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CONDITIONS AND WARRANTIES

ARTICLES

PERSONAL ANALYSIS

CASES
Soler vs Chelsey
G.R. No. L 17150 June 20,1922

Art. 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
non-performance 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)

A Condition is a future and uncertain event


which may or may not happen. There are two
general classifications of condition namely:
(a) suspensive condition and (b) resolutory
condition. The fulfilment of a suspensive
condition gives rise to the birth of an
obligation while the fulfilment of a resolutory
condition
extinguishes
a
subsisting
obligation.

Facts:

Soler entered into an agreement with Wm. H.


Anderson Co., for the purchase of machinery.
Later on, he sold all his rights and interests in
the contract of sale to Soler. The machinery
was however incomplete. The important
parts were not yet transferred to Chelsey as
they were still for delivery to the Philippines.
Article 1545 provides that if the condition Chelsey rescinded the contract. He believed
imposed upon a party is not fulfilled, the that the machineries said to be on the way
other has two options. He can either (a) were in fact shipped several days after.
refuse to proceed with the contract; or (b)
waive the performance of the condition and Issue:
proceed with the contract.
Whether or not the rescission was proper.
If the condition agreed upon partakes of the
nature of a promise that it should happen; Held:
non-fulfillment
of
such
condition
is
considered to be a breach of warranty.
Yes. Chelsey entered into the contract
believing that the machineries are about to
be delivered. He is expecting to receive them
within a short period of time. This was the

promise given by Soler, a condition agreed


upon by Chelsey. In the case at bar, the time
of arrival of the machinery is an essential
part of the contract. The promise that the
machinery are on their way and are to reach
manila in a short period of time is a
condition. The breach of which will entitle the
buyer to rescind the contract. Hence the
rescission is in place and valid.
Delevopment Bank of the Philippines vs.
Medrando and Privatization
Management Office
G.R. No. 167004 February 7, 2011
Facts: Respondent was president and general
manager of Paragon Paper Industries, Inc.
(Paragon). He owned 37,681 total of shares.
DBP offered him a commission if Medrano
would convince the minority stockholders to
sell their shares to DBP. Medrano started to
persuade the minority stockholders to sell
their stocks to DBP and almost all of them
agreed. The minority stockholders presented
proposals as regards the sale of their stocks.
The proposals were approved by DBP on 3
conditions. The contract also states that if
one of the conditions is not complied with,
the contract of sale will be cancelled.
Medrano also sold his shares to DBP who
accepted the sale. When Medrano tried to
collect his commission, DBP denied to give it

to him. This prompted Medrano to file a case


for specific performance with damages. The
RTC and the CA ruled in favor of Medrano
ruling that there was a perfected contract of
sale. According to the CA, although DBP had
the right not to proceed with the sale under
Article 1545, this right has been waived when
it retained the stocks it bought from Medrano
instead of returning it to him. If indeed DBP
intended to rescind from the contract, it
should have returned the stocks to Medrano.
Issue: Whether or not the application of
Article 1545 of the Civil Code to the case is
correct
Held: No. The Article 1545 of the Civil Code
does not apply to this case. The said article
presupposes the existence of a perfected
contract between the parties and that one of
them fails to perform his obligation. In the
case at hand, there is no perfected contract.
The failure of Medrano to comply with the
conditions set forth by DBP effectively
prevented the perfection of the contract
Songco vs Sellner
G.R. No. L 11513 December 4, 1917
Art. 1546

A Warranty is a collateral undertaking in a


sale, express or implied, that if the property Facts:
sold does not possess certain qualities or
incidents, the purchaser may either consider Sellner was the owner of a farm which was

