SALES

Q: What is the effect of failure to

determine the price?

A:
Where contract is executory
ineffective
Where the thing has been delivered to
and appropriated by the buyer the
buyer must pay a reasonable price
therefore
 Q: What is the effect of a breach of the agreed manner of
payment to the contract of sale?
A: None. A contract of sale being a consensual contract, it
becomes binding and valid upon the meeting of the minds as to
price.
If there is such meeting of the minds as to price, the contract of
sale is valid, despite the manner of payment, or even the
breach of that manner of payment.
If the real price is not stated in the contract, then the contract of
sale is valid but subject to reformation.
If there is no meeting of the minds as to the price because the
price stipulated in the contract is simulated, then the contract is
void, in accordance with Article 1471 of the Civil Code. (Sps.
Buenaventura v. CA, G.R. No. 126376, Nov. 20, 2003)
 Q: In an action for specific performance with damages, X
alleged that there was an agreement to purchase the lot of Y. As
regards the manner of payment, however, Ys receipts
contradicted the testimony of X. The receipts failed to state the
total purchase price or prove that full payment was made. For
this reason, it was contended that there was no meeting of their
minds and there was no perfected contract of sale. Decide.
A: The question to be determined should not be whether there was
an agreed price, but what that agreed price was. The sellers could
not render invalid a perfected contract of sale by merely
contradicting the buyers obligation regarding the price, and
subsequently raising the lack of agreement as to the price. (David v.
Tiongson, G.R. No. 108169, Aug. 25, 1999
 FAILURE TO PAY CONSIDERATION LACK OF
CONSIDERATION
As to validity of contract of sale
It is not the act of payment of price that determines the validity of
a contract of sale.
Note: Payment of the price has nothing to do with the perfection
of the contract. Instead, it goes into the performance of the
contract. Lack of consideration prevents the existence of a
valid contract.
As to resultant right
Failure to pay the consideration results in a right to demand the
fulfillment or cancellation of the obligation under an existing valid
contract. The contract of sale is null and void and produces
no effect whatsoever
OPTION MONEY
Q: What is the effect of failure to
determine the price?

A:
Where contract is executory ineffective
Where the thing has been delivered to and
appropriated by the buyer the buyer must
pay a reasonable price therefore
Q: What is an option money?
A: The distinct consideration in case of an option
contract. It does not form part of the purchase price
hence, it cannot be recovered if the buyer did not
continue with the sale.
Q: When is payment considered option money?
A: Payment is considered option money when it is
given as a separate and distinct consideration from
the purchase price. Consideration in an option
contract may be anything or undertaking of value.
EARNEST MONEY
Q: What is an earnest money or arras?
A: This is the money given to the seller by the
prospective buyer to show that the latter is truly
interested in buying the property, and its aim is to bind
the bargain. (Pineda, p. 75)
Q: What is the effect of giving an earnest money?
A: It forms part of the purchase price which may be
deducted from the total price. It also serves as a proof of
the perfection of the contract of sale. The rule is no more
than a disputable presumption and prevails only in the
absence of contrary or rebuttable evidence. (PNB v CA,
262 SCRA 464, 1996)
Q: When is payment considered an earnest
money?
A: When the payment constitutes as part of the
purchase price. Hence, in case when the sale
did not happen, it must be returned to the
prospective buyer.
OPTION MONEY EARNEST MONEY

Money given as distinct consideration for Forms part of the purchase price
an option contract

Applies to a sale not yet perfected Given only when there is already a sale

Prospective buyer is not required to buy When given, the buyer is bound to pay
the balance.

