Warranties

Conditions and Warranties (Art. 1545)

 Condition: uncertain event/contingency on the happening of which the obligation
of the contract depends. A Contract of sale may be absolute or conditional
 If condition not fulfilled:
(1) Refuse to proceed with the contract;
(2) Proceed with the contract, waiving performance of obligation
 Warranty: statement or representation made by the seller of goods,
contemporaneously and as a part of the contract of sale, having reference to the
character, quality, or title of the goods, and by which he promises or undertakes
to insure that certain facts are or shall be as he then represents them.
 

Condition Warranty

Purports to existence of obligation Purports to performance of obligation

Condition must be stipulated to form part of the Need not be stipulated; may form part of
obligation obligation by provision of law

May attach itself to obligation of seller to Relates to the subject matter itself or to
deliver possession & transfer ownership
obligation of the seller as to the subject
matter of the sale

 
Express Warranty (Art. 1546)
 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.
 Requisites:
(1) It must be an affirmation of fact or any promise by seller relating to the subject
matter of sale;
(2) Natural tendency of affirmation or promise is to induce buyer to purchase subject
matter; (3) Buyer purchases the subject matter relying thereon
when breached, seller is liable for damages
 
Effect of expression or opinion
 Art. 1340: The usual exaggerations in trade, when the other party had an
opportunity to know the facts, are not in themselves fraudulent.
 Art. 1341: A mere expression of an opinion does not signify fraud, unless made
by an expert and the other party has relied on the former's special knowledge.
 Art. 1343: Misrepresentation made in good faith is not fraudulent but may
constitute error
 Art. 1338: There is fraud when, through insidious words or machinations of one
of the contracting parties, the other is induced to enter into a contract which,
without them, he would not have agreed to. (CAUSAL FRAUD / DOLO
CAUSANTE = FRAUD IN THE PERFECTION OF THE CONTRACT)
Art. 1344: In order that fraud may make a contract voidable, it should be serious
and should not have been employed by both contracting parties.
 Incidental fraud only obliges the person employing it to pay damages.
(INCIDENTAL FRAUD / DOLO INCIDENTE)
 Art. 1170: Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable for damages.
 
Two general classifications of IMPLIED WARRANTY
 warranty against eviction (seller’s title)- seller has the right to sell the thing at the
time when ownership is to pass and the buyer shall from that time have and
enjoy the legal and peaceful possession of the thing.
 warranty against hidden defects-the thing shall be free from any hidden faults or
defects or any charge or encumbrance not declared or known to the buyer.
warranty as to fitness/merchantability- 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, of merchantable quality.
Implied warranties (Art. 1547)
 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;
 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.
 Not applicable to 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; “As is and where is” sale;
sale of 2nd hand articles; sale by virtue of authority in fact or law; Caveat emptor
on execution sales
Warranty Against Eviction (Art. 1548)
 Eviction: judicial process where the vendee is deprived of the whole/part of the
thing purchased by virtue of final judgment based on a right prior to the sale or an
act imputable to the vendor.
(1) buyer is evicted in whole or in part from the subject matter of sale/deprived in whole
or part (Art. 1548)
(2)  there is a final judgment (Art. 1557)
(3) basis of eviction is a right prior to sale or an act imputable to vendor (Art. 1548)
(4) seller has been summoned in the suit for eviction at the instance of buyer; or made
3rd party defendant through 3rd party complaint brought by buyer (Art. 1558)
(5) There is no waiver on the part of the vendee.
 
Trespass in fact vs. Disturbance in law
 Warranty against eviction applies to disturbance in law: court renders final
judgment depriving the vendee the right to sold or any part thereof.
 Trespass in fact: the vendee has a direct action against the trespasser
 Vendee has no duty to appeal from the decision of the court to hold vendor liable
for eviction
 
Other forms of breach of W.A.E. and seller is liable
 Sale of property for non-payment of taxes not made known to the vendee before
the sale (Art. 1551)
 Judicial Sales- judgment debtor is liable for eviction unless otherwise decreed in
the judgment
 
