Law on Sales
Law on Sales
Definition
According to Art. 1458, a contract of sale involves one party (vendor or seller) obligating themselves to transfer ownership and deliver a determinate thing, while the other party (vendee or buyer) is obligated to pay a price certain in money or its equivalent.
Nature
The nature of a contract of sale involves the transfer of ownership, enabling the recipient to alienate the transferred item. Ownership is acquired through delivery, which can be:
Actual delivery: Physical transfer of the object to the buyer.
Constructive delivery: Delivery is deemed to have occurred by operation of law without physical transfer.
Sale as a Title
A sale provides the buyer with a TITLE to the sold item. This title creates an obligation to deliver the item, and upon delivery, the buyer acquires ownership.
Characteristics
A contract of sale possesses the following characteristics:
Consensual: Perfected by mere consent or meeting of minds on the object and the price. Compliance is expected upon perfection.
Reciprocal: Both parties have corresponding obligations: the buyer pays the price, and the seller delivers the object.
Onerous: Parties acquire rights through a valuable consideration.
Commutative: Exchange of things with similar value between the parties.
Nominate: The law gives it a specific name, “contract of sale.”
Principal: Exists independently and doesn't rely on other contracts.
Form
General Rule
A contract of sale can take any form: writing, oral, or a combination, and can be inferred from conduct.
Exceptions
Certain contracts require a written form, including those:
To be performed after 1 year from the contract's perfection.
Involving real property (e.g., land), which must be in a written public instrument.
Involving personal property exceeding P500 in value which must be in a written instrument.
Involving the sale of large cattle,requiring a written instrument.
Where the power to sell land (agency) must be in writing.
Kinds
Absolute: The sale is not based on any condition, and ownership transfers immediately upon delivery.
Conditional: Ownership remains with the seller until conditions are met.
Sale or Return: Buyer can return the object instead of paying. Ownership transfers upon delivery but can revert to the seller within an agreed or reasonable time. The buyer bears the risk of loss.
Sale on Approval: Goods delivered for approval, trial, or satisfaction. Ownership passes when the buyer signifies approval/acceptance or when the time for signifying approval expires. The seller bears the risk of loss.
Requisites of a Contract
Essential Elements
Consent: Meeting of minds where the seller agrees to transfer ownership and the buyer agrees to pay the price. It must be freely given by legally capacitated individuals with absolute acceptance of an offer. Acceptance of payment can indicate consent.
Object: The object must be determinate or determinable. It can be personal or real property, things of potential existence, future goods, fungible goods, or things subject to a resolutory condition.
Requisites of a Valid Object:
Determinable: Capable of being made determinate without a new agreement.
Potential Existence: Things that may exist can be the object of a sale if the hope or expectancy comes into existence.
Future Goods: Objects yet to be acquired, manufactured, or raised can be the object.
Things Subject to a Resolutory Condition can be the subject of a contract.
The object may depend upon a contingency (Emptio rei speratae and Emptio spei)
EMPTIO REI SPERATAE
EMPTIO SPEI
Sale of thing having potential existence
Sale of mere hope or expectancy
Uncertainty is w/ regard to quantity & quality
Uncertainty is w/ regard to existence of thing
Contract deals w/ future thing
Contract deals w/ present thing – hope or expectancy
Sale is valid only if the expected thing exists.
Sale is valid even though the expected thing does not come into existence as long as the hope itself validly existed. (eg. lotto)
General Rule: A person cannot sell what they do not own.
Exceptions: Sale of a thing with potential existence, sale of future goods, or articles the vendor manufactures or procures for the general market.
Licit (lawful): The object must be legal, and the seller must have the right to transfer ownership.
Examples of Void sales: Sale of animals with contagious diseases, sale of future inheritance, sale of land to aliens.
Consideration / price: The price certain in money or its equivalent.
Requisites of a Valid Price/Consideration:
Certain: Must be certain or ascertainable at the time of perfection.
It can be a fixed amount.
With reference to another thing certain, or.
Left to the judgment of a third person/s.
Fixing of the price cannot be left to the discretion of one of the parties, but if the price is fixed by one party and accepted by the other, the sale is valid.
Money or its equivalent: The price should refer to money or legal tender or its equivalent, e.g. checks.
Real: Actual payment of the price must occur.
If the price is completely simulated, the sale is void but it can be proven to be another contract.