If buyer does not decide to buy, it cannot If sale did not materialize,it must be
be recovered returned.
 Q: Bert offers to buy Simeon's property under the following terms
and conditions: P1 million purchase price, 10% option money, the
balance payable in cash upon the clearance of the property of all
illegal occupants. The option money is promptly paid and Simeon
clears the property of all illegal occupants in no time at all.
However, when Bert tenders payment of the balance and asks for
the deed of absolute sale, Simeon suddenly has a change of heart,
claiming that the deal is disadvantageous to him as he has found
out that the property can fetch three times the agreed purchase
price. Bert seeks specific performance but Simeon contends that
he has merely given Bert an option to buy and nothing more and
offers to return the option money which Bert refuses to accept.
Will Bert's action for specific performance prosper? Explain.
May Simeon justify his refusal to proceed with the sale by the fact
that the deal is financially disadvantageous to him? Explain.
 Bert's action for specific performance will prosper because there was a
binding agreement of sale, not just an option contract. The sale was
perfected upon acceptance by Simeon of 10% of the agreed price.
This amount is in reality an earnest money which, under Art. 1482,
"shall be considered as part of the price and as proof of the perfection
of the contract." (Topacio v. CA, G.R. No. 102606, July 3, 1992;
Villongco Realty v. Bormaheco, G.R. No. L26872, July 25, 1975).

Simeon cannot justify his refusal to proceed with the sale by the fact
that the deal is financially disadvantageous to him. Having made a bad
bargain is not a legal ground for pulling out of a binding contract of
sale, in the absence of some actionable wrong by the other party
(Vales v. Villa, G.R. No. 10028, Dec. 16, 1916), and no such wrong
has been committed by Bert. (2002 Bar Question)
Q: What is the effect of delivery?
A:
GR: Title /ownership is transferred
XPN: Contrary is stipulated as in the case of:
Pactum reservatii in domini agreement that
ownership will remain with seller until full
payment of price (Contract to sell);
Sale on acceptance/approval;
Sale on return;
There is implied reservation of ownership;
 Q: Spouses Bernal purchased a jeepney from Union Motor to be paid in
installments. They then executed a promissory note and a deed of chattel
mortgage in favor of Union Motor which in turn assigned the same with
Jardine Finance. To effectuate the sale as well as the assignment of the
promissory note and chattel mortgage, the spouses were required to sign
documents, one of which was a sales invoice. Although the Spouses have not
yet physically possessed the vehicle, Union Motors agent required them to
sign the receipt as a condition for the delivery of the vehicle. It was
discovered that the said agent stole the vehicle even prior to its delivery to
the spouses. Was there a transfer of ownership of the subject vehicle?
A: No. The issuance of a sales invoice does not prove transfer of ownership of the
thing sold to the buyer; an invoice is nothing more than a detailed statement of the
nature, quantity and cost of the thing sold and has been considered not a bill of sale
The registration certificate signed by the spouses does not conclusively prove that
constructive delivery was made nor that ownership has been transferred to the
respondent spouses. Like the receipt and the invoice, the signing of the said
documents was qualified by the fact that it was a requirement of Union Motor for the
sale and financing contract to be approved. In all forms of delivery, it is necessary
that the act of delivery, whether constructive or actual, should be coupled with the
intention of delivering the thing. The act, without the intention, is insufficient.
Inasmuch as there was neither physical nor constructive delivery of a determinate
thing, (in this case, the subject motor vehicle) the thing sold remained at the sellers
risk. The Union Motor should therefore bear the loss of the subject motor vehicle
after its agent allegedly stole the same. (Union Motor Corp. v. CA, G.R. No. 117187,
Q: How may the buyer accept the
delivery of the thing sold?

