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CONEJOS LAYLO AMPONG PILAPIL SY GARCIA CHIONGSON LAW

79. Rudolf Lietz, Inc. vs CA, Agapito Buriol, Tiziana Turatello, Paola Sani (Jal) 19 Dec 2005 Tinga *land leased to Italians and subsequently sold; area less than what was in the contract Facts: 1. Agapito Buriol owned a parcel of unregistered land in Palawan. 2. On 15 Aug 1986, Buriol entered into a lease agreement with Flavia Turatello, Tiziana Turatello, and Paola Sani, all Italians, involving 1 hectare of the property. Lease agreement was for 25 years, renewable for another 25 years. 3. The Italians then took possession of the land after paying a downpayment of 10,000. The lease agreement was reduced into writing in Jan 1987. 4. On 17 Nov 1986, Buriol sold the land to Rudolf Lietz, Inc. for 30,000. The Deed of Absolute Sale states that the land measured 5 hectares, more or less. It also described the boundaries of the land. 5. Lietz later discovered that Buriol owned only 4 hectares, with 1 more covered by the lease agreement. Hence, only 3 hectares were actually delivered. 6. Lietz then filed a complaint for Annulment of Lease with Recovery of Possession against Buriol and the Italians. He alleged that Buriol sold to him the lot in evident bad faith and malice knowing that he owned only 4 hectares, not 5. 7. The trial court dismissed the complaint and the counterclaim of the Italians for damages. 8. The CA affirmed the dismissal. It held that under Article 1542, Lietz is no longer entitled to a reduction in price. 9. Lietz appeals. He contends that he is entitled to reduction under Article 1539. Issue: Is Lietz entitled to a reduction in the purchase price of the lot because of the reduced area of the property delivered to him? Held: No. Under Article 1542, there shall be no reduction in the purchase price even if the area delivered is less than that stated in the contract. Decision: Affirmed. Ruling: 1. Article 1539 governs a sale of immovable by the unit, that is, at a stated price per unit area. In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. 2. In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. 3. A vendee of land, when sold in gross or with the description more or less with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of more or less or similar words in designating quantity covers only a reasonable excess or deficiency. 4. What really defines a piece of ground is not the area mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. 5. In this case, the sale is one made for a lump sum. The Deed of Absolute Sale shows that the parties agreed on the purchase price on a predetermined area of 5 hectares within the specified boundaries and not based on a particular rate per area. 6. In accordance with Article 1542, there shall be no reduction in the purchase price even if the area delivered to Lietz is less than that stated in the contract. The area within the boundaries as stated in the contract shall control over the area agreed upon. 7. Lietz had an ocular inspection prior to the perfection of the contract. Thus, he gained a fair estimate of the area of the property sold to him. Also, his subscription to the Deed of Absolute Sale indicates his assent to the correct description of the boundaries of the property. Law: Art. 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in conformity with the following rules: If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated. x x x
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Art. 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 lesser area or number than that stated in the contract. The same rule shall be applied when two or more immovables are 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. 80. Sta. Ana, Sto. Domingo vs. Hernandez (Alps) 17 Dec 1966 JBL Reyes *describing a parcel of with words like humigit kumulang/more or less in the deed Facts: 1. Spouses Sta. Ana and Sto. Domingo owned a parcel of land. 2. They sold 2 separate portions of it for P11K to Hernandez. 3. These portions were described in the deed of sale as follows: Bahaguing nasa gawing Hilagaan. Humahanga sa Hilaga, kina Maria Perez, at Aurelio Perez; sa Timugan, sa lupang kasanib; sa Silanganan, kay Mariano Flores at Emilio Ignacio; sa Kanluran, kay Cornelio Ignacio; Mayroong (12,500), m.c. humigit kumulang. Bahaguing nasa gawing Silanganan Humahanga sa Hilagaan, sa kay Rosa Hernandez; sa Silanganan, kay Domingo Hernandez at Antonio Hernandez; sa Timugan, sa Sta. Maria-Tigbi Road; at sa Kanluran, sa lupang kasanib (Jose Sta. Ana, Jr.), mayroong (26,500) metros cuadrados, humigit kumulang. 4. After the sale, the spouses prepared a subdivision plan which was approved by the Dir. of Lands. 5. Hernandez, however, did not conform to the plan and refused to execute an agreement of subdivision and partition. 6. Hernandez also refused to vacate the areas that she had occupied. Instead, she caused the preparation of a different subdivision plan, which was also approved by the Director of Lands. 7. The spouses filed suit against Hernandez claiming that Hernandez was occupying an excess of 17,000 sqm in area of what she had bought from them. They contended: Article 1542 of the Civil Code of the Philippines does not apply, allegedly because the boundaries, as shown in the deed of sale, are not definite. 8. Hernandez, on the other hand, claimed that the alleged excess, was part of the areas that she bought. Issue: Were the lots sold identified by conspicuous boundaries? Held: Yes Ruling: 1. Reasons why the lost were said to be identified by conspicuous boundaries: i) There was a price in a lump sum (P11k) for both lots ii) CA found that the lots were identified by the conspicuous boundaries consisting in a long and continuous pilapil or dike that separated the lands in question from the rest of the property 2. Thus, vendors are bound to deliver to the buyer all the land within the boundaries, irrespective of whether its real area should be greater or smaller than what is recited in the. 3. And this is particularly true where, as in this case, the area given is qualified to be approximate only ("humigit kumulang", i.e., more or less) 4. To hold the buyer to no more than the area recited on the deed, it must be made clear therein that the sale was made by unit of measure at a definite price for each unit. 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 greater or less area or number than that stated in the contract. **The same rule shall be applied when two or more immovables are 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