Adverse Possession and Prescription (Art. 1550)
 Prescription- acquires ownership and other real rights through the lapse of time
/rights and actions are lost
Art. 1134. Ownership and other real rights over immovable property are acquired by
ordinary prescription through possession of ten years.
Art. 1137. Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of title or of good
faith.
 If prescription commenced and completed before the sale : vendor is liable for
W.A.E. –deprivation is based on a right prior to the sale and imputable to the
vendor
  Prescription completed after the sale: the vendor is NOT liable for the breach of
warranty
 Not applicable for land registered under the Torrens system
 
Waiver of WAE (Art. 1553) and kinds of waiver (Art. 1554)
 Rule: W.A.E. is not an essential element of the contract of sale, hence waivable
by agreement of parties. Exception: when vendor acted in bad faith
 Kinds:
(1) Consciente- voluntary waiver of the buyer without knowledge and assumption of the
risk of eviction. – vendor to pay the value of the thing sold at the time of eviction
(2) Intencionada – with knowledge of the risk of eviction and assumption of
consequences.- vendor is exempted from the obligation provided he did not act in bad
faith
 
Vendor’s Liability in Case of Eviction
 If there is a stipulation exempting the vendor/waiver
Vendor acted in bad faith: knowledge of fact that may give rise to eviction, waiver is
void.
(1)Value of the thing at the time of eviction
(2) Income/fruits
(3) Cost, for the suit
(4) Expenses of the contract
(5) Damages, interest and ornamental expenses
Vendor acted in good faith:
(1) Waiver consciente
(2) Waiver intencionada
 No warranty has been agreed upon/no waiver made
Vendor acted in bad faith- include 1 to 5; Vendor acted in good faith-  exclude damages
 
Rights of Vendee in Case of Partial Eviction (Art. 1556)
 Rule: vendee has the option either to enforce the vendor’s liability or to demand
rescission of contract.
 Application
(1) Vendee is deprived of a part of the thing sold if such part is of such important to the
whole that he would not have bought the thing sold without the part
(2) when two or more things are jointly sold whether for a lump sum or for a separate
price for each, vendee would not have purchased one without the other.
Total eviction- no rescission- contemplates ability to return whatever received.
 
Enforcement of W.A.E. (Arts. 1557 and 1558)
 Essential requirements:
(1) Deprivation of the thing sold, in whole/part
(2) Summoned in the suit for eviction at the instance of the vendee (due process of law)
(3) Final judgment not merely a subpoena ad testificandum/duces tecum
 
When vendee is the defendant of a suit (Art. 1559)
 Vendee shall ask the court in answering the complaint that the vendor be made a
co-defendant
 Pleadings filed in court for eviction: Complaint, Answer, Third-party complaint
 
Thing Sold With Non-Apparent Easement/Servitude (Art. 1560)
 Servitude/easement: encumbrance imposed upon an immovable (servient
estate) for the benefit of another immovable (dominant estate) belonging to a
different owner.
 Apparent easement –kept in view by external sign like easement of right of way
 Non-apparent easement- no exterior sign like party wall
 Art. 659. The existence of an easement of party wall is presumed, unless there is
a title, or exterior sign, or proof to the contrary:
(1) In dividing walls of adjoining buildings up to the point of common elevation;
(2) In dividing walls of gardens or yards situated in cities, towns, or in rural
communities;
(3) In fences, walls and live hedges dividing rural lands.
 
Warranty Against Hidden Defects (w.a.h.d.)/Encumbrances upon the Thing Sold (Art.
1561)
(1) Defect must be serious or important
(2) Hidden
(3) Exist at the time of the sale
(4) Notice to the vendor within reasonable time
(5) Rescission/reduction of price: 6 months from delivery of the thing sold/ 40 days from
the date of delivery in case of animals
(6)No waiver of w.a.h.d. on the part of the vendee
 
Implied warranties of quality
Warranty of fitness and merchantability (Art. 1562)
 Quality of goods: state or condition
 Fitness: (1) buyer manifests to the seller the particular purpose for the which the
goods are acquired; (b) seller relies upon the seller’s skills or judgment ; warranty
are suitable for the special purpose
 Merchantability: goods are bought by description. ; warranty on the general
purpose
 