the sale void or claim damages for breach of contiguous to the farm owned by Songco.
Any affirmation of fact or any promise by the warranty. It is a promise that a particular fact Both farms were sugar cane plantations.
seller relating to the thing is an express about the object of sale is true.
Sellner bought Songcos canes and as a
warranty if the natural tendency of such
consideration thereof, he executed three
affirmation or promise is to induce the buyer Article 1546 speaks about an Express promissory notes covering the collective
to purchase the same, and if the buyer warranty. As the term itself implies, it is any amount of 12,000 pesos. Two of the
purchase the thing relying thereon. No expressed affirmation of fact concerning the promissory notes were paid however the
affirmation of the value of the thing, nor any condition, quality, or character of the object third remained unpaid, hence the action for
statement purporting to be a statement of sold.
recovery was brought by Songco. Sellner for
the seller's opinion only, shall be construed
his part claims that Songco is guilty of
as a warranty, unless the seller made such
misrepresentation when he promised that
affirmation or statement as an expert and it
there are 3,000 piculs of cane in the field
was relied upon by the buyer. (n)
where in reality there were only 2,011 piculs.
Issue:
Whether or not there was a breach of
warranty.
Held:
No. While Article 1546 speaks of an expert
opinion relied upon by the buyer, the fact
that Songco was an experienced farmer does
not put this case in the ambit of the
contemplated expert opinion. The statement
was a mere matter of opinion. It is not a
sufficient ground for avoiding the contract.
Assertions concerning a property in regard to
its qualities and characteristics are usual and
ordinary means of a seller to obtain a high
price. They are always understood as to
afford the buyer to make inquiries. A man

who relies upon such affirmation made by a


person whose interest might so readily
prompt him to exaggerate the value of his
property does so at his own peril.
Guinhawa vs. People
486 SCRA 278 (2005)
Facts:
Jaime Guinhawa is engaged in the business of
selling
brand new vehicle, and had a
showroom displaying his products. Guinhawa
purchased a brand new Mitsubishi L-300 from
Manila. Guinhawas driver, Leopoldo Olayan,
drove the van from Manila to Naga. However,
Olayan suffered a heart attack during the trip
causing damage to the under chassis since
the left front tire had to be replaced. This was
repaired and the van was put on display in
Guinhawas showroom. This same van was
later sold to Spouses Silo who are engaged in
the business of buying garments in Manila
and selling them in Naga. They saw the wav
in Guinhawas shoeroom and inspected its
interior but not the under chassis. They also
did not conduct a test drive, and so bought
the van without any knowledge of the
damage it had previously incurred. Azotea,
the sales manager, was the one who
transacted with the Spouses Silo and
furnished the couple with a Service Manual

containing the warrant terms and conditions.


The day after the van was bought by the
Spouses, Josephine Silo went to Manila with
Glenda Pingol and the latters Husband. On
the way back, the heard a squeaking sound
and later discover that it was caused by parts
underneath the vehicle that were welded
together. Guinhawa insisted that the defect
were mere factory defects. As the defects
persisted, the Spouses requested that
Guinhawa replace the van with 2 CharadeDaihatsu vehicles within a week or two, with
the additional cost to be taken from their
downpayment. However, the Spouses later
asked for the rescission of the contract upon
discovering that the van was not really brand
new.
Issue:
Whether or not there were
representations by Guinhawa.

fraudulent

Held:
Yes. The Supreme Court ruled that Jaime
Guinhawa is guilty of other deceits. The Court
pointed out that the crime could be
commited by omission. 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

contact, knowing that the vendee is acting


upon the presumption that no such fact
exists, deceit is accomplished by the
suppression of the truth. Azotea knew that
the van had figured in an accident, was
damaged
and
had
to
be
repaired.
Nevertheless, the van was placed in the
showroom, thus making it appear to the
public that it was a brand new unit. The
petitioner was mandated to reveal the
foregoing to the private complainant.
Art. 1547
In a contract of sale, unless a contrary Article 1547 on the other hand speaks of the
second kind of warranty which is Implied
intention appears, there is:
warranty. There is an implied warranty where
(1) An implied warranty on the part of no formal, express, explicit warranty or
the seller that he has a right to sell the affirmation of fact is made or stipulated
thing at the time when the ownership is between the parties. The provision provides
to pass, and that the buyer shall from two instances where there is an implied
that time have and enjoy the legal and warranty.
peaceful possession of the thing;
There is deemed to be an implied warranty
(2) An implied warranty that the thing (a) as to the right of the seller to sell at the
shall be free from any hidden faults or time when ownership has to pass (warranty
defects, or any charge or encumbrance against eviction); and there is also an implied
(b) warranty against hidden defects, or faults,
not declared or known to the buyer.
or charge, or encumbrances unknown to the
This Article shall not, however, be held to buyer (warranty against hidden defects).
render
liable
a
sheriff,
auctioneer,
mortgagee, pledgee, or other person The requisites of a breach of warranty are: (a)

