BUSLAW – Lesson 4
If the thing deteriorates without the fault of the debtor, the
RIGHT OF RESALE
May be exercised only when
1. The unpaid seller has either a right of lien
2. Has stopped the goods in transit
3. Under any of the following conditions
a. Where the goods are perishable in nature
b. Where the right to resell is expressly reserved in case the
buyer should make a default
c. Where the buyer delays in the payment of the price for an
unreasonable time
EFFECT OF RESALE
1. The seller may recover from the original buyer damages for any
loss occasioned by the breach of the contract of sale
2. The seller is not liable for any profit made by such resale
RIGHT TO RESCIND
1. If the seller has either the right of lien
2. A right to stop the goods in transit
3. Under either of 2 situations:
a. Where the right to rescind on default has been expressly
reserved
b. Where the buyer has been in default for an unreasonable
time
EFFECT OF SALE OF GOODS SUBJECT TO LIEN OR STOPPAGE IN
TRANSITU
1. The seller’s right is not affected by any disposition of the goods
made by the buyer, unless he has assent thereto.
2. If goods are covered by negotiable document of title, the seller’s
right cannot prevail over the rights of a purchaser for value in
good faith to whom the document has been indorsed.
RIGHTS OF VENDOR TO WITHHOLD DELIVERY IN SALE ON CREDIT
1. When the vendee becomes insolvent
2. When vendee failed to give the promised guaranty or security
3. Impairment of the guaranty or security by the vendee’s act, or it
disappears through fortuitous event, unless he gives new ones
equally satisfactory
4. Violation of the undertaking in consideration of which the
vendor agreed to the period
5. When the vendee attempts to abscond
RIGHTS OF VENDEE TO FRUITS, ACCESSIONS, & ACCESSORIES
1. Right to fruits & accessions/accessories accrue from time sale is
perfected
2. No real right over it until it is delivered
LOSS, DETERIORATION, OR IMPROVEMENT BEFORE DELIVERY
Rules:
1. If the thing is lost without the fault of the debtor, the obligation
shall be extinguished.
2. If the thing is lost through the fault of the debtor, he shall be
obliged to pay damages.
3.
impairment is to be borne by the creditor.
4. If it deteriorates through the fault of the debtor, the creditor
may choose between rescission and fulfilment with damages in
either case.
5. If the thing improved by its nature, or by time, it shall inure to
the benefit of the creditor.
6. If it improved at the expense of the debtor, he shall have no
further right than that granted to usufructuary.
SALE OF REAL PROPERTY BY UNIT OF MEASURE OR NUMBER
1. Entire area stated in contract must be delivered
- Vendor must deliver the entire property agreed upon.
2. Where entire area could not be delivered
- Vendee is entitled to rescind it.
WHEN VENDEE ENTITLED TO RESCIND SALE OF REALTY
1. If the lack in area is at least 1/10 than that stated or stipulated.
2. If the deficiency in the quality specified in the contract exceeds
1/10 of the price agreed upon.
3. If the vendee would not have bought the immovable had he
known of its smaller area or inferior quality irrespective of the
extent of the lack in area or quality.
WHERE IMMOVABLE OF GREATER AREA OR NUMBER
 The vendee may accept the are included in the contract and
reject the rest.
 If he accepts the whole, he makes himself liable for the price of
the same at the contract rate.
 The vendee may not withdraw from the contract.
SALE OF REAL ESTATE MADE FOR A LUMP SUM
1. Mistake in area stated in contract immaterial
2. Where area or number stated together with boundaries
- Vendee has the option to reduce the price in proportion to
the deficiency or to set aside the contract.
DOUBLE SALE
Requisites:
1. Exactly same subject matter
2. Exactly same immediate seller
3. The buyers represent conflicting interest
4. Both sales are valid
Rules of Preference:
1. Personal property
- First possessor in good faith
2. Real property
a. First registrant in good faith
b. First possessor in good faith
c. Person with oldest title in good faith
CONDITION
 An uncertain event or contingency on the happening of which
the contract depends.
 The happening of the contract does not attach until the
condition is performed.
EFFECT OF NON-FULFILLMENT OF CONDITION EFFECT OF PRESCRIPTION

1. If the obligation 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.
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 non-performance of such condition may be treated
by the other party as breach of warranty.
1. Completed before sale – vendor will be liable for eviction
2. Completed after sale – vendor is not liable for eviction
EFFECT OF BAD FAITH
1. As to vendor – cannot be exempted from warranty against
eviction.
2. As to vendee – not to entitled to warranty against eviction or
right to recover damages.

WARRANTY KINDS OF WAIVER OF EVICTION

Any representation made by the seller of the thing with respect to 1. Consciente – voluntarily made by the vendee without knowledge
its character, quality, or ownership by which he induces the buyer and assumption of the risk of eviction.
to purchase the same relying on said representation. 2. Intencionada – waiver is made with knowledge of the risk of
eviction and assumption of risk.
KINDS OF WARRANTY
LIABILITY IN CASE OF EVICTION
1. Express warranty
2. Implied warranty 1. Return the value of the thing
2. Liable for income or fruit of the thing
REQUISITES OF EXPRESS WARRANTY 3. Cost of the suit
 Must be an affirmation of fact or any promise by seller relating 4. Expenses of the contract
to the subject matter of sale. 5. Damages and interest, and ornamental expenses
 Natural tendency of affirmation or promise is to induce buyer ACTION IN CASE OF PARTIAL EVICTION
to purchase subject matter.
 Buyer purchases the subject matter relying thereon 1. Enforce vendor’s liability for eviction
- When breached, seller is liable for damages. 2. Rescission