Sale Under Patent or Trade Name (1563)
 Limits the application of “particular purpose”
 Buyer has exercised his own judgment instead of the seller’s
 Description must be the buyer’s choice
 Exception: stipulation to the contrary
Effect of usage on trade (Art. 1564)
 Implied warranty/condition as to quality of fitness for particular purpose may be
annexed by the usage of trade
 If no usage on trade, naturally express intention
 
Merchantability of Goods by Sample (Art. 1565)
 Rule: goods be like sample to be merchantable
 Sample subject to latent defect: defect not reveal during inspection, buyer relies
on seller's skills or judgment – buyer entitled to merchantable goods of that kind
and quality
 to repair the damage done
 If in bad faith: seller and buyer agreed that seller would be exempted from hidden
defects, seller knew of hidden defects, seller would be liable.
Remedies in Case of Hidden Defects
 withdrawal or rescission (accion redhibitoria) plus damages
 proportionate reduction (accion quanti minores o estimatoria) –– reduction in the
price, plus damages.
Effect of Loss of the Thing Because of the Hidden Defects
 whether the seller knew or did not know of the defects, he is still responsible
 However, in case of ignorance, there will be no liability for damages.
Effect if Cause of Loss Was a Fortuitous Event and Not the Hidden Defect
 Hidden defect was NOT the cause of the loss. The cause was either a fortuitous
event or thru the fault of the buyer
 The difference (price minus value at loss) represents generally the decrease in
value due to the hidden defect (hence, the amount by which the seller was
enriched at the buyer’s expense).Prescriptive period for the Warranty Against
Hidden Defect
 6 months from delivery
 notice is sufficient
 
Sale of Two or More Animals Together
 Generally, a defect in one should not affect the sale of the others
 This is true whether the price was a lump sum, or separate for each animal
 Exception: team, yoke, pair, or set is bought, even if a separate price has been
fixed for each one of the animals composing the same
 applicable to the sale of other things (Art. 1573)
 
No Warranty Against Hidden Defects Exists
 animals sold at fairs or at public auctions, or of livestock sold as condemned.Void
Sales of Animals
 Animals suffering from contagious diseases
 If the use or service for which they are acquired has been stated in the contract,
and they are found to be unfit therefor
 
Redhibitory Defect of Animals
 Even in case a professional inspection has been made, defect should be of such
a nature that expert knowledge is not sufficient to discover it
Prescriptive Period
 40 days –– the redhibitory action, based on the frauds or defects of animals. (Art.
1577)
 six months:
(1) breach of warranty against hidden defects; rescission of the contract because of the
same; or proportionate reduction in the price because of the same. (Arts. 1561-1571,
Civil Code).
(2) rescission or proportionate reduction in the price for sales of real estate either by the
unit or for a lump sum, because of failure to comply with the provisions of the contract.
(Arts. 1539-1543, Civil Code).
 
Death of Animals Sold
 If the animal should die within three days after its purchase, the vendor shall be
liable if the disease which cause the death existed at the time of the contract
 If the sale be rescinded, the animal shall be returned in the condition in which it
was sold and delivered, the vendee being answerable for any injury due to his
negligence, and not arising from the redhibitory fault or defect.
Remedies of Buyer of Animals With Redhibitory Defects
 withdrawal or rescission (plus damages)
 proportionate reduction in price (plus damages)

Obligations of the Vendee & Extinguishment of Sale

Principal Obligations of the Vendee (Art. 1582)
 to accept delivery of the thing sold;
 to pay the price1 of the thing sold at the time and place stipulated in the contract;
and
 to bear the expenses for the execution and registration of the sale and putting the
goods in a deliverable state, if such is the stipulation.
Pertinent Rules
 the vendor is not required to deliver the thing sold until the price is paid nor the
vendee to pay the price before the thing is delivered in the absence of an
agreement to the contrary
 If stipulated, then the vendee is bound to accept delivery and to pay the price at
the time and place designated
 If there is no stipulation as to the time and place of payment and delivery, the
vendee is bound to pay at the time and place of delivery; as to the place of
delivery, it shall be made wherever the thing might be at the moment the contract
was perfected
 