Ang vs. Court of Appeals


567 SCRA 53 (2008)
Facts:
Under
a"carswapping
scheme,
Bruno
Soledad sold his Mitsubishi GSR sedan 1982
model to Jaime Ang. For his part, Ang
conveyed to Soledad his Mitsubishi Lancer
model 1988. Ang, a buyer and seller of used
vehicles, later offered the Mitsubishi GSR for
sale through Far Eastern Motors, a secondhand auto display center. The vehicle was
eventually sold to Paul Bugash. Before the
deed could be registered in Bugashs name,
however, the vehicle was seized by virtue of
a writ of replevin on account of the alleged
failure of Ronaldo Panes, the owner of the
vehicle prior to Soledad, to pay the mortgage
debt constituted thereon.

professing to sell by virtue of authority in fact purchaser has been deprived of whole or part
or law, for the sale of a thing in which a third of the thing sold; (b) by final judgment; (c)
person has a legal or equitable interest. (n)
based on a right prior to the sale made by
the vendor; (d) the vendor has been
summoned and made co-defendant in the
suit for eviction.
The last paragraph of the provision states an
exception to the general rule. There implied
warranties above stated does not apply when
the sale is made by a sheriff, auctioneer,
mortgagee,
pledge,
or
other
person
profession to sell by virtue of authority
conferred by law.

To secure the release of the vehicle, Ang paid


BA Finance. Soledad refused to reimburse,
despite repeated demands, drawing Ang to
charge him for Estafa with abuse of
confidence.
By
Resolution,
the
City
Prosecutors Office dismissed the complaint
for insufficiency of evidence, drawing Ang to
file for consecutive complaints for damages
against Soledad before the Regional Trial
Court (RTC) of Cebu City. Subsequently, the
RTC rendered judgment in favor of Ang "for
the sake of justice and equity, and in
consonance with the salutary principle of
non-enrichment at anothers expense. The
RTC then ordered Soledad to pay Ang the
amount the latter paid to BA Finance.
Soledad then appealed to the Appellate
Court, which reverses the decision of the RTC.
The Court of Appeals dismissed Angs petition
on the ground that the filing of said complaint
seeking the awarding of damage for breach
of warranty has already prescribed.
Issue:
Whether or not Angs cause of action had not
yet prescribed when he filed the complaint.
Held:
Yes. In declaring that he owned and had

clean title to the vehicle at the time the Deed


of Absolute Sale was forged, Soledad gave an
implied warranty of title. In pledging that he
"will defend the same from all claims or any
claim whatsoever and will save the vendee
from any suit by the government of the
Republic of the Philippines," Soledad gave a
warranty against eviction.
Given Angs business of buying and selling
used vehicles, he could not have merely
relied on Soledads affirmation that the car
was free from liens and encumbrances. He
was expected to have thoroughly verified the
cars registration and related documents.
Since what Soledad, as seller, gave was an
implied warranty, the prescriptive period to
file a breach thereof is six months after the
delivery of the vehicle, following Article 1571.
But even if the date of filing of the action is
reckoned from the date petitioner instituted
his first complaint for damages on November
9, 1993, and not on July 15, 1996 when he
filed the complaint subject of the present
petition, the action just the same had
prescribed, it having been filed 16 months
after July 28, 1992, the date of delivery of the
vehicle.
SUBSECTION ONE: WARRANTY IN CASE OF EVICTION

Art. 1548
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. (1475a)