A:
1. Express he intimates to seller that he
has accepted
2. Implied
a. Buyer does not act inconsistent with
ownership of seller after delivery
b. Retains without intimating to seller that
he has rejected
 Q: What is the effect if the buyer refuses to accept despite
delivery of the object of the sale?
A: Delivery is completed. Since delivery of the subject matter of the
sale is an obligation on the part of the seller, the acceptance thereof
by the buyer is not a condition for the completeness of the delivery.
(Villanueva, p. 117)
Note: Thus, even with such refusal of acceptance, delivery
(actual/constructive), will produce its legal effects. (e.g. transferring
the risk of loss of the subject matter to the buyer who has become the
owner thereof) (Villanueva, p. 117)
Under Art. 1588, when the buyers refusal to accept the goods is
without just cause, the title thereto passes to him from the moment
they are placed at his disposal. (Villanueva, p. 117)
Q: Is payment of the purchase price
essential to transfer ownership?
A: Unless the contract contains a stipulation
that ownership of the thing sold shall not
pass to the purchaser until he has fully paid
the price, ownership of the thing sold shall
be transferred to the vendee upon the
actual or constructive delivery thereof.
(Diaz, p. 48)
Q: What are the effects of a sale of
goods on installment?
A:
Goods must be delivered in full except
when stipulated

When not examined by the buyer it is

not accepted until examined or at least
had reasonable time to examine
 Q: When may the buyer suspend payment of the price?

A:
GR:
If he is disturbed in the possession or ownership of the thing bought
If he has wellgrounded fear that his possession or ownership would be
disturbed by a vindicatory action or foreclosure of mortgage.
XPN:
Seller gives security for the return of the price in a proper case;
A stipulation that notwithstanding any such contingency, the buyer
must make payment;
Disturbance or danger is caused by the seller;
If the disturbance is a mere act of trespass;
Upon full payment of the price.

U
 Q: When does delivery does not transfer title?

A:
1. Sale on Trial, Approval, or Satisfaction
2. When there is an EXPRESS RESERVATION
a. If it was stipulated that ownership shall not pass to the
purchaser until he has fully paid the price (Art. 1478)
3. When there is an IMPLIED RESERVATION
a. a. When goods are shipped, but the bill of lading states
that goods are deliverable to the seller or his agent, or to
the order of the seller or his agent
b. b. When the bill of lading is retained by the seller or his
agent
 c. when the seller of the goods draws on the buyer for the price and
transmits the bill of exchange and the bill of lading to the buyer , and
the latter does not honor the bill of exchange by returning the bill of
lading to the seller
4. When sale is not VALID
5. When the seller is not the owner of the goods
XPNs:
a. Estoppel: when the owner is precluded from denying the sellers
authority to sell
b. Registered land bought in good faith: Ratio: Buyer need not go
beyond the Torrens title
c. Order of Courts in a Statutory Sale
d. When the goods are purchased in a Merchants store, Fair or
Market (Art. 1505)
SALE ON TRIAL, APPROVAL OR
SATISFACTION

Q: What is sale on trial, approval or

satisfaction?
A: It is a contract in the nature of an
option to purchase if the goods prove to
be satisfactory, the approval of the buyer
being a condition precedent.
 Q: What are the different kinds of delivery?

A:
Actual thing sold is placed under the control and possession of
buyer/agent;
Constructive does not confer physical possession of the thing, but by
construction of law, is equivalent to acts of real delivery.
Requisites:
a. The seller must have control over the thing
b. The buyer must be put under control
c. There must be intention to deliver the thing for purposes of ownership

Tradicion Symbolica delivery of certain symbols representing the thing

. Tradicion Instrumental delivery of the instrument of conveyance.
. Traditio Longa Manu Delivery of thing by mere agreement; when seller
points to the property without need of actually delivering
radicion Brevi Manu Before contract of sale, the wouldbe buyer was
already in possession of the wouldbe subject matter of sale
onstitutum Possessorium at the time of perfection of contract, seller
continues to have possession merely as a holder
 3. Quasitradition delivery of rights, credits or incorporeal property, made
by:
a. Placing titles of ownership in the hands of the buyer;

