quanti minors o estimatoria) plus damages.

•There is no warranty against hidden defects of animals sold at fairs or public

auctions, or livestock sold as condemned.

•The sale of animals suffering from contagious diseases shall be void.

Warranty of merchantability and fitness
•Warranty of merchantability is a warranty that goods are reasonably fit
for the GENERAL purpose for which they are sold.

•Warranty of fitness is a warranty that the goods are suitable for the
SPECIAL purpose of the buyer which will not be satisfied by mere fitness
for general purpose.
Warranty against hidden defects
Instances when the vendor is not liable for his warranty against
hidden defects:
1. Where the defect is patent or visible, or
2. Though the defects are not visible, but the vendee is an
expert who, by reason of his trade or profession should
have known them (1561)
Redhibitory Defects
• Art. 1572
• Exception: Art. 1574

• Redhibitory defect – a defect in the article sold against which

defect the seller is bound to warrant
• When action must be brought
Sale of animals
• Sale of animals suffering from contagious diseases: VOID
• Art. 1575
OBLIGATIONS OF THE VENDEE
•The vendee is bound to accept delivery and to pay the price of the thing
sold at the time and place stipulated in the contract.

•The vendee shall owe interest for the period between the delivery of the
thing and the payment of the price, in the following three cases:
1. Should it have been stipulated;
2. Should the thing sold and delivered produce fruits or income;
3. Should he be in default, from the time judicial or extra-judicial demand for
payment of the price.
OBLIGATIONS OF THE VENDEE
•In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon the
rescission of the contract shall of right take place, the vendee may pay,
even after the expiration of the period, as long as no demand for
rescission of the contract has been made upon him either judicially or by
a notarial act.
OBLIGATIONS OF THE VENDEE
• Sale of movable property
OBLIGATIONS OF THE VENDEE
• Art. 1589
• Art. 1590
Equitable Mortgage

• Is one which, although it lacks the proper formalities of a mortgage,

shows the intention of the parties to make the property subject of the
contract as a security for the fulfilment of an obligation
Conventional Redemption
is considered to be an equitable mortgage in any of the following:
a. Price of the sale is usually inadequate;
b. Vendor remains in possession;
c. Period of redemption is extended after expiration;
d. Purchaser retains part of the purchase price;
e. Vendor binds himself to pay the taxes of the thing sold;
f. Other cases where the parties really intended that the transaction
shall secure the payment of a debt or the performance of any
obligation.
Conventional Redemption
•In case of doubt, a contract purporting to be a sale with a right to
repurchase shall be construed as an equitable mortgage.

•Conventional redemption, in the absence of any agreement, shall last

four (4) years from the date of the contract. Should there be an
agreement, the period cannot exceed ten (10) years.
 Conventional Redemption
• If several persons, jointly and in the same contract, should sell an undivided immovable with a right of
repurchase, none of them may exercise this for more than his respective share.

• Same rule shall apply if the person who sold an immovable alone has left several heirs, in which case each of
the latter may only redeem the part which he may have acquired.

• The vendee, however, may demand of all the vendors or co-heirs that they come to an agreement upon the
repurchase of the whole thing sold; and should they fail to do so the vendee cannot be compelled to consent to
a partial redemption.

• Each one of the co-owners of an undivided immovable who may have sold his share separately, may
independently exercise the right of repurchase as regards his own share, and the vendee cannot compel him
to redeem the whole property.
Legal Redemption
•Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in
the contract in the place of one who acquires a thing by purchase or dation in payment, or by any
other transaction whereby ownership is transmitted by onerous title.

•A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-
owners or of any of them, are sold to a third person. If the price of the alienation is grossly
excessive, the redemptioner shall pay only a reasonable one.

•Should two or more co-owners desire to exercise the right of redemption, they may only do so in
proportion to the share they may respectively have in the thing owned in common.
Legal Redemption
•The owners of adjoining lands shall also have the right of redemption when a piece of
rural land, the area of which does not exceed one hectare, is alienated, unless the
grantee does not own any rural land.

•This right is not applicable to adjacent lands which are separated by brooks, drains,
ravines, roads and other apparent servitudes for the benefit of other estates.

•If two or more adjoining owners desire to exercise the right of redemption at the same
time, the owner of the adjoining land of smaller area shall be preferred; and should both
lands have the same area, the one who first requested the redemption. (1523a)
Legal Redemption
•Whenever a piece of urban land which is so small and so situated that a major portion
thereof cannot be used for any practical purpose within a reasonable time, having been
bought merely for speculation, is about to be re-sold, the owner of any adjoining land
has a right of pre-emption at a reasonable price.

•If the resale has been perfected, the owner of the adjoining land shall have a right of
redemption, also at a reasonable price.

•When two or more owners of adjoining lands wish to exercise the right of pre-emption or
redemption, the owner whose intended use of the land in question appears best justified shall be
preferred.
Redemption versus pre-emption:
a. Redemption is the right after the sale, while pre-emption is before
the sale;
b. Redemption gives right to rescission of the original sale; while pre-
emption gives no right because there is no sale;
c. Redemption is directed against the buyer; while pre-emption is
directed against prospective buyer.