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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. 81. Luis Asiain vs Benjamin Jalandoni (Chip) October 23, 1923 Malcolm *Neighboring hacienderos enter into a sale in gross. Facts: 1. Luis Asiain Benjamin Jalandoni owned adjacent tracts of land in La Carlota, Negros Occidental. They once met and talked about the land of Asiain, where the latter waved his hand in the direction of his land and made a sweeping claim that it had was between 25 to 30 hectares. He also said that it would produce not less than 2,000 piculs of sugar. 2. Jalandoni was quite doubtful of the claim, so Asiain sent him a letter saying that although he (Asiain) was not a surveyor, he knows the area more or less. In the letter, he also assured Jalandoni that the tract had the right size and was going to produce enough piculs (2,000). He even said that there was a possibility of excess production, all of which should be returned to him in case. 3. Later on, the two met in Iloilo and signed a memorandum of agreement, showing the sale between them regarding the parcel of land. The MOA said that the land contains 25 hectares and is capable of producing 2,000 piculs of sugar. It also contained all the other obligations that Asiain would assume, like taking care of the lot while the sugar is being planted. Jalandoni then made an advance payment of P30,000. 4. After this, Jalandoni remained doubtful, he also continually suggested that the size of the land and the crop was overestimated. This led to another agreement, which added some stipulations to the original MOA to put Jalandonis mind at ease. It said that if Asiain withdrew from the sale, he would have to return the P30,000 advance made by Jalandoni, and a P15,000 penalty. If Jalandoni refused, he would forfeit all the money he had advanced so far. 5. Upon receiving the land, Jalandoni did two things: He had the cane ground in the sugar central and found that it only produced 800 piculs of sugar. He had the land surveyed and found out that it only contained 18 hectares. 6. Asiain sued Jalandoni for the remaining balance of P25,000, because the latter refused to pay. Jalandoni then filed a countersuit to absolve himself from the contract and to have it rescinded. 7. The trial court ruled for Jalandoni, hence this case. Issues: Is Asiain entitled to the remaining balance of P25,000? Held: No. The sale of real estate for a lump sum cannot involve a reduction in price, unless the area or number is designated in the price and the vendor fails to deliver what is promised. In such a case, he will suffer a reduction in proportion to what is lacking. Decision: The petition is DISMISSED and the CA ruling is AFFIRMED. Ruling: 1. The Court said that the relevant provision of the Old Civil Code is the one regarding the sale real estate for a lump sum and not at the rate of specified price of each unit or measure, Article 1471. This provision, which is now Article 1542 of the New Civil Code, states that there shall be no increase or decrease of the price if the area is found to be more or less than that stated. 2. The second paragraph of the article then provides that if the area is designated in the contract, the vendor shall be obliged to deliver all that is included within such boundaries, even if it should exceed the the area specified. If he does not do so, he shall suffer a reduction in the price in proportion to what is lacking, or the vendee may rescind the contract. 3. Taking Manresas view of the article, it seems to provide that whether or not it is a sale of a single real property, as long as the price paid is a lump sum that is not at the specified rate price for each unit of measurement, the vendor is obliged to deliver all that is within the boundaries stated. In case he fails to do so, the vendee has a right to reduce the price in proportion to what is lacking or to rescind the contract.
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This is true despite the confusion caused by the fact that the article is divided into two paragraphs. 4. The Court adopted the view of Manresa as against all other Spanish commentators, who seemed to make the risk equal among the vendor and the vendee. Manresas view, as the Court then admitted, was more favourable to the vendee. The vendee can get whatever is in excess without paying more, but he can reduce the payment or rescind the contract if the area is considerably less. 5. This view is also adopted by American authorities, who said that a purchaser of land sold in gross does not take all risk of quantity in the purchase. The use of words like more or less covers only a reasonable excess or deficiency. Mutual mistake of the parties is a ground for relief and rescission. 6. Being a sale in gross in which there was a mutual mistake as to the quantity of land sold and as to the amount of the standing crop, the contract between Asiain and Jalandoni may thus be rescinded (in accordance to Jalandonis prayer for rescission). 82. Azarraga vs Gay Dec 29, 1928; P: Villamor *Sale of property in lump sum; understanding Art. 1171, OCC(Now Art. 1542 under NCC) Facts: 1. On Jan 1921, Leodegario Azarraga executed an absolute deed of sale in favor of Maria Gay. Subject-matter: 2 parcels of lot Total Price: P47,000 Schedule of Payments: a. P 5,000: at time of signing the contract b. P 20,000: upon delivery by Azarraga of the Torrens title to 1st lot c. P 10,000: upon delivery by Azarraga of the Torrens title to 2nd lot d. P 12,000: one after the preceding payment 2. Gay only paid for the first P25,000 and refused to repay the remaining balance 3. Azarraga sued Gay for collection of a sum of money for the balance due 4. Gay argued that: Azarraga misrepresented lot 2 to be 98 hectares in the contract, even though it was actually 60. 5. The lower court ruled in favour of Azarraga Issues: 1. Did Azarraga really misrepresent the actual land size to Gay? 2. Based on Art. 1471 of the Civil Code, does Gay have the right to ask for the reduction of the price for the sale on the ground that lot 2 was smaller than what was agreed upon? Held: 1) No. Gay was given all the opportunities to check the actual size of the land so she cant later say that she was deceived. 2) No. Azarraga was able to deliver the land within the boundaries stated in its entirety. Decision -Judgment AffirmedRuling: 1) Gay was not deceived by Azarraga: a. Gay had the opportunity to visit the 2 lots and make her own calculations of the land b. She had the deed evidencing the sale of said lots to Azarraga by the previous owner. There, it was shown that lot 2 is about 7- hectares. c. She and her lawyer were the ones who drafted the questioned deed of sale. It is presumed that they read and understood the contents thereof. d. There was no evidence of Azarragas misrepresentation e. It is only 5 years after the completion of the sale that she complained about it Songco-vs-Sellner - When the purchaser proceeds to make investigations by himself, the vendor does nothing to prevent such investigation from being as complete as the former might wish, purchaser cannot later allege that vendor made false representations to him 2) No price reduction based on actual size of land in a sale of real property in lump-sum Nature of Sale in Lump-Sum