b. Allowing buyer to make use of rights

4. Tradition by operation of law Execution of a public instrument is

equivalent to delivery. But to be effective, it is necessary that the seller
have such control over the thing sold that, at the moment of sale, its
material delivery could have been made.
GR: There is presumption of delivery
XPN:
a. Contrary stipulation;
b. When at the time of execution, subject matter was not subject to the
control of seller;
c. Seller has no capacity to deliver at time of execution;
d. Such capacity should subsist for a reasonable time after execution of
instrument.
 Q: Susan invested in commodity futures trading in OCP, which involves the
buying or selling of a specified quantity and grade of a commodity at a future
date at a price established at the floor of the exchange. As per terms of the
trading contract, customer's orders shall be directly transmitted by OCP as
broker to its principal, Frankwell Enterprises, which in turn must place the
customer's orders with the Tokyo Exchange. In this case, however, there is no
evidence of such transmission. When Susan withdrew her investment, she was
not able to recover the entire amount. She thus filed a complaint and the trial
court ruled in her favor, saying that the contract is a species of gambling and
therefore void. Is the courts ruling correct?
A: Yes. A trading contract is a contract for the sale of products for future delivery, in
which either seller or buyer may elect to make or demand delivery of goods agreed to
be bought and sold, but where no such delivery is actually made. In this case, no
actual delivery of goods and commodity was intended and ever made by the parties. In
the realities of the transaction, the parties merely speculated on the rise and fall in the
price of the goods/commodity subject matter of the transaction. If Susans speculation
was correct, she would be the winner and OCP, the loser, so OCP would have to pay
her the "margin".
But if she was wrong in her speculation then she would emerge as the loser and OCP,
the winner. OCP would then keep the money or collect the difference from her. This is
clearly a form of gambling provided for with unmistakable certainty under Article 2018.
(Onapal Phils. Commodities, Inc. vs. CA and Susan Chua, G.R. No. 90707, Feb. 1,
1993)
 Q: Given that actual possession, control and enjoyment is a
main attribute of ownership, is symbolic delivery by mere
execution of the deed of conveyance sufficient to convey
ownership over property?

A: Yes, possession is also transferred along with ownership thereof

by virtue of the deed of conveyance. The mere execution of the deed
of conveyance in a public document is equivalent to the delivery of
the property, prior physical delivery or possession is not legally
required. The deed operates as a formal or symbolic delivery of the
property sold and authorizes the buyer or transferee to use the
document as proof of ownership. Nothing more is required. (Sps.
Sabio v. International Corporate Bank, Inc. et. at. G.R. No. 132709,
Sept. 4, 2001)
Q: Can delivery be effected through a
carrier?
A:
GR: Yes, if the seller is authorized. Delivery
to carrier is delivery to the buyer.
XPN:
A contrary intention appears
Implied reservation of ownership under
Art. 1503, pars 1, 2, 3.
 Q: What are the kinds of delivery to carrier?

A:
FAS (Free Along Side) when goods are delivered alongside the
ship, there is already delivery to the buyer

2. FOB (Free On Board) when goods are delivered at the point of

shipment, delivery to carrier by placing the goods on vessel is delivery
to buyer
3. CIF (Cost, Insurance, Freight)
a. When buyer pays for services of carrier, delivery to carrier is
delivery to buyer, carrier as agent of buyer;
b. When buyer pays seller the price from the moment the vessel is
at the port of destination, there is already delivery to buyer
4. COD (Collect On Delivery) the carrier acts for the seller in
collecting the purchase price, which the buyer must pay to obtain
possession of the goods.
Q: What are the sellers duties after
delivery to the carrier?

A:
To enter on behalf of the buyer into such
contract reasonable under the
circumstances;
To give notice to the buyer regarding
necessity of insuring the goods.
 Q: Where is the place of delivery?

A:
That agreed upon
Place determined by usage of trade
Sellers place of business
Sellers residence
In case of specific goods, where they can be found

Q: When should the object be delivered?

A:
Stipulated time
If there is none, at a reasonable hour.
Q: What are the effects of a sale of goods on installment?

A:
Goods must be delivered in full except when stipulated
When not examined by the buyer it is not accepted until examined or at
least had reasonable time to examine
Q: When is the seller not bound to
deliver the thing sold?

