Chapter 12 Report 2
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Transcript of Chapter 12 Report 2
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Chapter 12
CONDITIONS AND WARRANTIES
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Conditions
A condition is a future and an uncertain event
which may or may not happen, upon which
depends the rising or extinction of an
obligation. May be suspensive or resolutory.
The fulfillment of a suspensive condition givesrise to the birth of the obligation; while the
fulfillment of the resolutory condition
extinguishes a subsisting obligation.
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Distinction between a condition imposed on the
perfection of the contract and a condition
imposed on the performance of an obligation.
The failure to comply with the first results in
the failure of the contract
The failure to comply with the second, i.e.,where the obligation of the other party to a
contract of sale is subject to any condition
which is not performed, gives the injured partytwo alternative remedies the option to either
refuse to proceed with the sale or to waive the
condition as mandated under Article !"#"; and
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that the choice is not with the obligor but with
the injured party.
$arranties forms part of the conditions
imposed on the performance of an obligation in
a contract of sale.
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Distinctions between Conditions and
Warranties
$arranty is a collateral underta%ing in a sale,
express or implied, that if the property sold
does not possess certain incidents or &ualities,
the buyer may either consider the sale void or
claim damages for breach of warranty. The
warranty is a contract in which the implied
promise is that the seller will pay damages if the property does not possess the
characteristics warranted, or if the protection is
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not furnished, and the consideration for this
promise is the ma%ing of the contract of sale.
'on(fulfillment of a warranty constitutes a
breach of the contract, whereas
'on(happening of the condition, although it
may extinguish the obligation upon which it isbased, generally does not amount to a breach
of the contract of sale.
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$here the ownership in the things has not passed, the
buyer may treat the fulfillment by the seller of his
obligation to deliver the same, as described and as
warranted expressly or by implication in the contract of
sale, as a condition of the obligation of the buyer to
perform his promise to accept and pay for the thing.
)emedy of the buyer in case of failure of the seller to do
his obligation is to either refuse to proceed with the
contract or to waive that condition.
*n the other hand, if the party has promised that the
condition should happen or be performed, the other party
may also treat the non(performance of the condition as a
breach of warranty because such stipulation would elevate
the condition to a warranty, and the non(happening of the
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condition would itself constitute a breach of such warranty,
and would entitle the injured party to sue for damages.
+ondition generally goes into the root of the existence of the obligation whereas a warranty goes into the
performance of such obligation, and in fact may constitute
an obligation in itself
+ondition must be stipulated by the parties in order toform part of an obligation, while a warranty may form part
of the obligation or contract by provision of law, without
the parties having expressly agreed thereto
+ondition may attach itself either to the obligations of theseller or of the buyer whereas, warranty, whether express
or implied, relates to the subject matter itself or to the
obligations of the seller as to the subject matter of the
sale.
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Express Warranties; reqisites!
- t must be an affirmation of fact or any
promise by the seller relating to the subject
matter of the sale;- The natural tendency of such affirmation or
promise is to induce the buyer to purchasethe thing; and
- The buyer purchases the thing relying on
such affirmation or promise thereon
The decisive test is whether the seller assumes
to assert a fact of which the buyer is ignorant
of.
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-owever, an affirmation of the value of the
thing, or any statement purporting to be a
statement of the sellers opinion only, shall notbe construed as a warranty, unless the seller
made such affirmation or statement as an
expert and it was relied upon by the buyer.Article !/#! provides that 0a mere expression
of an opinion does not signify fraud, unless
made by an expert and the other party has
relied on the formers special %nowledge.1
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The law allows considerable latitude to sellers
statements, or dealers tal%; and experience teaches
that it is exceedingly ris%y to accept it at its facevalue. The +ourt held that assertions concerning the
property which is the subject of a contract of sale,
or in regard to its &ualities and characteristics, are
the usual and ordinary means used by sellers toobtain a high price and are always understood as
affording to buyers no ground for omitting to ma%e
in&uiries, thus if the buyer relies upon such an
affirmation whose interest might so readily prompt
him to exaggerate the value of his property does so
at his peril, and must ta%e the conse&uences of his
own imprudence.
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I"p#ies Warranties; de$ined
Those which by law constitute part of every contract
of sale, whether or not the parties were aware of them, and whether or not the parties intended them.
An implied warranty is inherent in a contract of sale. t
is presumed to exist although nothing has been
mentioned about it. t is deemed incorporated in the
contract of sale. -owever, implied warranties may be
modified or suppressed by agreement of the parties.
Although only a seller is bound by the impliedwarranties of law, nevertheless, by express
contractual stipulation, an agent of the seller may bind
himself to such warranties.
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Re#e%ant Discssions
!. Warrant& that se##er has ri'ht to se##
There is an implied warranty on the part of the seller
that he has a right to sell the thing at the time when
the ownership is to pass.
There can be no legal waiver of such warranty without changingthe basic nature of the relationship, for the warranty on the part
of the seller that he has the capacity to sell is the essence of
sale; unless, it amounts to clear assumption of ris% on the part
of the buyer.
-owever, this warranty is not applicable to render liable a
sheriff, auctioneer, mortgagee, pledge, or other person
professing to sell by virtue of authority in fact or law, for the
sale of a thing in which a third person has a legal or e&uitable
interest.
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2. Warrant& A'ainst E%iction
There is an implied warranty on the part of the
seller that when the ownership is to pass, the
buyer shall from that time have and enjoy the
legal and peaceful possession of the thing. The
seller shall answer for the eviction even thoughnothing has been said in the contract on the
subject.
