chapter 12 report 2

8/16/2019 Chapter 12 Report 2

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Chapter 12

CONDITIONS AND WARRANTIES



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.



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



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.



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



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.



$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



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.



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.



-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



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.



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.



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.



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.



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.



- 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.



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.



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



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.



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.



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.



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.



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.



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.



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.



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.



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.

chapter 12 report 2

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