If the price is only partially simulated, the sale remains to be valid, gross Inadequacy of the price will not affect the contract of sale.
If the price given is false, the sale is void but it can be proven that the sale is founded on another true and lawful price.
If no price can be agreed upon the sale is inefficacious or with no effect.
Manner of payment must be agreed upon A disagreement on the manner of payment is equivalent to a failure of the price.
Gross Inadequacy of the Price
General rule: Gross inadequacy of the price does not invalidate a contract of sale.
Exception: If it shows a defect in the consent or that it was intended as a donation.
Inadequacy of cause will not invalidate a contract unless there has been fraud, mistake, or undue influence.
Contract of Sale vs. Other Contracts
Contract to Sell: Seller reserves ownership until full payment, promising to sell upon fulfillment of the condition. There is no sale yet.
Agency to Sell: Agent doesn't become the owner but holds the item in trust, remitting proceeds to the principal.
Contract for a Piece of Work: Object is manufactured specially for the customer and wouldn't exist otherwise; if the object will exist with or without the order, it is a sale.
Option: The prospective buyer has the right to purchase within a specific period for a separate consideration. It's an unaccepted offer.
Option Money: Separate consideration for the option contract. Money paid in advance that is not part of the price
Earnest Money: Part of the purchase price, indicating a binding contract of sale. Money paid in advance that is part of the purchase price and presupposes that there is a binding contract of sale.
Right of First Refusal: Gives priority to purchase if the owner decides to sell.
Dacion en Pago/Dation in Payment: Delivering an equivalent of the original object of a pre-existing obligation, special form of payment.
Double Sale: Sale to two or more buyers; the earliest valid sale prevails, provided it has no defect.
Barter: Exchange of one thing for another.
If consideration is partly money, partly exchange, the intention determines whether it's a sale or barter.
If intention is unclear, barter if the value of the exchange is greater or equal to money; otherwise, it is considered a sale
SALE | BARTER | |
|---|---|---|
A thing is given in exchange of money or its equivalent | A thing is given in exchange of another thing | |
If the consideration is partly in money and partly in another thing | ||
1. The transaction will be characterized based on the intention of the parties | ||
2. If the Intention cannot be determined | ||
a. Barter if the value of the thing is more valuable than money | ||
b. Sale if the thing is equal or less than the amount of the money |
Capacity to Buy or Sell
General Rule
All persons, natural or juridical, with the capacity to bind themselves can enter into a contract of sale.
Exception
Incapacitated persons are an exception.
Absolute Incapacity: Minors, insane persons, deaf-mutes who cannot write.
Relative Incapacity:
Husband and wife (regarding sales between each other).
Guardians (as to the property of their wards).
Agents unauthorized to sell the property of their principals.
Executors and administrators of estates.
Public officers and employees regarding state property.
Justices, judges, attorneys, clerks, and court officers concerning property in litigation.
Obligations of the Vendor
The obligations of the vendor/seller include:
Transfer ownership.
Deliver the thing.
Warrant against eviction and hidden defects.
Take care of the thing pending delivery.
Pay for expenses for the execution and registration of the contract unless otherwise stipulated.
Delivery
The primary purpose of delivery is to transfer ownership from seller to buyer. The buyer becomes the owner after delivery.
Kinds of Delivery
Actual Delivery: Physical placement of the thing in the buyer's possession and control.
Constructive (Legal) Delivery: The thing is not physically transferred, but the law treats it as delivered.
Execution of a Public Instrument: Executing a document for evidence of transfer and delivery; the sale can also be considered as delivery.
Symbolical Tradition (Traditio Symbolica): Delivery of a symbol representing the object, such as keys for a car.
Mere Consent of Parties (Traditio Longa Manu): Pointing out the object without physical delivery.
Previous Possession Not as Owner (Traditio Brevi Manu): Buyer already possesses the object under a different title (e.g., tenant becoming owner).
Retains Possession in a Different Concept (Traditio Constitutum Possessorium): Seller retains possession but not as the owner (e.g., seller becomes lessee).
What Should Be Delivered?
Object of the Sale: Must match what was agreed upon.
Delivery of Goods (Personal Property)
When the seller delivers a lesser quantity and the buyer is aware, buyer should pay the full price. If there is no awareness, the buyer is expected to pay in proportion.