Delivery in Installment (Art. 1583)
 Rule: the buyer is not bound to receive delivery of the goods in installments.
 Exception: Where the contract provides for the delivery of goods by installments
(1) defective, partial or incomplete deliveries or the buyer wrongfully neglects or refuses
to accept delivery or fails to pay any installment: breach of whole contract
(2) breach is severable, it will merely give rise to a claim for compensation for the
particular breach but not a right to treat the whole contract as broken
 
Buyer’s Right To Examine (Art. 1584)
 Acceptance by the buyer
(1) Actual delivery- transfer of ownership-subject to right to examination or
inspection by reasonable opportunity
(2)  COD or not COD. Rule of delivery to the carrier for purpose of delivery is deemed
delivery to the buyer
-Not COD- examination of the goods a condition precedent to paying the price after the
ownership has passed
- If COD- buyer allowed to examine if should it have been agreed/ permitted by usage
-Stipulation of waiver of right to examine
 
Modes Of Manifesting Acceptance (Art. 1585)
 Express acceptance –verbal or in writing
 Implied acceptance- conduct or retention of the goods
 Acceptance not a condition to complete delivery
 Acceptance and actual receipt do not imply the other
 
Acceptance Not a Bar To Damages Suit (Art. 1586)
 Acceptance does not discharge the seller from liability in damages/other legal
remedy like rescission for breach of promise or warranty except if there is an
agreement
 Notice to seller of breach is a necessity-within reasonable time, from the time he
ought to have known it not merely from knowledge
 
Justified Refusal To Accept By The Buyer (Art. 1587)
 Buyer’s ordinary care without obligation to return (when he act as bailee)
 Duty of seller to take delivery
 Seller’s risk of loss – buyer shall not be a depositary unless he voluntarily
accepts it
 Right of buyer to resell-after notice and seller failed to take delivery
 
Wrongful refusal to accept (Art. 1588)
  Title passes to the buyer and risk is loss is with him from the moment of
withdrawal Suspension Of Payment Of Price By Vendee (Art. 1590)
 Two Situations
(1) vendee is disturbed in the possession or ownership of the thing bought; OR
          (2) vendee has well-grounded fear that his possession/ownership would be
disturbed by a vindicatory action or foreclosure of mortgage
not a ground for rescission before final judgment to prevent collusion between vendee
and a 3rd person except when the disturbance is caused by non-apparent easement
(Art. 1560)
 
When Vendee Cannot Suspend Payment Of Price
 Vendor gives security for the return of the price;
 Stipulation that notwithstanding any contingency;
 Vendor has caused the disturbance or danger to cease;
 Disturbance is a mere act of trespass; and
 Vendee has fully paid the price.
 
Vendor: Rescind Sale of Real Property (Art. 1591)
 reasonable grounds to fear the loss of immovable property sold and its price
 time: immediately sue for rescission
 sale either cash or in installments
 
Stipulation On Automatic Rescission Of Sale Of Real Property (Art. 1592
 Rule: vendor may sue rescission if vendee failed to pay the agreed price, hence
not automatic.
 exception: subject to stipulation agreed upon by parties on automatic rescission
and the following rules:
(1) vendee may pay the price after the lapse of the period as long as no demand for
rescission made either judicially or by notarial act
(2) after demand, court cannot grant new term
(3) no automatic rescission for non payment of price
 
when Art. 1592 not applicable
 sale on installments of real property
 mere promise to sell
vendee may no longer pay the price after expiration of the term agreed and even no
demand has yet been made
 
Stipulation On Automatic Rescission Of Sale Of Movable Property (Art. 1593)
 vendor can rescind, as a matter of right, if vendee without valid cause, does not
(1) accept delivery; or (2) pay the price UNLESS a credit period for its payment
has been stipulated
 reason for different rule on real vs. personal properties: stability of price in the
market
 
Breach Of Contract Of Sale Of Goods (Art. 1594)
 “goods" -all chattels personal but not things in action or money of legal tender in
the Philippines; includes growing fruits or crops
 actions available:
(1) action of seller for payment of the price (Art. 1595)
(2) action by seller for damages for non-acceptance of the goods (Art. 1596)
(3) action by seller for rescission of contract (Art. 1597)
(4) action by the buyer for specific performance (Art. 1598)
(5) action by the buyer for rescission or damages for breach of warranty (Art. 1599)
 