IMPLIED WARRANTIES IMMOVABLE SOLD ENCUMBERED WITH NON-APPARENT BURDEN

1. Warranty that seller has a right to sell Rights of vendee

2. The thing is free from any hidden defects or any charge or
a. Rescission
encumbrance.
b. Indemnity
NON-APPLICABILITY OF IMPLIED WARRANTY
When right cannot be exercised:
1. “as is and where is” sale
a. If the burden or servitude is apparent
2. Sale of second hand articles
b. If the non-apparent burden or servitude is registered
3. Sale by virtue of authority in fact or law
c. If vendee had knowledge of the encumbrance, whether it is
WARRANTY AGAINST EVICTION registered or not

Warranty in which 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.
ESSENTIAL ELEMENTS OF THE WARRANTY AGAINST EVICTION
1. Buyer is evicted in whole or in part from the subject matter of
sale.
2. There is a final judgement
3. Basis of eviction is a right prior to sale or an act imputable to
vendor
4. Seller has been summoned in the suit for eviction at the
instance of buyer
5. There is no waiver on the part of the buyer
PRESCRIPTION
By Prescription – one acquires ownership and other real rights
through the laps of time in the manner and under the conditions
prescribed by law. (Art. 1106)
When action must be brought
 Within one year from the execution of the deed of sale
- File for rescission
- Action for damages
 After one year
- Action for damages only
REQUISITES FOR WARRANTY AGAINST HIDDEN DEFECTS
1. Defect must be serious or important
2. It must be hidden
3. It must exist at the time of the sale
4. Vendee must give notice of the defect to the vendor within a
reasonable time
5. Action for rescission or reduction of price must be brought within
the proper period (within 6 mos. from delivery of the thing or 40
days from date of delivery in case of animals)
6. No waiver of the warranty by vendee
IMPLIED WARRANTIES OF QUALITY 3. To bear the expenses for the execution and registration of the
sale and putting the goods in a deliverable state, if such is the
1. Warranty of fitness or quality stipulation.
2. Warranty of merchantability
PERTINENT RULES
WARRANTY OF FITNESS

General Rule: There is no implied warranty as to the quality, or
fitness for any particular purpose of goods under a contract of sale.
Exceptions:
1. Where the buyer expressly or by implication manifests to the
seller the particular purpose for which the goods are required.
2. Where the buyer relies upon the seller’s skill or judgment.
WARRANTY OF MERCHANTABILITY
 Where the goods were bought by description that they are
reasonably fit for the general purpose for which they are sold
 It requires identity between what is described in the contract
and what is tendered, in the sense that the latter is of such
quality to have some value.
1. 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.
2. If stipulated, the vendee is bound to accept delivery and to pay
the price at the time and place designated.
3. 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.
4. In the absence of stipulation as to the place of delivery, it shall
be made wherever the thing might be at the moment the
contract was perfected.
5. If only the time for delivery has been fixed in the contract, the
vendee is required to pay even before the thing is delivered to
him; if only the time for payment has been fixed, the vendee is
entitled to delivery even before the price is paid by him.

REMEDIES OF BUYER AGAINST HIDDEN DEFECTS RULES GOVERNING DELIVERY IN INSTALLMENT

1. Buyer may elect between withdrawing from contract, or 1. The buyer of goods is not bound to accept delivery by
2. Demand proportionate reduction of price with damages in instalment unless stipulated.
either case. 2. Where separate price has been fixed for each instalment, the
buyer may reject the succeeding instalment in case of defective
EFFECT OF LOSS OF THING ON ACCOUNT OF HIDDEN DEFECTS deliveries, and sue for breach of contract.
3. Where the buyer unjustly refuse to accept delivery or to pay
1. If vendor was aware of hidden defects, he shall bear the
one or more instalments, seller may sue for breach of contract
loss and vendee shall have the right to recover:
if the breach is so material as to affect the whole contract.
a. the price paid
4. Where breach is severable, it will give rise to claim for
b. expenses of the contract
compensation for the particular breach but will not affect the
c. damages
whole contract.
2. If vendor was not aware, he shall be obliged to return:
a. price paid BUYER’S RIGHT TO EXAMINE THE GOODS
b. interest thereon
c. expenses of the contract if paid by the vendee Arises

RULES IN CASE OF SALE OF ANIMALS 1. In actual delivery of goods

2. In goods delivered COD/ Not COD, if stipulated or if permitted
1. When two or more animals sold at the same time: under usage of trade.
 Redhibitory defect of one will not affect the others
without it MODES OF MANIFESTING ACCEPTANCE
 Exception: when it appears that purchase of team will not
1. Express acceptance
be done without the defective one
- Verbal or in writing
2. Sale of animals at fair or public auction
2. Implied acceptance
 No warranty against hidden defects
- The buyer does any act inconsistent with seller’s
3. Sale of animals shall be void when:
ownership
 Animals sold are suffering from contagious disease
- Retains the goods after the lapsed of reasonable time
 If the use or service for which they are acquired has been
stated in the contract, and they are found to be until
therefor.

OBLIGATIONS OF THE VENDEE

Principal Obligations
1. To accept delivery
2. To pay the price of the thing sold in legal tender unless another
mode has been agreed upon.