When the seller delivers goods different in quality as agreed, the buyer can reject all that is delivered, but if the seller delivers goods lesser in quality mixed with goods within the quality agreed, the buyer can reject the goods with a lesser or different quality, however, if they cannot be separated the buyer can reject all goods delivered.
Delivery of Real Property
In the sale of real property in units, e.g.; per square meter, square foot, hectare, and etc., when the seller delivers a lower amount or quality as agreed the price is reduced according to the deficiency, but if more is delivered the buyer can reject the excess and accept only the agreed portion.
In the sale of real property in lump sum, the buyer should accept what is delivered regardless of size and quality.
Accessions and Accessories:
Accessions: Additions to or improvements upon the principal thing.
Accessories: Items joined to the principal thing for embellishment or better use.
Fruits: All fruits derived from the time the contract is perfected up to delivery should also be delivered.
To Whom Should the Seller Deliver?
The Buyer;
The Agent/Authorized Representative of the Buyer; or
The Carrier in goods delivered in/by transit/shipping
Delivery to the Carrier is delivery to the Buyer, thus, ownership is transferred to the buyer upon delivery to the carrier.
Exceptions to the General Rule:
Even after delivery to the carrier, the Seller retains ownership if:
The Seller makes a reservation as to the ownership of the goods. Declaration that he/she will maintain ownership of the goods even after delivery to the Carrier.
The Seller makes a reservation as to the possession of the goods. Declaration that he/she will maintain possession of the goods even after delivery to the Carrier
Where the agreement of the parties including the bill of lading contains provisions that indicates that the goods are still at the sellers risk. A Bill of Lading defines the rights and liabilities of parties in contracts of carriage (Shipping, freight, or passenger vehicles), it is a document that serves as evidence of receipt of goods for shipment issued by a common carrier.
*F.O.B. (Free on Board):F.O.B. point of destination – the Seller assumes the risk until the point of destination of the goods as ownership transfers to the Buyer only at that point.
F.O.B. point of shipment – the Buyer will assume the risk of loss as ownership is transferred at the point where the goods have been shipped.
F.A.S. (Free Alongside) – used when the goods are shipped by water. The Seller loses the risk of loss once the goods are placed on the vessel.
C.I.F. (Cost, Insurance, Freight) – the buyer assumes all the risk of loss while the goods are being shipped.
Seller Not the Owner
General Rule: Ownership does not transfer if the seller isn't the owner or authorized by the owner.
Exceptions:
Estoppel: The owner's actions preclude them from denying the seller's authority.
When existing or future law states that ownership has passed.
When the sale is validated by a judicial decision.
Effects of Loss
If it is a generic thing there is no effect because a generic thing can always be replaced (genus nunquam perit).
If it as a determinate/specific thing the following rules shall apply:
Loss before perfection of the contract : SELLER BEARS LOSS
If the loss is after the perfection of the contract of sale but before delivery: SELL BEARS THE LOSS because he still has the duty to take care of the thing
Object is lost AFTER DELIVERY: BUYER BEARS THE LOSS. (Res Perit Domino - Owner of the property bears the loss)
When the object of the sale is a determinate thing and it has partially perished or deteriorated in quality, without the knowledge of the seller, and in a manner that would substantially change the character of the object, the buyer can choose to:
Avoid/Withdraw from the sale if the object is indivisible; or
Treat the sale valid and in all of the existing goods that have not deteriorated and pay the price for the goods in which ownership will pass if the object is indivisible.
Documents of Title
A document of title is a written order for the delivery of goods, or any other document used in the ordinary course of business in the sale or transfer of goods, as proof of the possession or control of the goods, or authorizing or purporting to authorize the possessor of the document to transfer or receive, either by indorsement or by delivery, goods represented by such document. (Art. 1636, New Civil Code)
Examples of Documents of Title
Bill of Lading – defines the rights and liabilities of parties in contracts of carriage (Shipping, freight, or passenger vehicles); it is a written document that proves the receipt of goods for the transport and delivery to the one named therein.
Quedan – a warehouse receipt which specifically deals with sugar deposits.
Warehouse Receipts – it is written instrument issued by the owner of a warehouse to the owner of goods deposited in the therein and the former’s obligation to hold and deliver the goods to the order or holder of the instrument.
Dock Warrant – a written instrument issued by a dock owner to the owner of goods stored in a warehouse on the dock proving the latter’s right to the goods.