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Different Basis for Consideration (a) Object is sold independent of its values or measure; and (b) The consideration for the thing is determined by the stipulated boundaries Thing(s) involved is considered as a Determinate Object There are 2 kinds of Delivery that can take place (1) Delivery of everything included in the boundaries (2) Impaired delivery due to failure to deliver something included within the boundaries RULE- Interpretation of Art 1471,Old CC (Now Art. 1542 under NCC) Art. 1471, Old CC/ Art. 1542, NCC 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. 2 PARTS For Par 1 and first clause of Par 2: In the Sale of 1 OR 2 or more lots for a single lump-sum price, the basis is NOT the unit of measure or number. Therefore, there can be no increase or decrease in the price if the area is found to be more or less than whats indicated in the contract Lots are considered sold as a single realty (one determinate object) For the rest of Par 2 The vendor has the obligation to deliver everything included in the lot(s) sold for a lump-sum (with respect to the boundaries in the deed) If he fails to deliver EVERYTHING, vendee has 2 choices: (a) To reduce the price to proportionally to what is lacking in area or number (b) To rescind the contract at his option It doesnt matter if land area is greater than or lesser that what was expressed, AS LONG AS WHAT WAS DELIVERED PERTAIN TO ALL THOSE UNDER THE BOUNDARIES STATED IN THE CONTRACT Application to the case at hand: Here, Gay contends that Part 2 of the rule should be applied to the case. She wants the excess of the mone she paid, in proportion to the area which was not actually in the agreed land HOWEVER, PART 2 of RULE DOES NOT APPLY HERE: All the land included in the boundaries indicated in the contract is delivered in its entirety to Vendee No division of land enclosed within the boundaries of the properties sold 83. Visayan Distributors Inc. v. Flores (Shar) October 25, 1952 Paras Facts: 1. Visayan ordered copra from Flores 2. It was agreed that Flores was supposed to deliver the copra to a port in Romblon 3. On the day of the delivery Flores did not deliver the copra a. The ship then had no choice but to leave without the cargo 4. Visayan sues Flores for damages 5. Flores argues that they did not deliver because, Visayan was not able to pay for everything yet and Visayan was insolvent already. Issue: Is delivery affected by the insolvency of the buyer? Held: No, Flores should have still delivered the goods because, there was no proof that would even suggest that Visayan was already insolvent.
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Decision: Affirmed cost against Flores Ruling: 1. The vendee's insolvency that will excuse the vendor from his obligation to deliver the thing sold should be a. Judicially declared insolvency, or b. One inferred from such acts as petitioning for suspension of payments or c. As a result of all his properties having been attached in a civil or criminal proceeding is one which is discovered after the perfection of the contract. 2. In this case Flores only thought that Visayan was insolvent no other document or act evidenced their claim. 84. Behn, Meyer & Co. (Ltd.) (aka Company) vs. Teodoro Yangco (Garsha) September 18, 1918 Malcolm * delivery of soda case with a Carabao brand | Facts: 1. A memorandum agreement (Contract No. 37) was executed by the duly authorized parties of this case. 2. The contract of sale executed is composed of three parts: a) Subject Matter and Consideration Object: 80 drums of caustic soda, 76 per cent "Carabao" brand Price: $9.75 per one hundred pounds What are included in the price: Cost, insurance, and freight included Time of shipment: March, 1916 Place of delivery: Manila Time of Payment: On delivery of the documents b) Place of Delivery The contract provided for "c.i.f. Manila, pagadero against delivery of documents." c) Time of Delivery The contract provided for: "Embarque: March 1916" The merchandise was in fact shipped from New York on the Steamship Chinese Prince on April 12, 1916. 3. Merchandise was shipped from New York on a steamship. Note: i. The goods were not shipped nor consigned from New York to petitioner Company. ii. The bill of lading was for goods received from Neuss Hesslein & Co. iii. There were documents evidencing said shipment and symbolizing the property were sent by Neuss Hesslein & Co. to the Bank of the Philippine Islands with a draft upon Behn, Meyer & Co. and with instructions to deliver the same iv. The court later on ruled that the property is transferred to petitioner Company depends on when and if Behn, Meyer & Co. should pay the draft. 4. The steamship was DETAINED by the British authorities at Penang and 71 drums of the caustic soda were REMOVED. 5. Defendant Teodoro Yangco REFUSED to accept the delivery because: a) Refused to accept the remaining 9 drums of soda were in bad order b) Refused the optional offer of the petitioner Behn, Meyer & Co. (Ltd.) Optional offer provides that defendant Yangco has the option of: i. Waiting for the remainder of the shipment until its arrival OR ii. Accept the substitution of 71 drums of caustic soda of SIMILAR grade from petitioner Behn, Meyer & Co.s stock. 6. Petitioner Behn, Meyer & Co. sold 80 drums of caustic soda for the account of the defendant Yangco. Realized sum of sale: P6,352.89 Selling price: P10,063.86 Selling price Realized sum = Amount claimed as damages by the defendant Yangco for the BREACH OF CONTRACT. 7. Argument of Petitioner Company:
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Defendant should be the absolute owner of the specific soda confiscated at Penang. Thus, the defendants would have been indebted for the contract price of the same. 8. The trial court ruled in favor of defendant Yangco.

