ARTICLE 1542 - 1547

LAW ON SALES, AGENCY & CREDIT TRANSACTION

ARTICLE 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less area or number than that stated in the contract.

The same rule shall be applied when two or more immovables as sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated.

ARTICLE 1543. The actions arising from articles 1539 and 1542 shall prescribe in six months, counted from the day of delivery. (1472a)

ARTICLE 1544.If the same thing should have been sold to

different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

ARTICLE 1544.

Rules On Double Sale Of ImmovablesIn double sale of an immovable, the rules

of preference are as follows:(a)       the first registrant in good faith;

(b)       should there be no entry, the first in possession in good faith; and

(c)        in the absence thereof, the buyer who presents the oldest title in good faith. (Martinez vs. CA, 358 SCRA 38 (2001); Art. 1544, NCC).

SECTION 3Conditions and Warranties

ARTICLE 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waive performance of the condition. If the other party has promised that the condition should happen or be performed, such first mentioned party may also treat the nonperformance of the condition as a breach of warranty.

Where the ownership in the thing 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. (n)

SECTION 3Conditions and Warranties

ARTICLE 1546Any affirmation of fact or any promise by the

seller relating to the thing is an express warranty 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. No affirmation of the value of the thing, nor any statement purporting to be a statement of the seller's opinion only, shall be construed as a warranty, unless the seller made such affirmation or statement as an expert and it was relied upon by the buyer. (n)

ARTICLE 1547In a contract of sale, unless a contrary

intention appears, there is:

(1) 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, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing;

(2) An implied warranty that the thing shall be free from any hidden faults or defects, or any charge or encumbrance not declared or known to the buyer.

IMPLIED WARRANTIES

What are implied warranties?

Warranties deemed included in all contracts of sale by operation of law. (Art. 1547)

1. Warranty that seller has right to sell – refers to consummation stage. Not applicable to sheriff, auctioneer, mortgagee, pledge

2. Warranty against eviction Requisites:

a. Buyer is Evicted in whole or in part from the subject matter of sale     b. Final Judgment     c. Basis of eviction is a right Prior to sale or act imputable to seller     d. Seller has been Summoned in the suit for eviction at the instance of buyer; or made 3rd party defendant through 3rd party complaint brought by buyer     e. No waiver on the part of the buyer Note: For eviction – disturbance in law is required and not just trespass in fact.

3. Warranty against encumbrances (non-apparent) Requisites:a. immovable sold is encumbered with non- ‐

apparent burden or servitude not mentioned in the agreement

b. 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

Exception: warranty not applicable when non-apparent burden or servitude is recorded in the Registry of Property – unless there is expressed warranty that the thing is free from all burdens & encumbrances

4. Warranty against Hidden Defects Requisites:a. Defect is important or Serious         i. The thing sold is unfit for the use which it is intended          ii. Diminishes its fitness for such use or to such an extent that the

buyer would not have acquired it had he been aware thereof

b. Defect is Hidden

c. Defect Exists at the time of the sale

d. Buyer gives Notice of the defect to the seller within reasonable time

e. Action for rescission or reduction of the price is brought within the proper period

          i. 6 months – from delivery of the thing sold          ii. Within 40 days – from the delivery in case of animals

f. There must be No waiver of warranty on the part of the buyer.

When is implied warranty not applicable?

1. “As is and where is” sale2. Sale of second hand articles3. Sale by virtue of authority in fact

or law4. Sale at public auction for tax

delinquency

What are the effects of waiver of an implied warranty?

1. Seller in bad faith & there is waiver against eviction –void

2. When buyer w/o knowledge of a particular risk, made general renunciation of warranty – is not a waiver but merely limits liability of seller in case of eviction

3. When buyer with knowledge of risk of eviction assumed its consequences & made a waiver – seller not liable (applicable only to waiver of warranty against eviction)