SALES 1

DOUBLE SALE (1544)

General Rule: FIRST IN TIME, PRIORITY IN RIGHT

Applicability of General Rule: Only when the requisites in Article 1544 are not present

Requisites for DOUBLE SALE to EXIST (VOCS)

1. Two or more sales transactions must constitute valid sales
2. Two or more sales transactions must pertain to the same object or subject matter
3. Two or more buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests
4. Two or more buyers must each have brought from the very same seller

Rules of Preference of Ownership

Movable or Personal Property: Owner is the one who is in first possession in good faith.

Immovable
1. First to register in good faith
2. No inscription, first to possess in good faith
3. No inscription and no possession in good faith—Person who presents oldest title in good faith

What is REGISTRATION? It is any entry made in the books of the Registry, including both registration in its ordinary and strict sense, and
cancellation, annotation, and even the marginal notes. It is the entry which records solemnly and permanently the right of ownership and other real
rights.

CASES WHERE ARTICLE 1544 CANNOT BE INVOKED

1. When the earlier transaction is a pacto de retro sale of an unregistered land and the subsequent conveyance is a donation of the land in favor of
another by the vendor a retro. The vendee a retro has the better right over the donee. The donor had nothing more to donate because of failure to
repurchase the property.
2. Where one of the deeds of sale is a forgery.
3. Where one sale is absolute and the other is a pacto de retro where the period to redeem has not yet expired.
4. Where one of the sales is subject to a suspensive condition which condition was not complied with and the other is an absolute sale. Even if the
conditional sale was made prior to the absolute sale.
5. Where one transaction is a sale and the other a mortgage
6. Where one claim is based on prescription and the other is on sale
7. Where the subject land is not registered under PD 1529
8. In a contract to sell, there being no previous sale of the property.

 Article 1544 applicable to Double Donations as provided by Art. 744.

CONDITIONS AND WARRANTIES

Article 1545.
What are the options of a party to a contract of sale subject to a condition, when such condition was not fulfilled by the other party?
a. Refuse to proceed with the contract OR
b. Waive performance of the condition and proceed with the contract

What if the condition agreed upon is in the nature of a promise that it should happen? Then the non-fulfillment of such condition is considered a
breach of warranty.

Article 1546. WARRANTY.

--It is a collateral undertaking in a sale of either real or personal property, express or implied, that if the property sold does not possess certain
incidents or qualities, the purchaser may either consider the sale void or claim damages for breach of warranty.

Express Warranty—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.

 Affirmation of the value of the thing or statement of the seller’s opinion is not warranty, unless the seller made such affirmation or statement
as an expert and it was relied upon by the buyer.

Implied Warranty—It is inherent in a contract of sale and presumed to exist although nothing has been mentioned about it.

Implied Warranties in Contracts of Sale (1547)

1. Implied warranty as to the right of the seller to sell at the time when ownership has to pass. (Warranty against eviction)
2. Implied warranty against hidden defects or faults or charge or encumbrances unknown to the buyer
3. Implied warranty as to fitness and merchantability
4. Warranty against encumbrances or non-apparent servitudes (1560)

Cases where implied warranty is not applicable

1. Sale made by a sheriff, auctioneer, mortgagee, pledge or other person professing to sell by virtue of authority in fact or law (1547) (The judgment
debtor is responsible here for eviction)
2. Sale under “as is and where is”—this carries no warranty as to the quality or workable condition of the goods and the buyer takes them as they are.
However, such condition does not include those that could not be discovered by a physical examination of the goods sold.
 SALES 2

3. Sale of second hand articles does not carry any warranty as to the condition, adaptation, fitness or suitability for purposes for which they have been
purchased.
4. Sale of property sold at public auction for tax delinquency. There is no warranty on the part of the State as to the title of the owner.

WARRANTY AGAINST EVICTION—The seller guarantees that he has the 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.

Eviction—A judicial process by virtue of which the vendee is deprived of the ownership of the whole or part of the thing he purchased by final judgment
or by an act imputable to the vendor.

Elements (DVJ-SW)
1. Vendee is deprived in whole or in part of the thing purchased
2. The deprivation is by virtue of a final judgment (1557)
3. The judgment is based on a prior right 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 (1558)
5. No waiver of warranty by the vendee

 Failure of the vendee to appeal does not relieve vendor from responsibility [1549]

Effect of Prescription/Adverse Possession (1550)

1. Prescription consummated before sale—Vendee can claim warranty against eviction (deprivation is based on right prior to sale)
2. Prescription consummated after sale—Vendee cannot claim warranty against eviction

 If Property is sold for non-payment of taxes due and not made known to the vendee before the sale, vendor is liable for eviction (1551)
 Judgment debtor is responsible for eviction in judicial sales unless otherwise decreed in judgment (1552)
 Any stipulation exempting vendor from responsibility for eviction is void if he acted in bad faith (1553)

Kinds of Waiver in eviction (1554) –Applicable to total eviction only.

1. Consciente—the waiver is voluntarily made by the vendee w/o the knowledge and assumption of the risks of eviction. (Vendor shall only be liable to
pay the value w/c the thing sold had at the time of the eviction)
2. Intencionada—the waiver is made by the vendee w/ knowledge of the risk of eviction and assumption of its consequences. (Vendor here shall not be
liable)

Rights of Vendee in case of eviction (1555)

 To demand to the vendor the following (VICED)
1. Value which the thing sold had at the time of eviction, be it greater or less than the price of the sale.
2. Income or fruits, if vendee was ordered to deliver them to the party who won the suit against him
3. Costs of the suit which caused the eviction, and those suit brought against the vendor for warranty
4. Expenses of the contract, if the vendee paid them
5. Damages and interests and ornamental expenses, if the sale was made in bad faith.