Issue/Held: 1. Main Issue: Is the place of delivery in New York? No. The place of deliver was in Manila. 2. Whether the petitioner Behn, Meyer & Co. (Company) were able to prove performance on its part of the conditions provided in the contract? No. The petitioner Company failed to prove that it complied with the warranty. Decision: Trial Court decision is AFFIRMED. Costs vs. Behn, Meyer & Co. (Ltd.) Ruling: Issue 1: The place of delivery was in Manila and not in New York 1. How to determine the place of delivery: This is a question of fact. If there is no specification in the contract: If the contract be silent as to the person or mode by which the goods are to be sent, delivery by the vendor to a common carrier, in the usual and ordinary course of business, transfers the property to the vendee. If there is a specification regarding to the payment of freight: This may indicate the intention of the parties in regard to the place of delivery i. If the buyer is to pay the freight, it is reasonable to suppose that petitioner does so because the goods become his at the point of shipment. ii. If the seller is to pay the freight, the duty of the seller is to have the goods transported to their ultimate destination and that title to property does not pass until the goods have reached their destination. 2. Meaning of C.I.F found in British Contracts: CIF- stands for Cost, Insurance and Freight Meaning: the price fixed covers not only the cost of the goods, but the expense of freight and insurance to be paid by the seller. Case at bar: The contract included C.I.F which was followed by Manila Meaning: i. There is no inference is permissible that a seller was bound to deliver at the point of destination. ii. C.I.F Manila must mean that the contract price, covering costs, insurance, and freight, signifies that delivery was made at Manila. iii. The place of delivery was NOT in New York but it was in Manila d Reason: The petitioner company would not have gone to the trouble of making fruitless attempts to substitute goods for the merchandise named in the contract, but would have permitted the entire loss of the shipment to fall upon the defendant Yangco iv. SC said that goods were not shipped nor consigned from New York to plaintiff. The bill of lading was for goods received from Neuss Hesslein & Co. the documents evidencing said shipment and symbolizing the property were sent by Neuss Hesslein & Co. to the Bank of the Philippine Islands with a draft upon Behn, Meyer & Co. and with instructions to deliver the same, and thus transfer the property to Behn, Meyer & Co. when and if Behn, Meyer & Co. should pay the draft. v. SC concluded that the place of delivery was Manila and plaintiff has not legally excused default in delivery of the specified merchandise at that place. 3. Meaning of F.O.B found in mercantile contracts of American Origin: FOB stands for Free on Board Meaning: The seller shall bear all expenses until the goods are delivered where they
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are to be "F.O.B." 4. How to determine the time the goods were delivered: Whether the goods are to be delivered "F.O.B." at the point of shipment or at the point of destination determines the time when property passes.

5. Note: The use of C.I.F and F.O.B merely make rules of PRESUMPTION. Thus, one may still give proof
to a contrary intention The INTENT (to be ascertained by all the circumstances) should be considered. Example: The court ruled that a sale was complete on shipment, though the contract was for goods, "F.O.B. Manila," the place of destination the other terms of the contract showing the intention to transfer the property Issue 2: The Petitioner Company failed to comply with its warranty 1. Effect of failure to comply with Warranty: When the material promise of the seller to the buyer has not been complied with, the buyer may rescind the contract of sale because of a breach in substantial particulars going to the essence of the contract. 2. Basis: Article 1451 of the Civil Code The vendee can demand fulfillment of the contract, and this being shown to be impossible, is relieved of his obligation. 3. Case at bar: Petitioner Company failed to prove performance on its part of the conditions precedent in the contract. There was sufficient ground for rescission. Thus, the defendant Yangco is not liable. 85. Bislig Bay Lumber Co. vs Collector of Internal Revenue (Jal) 28 Jan 1961 Padilla *logs sold for Japan; ownership transferred in the Philippines Facts: 1. The Collector of Internal Revenue assessed Bislig Bay Lumber deficiency sales tax for the following: a) sales of logs to buyers in Japan from 14 Jun 1951 to 19 Jun 1953 b) sales of lumber to buyers in Manila and Cebu from Q1 1951 to Q4 1954 2. Bislig Bay Lumber requested reconsideration of the assessment on the ground that with respect to the logs sold to buyers in Japan, the title to the logs passed outside of the Philippines, hence such sales were not subject to tax. 3. The CIR denied the request. 4. Bislig Bay lumber then filed a petition for review in the Court of Tax Appeals. 5. CTA affirmed the assessment on the deficiency sales tax on sale of logs to buyers in Japan. It found that the transfer of ownership happened in Manila since the logs were shipped F.O.B. or C.&I. Issue: Did delivery of the logs to buyers in Japan take place in Manila under F.O.B. (free on board) shipping terms? Held: Yes. Freight was paid by the buyers, thus, transfer of ownership took place in Manila. Decision: Affirmed. Ruling: 1. Ownership in the logs passed in the Philippines from the seller to the foreign buyers because the freight charges were paid by the buyers, the shipments were insured by the buyers, and the bills of lading and other shipping documents were indorsed in blank by the seller and presented for collection to a local bank where the foreign buyers opened irrevocable letters of credit. 2. The Court upheld the legality of the assessments for sales tax in two similar cases: a) Misamis Lumber vs CIR: Misamis Lumber shipped lumber and logs for export on board foreign merchant vessels purchased by foreign buyers established abroad. Shipment was F.O.B., Misamis Lumber defraying all expenses incurred from the sawmills to the loading on board the vesses; the buyers paying in Manila all freight, insurance charges, and price. b) Western Mindanao Lumber vs CTA: Facts were similar to Misamis Lumber but loading was made in