Seller’s right of action for the price 3 cases:
 ownership of the goods has passed to the buyer and he wrongfully
neglects/refuses to pay for the price;
 when price is payable on a certain day and the buyer wrongfully neglects/refuses
to pay such price, irrespective of delivery or of transfer of title;
 when the goods cannot readily be resold for a reasonable price and the buyer
wrongfully refuses to accept them even before the ownership in the goods has
passed, if Art. 1596 4th paragraph is not applicable.
ownership in the goods shall have passed to the buyer UNLESS the price is payable on
a certain day or the goods can readily be resold for a certain price
 
Seller's Right Of Action For Damages (Art. 1596)
 3 cases :
(1) if buyer without lawful cause neglects/refuses to accept and pay for the goods
he agreed to buy;
(2) in an executory contract, where the ownership in the goods has not passed, and the
seller cannot maintain an action to the price;
(3) if the goods are not yet identified , the time of the contract or subsequently, seller's
right is necessarily confined for damages.
 measure of damages for nonacceptance:
(1) difference between contract price and market price
(2) full amount of damage ( nominal damages)
(3) proximate damages (consequential damages)
 seller is entitled to the following for buyer's repudiation:
(1) labor performed and expenses incurred for materials before receiving notice
of  repudiation
(2) profit he would have realized if the sale
 
When Seller May Rescind And No Delivery Yet On The Goods (Art. 1598)
 When buyer has repudiated the contract of sale;
 When the buyer has manifested his inability to perform his obligations
thereunder;
 When the buyer has committed a breach of the contract of sale.
Requirement of rescission: notice to the buyer
If the goods already delivered: recovery of the value of the things given.
 
Buyer’s right to Specific Performance (Art. 1598)
 Applies only on sale with specific or determinate/ascertained goods
 Without giving the seller the option of payment of damages in lieu of option to
retain the goods
 Judgment on specific performance: unconditional or with conditions in payment
of the price, damages etc.
 
Remedies Of Buyer For Breach Of Warranty (Art. 1599)
(1) Accept the goods and set up the seller’s breach to reduce or extinguish the
price; recoupment
(2) Accept the goods and maintain an action for damages for the breach of he
warranty; counterclaim for damages
(3) Refuse the goods and maintain an action for damages for the breach of
warranty; action for damages
(4) Rescind the contract of sale by returning or offering the return of the goods and
recover the price. Rescission
 Remedies are alternative except for fulfillment and the same become impossible-
rescission is possible Measure of damages-similar to Art. 1596 (2)
 
When buyer cannot resort to RESCISSION
(1) When he accepted the goods knowing of the breach of warranty without protest
(2) If he fails to notify the seller within a reasonable time of his election to rescind
(3) If he fails to return or offer to return the goods in substantially as good condition as
they were in at the time of the transfer of ownership to him (except when injury to the
goods was caused by the very defect against which the seller warranted)
 
Rights and obligations of buyer in case of rescission
 Buyer shall cease to be liable for the price, his only obligation being to return the
goods;
 If he has paid the price, or any part thereof, he may recover it from the seller.
 Right to hold the goods as bailee for the seller should the latter refuse the return
of the goods and to have lien thereon for any portion of the price already paid (as
if an unpaid seller)
 
EXTINGUISHMENT OF SALE (Arts. 1600-1623)
Causes Of Extinguishment (Art. 1600)
 Common- like other contracts i.e., payment, loss of the thing, condonation etc.
 Special- recognized under law on sales, i.e., sale of personal property by
installment; stoppage in transitu;sale of real property by unit/measure/number;
case of partial eviction; accion redhibitoria or accion quanti minoris;
 Extra-special- with special discussion by the Civil Code, i.e., conventional and
legal redemption.
 
Conventional Redemption (Art. 1601)
 VENDOR reserves the right to repurchase the thing sold, reimburses the vendee
of the price, expenses of the contract and other legitimate payments, usual and
necessary expenses and fulfills other stipulations which may have been agreed
upon.
 Applies both to real and personal properties, generally.
Equitable Mortgage (Art. 1602)
 Although it lacks the proper formalities of a mortgage, shows the intention of the
parties to make the property subject of the contract as security for the fulfillment
of an obligation.
 Presumption of equitable mortage:
(1) When the price of a sale with right to repurchase is unusually inadequate;
 (2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another
instrument
 (4) extending the period of redemption or granting a new period is executed;
 (5) When the purchaser retains for himself a part of the purchase price;
 (6) When the vendor binds himself to pay the taxes on the thing sold;
 (7) In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation.
 
