Seller’s warranty in case of eviction

The seller is liable for the eviction of the buyer even if there is no stipulation on the matter in their contract.[1] Notwithstanding, the seller and the buyer may increase, diminish, or suppress this legal obligation of the vendor.[2]

The seller is liable for eviction if the property is sold for nonpayment of taxes due and it is not made known to the buyer before the sale.[3]

The seller (as judgment debtor) is liable for eviction in judicial sales, except if otherwise decreed in the judgment.[4]

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Conditions and warranties in sale on seller

Sales contract with suspensive condition

If the sales contract is under a suspensive condition which is not met, the innocent party may refuse to proceed with the contract or he may waive performance of the condition.[1]

Breach of warranty

In addition to the above rule, the innocent party may also consider the non-performance of the condition as a breach of warranty if the other party has promised that the condition should happen or be performed.[2]

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Seller’s obligation to deliver

The seller is obligated to transfer the ownership of and deliver the object of the sale, as well as answer for its warranty.[1]

The buyer acquires ownership of the thing sold from the moment it is delivered to him: (a) through the various modes of delivery, or (b) in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee.[2] Not mere agreements but tradition or delivery transfers the ownership of things (Non nudis pactis sed traditione dominia rerum transferentur).[3]

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Concept of Sale

In a contract of sale, “one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.”[1] A sales contract may either be absolute or conditional.[2]

Perfection of sales contract

The perfection of the sales contract happens when there is a meeting of minds upon the thing which is the object of the contract and upon the price.[3] The parties may reciprocally demand performance reckoned from such moment subject to the provisions of the law governing the form of contracts.[4]

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Exemplary Damages

In order to set an example for the public good, exemplary or corrective damages are awarded in addition to moral, temperate, liquidated or compensatory damages.[1]

Lopez v. Pan American World Airways
G.R. No. L-22415, 30 March 1966

Plaintiffs were entitled to exemplary damages. “The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction for public good. Defendant having breached its contracts in bad faith, the court, as stated earlier, may award exemplary damages in addition to moral damages (Articles 2229, 2232, New Civil Code).

“In view of its nature, it should be imposed in such an amount as to sufficiently and effectively deter similar breach of contracts in the future by defendant or other airlines. In this light, we find it just to award P75,000.00 as exemplary or corrective damages.”

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Liquidated Damages

In a contract, parties may agree to liquidated damages as indemnity or penalty for non-performance of any or all of the obligations in their agreement.[1]

Best Legal Practices:

Stipulate liquidated damages – The party who has interest to protect in a transaction should ask for liquidated damages to be stipulated in the contract. The amount for the penalty depends on the value of transaction involved to the said party.

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Temperate Damages

Temperate or moderate damages are awarded when there is a finding of pecuniary loss but the amount cannot be determined with certainty due to the nature of the circumstances.[1] Temperate damages are more than nominal but less than compensatory damages.[2]Despite the fact that the amount cannot be determined, the courts are required to impose reasonable amounts as may be derived from the circumstances of the case.[3]

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