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Basilan while the price was paid in Manila. Payment was made upon presentation of the corresponding invoices and bulls of lading to the local banks where the buyers had opened letters of credit, after the various shipments had been made. 3. The fact that the buyers do not have representatives in the Philippines and that all the shipping documents were relating to exports do not necessarily prove that title to the logs passed into the buyers in Japan and not in the Philippines, thereby exempting Bislig Bay lumber from the payment of sales tax. 4. Baviera: where the logs were shipped f.o.b. Bislig, Surigao to the buyer in Japan, and the bill of lading was endorsed in blank by the seller and presented for collection to a local bank, with whom a letter of credit for the price was opened by the buyer, the Court held that the place of delivery was in the Philippines. Concept: Baviera: If the buyer pays the freight, it is reasonable to suppose that he does so because the goods became his at the point of shipment. F.O.B. means free on board, and the seller bears the expenses of transportation up to the f.o.b. point. The best indication of the intention of the parties as to the place of delivery of the goods to the buyer is the manner and place of payment of the price agreed upon by the parties. Where the price is payable upon the proof of shipment of the goods, then the buyer agrees to accept delivery at the point of shipment. 86. Republic vs. Litton (Rocky) November 28, 1953Paras office equipment for the elections. Facts: *Late delivery of padlocks and

1. Defendants are the partnership Litton & Co, and George Litton. They sell office supplies from the United States. 2. The defendants were contracted to supply (1) Padlocks and (2) office supplies for the upcoming April 23, 1946 elections. 3. They were tasked to deliver all of the above by April 8. 4. Their contract with the Republic included a stipulation that The stipulated delivery period shall not be exceeded. 5. The items were insured by Central Surety Co with bonds. 6. The defendants notified the Republic through mail that it is understood that [the government] will give a letter certifying that the padlocks are urgently needed and that the export license can be secured without delay. 7. The defendants did not deliver everything on time. 8. The defendants asked for an extension which was granted, but nevertheless, they still failed to deliver the items on time. 9. The Republic was forced to buy the remaining equipment from another supplier at a higher cost because they still lacked some supplies for the elections. It is now filing a case of damages against the defendants for their failure to deliver the goods on time for the elections. 10. The defendants claim they are not liable because it was necessary for the republic to furnish the export license in order to quicken the delivery of the items to meet the date. Issue: Was it a condition precedent for the Republic to first provide the export license before the defendants could meet the strict deadline they had agreed upon? Held: No, the intent of the contract, was to furnish the demanded supplies before the elections, regardless if there was an export license or not (which was strictly provided for in the contracts stipulation [fact #4]) Decision: The petition is granted. Ruling:

1. The contract has a section called Important Conditions, which carries the stipulation that The
stipulated delivery period shall not be exceeded. This makes defendants liable in all eventualities. 2. The letter wrote by the defendants only shows that they merely expected the Republic to give a certification. It was never considered a condition precedent. 3. Although the Republic granted some effort in granting the U.S. authorities of the necessary export
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license and shipping space, it cannot be considered as an obligation on the part of the Republic. 87. Carrascoso, Jr. vs. Court of Appeals (Garsha) really long case. Sorry Dec. 14, 2005 Carpio-Morales, J. * Carrascoso failed to pay full purchase price when it sold a portion of property to PLDT (discussion of conditional contract of sale, contract to sell, contract of sale) Facts: 1. El Dorado Plantation was the registered owner of a parcel of land (with TCT No. 93) in Occidental Mindoro 2. El Dorados Board of Directors (BOD) passed a RESOLUTION authorizing its president Feliciano Leviste to negotiate the SALE of the PROPERTY and SIGN all documents and contracts. 3. El Dorado (via Leviste) SOLD the property to petitioner Carrascoso. Provisions of the Deed of Sale provided that petitioner Carrascoso should pay the FULL purchase price on March 23, 1975 Leviste assured that there are NO TENANTS in the said property and it does not apply to Land Reform Code. 4. (Impt!) El Dorados Board of Directors (BOD) passed a Resolution This states that El Dorado interposes NO OBJECTION to the property being mortgage by petitioner Carrascoso to any bank AS LONG AS THE BALANCE on the Deed of Sale shall be recognized by the petitioner (he will pay for the balance due on the property sold) 5. Carrascoso and his wife executed a Real Estate Mortgage over the property (sold by El Dorado) in favor of Home Savings Bank to secure a loan of P 1m 6. Petitioner Carrascoso failed to pay the full purchase price by March 23, 1975 (See #3) 7. Petitioner Carrascoso executed an Agreement to Buy and Sell (Buy and Sell Contract) with PLDT to sell 1,000 hectares of petitioners property for P 3m. Agreement to Buy and Sell was NOT registered and annotated in the TCT No. T-6055 of petitioner Carasscoso. Carrascoso was asked to relocate the tenants/squatters in the said property 8. Lauro, BOD member of El Dorado, told the Board that petitioner Carrascoso failed to pay P 1.3 m for the property 9. Leviste, president of El Dorado, sent a Letter to petitioner Carrascoso Inform him of his failure to pay the balance of the purchase price El Dorado was seeking to RESCIND the Deed of Sale of Real Property with petitioner Carrascoso. 10. Lauro and El Dorado filed a complaint for RESCISION with Damages before CFI-Occidental Mindoro 11.Petitioner Carrascoso and PLDT forged a Deed of Absolute Sale After PLDT gained possession of the land, it conveyed the 1, 000 hectare portion of its property to PLDT Agricultural Corporation (PLDTAC) 12. When El Dorado filed a civil case against Carrascoso, PLDT intervened averring that it was a buyer in good faith. 13.Decision of RTC: Decided in favor of Carrascoso Dismissed complaint because it was PREMATURE 14.Decision of CA: Reversed the decision of RTC Ordered Petitioner Carrascoso return the possession of portion of land + net fruits of land to El Dorado Ordered PLDTAC to return 1000 hectrate farm to El Dorado 15. Issue: 1. Main issue: Whether the argument of Carrascoso that there was a breach of warranty of non-tenancy committed by El Dorado (where, as a result, he incurred expenses of P 2, 890, 000 for which he should be reimbursed and that his unpaid obligation to El Dorado worth P 1, 300,000 should be deducted there from) is tenable? 2. What is the nature of the contract between El Dorado and Carrascoso?