Presumption Of Equitable Mortgage (Arts.1603-1604)
 DOUBT whether an absolute sale or pacto de retro
 Exception to the rule in onerous contracts, in favor of the greatest reciprocity of
interest (Art. 1378 (1))
 Lesser transmission of rights
 
Vendor ask reformation (Art. 1605)
 Article 1359. When, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to
embody the agreement, by reason of mistake, fraud, inequitable conduct or
accident, one of the parties may ask for the reformation of the instrument to the
end that such true intention may be expressed.
 Reformation as a remedy in equity to conform to the real intention of the parties
 
Period to Exercise Right Of Redemption (Art. 1606)
 No agreement granting right: no right of redemption
 Agreement merely grants right with no stipulated period: 4 years from date of
contract
 Agreement with definite period: period but not to exceed 10 years
 Period is intended but not stated in the contract: 10 years
 Agreed period exceeds 10 years: 10 years from execution of the contract to
exercise redemption
 Final judgment of a contract pacto de retro: 30 days to exercise right of
redemption
 
Judicial Order For Recording Of Consolidation Of Ownership (Art. 1607)
 Real property is involved
  Vendor failed to comply obligations under Art. 1616
 Judicial order required for consolidation in favor of vendee a retro
 
Right of Redemption A REAL Right (Art. 1608)
 Real right vs. a personal right
 vendor may bring his action against every possessor whose right is derived from
the vendee
 Exception: buyer in good faith of a registered real property
 
Vendee Subrogated to the Vendor’s Rights (Art. 1609)
 Subrogation of the credit with all the rights thereto appertaining
 Rights of vendee to enjoy the property as an owner
 
vendor's creditors right to redeem (Art. 1610)
only after the exhaustion of the properties of the vendor
 
Redemption In Sale Of Part Of Undivided Real Property (Art. 1611)
 vendee may compel the vendor to redeem the whole property, if the latter wishes
to make use of the right of redemption
 co-ownership discouraged by law
 
Redemption in joint sale by co-owners (Art. 1613)
 co-owners sold by them jointly undivided immovable with right of repurchase-
right only as regards respective share
 applies to heirs of vendor of an undivided immovable
 the vendee may demand of all the vendors or co-heirs that they come to an
agreement upon the purchase of the whole thing sold; and should they fail to do
so, the vendee cannot be compelled to consent to a partial redemption
 
Redemption In Separate Sales By Co-Owners (Art. 1614)
 If sale was made separately and independently on undivided immovable, right to
repurchase may be exercised independently, vendee a retro cannot compel
redemption of whole property
 
Redemption Against Heirs Of Vendee (Art. 1615)
 vendor a retro can exercise the right of redemption against the heirs of the
vendee a retro - respective shares only
 partition by adjudication to one heir- right to redemption against said heir for the
whole
 
Obligations Of Vendor A Retro In Case Of Redemption (Art.1616)
 price of the sale
 expenses of the contract and other legitimate expenses (necessary and useful)
 offer to redeem must be bona fide
 legal consignation not required to vendor
 
Right To Fruits Of Land (Art. 1617)
 fruits when paid at the time of sale-reimbursement to the vendee a retro
 fruits no payment- no reimbursement
 no fruits at the time of sale and exist at redemption- proportionate to the time of
possession
 
Recovery Of The Thing Sold By The Vendor A Retro (Art. 1618)
 free from all charges or mortgages constituted by the vendee
 respect the leases executed in good faith according to the law of customs
 
Legal Redemption (Art. 1619)
 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
 
Legal Redemption By a Co-Owner (Art. 1620)
 Requisites:
(1) existence of co-ownership
(2) alienation of all or any of the shares
(3) sale to a stranger
(4) sale before partition
if price is grossly excessive- pay only reasonable price
2 or more redemptioners: proportionate to the share
 