Tiana vs. Torrejon


GR NO. 6638 December 28, 1911
Eviction is a judicial process by virtue of
which the buyer is deprived of the ownership Facts:
of the whole or part of the thing purchased
by final judgment or by any act imputable to Jose Maria Torrejon was sold a parcel of land
the vendor.
with the improvements therein to appellees.
In the contract of sale, defendant warranted
The final judgment contemplated by Article that he has title to the land. Pending the sale
1548 refers to a final and executor judgment. transaction and unknown to plaintiffs, Jose
Maria Torrejon filed an application for
A warranty is necessarily included in the registration of the exact land being sold by
contract even though it is not stated or him to the plaintiffs. When the deed of sale
contained in the contract. It automatically was executed, Torrejon still proceeded with
attaches in a contract of sale.
the application for registration. However, the
registration was not effected due to the
However, warranty against eviction and the failure of Torrejon to produce evidence that
liability attached therewith is waivable. The he is the owner of the property. The property
parties may agree to increase, diminish, or was therefore pronounced as government
totally suppress the legal obligation of the property. The military took possession of the
vendor from his liability due to the eviction of property and the plaintiffs were evicted
the vendee.
therefrom, prompting them to file a suit for
breach of warranty against eviction. Torrejon
claims that he cannot be liable for eviction as
one of the elements of eviction are not
present, i.e., notice.
Issue:
Whether or not there was eviction.
Held:

Yes. The essential requisites of eviction are


present in the instant case, namely: (a) final
judgment; (2) that the vendee be deprived of
the whole or a part of the thing sold; (c) a
right prior to the sale: and (d) that the vendor
be given notice of the suit at the instance of
the vendee. Torrejon cannot claim that he
was not notified of the suit because he is the
applicant in the said action.

Art. 1549

Tiana vs. Torrejon


GR NO. 6638 December 28, 1911

When eviction is enforced by a final and


executor judgment, and the losing vendee Facts:
failed to appeal the case, the vendor remains
The vendee need not appeal from the liable just the same because it is his Jose Maria Torrejon was sold a parcel of land
decision in order that the vendor may responsibility to make good the warranty.
with the improvements therein to appellees.
become liable for eviction. (n)
In the contract of sale, defendant warranted
that he has title to the land. Pending the sale
transaction and unknown to plaintiffs, Jose
Maria Torrejon filed an application for
registration of the exact land being sold by
him to the plaintiffs. When the deed of sale
was executed, Torrejon still proceeded with
the application for registration. However, the
registration was not effected due to the
failure of Torrejon to produce evidence that
he is the owner of the property. The property
was therefore pronounced as government
property. The military took possession of the
property and the plaintiffs were evicted

therefrom, prompting them to file a suit for


breach of warranty against eviction. Torrejon
claims that he cannot be liable for eviction as
one of the elements of eviction are not
present, i.e., notice.
Issue:
Whether or not there was eviction.
Held:
Yes. The essential requisites of eviction are
present in the instant case, namely: (a) final
judgment; (2) that the vendee be deprived of
the whole or a part of the thing sold; (c) a
right prior to the sale: and (d) that the vendor
be given notice of the suit at the instance of
the vendee. Torrejon cannot claim that he
was not notified of the suit because he is the
applicant in the said action.

Art. 1550

The provision contemplates an event where


occupation of the property by the vendee
started while the property is still owned by
the vendor; and later on the ownership was
When
adverse
possession
had
been transferred to the vendee whilst maintaining
commenced before the sale but the occupation. In this situation, the vendor is
prescriptive period is completed after the exempted from liability.
transfer, the vendor shall not be liable for

eviction. (n)

Art. 1551
If the property is judicially sold due to the
fact of (a) non-payment of taxes and (b) such
fact is not made known to the vendee before
If the property is sold for non-payment of the sale, the vendor is not excused from
taxes due and not made known to the liability arising from breach of warranty.
vendee before the sale, the vendor is liable
for eviction. (n)

Bonzon vs. Standard Oil


G.R. No. 8851 March 16, 1914
Art. 1552

The judgment debtor is also not exempted Facts:


from liability except otherwise decreed by the
court who rendered judgment.
The plaintiff purchased certain real estate at
an execution sale, paying therefor the sum of
The judgment debtor is also responsible for
P2,170 to the defendant sheriff who turned
eviction in judicial sales, unless it is otherwise
over the purchase price to the defendant
decreed in the judgment. (n)
company, the execution creditor, at whose
instance the sale was had. Thereafter, the
plaintiff having taken possession of the land
was evicted in the judicial proceedings. The
court found that the land in question was a
property belonging to a third party, and that
neither the judgment debtor nor the