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3. WON the Agreement to Buy and Sell between PLDT and petitioner Carrascoso is a CONDITIONAL contract of sale? 4. WON the period for Petitioner Carrascoso to fully pay purchase price was suspended because of El Dorados non-objection to mortgage the property? Held: 1. The contract is a contract of SALE which is a reciprocal obligation. Failure to pay the price entitles the unpaid seller (El Dorado) the right to sue for the collection of payment OR rescission of contract 2. No, The contract between petitioner Carrascoso and PLDT is a contract to SELL. 3. No, even if El Dorado did not object to the mortgage of the property does not mean that the period for petitioner Carrascoso to pay purchase price was suspended. Decision: Petitions are DENIED. Decision of CA is AFFIRMED Deed of sale between El Dorado and Carrascoso is RESCINDED. 1,000 hectare portion of the property should be turned over by PLDT to El Dorado. El Dorado may choose whether to appropriate the improvements (made by PLDT) or ask PLDT to pay the price of land. PLDT shall pay reasonable compensation to El Dorado for occupying 1000 hectare property. Ruling: On the issue of warranty: 1. Breach of an express warranty makes the seller liable for damages. 2. Requisites of an Express Warranty in a Contract of Sale: 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 tendency of such affirmation or promise is to induce the buyer to purchase the thing c) The buyer purchases the thing relying on such affirmation or promise thereon. 3. Argument of Petitioner Carrascoso: El Dorado is guilty of breach of warranty of non-tenancy Reasons: i. Because of El Dorado, petitioner Carrascoso incurred P 2 , 890, 000.00 worth of expenses ii. This must be deducted from the petitioners unpaid obligation to El Dorado (worth P 1.3 million) iii. The remaining amount should be reimbursed to petitioner Carrascoso for damages. 4. Argument of Defendant: Based on the March 23, 1972 Deed of Sale of Real Property, El Dorado already WARRANTED that the property was NOT being cultivated by any tenant. Thus, it is not covered by the provisions of Land Reform Code. The only way El Dorado may be allowed to reimburse is when he is liable under the said law.

5. Decision of SC: (The SC only provided the requisites of express trust. Since warranty was not a
major topic in this case I got this from the Notes part of the decision) Where the complaint is one for DAMAGES arising from a BREACH of a written contract and NOT a suit to enforce warranties against hidden effects, the governing law is Art. 1715 of the Civil Code. Art. 1715. The contract shall execute the work in such a manner that it has the qualities agreed upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use. Should the work be not of such quality, the employer may require that the contractor remove the defect or execute another work. If the contract fails or refuses to comply with this obligation, the employer may have the defect removed or another work executed, at the contractor's cost. BUT, since Art. 1715 of the Civil Code does not provide a specific prescriptive period, the general law on prescription, Art. 1144 will apply. Art. 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.
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On the issue that the contract involved between El Dorado and Petitioner Carrasocoso is a Contract of Sale which implies reciprocal obligation for both buyer and seller 1. The contract is a contract of SALE which is a reciprocal obligation. Failure to pay the price entitles the unpaid seller (El Dorado) the right to sue for the collection of payment OR rescission of contract 2. It was perfected by their meeting of the minds and was consummated by the delivery of the property to Carrascoso. However, El Dorado has the right to rescind the contract by reason of Carrascosos failure to perform his obligation. 3. The seller obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer obligates itself to paa price certain in money or its equivalent. 4. The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction that for a time existed, and discharges the obligations created. Such failure to pay the price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for collection or to rescind the contract. On the issue that the contract between PLDT and petitioner Carrascoso is a contract to sell 1. This is evidenced by the terms and conditions that they have agreed upon that after fulfillment of Carrascosos obligation PLDT has to notify Carrascoso of its decision whether or not to finalize the sale. 2. Agreement to Sell between PLDT and Carrascoso is merely a PREPARATORY contract in the nature of a contract to sell. 3. It is a contract to sell because, the parties had to stuipulate in the Agreement to Buy and Sell that Carrascoso shall not sell, cede, assign and/or transfer the parcel of land which is a typical characteristic of a contract to sell. On the issue that even if El Dorado did not object to the mortgage of the property does not mean that the period for petitioner Carrascoso to pay purchase price was suspended. 1. Seller El Dorado already performed its obligation through executing the Deed of Sale BUT petitioner Carrascoso FAILED to perform his obligation in paying the FULL contract price 2. Resolution of El Dorado stating that it does not object Carrascosos mortgaging of the property DID NOT have EFFECT of suspending the period to FULLY pay the purchase price. 3. There was NO PROOF that Carrasocos was given verbal extensions to pay the balance of the purchase price. Other issues: On the issue the El Dorado was not given notice of the Agreement to Buy and Sell between the Carasscoso and PLDT: There is inadequate proof to affirm the argument of Carrascoso that he notified the members of the Board (El Dorado) about his intention to sell 1,000 hectare of property to PLDT. Concept: Difference between a Contract of Sale and Contract to Sell: Contract of Sale Title is TRANSFERED to the VENDEE upon DELIVERY of the thing sold Vendor has LOST and CANNOT recover ownership until the contract is RESOLVED/RESCINDED Contract to Sell Ownership is TRANSFERRED upon FULL PAYMENT OF THE PURCHASE PRICE (and NOT upon delivery of the property) Title is RETAINED by VENDOR until FULL PAYMENT of the price (positive suspensive condition). Failure to pay is NOT breach BUT it prevents the obligation of the vendor to convey the title from being effective.