Legal Redemption Of Adjacent Owners Of Rural Lands (Art. 1621)
 Apply to rural lands
 There is alienation
 Piece alienated not to exceed 1 hectare
 Vendee own some rural land
 rural land not separated by brooks, drains ,ravines, roads or apparent easements
-If 2 or more adjacent owners: preference on smaller area/ First who requested
redemption --Encourage maximum development and utilization of agricultural
lands
 
Pre-Emption And Redemption Of Adjacent Owners Of Urban Lands (Art. 1622)
 pre-emption: act or right of purchasing before others
 redemption: exercised after the sale against the vendee
 requisites: adjacent; piece of land sold so small and major portion cannot be
used for any practical purpose; urban land was bought for speculation
 price-reasonable
 preference: whose intended use of the land appears best justified
 
Period To Exercise Pre-Emption Or Redemption (Art. 1623)
30 days from notice in writing given by the vendor
 
Assignment Of Credits And Other Incorporeal Rights (Art. 1624)
 Assignment of credit is a contract by which a person (assignor/creditor) transfers
to another his rights and actions against a 3rd person (debtor) in consideration of
a price certain in money or its equivalent.
 Nature: It is a contract of SALE: subject matter- credit/right; consideration- price
paid for credit or right; consent- agreement of the parties
 Consent of debtor not essential, only notice
 Example: Donna owes Carla P 5,000.00. Carla assigns her credit right to Teddy
for a consideration with notice to Donna. Carla is the assignor. Teddy is the
assignee. Donna will have to make payment to Teddy and no longer Carla.
 
Form Of Assignment Of Credits (Art. 1625)
  Between the parties
- Any form, written or oral, or mixed
 As against 3rd persons
(1) Movable property: must be in a public instrument
(2) Real property: public instrument recorded in the Register of Deeds
 Subrogation
Assignee merely steps in the shoes of the assignor, the former acquiring the
credit subject to defenses available to the debtor against the assignor.
Debtor Pays Before The Knowledge Of Assignment (Art. 1626)
 Consent of debtor not essential, only notice
 Purpose of notice: protection of the assignee as the payment should be given to
him and not to the original debtor.
 Effect of payment by debtor
(1) before knowledge of assignment: payment to the original debtor is valid. Assignee’s
action this time is against the assignor/original creditor.
(2) after knowledge of assignment: debtor is not released from obligation to pay the
assignee
 
Accessory Rights Included (Art. 1627)
 Guaranty
 Mortgage
 Pledge Preference
Reason: accessory follows the principal, subject to a contrary stipulation in the
assignment

1. Warranties of assignor (Arts. 1628-1629)

 Legality and existence of the credit at the time of sale except if the credit was
sold as doubtful. (example: debt evidenced by a p.n. and issued as payment for
gambling debt; or when the debt has prescribed. When doubtful: credit right is in
litigation)
 Re: debtor’s solvency, no warranty except:

(a) When there is stipulation (Duration of warranty: period as stipulated; or if assignment

done before maturity- 1 year from maturity; if assignment done after maturity- 1 year
from the time of assignment.)
(b) When the insolvency already existed prior to the sale and of public knowledge.
 
Liability Of Assignor When Warranties Are Violated
  If assignor is in good faith:
(1) Price received
(2) Expenses of the contract
(3)  Other legitimate payments
 If assignor is in bad faith:
(1)  Price received
(2) Expenses of the contract
(3) Other legitimate payments
(4) Damages
 
Sale Of Successional Rights (Arts. 1630; 1632; 1633)
 Right to an inheritance before partition without enumerating the thing which it is
composed- liable only for his character as an heir – no warranty of heirship
unless things were enumerated
 Vendor profited from the fruits/received anything from the inheritance sold except
the price- obligated to pay them to the vendee unless a contrary has been
stipulated
 Vendee must reimburse the vendor for the debts and charges on the estate paid
by the vendor unless a contrary has been stipulated
 
Sale Of Whole Of Certain Rights, Rents Or Products (Art. 1631)
 Vendor: warranty on the legitimacy of the whole in general and shall not be
obliged to warrant each of the various parts of which it may be composed, except
when he is evicted from the whole of the thing or from a part of the greater value.
 Example: sale of interest in a partnership; sale of receivables (greater value of
more than 50%)