Ownership
A Document of Title can either be negotiable or non- negotiable. Negotiation is the transfer of a negotiable instrument from one person to another making the transferee as the holder of the instrument. Negotiation must be done in good faith and for value in order to be valid.
Negotiable Documents of Title
a document of title which states that the goods it represents will be delivered to the order of any person named or the bearer of the instrument. (Art. 1507, New Civil Code)
Kinds of Negotiable Document of Title:
Bearer document of title – a document that states that the goods shall be delivered to bearer, or to one where the last indorsement is blank. (Art. 1508, New Civil Code)
Order document of title – a document that states the goods shall be delivered to the order of the person specifically named therein. (1509, New Civil Code)
a document of title that does not state that the goods it represents will be delivered to the order of any person named or the bearer of the instrument, or simply stated one that does not conform with Article 1507 of the New Civil Code. (Art. 1511, New Civil Code) A document of title where the words “not negotiable” or “non-negotiable” can still be negotiated, but such negotiation will not affect the agreements and stipulations between the parties in the original contract for which the document of title was issued. (Art. 1510, New Civil Code)
How is a Document of Title negotiated?
If the document of title is a Bearer document then it is negotiated by its delivery. (Art. 1508, New Civil Code)
If the document is an Order document then it is negotiated by delivery and indorsement. (Art. 1509, New Civil Code)
Indorsement is for the purpose of transferring the document or for the better security of the obligation as represented by the document. Indorsement is made by signing on the document itself or on a separate piece of paper attached to the documentKinds of Indorsement
Blank indorsement – an indorsement where no one is specifically named (Art. 1509, New Civil Code)
Specific indorsement – an indorsement made to a specified person (Art. 1509, New Civil Code)
If the last indorsement in a document is a specific indorsement then the document must can only be negotiated by indorsement and delivery (Art. 1508, par. 3, New Civil Code)
Who Can Negotiate?
A negotiable document of Title can be negotiated by:
The owner of the document; (Art. 1512, New Civil Code)
If the document is an order document or one where the last negotiation is specific, any person who has possession of the document and is authorized by the owner of the document to negotiate it further; or (ibid.)
Any person who has possession of the document when the document is a bearer instrument. (ibid.)
Effects of Negotiation of a Document of Title
The negotiation of a document of title will have the following effects:
The title of ownership of the goods as represented by the document
The right to obligate the bailee (the bailee is one who keeps the possession of a thing in favor of another) to hold the goods represented by the document according to the original agreement
Transfer of Document of Title Without Negotiation
If the document is transferred but not negotiated, the transferee will only obtain the same title as the transferor as against him, which may mean ownership or mere possession. (Art. 1514, Par 1, New Civil Code)
Transfer of Non-negotiable Document of Title
When what is transferred is a non-negotiable document of title the transferee will obtain the same right as the transferor as against him, and the right to notify the bailee who issued the document of title of such transfer. (Art. 1514, Par. 2, New Civil Code)
A subsequent transferee of the non-negotiable document will have a better right over the goods it represents if the same notifies the bailee first. (Art. 1514, Par. 3).
Incomplete Negotiation of Order Document of Title
When an order document of title is negotiated only by delivery and without indorsement the transferee has the right to compel from the transferor the indorsement thereof in order to complete the negotiation. (Art. 1515, New Civil Code)
Warranties of a Person Who Negotiates a Document of Title
A person who for value negotiates or transfers a document of title by indorsement or delivery, including one who assigns for value a claim secured by a document of title unless a contrary intention appears, warrants:
That it is genuine;
That he has a legal right to negotiate or transfer it;
That he is unaware of any fact which would impair the validity or worth of the document; and
That he has a right to transfer the title to the goods and that the goods are merchantable or fit for a particular purpose, as would any contract that would involve transfer even without the use of a document of title. (Art. 1516, New Civil Code)
Other Rules on Negotiation of Documents of Title
Any breach of obligation made by the bailee will not make any subsequent indorser of the document of title liable thereof. (Art. 1517, New Civil Code)
The negotiation of a negotiable document of title to a transferee who has received the same in good faith and for value is valid even if the transferor had negotiated the same in bad faith, provided that the transferee was unaware of any infirmity in the title of the transferor at the time of negotiation. (Art. 1518, New Civil Code)
The document of title must be surrendered to the bailee in order to subject the goods it represents to any judicial proceeding such as levy or garnishment. (Art. 1519, New Civil Code)
A document of title may be subject to levy or garnishment through the legal action of an unpaid creditor of the owner of the document of title. (Art. 1520. New Civil Code)
Rights of the Vendor
Unpaid Seller
An unpaid seller is one where:
a. Where the whole price has not been paid to the seller or his agent; or
b. Where conditional payment in the form of a bill of exchange (e.g. checks) or other negotiable instrument (e.g. negotiable promissory note, negotiable documents of title) has been broken by any reason. (Art. 125, New Civil Code)
Bill of exchange – is an unconditional promise order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer.