A:
If the buyer has not paid the price;
No period for payment has been fixed in
the contract;
A period for payment has been fixed in the
contract but the buyer has lost the right to
make use of the time.
 Q: When is there a double sale?
A: There is double sale when the same object of
the sale is sold to different vendees.
Note: Requisites:
Same subject matter
Same immediate seller
Two or more different buyers
Both sales are valid
 Q: What is the rule on double sale?
A: First in time, priority in right
Note: Rule on Double Sale regarding immovables:
GR: Apply Art.1544
XPN: Sale of registered lands apply Torrens System
Q: What are the rules according to Article 1544 of the Civil Code?

A:
c. Movable Owner who is first to possess in good faith
d. Immovable
d. First to register in good faith
e. No inscription, first to possess in good faith
f. No inscription & no possession in good faith Person who presents
oldest title in good faith
 Q: Ten Forty Realty purchased from Galino a parcel of
land. However, the Deed of Sale was not recorded in the
Registry of Deeds. Subsequently, Galino sold the same
property to Cruz who immediately took possession of
the said property. Who has a better right between Ten
Forty and Cruz?
A: In the absence of the required registration, the law gives
preferential right to the buyer who in good faith is first in
possession. The subject property had not been delivered to
Ten Forty; hence, it did not acquire possession either
materially or symbolically. As between the two buyers,
therefore, respondent was first in actual possession of the
property. (Ten Forty Realty & Devt. Corp. v. Cruz, G.R. No.
151212, Sept. 10, 2003)
Q: Explain the principle of prius tempore, potior
jure.
A: Knowledge by the first buyer of the second sale
cannot defeat the first buyers rights except when
the second buyer first registers in good faith the
second sale. Conversely, knowledge gained by the
second buyer of the first sale defeats his rights
even if he is first to register, since such knowledge
taints his registration with bad faith to merit the
protection of Art. 1544 (2nd par.), the second realty
buyer must act in good faith in registering his deed
of sale. (Diaz, p. 125)
 Q: Juliet offered to sell her house and lot, together with all the
furniture and appliances therein, to Dehlma. Before agreeing to
purchase the property, Dehlma went to the Register of Deeds to verify
Juliets title. She discovered that while the property was registered in
Juliets name under the Land Registration Act, as amended by the
Property Registration Decree, it was mortgaged to Elaine to secure a
debt of P80, 000. Wanting to buy the property, Dehlma told Juliet to
redeem the property from Elaine, and gave her an advance payment
to be used for purposes of releasing the mortgage on the property.
When the mortgage was released, Juliet executed a Deed of Absolute
Sale over the property which was duly registered with the Registry of
Deeds, and a new TCT was issued in Dehlmas name. Dehlma
immediately took possession over the house and lot and the
movables therein. Thereafter, Dehlma went to the Assessors Office to
get a new tax declaration under her name. She was surprised to find
out that the property was already declared for tax purposes in the
name of XYZ Bank which had foreclosed the mortgage on the
property before it was sold to her. XYZ Bank was also the purchaser
in the foreclosure sale of the property. At that time, the property was
still unregistered but XYZ Bank registered the Sheriffs Deed of
Conveyance in the day book of the Register of Deeds under Act 3344
and obtained a tax declaration in its name.
 Was Dehlma a purchaser in good faith?
A: Yes, Dehlma is a purchaser in good faith. She learned about the
XYZ tax declaration and foreclosure sale only after the sale to her was
registered. She relied on the certificate of title of her
predecessorininterest. Under the Torrens System, a buyer of
registered lands is not required by law to inquire further than what the
Torrens certificate indicates on its face. If a person proceeds to but it
relying on the title, that person is considered a buyer in good faith.
The priority in time rule could not be invoked by XYZ Bank because
the foreclosure sale of the land in favour of the bank was recorded
under Act 3344, the law governing transactions affecting unregistered
land, and thus, does not bind the land.
 Q: Who as between Dehlma and XYZ Bank has a better right to the
house and lot?
A: Between Dehlma and the bank, the former has a better right to the
house and lot.
Q: Who owns the movables inside the house?
A: Unless there is a contrary stipulation in the absolute deed of sale,
Dehlma owns the movables covered by the Deed of Sale and her
ownership is perfected by the execution and delivery of public document
of sale. The delivery of the absolute deed of sale is a symbolical
delivery of the house and lot, including the contents of the house. This is
an obligation to deliver a specific thing, which includes the delivery of
the specific thing itself and all of its accessions and accessories even
though they may not have been mentioned (Art. 1166, CC). (2008 Bar
Question)
 Q: Does prior registration by the second buyer of a property
subject of a double sale confer ownership or preferred right in
his favor over that of the first buyer?
A: Prior registration of the disputed property by the second buyer
does not by itself confer ownership or a better right over the property.
Article 1544 requires that such registration must be coupled with good
faith.
Knowledge gained by the first buyer of the second sale cannot defeat
the first buyer's rights except where the second buyer registers in
good faith the second sale ahead of the first, as provided by the Civil
Code.
Knowledge gained by the second buyer of the first sale defeats his
rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith (Art. 1544)
(Uraca, et. al v. CA, G.R. No. 115158, Sept. 5, 1997)
Q: When is a thing considered lost?
A: It is understood that the thing is lost when it:
perishes, or
goes out of commerce, or
disappears in such a way that its existence is
unknown or cannot be recovered. (Art. 1189, 2nd
par.)