Difference between Conditional Contract of Sale and Contract to Sell Conditional Contract of Sale If the suspensive condition is fulfilled, the
st

Contract to Sell If the suspensive condition is fulfilled,


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contract of sale is perfect such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership AUTOMATICALLY transfers to the BUYER by operation of law No need for seller to perform further acts ownership will NOT AUTOMATICALLY transfer to the buyer even if the property has been previously delivered to him. Seller still have to CONVEY title to the prospective buyer by entering into a contract of absolute sale

Reciprocal Obligations (Art. 1191 of CC) Basis of Right to Rescind Contract by INNOCENT party: Art. 1191 of CC Obligation of one (debtor or creditor) is dependent upon the obligation of the other These are performed SIMULTANEOUSLY Effect of Rescinding the Contract: The exercise of power to rescind extinguishes the obligatory relation as if it had NEVER created, the extinction having a retroactive effect. Invalidating and unmaking the juridical tie which would leave things in their status BEFORE the celebration of contract Where a contract is rescinded it is the duty of the Court to require both parties to surrender that which they may have respectively received and to place each other as far as practicable in his original situation. The exercise of the power to rescind extinguished the obligatory relation as if it had never been created, the extinction having a retroactive effect Requisites in order to have Express Warranty in a Contract of Sale: 1. Express warranty must be an affirmation of fact/promise by the seller relating to the subject matter of the sale 2. The natural tendency of such affirmation or promise is to INDUCE the buyer to purchase the thing 3. The buyer purchases the thing relying on such affirmation or promise. Law: 1. Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between: a) Fulfillment of obligation + damages OR b) Rescission of the obligation + damages He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124) 88. Philippine Manufacturing Corporation v. Go Jocco January 21, 1926 - Ostrad Facts: 1. PhilMan entered a contract of sale with Go Jocco 2. PhilMan bought Oil from Go Jocco with the intention of shipping it to New York 3. 1st testing: Mason the Chemist and Secretary of Phiman went to Go Joccos Store and took samples of the oil for testing NO COMPLAINTS 4. 2nd testing: before the payment of the oil Mason again went to the store and tested the oil (as agreed) NO COMPLAINTS 5. The Oil Tanks were then paid for and delivered 6. In the ship another test was conducted IT WAS CONTAMINATED 7. When it reached New York it was rejected
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8. PhilMan now sued for breach of warranty Issue: Was there any breach of warranty? Held: No, 1. There was not express warranty and 2. Implied warranty was waived already Decision: Go Jocco is not Liable Ruling: 1. There was no express warranty none was stated in the contract nor said by Go Jocco 2. There is no implied warranty too. a. A purchaser of merchandise having fully examined the same to his satisfaction before the consummation of the sale, cannot maintain an action for breach of an implied warranty under article 336 of the Code of Commerce. 89. Guinhawa v. People (Shar) August 25, 2005 - Callejo Facts: 1. Guinhawa owned a van, one day, his driver suffered a heart attack while driving tha van and the van was heavily damaged. a. The van was repaired 2. It was then displayed for sale in Guinhawas showroom. 3. Guinhawa sold the van to the Spouses Silo. 4. Silo only inspected the interior but not under the chassis, because they thought the van was brand new. 5. When the spouses used the van, the van had squeaking sounds and when the van was checked, the mechanic discovered that some parts underneath the van had been welded. 6. The spouses Silo requested that Guinhawa change the van with 2 Charade-Daihatsu vehicles within a week or two, with the additional costs to be taken from their down payment. 7. Silo filed a complaint for the rescission of the sale and the refund of their money before the Department of Trade and Industry (DTI). 8. During the confrontation between Silo and Guinhawa, Silo learned that Guinhawa had bought the van from UMC before it was sold to them, and discovered about the accident that happened. a. Spouses Silo withdrew their complaint from the DTI. 9. Spouses Silo filed a criminal complaint for violation of paragraph 1, Article 318 of the RPC against Guinhawa. 10. RTC In Favor of SILO 11. CA Affirmed a. The spouses had the right to assume that the van was brand new because Guinhawa held himself out as a dealer of brand new vans. b. The act of displaying the van in the showroom without notice to any would-be buyer that it was not a brand new unit was tantamount to deceit. c. Thus, in concealing the vans true condition from the buyer, Guinhawa committed deceit. Issue: Whether or not Guinhawa is liable for the defects of the van? Held: Yes, because he deceived the spouses into believing that the van was brand new, he had an obligation to tell them that it was no longer brand new. Decision: Favor of Silo spouses; Guilty Ruling: 1. Guinhawa is not relieved of his criminal liability for deceitful concealment of material facts, even if the spouses made a visual inspection of the vans interior and exterior before they agreed to buy it and failed to inspect under the chassis. 2. Where the vendee made only a partial investigation and relies, in part, upon the representation of the vendee, and is deceived by such representation to his injury, he may maintain an action for such deceit. The seller cannot be heard to say that the vendee should not have relied upon the fraudulent concealment; that negligence, on the part of the vendee, should not be a defense in order to prevent the vendor from unjustifiably escaping with the fruits of the fraud. 3. Art 1389 NCC provides that failure to disclose facts when there is a duty to reveal them constitutes fraud. a. If, in a contract of sale, the vendor knowingly allowed the vendee to be deceived as to the thing sold in a material matter by failing to disclose an intrinsic circumstance that is vital to the contract, knowing that the vendee is acting upon