* Rescission is not a remedy in case of Total eviction because rescission contemplates that the one demanding it is able to return whatever he has
received under the contract. Since the vendee can no longer restore the subject-matter of the sale to the vendor, rescission cannot be carried out.

Rights of Action of Vendee in case of Partial Eviction (1556)

1. Enforce the vendor’s liability for warranty against eviction OR
2. Demand the rescission of the contract of sale w/ obligation to return the thing w/o other encumbrances than those w/c it had when acquired

 Applicability: A part of the thing sold of such importance was lost because of eviction, that the vendee would not have bought it w/o said part.
 Same rules apply to a case where two or more things are jointly sold for a lump sum or for separate price for each, when the vendee would
not have bought one w/o the other.

Warranty against encumbrances or non-apparent servitudes (1560)

Requisites:
1. Immovable sold is encumbered with non-apparent burden or servitude not mentioned in the agreement
2. Nature of non-apparent servitude or burden is such that it must be presumed that the buyer would not have acquired it had he been aware thereof.

Remedies of the vendee

1. Rescission of the contract OR
2. Indemnity

 Warranty is not applicable if non-apparent servitude is recorded in the Registry of Property, unless there is an express warranty that the thing
is free from all burdens and encumbrances.
 Prescription of actions for rescission of damages: W/in 1 year from the execution of contract
 If what was chosen was rescission but was not filed w/in 1 year, vendee may still sue for damages w/in one year from the discovery of
burden or servitude.

WARRANTY AGAINST HIDDEN DEFECTS

 SALES 3

Requisites: (HIPANN)
1. Defect must be hidden. –it cannot be discovered by an ordinary inspection or examination.
2. Defect must be important or grave. –a) defect renders the thing sold unfit for the use for w/c it is intended; b) diminishes its fitness for the use
intended, to such an extent that the vendee would not have acquired if he had been aware thereof or would have given a lower price for it.
3. Defect must be present at the time of the execution of the sale.
4. Action for rescission or reduction of price must be filed w/in the prescriptive period.
5. No waiver of the warranty against hidden defects.
6. Notice by the vendee to the vendor within a reasonable time.

REDHIBITORY DEFECTS—an imperfection or defect of such nature as to engender a certain degree of importance

REDHIBITION--claim against the seller of a product in which the buyer demands a full refund or a reduction of the purchase price due to a hidden
defect that prevents the product from performing the task for which it was purchased.

Art. 1562—Implied Warranty or Condition as to quality or fitness of goods

Applicability: Goods—all chattel personal but not things in action or money of legal tender, this includes growing fruits or crops

1. IMPLIED WARRANTY OF FITNESS.

General Rule: there is no implied warranty of fitness
Exceptions: a) Buyer expressly makes known the particular purpose or by implication; b) Buyer relies upon the seller’s skill or judgment

2. IMPLIED WARRANTY OF MERCHANTABILITY. Applies when goods are bought by description.

* Merchantability—quality and condition of goods that a reasonable man would after a full examination accept the same under the
circumstances of the case, in the performance of his offer to buy, whether for his own use or for resale.
--fitness for the general purpose for which they are sold.

 There is no warranty as to fitness for particular purpose in a contract of sale of a specified article under its patent or other trade name unless
there is a contrary stipulation. (1563)
 A warranty as to quality or fitness for a particular purpose may be attached to a contract by usage or trade in place of execution. (1564)
 Merchantability of goods in sale by sample is implied. Defect should not be apparent on reasonable examination of the sample for the
vendor to be liable (1565)
 Vendor is liable eventhough not aware of hidden defects, unless there is a contrary stipulation and he is in good faith (1566)

Caveat Venditor—“Let the Seller Beware” Vendor is liable eventhough not aware of hidden defects
Caveat Emptor—“Let the Buyer Beware” Requires the purchaser to be aware of the supposed title of the vendor and one who buys without
checking the vendor’s title takes all the risks and losses consequent to such failure.

Remedies of Buyer (1567)

1. Accion Redhibitoria—action seeking withdrawal from the contract
2. Accion quanti minores or estimatoria—action for proportionate reduction in the price

Nature of Remedies: Alternative; both with damages

Loss of Thing Sold due to Hidden Defects (1568)

Vendor in Bad Faith Vendor in Good Faith

Bears the loss Does not bear the loss
Must return the price Must return the price with interest
Must refund expenses of the contract Must refund expenses of the contract
Pay damages Not obliged to pay damages

Loss of Thing Sold w/ Hidden defects through fortuitous event or vendee’s fault (1569)
* Vendee may demand price paid less value of the thing at the time of loss plus damages if vendor acted in bad faith.

 Warranties against hidden defects, merchantability and fitness are applicable to judicial sales but judgment debtor is not liable for damages,
because the latter is only forced to sell and therefore did not take part in the conduct of the sale and determination of price which precludes
possibility of bad faith (1570)
 Prescription of Actions: 6 Months from delivery of thing (1571)

Joint Sale of two or more animals (1572)

 Where one suffers redhibitory defect this shall not affect others
 Exception: If the buyer would not have purchased the sound animals w/o the defective ones. In such case, sale may be rescinded.
 Presumption of Exception: If a team, yoke or pair or set is bought even if a separate price has been fixed for each
 The following rules shall be applicable to joint sale of two or more things (1573)

* There is no warranty against hidden defects of animals sold at fairs or at public auctions or of livestock sold as condemned.(1574) Rationale: Animals
are not bought because of their quality or capacity for work; and in such circumstance defects are clearly known to buyer.