Rights of unpaid seller BEFORE DELIVERY
An unpaid seller has the right to suspend delivery of the object.
If no price or period for payment has been agreed upon the seller can suspend delivery of the object.
Retain the possession and exercise his right of lien over the object until whole payment or tender of payment in the following instances:
In sale where there was no agreement as to payment on credit;
In sale on credit but the term of credit has expired; and
When the buyer becomes insolvent
A lien on property is a burden or encumbrance on the property for where the creditor holds possession of the property until the debtor fulfills his obligation. Where only part of the goods have been delivered to the buyer, the seller may still exercise his right of lien the remaining goods still in his possession
Withhold delivery when the ownership has not passed to the buyer
Rights of unpaid seller where OWNERSHIP has PASSED WITHOUT ACTUAL DELIVERY
The unpaid seller who still possesses the object of the sale even if ownership had already passed to the buyer shall have the right to:
Exercise a lien over the goods while he is in possession of them; Where only part of the goods have been delivered to the buyer, the seller may still exercise his right of lien the remaining goods still in his possession
Retain possession of the goods
STOPPAGE IN TRANSITU, If the buyer had already delivered it to the carrier and had become insolvent.
Goods are considered in transit in the following instances:
a. Whether by land, water, or air, from the time it has been delivered to the carrier or other bailee for purposes of transmission to the buyer until the buyer or his agent has received the goods; or
b. When the possession of the goods remains with the carrier or other bailee after the buyer had rejected the goods
Goods no longer in transit in the following instances:
a. When the buyer or his agent have obtained the goods before they have arrived at their intended destination;
b. When the carrier or other bailee had already informed the buyer or his agent that the goods have already arrived at their destination, even if the buyer stated another place for delivery;
c. When the carrier or other bailee refuses to deliver to the buyer or his agent without any justifiable reason.
If the goods are delivered to a ship, freight train, truck, or airplane which was rented by the buyer for the purpose of transport to him, the question of who possesses the goods, whether by the carrier on its own or the carrier as the agent of the buyer will be decided by the circumstances surrounding the case.
How do you exercise Right of Stoppage in Transitu?
a. Obtaining actual possession of the goods as shipped at a reasonable time before the carrier could deliver the goods;
b. Giving notice to the carrier, whether the principal or the person who has actual possession of the goods, of his claim over the goods at a reasonable time before the carrier could deliver the goods.
c. If the goods are covered by a negotiable document of title, by surrendering the same to the carrier or bailee who had issued it
The right of stoppage in transit can only be exercised while the goods are considered to be in transit.
Expenses incurred in the delivery of the goods from the carrier/bailee back to the seller shall be borne by the seller.
Where only a part of the goods are in transit. Where only part of the goods are in transit and the other parts have already been delivered to the buyer, the seller may still exercise his right of stoppage in transitu for the remaining part.
Exercise his right of resale in the following instances:
a. Where the goods are perishable in nature.
b. The seller had made a reservation that in case of default of the buyer he can resell.
c. When an unreasonable amount of time had lapsed and the buyer still has not paid.
d. After the exercise of the sellers right of stoppage in transitu.
In exercising the right to resale notice is not necessary for subparagraphs a and b, but for subparagraph c giving of notice is essential in determining what an unreasonable amount of time is.
And in the case of a valid resale the seller will not be liable to the original buyer for any damages. The resale can be through a public sale or a private sale. The seller cannot buy his own goods in a resale whether directly or indirectly
Rescind the Contract if the seller has the right of lien or stoppage in transit in the following instances and recover ownership:
a. When the seller made an express reservation to do so in case of default on the buyer.
b. When the buyer has not paid even after the lapse of an unreasonable amount of time.
The seller shall recover ownership of the goods once a manifestation through notice or an overt act the intent to rescind.