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a. When there is breach o$ warrant& a'ainst
e%iction
There is a breach of warranty against eviction whenthe following conditions are present
- 3urchaser has been deprived of, or evicted from,
the whole or part of the thing sold;
-4viction is by a final judgment;
- The judgment is in favor of the plaintiff which is
based a right prior to the sale or event after the
sale if the cause of eviction is due to an act or acts
imputable to the seller; and- 5eller has been summoned and made co(defendant
in the suit for eviction at the instance of the buyer.
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- 6uyer has not waived the sellers warranty against
eviction. 73ineda8
The warranty cannot be enforced until a final judgment has
been rendered. The buyer need not appeal from the
decision in order that the seller may become liable for
eviction. The buyer is not re&uired to resist the action foreviction ta%en against him since the warranty is a covenant
on the part of the seller, and by having given the seller
proper notice of the eviction 7i.e., by ma%ing him a party
to the case8 the buyer is deemed to have complied with
what is incumbent upon him, the seller must then ta%e the
lead to resist the claim of the third party on the subject
matter of the sale.
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There can be no breach of warranty against eviction if
the buyer was well aware of the presence of other
claimants such as tenants at the time the buyer entered
into the sale transaction.
6reach of warranty against eviction cannot be enforced
against the seller if the buyer merely furnished the seller
a copy of the opposition of the buyer filed in an evictionsuit against him, without going through formally
summoning the seller to be a party to the case. The
notice re&uired by law is not merely giving notice but
that the seller should be made parties to the suit at theinstance of the buyer, either by way of as%ing that the
seller be made a co(defendant or by the filing of a third(
party complaint against the seller.
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b. E%iction in part.
5hould the buyer lose, by reason of the
eviction, a part of the thing sold of such
importance, in relation to the whole, that the
buyer would not have bought it without said
part, the buyer may demand the rescission of the contract; but with the obligation to return
the thing in the same condition when it was
ac&uired, instead of enforcing the liability of
the seller for eviction.
5ame rule applies if two or more things have
been jointly sold when it clearly appears that
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the buyer would not have purchased one
without the other.
The reason why rescission is available only in
case of partial eviction is because there is still
something left of the property in the hands of
the buyer which can be returned. f theeviction is total, the buyer cannot return the
property to the vendor because a third
claimant has ta%en over the whole property
because in rescission, the one demanding it
must be able to return what he received.
Mutual restitution is re&uired.
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c. (artic#ar cases 'i%en b& #aw
$hen adverse possession had been commenced
before the sale but the prescriptive period iscompleted after the transfer, the seller shall not be
liable for breach of warranty against eviction.
The property must be susceptible to prescription. f
the thing purchased is not susceptible to prescription
li%e lands registered under the )eal 3roperty
)egistration Decree, prescription will not lie. -ence,
the particular cause given by law, such as
prescription, will not be applicable.
f the property is sold due to nonpayment of taxes
which was not made %nown to the buyer before the
sale, the seller is liable in case of eviction.
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d. App#icabi#it& to )dicia# Sa#es*
n case of judicial sales, the judgment debtor is
also responsible for eviction unless it is
otherwise decreed in the judgment. -owever,
in several cases, it was held that, in execution
sales, the rule of caveat emptor applies; thesheriff does not warrant the title to the
property sold by him, and it is not incumbent
upon him to place the purchaser in possession
of the property. 5uch buyer at such sales ta%es
the property subject to the superior right of
other parties.
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e. A"onts $or which Se##er is #iab#e in
case o$ e%iction*
9nder Article !""", in case eviction occurs, the buyer shallhave the right to demand of the seller
- )eturn of the value which the thing sold had at the time
of the eviction, be it greater or lesser than the price of
the sale;- ncome or fruits, if buyer has been ordered to deliver
them to the party who won the suit against him;- +osts of the suit which caused the eviction, and, in a
proper case, those of the suit brought against the sellerfor the warranty;
- 4xpenses of the contract, if the buyer has paid them;
- Damages and interests and ornamental expenses, if the
sale was made in bad faith.
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f. Wai%er o$ Warrant& and E$$ects thereo$
Article !"#: provides that the contracting
parties to a contract of sale may increase,diminish, or suppress the implied warrant
against eviction. -owever, the effect of this
waiver depends on the nature of such waiver,whether it is general or specific waiver, and
whether done in good faith or bad faith on the
part of the seller.
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9nder Article !""/, if the seller acted in bad
faith then any stipulation exempting the seller
from the obligation to answer for eviction shallbe void.
*n the other hand, if the buyer merely
renounces the warranty in general terms,
without %nowledge of a particular ris%, andeviction should ta%e place, the seller shall only
pay the value which the thing sold had at the
time of the eviction.
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Thus, a general waiver of the warranty does
not create the effect of waiver but merely
limits the liability of the seller to the value of the thing sold at the time of eviction.
- -ere, the buyer ma%es a waiver of eviction
without %nowledge of the ris% of eviction orthe details of the cause of eviction. 4very
waiver of warranty against eviction is
presumed to be a simple waiver. That the
waiver was merely conscious, that is, the
buyer had waived his right to the warranty
against eviction and its conse&uences.
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5hould the buyer have made the waiver with
%nowledge of the ris%s of eviction and assumed
its conse&uences, the seller shall not be liable.- -ere, there is an intentional and deliberate
waiver. The waiver was not merely conscious
but was full with absolute %nowledge of theris%s of eviction.
$hen the waiver is of a specific case of
expected eviction, the waiver has the effect of wiping out the warranty as to that specific ris%,
but not as to eviction caused by other reasons
not covered in the waiver.
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4ven when there is no specific waiver, a buyer
cannot ta%e refuge on the warranty against
eviction when he purchases the land fullyaware of a claim by a third party on the title to
the land and who was in actual possession
thereof; when the buyer cannot show that he
is a buyer in good faith, the buyer is not
entitled to the said warranty.