Q: What is deterioration?
A: Deterioration is the lowering of the value or
character of a thing. It normally occurs by reason
of ordinary wear and tear. (Pineda, Credit, p. 20)
 A: BEFORE PERFECTION Res perit domino Seller is the owner so
seller bears risk of loss
AT PERFECTION Res perit domino
Contract shall be without any effect the seller bears the loss since the buyer is
relieved of his obligation under the contract
AFTER PERFECTION BUT
BEFORE DELIVERY Two Views:
Paras: Buyer, except:
when object sold consists of fungible goods for a price fixed
when seller is guilty of fraud, negligence, default, or violation of contractual terms;
or
when object sold is generic.

Tolentino: Seller;
Deterioration & fruits Buyer bears loss
AFTER DELIVERY Res perit domino
Buyer becomes the owner so buyer bears risk of loss
Delivery extinguish ownership visavis the seller & creates a new one in favor of
the buyer
Q: What is the effect of the loss of the
thing subject of the contract at the time of
sale?

A:
Total loss contract is void & inexistent
Partial loss buyer may elect between
withdrawing from the contract or demanding
the remaining part, paying its proportionate
price
Q: Who is an unpaid seller?
A: The seller of goods is deemed to be an unpaid
seller either:
when the whole of the price has not been paid or
tendered; or
when a bill of exchange or other negotiable
instrument has been received as conditional
payment, and the condition on which it was
received has been broken by reason of the
dishonor of the instrument, the insolvency of the
buyer, or otherwise.
 Q: What are the remedies of an Unpaid Seller?
A:
I. Ordinary

1. Action for Price

Exercised when:
a. ownership has passed to buyer;
b. price is payable on a day certain
c. goods cannot readily be resold for reasonable price and Art. 1596
is inapplicable

Action for Damages In case of wrongful neglect or refusal by the

buyer to accept or pay for the thing sold
 . Special

1. Possessory Lien Seller not bound to deliver if buyer has not paid
him the price. It is exercisable only in following circumstances:
a. goods sold without stipulation as to credit
b. goods sold on credit but term of credit has expired
c. buyer becomes insolvent