The unpaid seller loses his lien on the goods, if:
Delivery to the carrier or other bailee for transport to the buyer has been made and he did not make a reservation as to the ownership or possession of the goods;
When the buyer or his agent lawfully obtains possession of the goods; and
When the seller waives such right.
Warranties
A warranty is a statement or representation made by the seller of the goods with regards to the character, quality, or title of the goods, and by which he promises or undertakes to insure that such representations are true as how he had represented them. The warranty given by the seller is made simultaneous and a part of the contract of sale
Kinds of Warranties
Express and Implied Warranties
Express Warranty -
any affirmation of fact or any promise by the seller relating to the thing where the natural tendency of such affirmation or promise is to induce the buyer to purchase the object. It is express because it is either made orally or in writing. a statement or promise about character, quality, or title of the object made by the seller which the buyer had relied upon in buying the object
A warranty being a part of the contract of sale, it is immaterial whether the seller did not know that it was true or false. The intention of the seller in his warranty is not important. It is the natural consequences of what the seller says and the reliance thereon by the buyer that alone are important. If the buyer relied on what the seller had promised then the seller is automatically liable
Misrepresentation in good faith
A misrepresentation in good faith is not fraudulent but may constitute error.
Expression of Opinion
A mere expression of an opinion is not in itself a warranty. It only becomes a warranty if the seller is considered an expert and that his opinion was relied upon by the buyer
Usual exaggerations in trade
Usual exaggerations in trade, when the other party had the opportunity to know the facts are not in themselves fraudulent.
A condition is considered as an express warranty when it should be performed and that there is failure to do so. Where the condition is to be performed prior to delivery and delivery has already been made, the buyer may treat delivery as fulfillment of the condition.
Requisites to Establish an Express Warranty
a. The express warranty must be an affirmation of fact or any promise by the seller relating to the subject matter of the sale;
b. The natural effect of the affirmation or promise is to induce the buyer to purchase the thing; and
c. The buyer purchases the thing relying on that affirmation or promise.
Implied Warranty –
forms part of every contract of sale, except if there is an agreement stating otherwise. The following warranties are implied warranties as provided by the law:
a. Warranty that the seller has a right to sell
b. Warranty Against Eviction
c. Warranty Against Hidden Defects
d. In sales of goods, Warranty of fitness or quality
e. warranty against redhibitory defects in animals
These warranties are considered as required by law to be automatically included in a contract of sale even though not expressed by the seller or not expressly agreed upon by the seller and the buyer. Thus, even though there was no agreement that these warranties will be included in the contract of sale, it is already considered as automatically included.
Warranty that the seller has a right to sell
Art 1505. Where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.
Buyer in good faith
A buyer for value in good Faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He buys the property with the well- founded belief that the person from whom he recieves the thing had title to the property and capacity to convey it
To prove good faith, a buyer of registered and titled land need only show that he relied on the face of the title to the property. He need not prove that he made further inquiry for he is not obliged to explore beyond the four comers of the title.
Such degree of proof of good faith, however, is sufficient only when the following conditions concur:
first, the seller is the registered owner of the land;
second, the latter is in possession thereof; and
third, at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property.
WARRANTY AGAINST EVICTION
The seller in every sale shall warrant that he has a right to sell the thing at the time when he delivers the object, and that the buyer from that time shall enjoy the legal and peaceful possession of the thing without the fear of being dispossessed of the object.
When is there Eviction?
There is Eviction whenever by a final judgment the buyer is deprived of the whole or of a part of the thing purchased. The final judgment by the court which deprived the buyer of the object may have been caused by 2 things, either there is another person who has a better right to the object or that the seller does an act which will cause the buyer to be dispossessed of the object.
Requisites for Breach of Warranty Against Eviction
The buyer has been deprived of the whole or part of the thing sold;
This eviction is by a final judgment of the court;
The basis thereof is by virtue of a right prior to the sale made by the seller; and
The seller has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.
In cases where the property is already possessed adversely by a third person before the sale and one year had lapsed after the sale and the third person still possesses the property, the seller will not be liable.
In case that the buyer is evicted due to non-payment of taxes and he is unaware of such fact, the seller is liable for eviction.
The Buyer can renounce the warranty against eviction, and the buyer is later evicted, the seller is only liable for the value of the thing at the time of eviction, but if the buyer is aware of any encumbrance or burden on the thing when he renounced the warranty the seller