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the presumption that no such fact exists, deceit is accomplished by the suppression of the truth. 4. In this case, Guinhawa and Azotea (Guinhawas sales manager) knew that the van was in an accident and was just repaired, but they still placed the van in the showroom, making it appear to the public that it was a brand new. 5. Guinhawa was obligated to reveal the foregoing facts to the spouses. a. But Guinhawa and Azotea declared when they testified in the court a quo that the vehicle did not figure in an accident, nor had it been repaired; they maintained that the van was brand new, knowing that the spouses was going to use it for their garment business. Thus, the spouses bought the van, believing it was brand new. 90. Power Commercial and Indl Corp v. CA January 31, 1979 Panganiban Facts: 1. PCIDC entered (contract of sale) parcel of land from Quiambao a. Down payment = 108,000 b. Balance of 295,000 upon execution of deed of transfer of the title over the property c. To assumed the existing mortgage over the land paid PNB 2. June 1, 1979 Quiambao mortgaged the land to PNB again. 3. June 26, 1979 the parties executed the deed of sale 4. Feb. 15, 1980 PNB informed Quiambao that the assumption of the mortgage was considered withdrawn because PCIDC did not submit the necessary papers. subsequently never paid 5. PCIDC the previous owners did not remove the people staying there, it was our agreement 6. PCIDC Filed a case against Quiambao for rescission and damages. 7. PNB Bought the land in a public auction. 8. RTC Favor PCIDC PNB must return all payments 9. CA Reversed Deed of Sale did not obligate respondents to remove the people. Rescission was not justified. Issue: 1. Was there any ground for rescission? 2. Was there delivery? 3. Was there any breach of warranty? Held: 1. The failure to evict the lessees and to deliver actual or physical possession is not substantial breach for two reasons. 2. Yes, the property was delivered, symbolically 3. No, there was no breach of warranty. The requisites of breach of warranty were not present. Decision Affirmed Ruling: No Ground for Rescission 1. The failure was not stipulated as a condition whether as resolutory or suspensive. 2. Its effects and consequences were not specified either. If they intended it to be then, it should have been stipulated, absence of a stipulation, it cannot be considered a ground for rescission. Symbolic Delivery 1. Symbolic delivery is a species of constructive delivery, effects the transfer of ownership through the execution of a public document. a. Its efficacy, can however be prevented, if the vendor does not possess control over the thing sold, in which case the legal fiction must yield to reality. b. Control => not possession! a. When there is not impediment, whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient. b. In this case, the lot was placed under the control of the petitioner. No breach of warranty 1. The requisites of breach of warranty were not present a. The purchaser has been deprived of the whole or part of the thing sold b. Eviction is by final judgment c. The basis thereof is by virtue of a right or prior to the sale made by the vendor.
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d. The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee. 91

92. Mendoza-vs-Caparros (~Diana) Jan 30, 1954; P:Pablo * Sellers can be impleaded as a defendant when buyer files in a case for re-conveyance of the title of property the former bought Facts: (Please note that the original decision was in Spanish) 1. On June 1921, Agapito Ferreras sold his 2 parcels of lot to Paulino Pelejo 2. On February 1932, Paulino sold these lots to the Mendoza spouses. **take not of the condition: "to defend against claims now and forever just for the person filing." 3. The Mendoza spouses died 4. On August 1933, Mendozas children extra-judicially partitioned their properties. Pedro Mendoza got the subject lots. 5. On March 1935, Agapito obtained the Original TCTS of the lands (or at least retained title to it) 6. On April 1951, Agapitos heirs extra-judicially partitioned the same lots. The lots went to Justina Caparros and her 2 daughters, Socorro and Policornia. 7. Pedro Mendoza filed a complaint for the conveyance of the title to his name. He argued that that lost were recorded incorrectly. Here, Pedro wished that: "in case cancellation or re-conveyance is impossible, the Defendants (including Paulino) or any of them should be required to pay him the purchase price paid by his predecessor-in-interest." The court ruled in his favor and ordered the transfer of title in his name. The Caparros were ordered to pay for the expenses of the suit, but Paulino was not ordered to do so 8. Paulino later filed a motion for reconsideration. He wants the court to grant P500.00 in his favor (the fee he had to pay for his lawyer in said case) He based his motion on Art. 2208 of the Civil Code "In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: . . . (4) In case of a clearly unfounded civil action or proceeding against the plaintiff;" Issue: Did Pedro have a valid legal basis to implead Paulino, who sold the lots to the formers parents, when he sued the Caparroses for conveyance of title? Held: Yes. The law and the stipulation between the parties show that sellers have a responsibility (for reparation) to their buyers in case of eviction. Hence, the case was clearly NOT an unfounded civil action against Paulino. Decision: -Judgment AffirmedRuling: Pedro is justified for impleading Paulino in the case as a co-defendant of the Caparroses. 1) Sellers have the responsibility to their buyers in case of eviction: By Express Stipulation of the Parties Condition: "to defend against claims now and forever just for the person filing." By Express Provision of the Law (even if theres no condition) Art. 1548, New Civil Code Application to the Case Paulino, as the seller, guarantees to the buyer that he will be responsible, even in the ff cases: a. in case of eviction, or
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b. if the buyer or his heir would be deprived of the thing bought or part thereof for a final ruling 2) Other reasons which justify Pedros action: Pedro didnt know that his action against Paulino was unfounded Pedro just did this so that he can protect his rights Because of this, Paulino was given the opportunity to prove that he had title to the lands at the time
of sale. What does the sellers inclusion as co-defendant in this cases show? It serves as a warning that in case of eviction, he - as a salesman - had to meet reparation. Laws Applied: Art. 1548, Civil Code: Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased. The vendor shall answer for the eviction even though nothing has been said in the contract on the subject. The contracting parties, however, may increase, diminish, or suppress this legal obligation of the vendor.

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