Note: When part of goods delivered, may still exercise right on goods
undelivered
 2. Stoppage in Transitu
Requisites: ISENTU
a. Insolvent buyer
b. Seller must Surrender the negotiable document of title, if any
c. Seller must bear the Expenses of delivery of the goods after the exercise of the
right.
d. Seller must either actually take possession of the goods sold or give Notice of his
claim to the carrier or other person in possession
e. Goods must be in Transit
f. Unpaid seller

Special Right to Resell the Goods

Exercised when:
a. Goods are perishable,
b. Stipulated the right of resale in case of default, or
c. Buyer in default for unreasonable time

4. Special Right to Rescind

Requisites:
a. Expressly stipulated OR buyer is in default for unreasonable time
b. Notice needed to be given by seller to buyer
Q: What are the instances when possessory lien is
lost?

A:
Seller delivers without reserving ownership in goods or
right to possess them
Buyer or agent lawfully obtains possession of goods
Waiver
Q: What is the right of stoppage in transitu?
A: The seller may resume possession of the goods at
any time while they are in transit, and he will then
become entitled to the same rights in regard to the
goods as he would have had if he had never parted
with the possession. (Art. 1530, NCC)
Q: When are goods considered to be in transit?

A:
After delivery to a carrier or other bailee and before
the buyer or his agent takes delivery of them; and
If the goods are rejected by the buyer, and the
carrier or other bailee continues in possession of
them. (Art. 1531, par. 1)
 Q: What is a warranty?
A: A statement or representation made by the seller of goods, as
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.
Q: What is the effect of a breach of warranty?
A: Buyer may:
Refuse to proceed with the contract; or
Proceed with the contract; waive the condition.
Q: What are the kinds of warranties? Distinguish.

A:
Express
. Implied
Q: What are express warranties?
A: Any affirmation of fact or any promise
by the seller relating to the thing 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. (Art.
1546)
Q: What are the requisites of express
warranties?
A: AIR
t must be an Affirmation of fact relating to
the subject matter of sale
Natural tendency is to Induce buyer to
purchase subject matter
Buyer purchases the subject matter
Relying thereon
Q: What is the liability of the seller
for breach of express warranties?
A: The seller is liable for damages.
(Villanueva, p. 249)
 Q: What are implied warranties?
A: Warranties deemed included in all contracts of sale by operation of law.
(Art. 1547)
Warranty that seller has right to sell refers to consummation stage. Not
applicable to sheriff, auctioneer, mortgagee, pledge
Warranty against eviction
Requisites: JPENS
a. Buyer is Evicted in whole or in part from the subject matter of sale
b. Final Judgment
c. Basis of eviction is a right Prior to sale or act imputable to seller
d. 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
e. No waiver on the part of the buyer
Warranty against encumbrances (non apparent)
Requisites:
a. immovable sold is encumbered with nonapparent burden or servitude not
mentioned in the agreement
b. nature of nonapparent servitude or burden is such that it must be
presumed that the buyer would not have acquired it had he been aware
thereof
 the buyer would not have acquired it had he been aware thereof
b. Defect is Hidden
c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the seller within reasonable time
e. Action for rescission or reduction of the price is brought within the
proper period
6 months from delivery of the thing sold
. Within 40 days from the delivery in case of animals
f. There must be No waiver of warranty on the part of the buyer.
Q: When is implied warranty not
applicable?
A: ASAP
As is and where is sale
Sale of second hand articles
Sale by virtue of authority in fact or law
Sale at public auction for tax delinquency
Q: What are the effects of waiver of an
implied warranty?

A:
Seller in bad faith & there is waiver against
eviction void
When buyer w/o knowledge of a particular risk,
made general renunciation of warranty is not a
waiver but merely limits liability of seller in case
of eviction
When buyer with knowledge of risk of eviction
assumed its consequences & made a waiver
seller not liable (applicable only to waiver of
warranty against eviction)
Q: What is a warranty against eviction?
A: In a contract of sale, unless a contrary
intention appears, there is an implied warranty on
the part of the seller that 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. (Art. 1547, 1st
paragraph)