purchases at the execution sale had any title


thereto. The prayer of the complaint is to
recover the price paid at the execution sale
against the sheriff and the judgment debtor.
Issue:
Whether or not plaintiff has an action against
the judgment creditor.
Held:
Yes. Under the principle of unjust enrichment,
the judgment creditor cannot retain the
purchase price of a land sold as a property of
the judgment debtor after showing that even
he had no title to the property. The plaintiffs
right to recover is based on a warranty that
the property sold is indeed owned by the
creditor.
Santiago Land Development Corporation
vs.
CA and the heirs of Norberto
Quisumbing
G.R. No. 106194 January 28, 1997
Facts:
Quisumbing brought an action against
Philippine National Bank (PNB) for the
enforcement of an alleged right to redeem
certain real properties foreclosed. Santiago

Land
Development
Corporation
(SLDC)
bought from PNB one of the properties
subject of the abovestated litigation. SLDC
intervened in the case of Quisumbing versus
PNB. Quisumbing opposed the intervention
arguing that SLDCs interest in the property is
based on mere expectancy but such
opposition
was
denied.
SLDC
served
interrogatories upon private respondents
because they wanted to know if the
respondents had any documents to support
their claim that they are the owners of the
land. Private respondents for their part filed a
motion to quash interrogatories but the same
was denied. Interrogatories were issued to
the private parties. But they recoursed to the
CA which reversed and set aside the decision
made by the trial court.
Issue:
Whether or not SLDC as transferee pendent
lite of the property in litigation has a right to
intervene.
Held:
No. There was already a transfer of interest
by PNB to SLDC effectively making SLDC a
party to the suit. SLDC subrogated the rights
of PNB in the suit however he may not
intervene based on an entirely different
ground originally raised by PNB. While SLDC

may have interests on the subject matter, the


interest of a transferee pendent lite are
different from the interests of an intervenor.
As SLDCs personality partakes the nature of
a transferee pendent lite, he is barred from
presenting a new or different claim. However
although SLDC is only a transferee pendent
lite, it is still bound by judgments handed
down against his transferor of PNB.

Art. 1553

Angelo vs. Pacheco


G.R. No. 32984 September 8, 1931
Generally, a stipulation exempting the vendor
from liability is valid. However, when he acts
in bad faith, such stipulation becomes void.
Facts:

Any stipulation exempting the vendor from


the obligation to answer for eviction shall be
void, if he acted in bad faith. (1476)

The plaintiff executed a deed of sale in favour


of the defendant. The defendant for his part
offered a down payment and promised to pay
the balance later on. The deed of sale
contained a provision whereby the defendant
waived his rights to warranty against
eviction. The defendant wanted to dispose of
the property but was unable to do so because
of some provision in the contract prohibiting
him to alienate the property. At the
defendants instance, a second contract was
formed eliminating the prohibition to dispose
of the property however, the waiver of the
right to warrant against eviction was still
retained and carried on to the second

contract. The land became the subject of a


pending suit. One Lucia Cruz brought an
action and obtained a favourable action
against defendant Pacheco. The land was
awarded to Lucia Cruz.
Issue:
Whether or not the warranty against eviction
still applies.
Held:
No. The waiver of the right to warranty
against eviction stands, there being no bad
faith on the part of defendant. Bad faith
consists of knowledge beforehand at the time
of the sale of the presence of a fact giving
rise
to
eviction
and
its
possible
consequences. There was no bad faith
because at the time the contract was
executed, the defendant was the registered
owner. Furtheremore, the plaintiff made a
formal and express waiver of warranty; and in
the absence of bad faith on the part of the
vendor, the waiver is valid.

Art. 1554

Article 1554 speaks about the liability of the


vendor in total eviction and in case it is
waived. If the vendee has renounced his right

Andaya, et al. vs. Manansala

against eviction and eviction is later on


effected, the vendor is still liable for total
G.R. No. L-14714 April 30, 1960
eviction to the extent of the actual value of
If the vendee has renounced the right to the thing sold
warranty in case of eviction, and eviction
should take place, the vendor shall only pay
Facts:
the value which the thing sold had at the
time of the eviction. Should the vendee have
made the waiver with knowledge of the risks
of eviction and assumed its consequences,
The land in question was sold by one Isidro
the vendor shall not be liable. (1477)
Fenis to Eustaquia Llanes on June 13, 1934
and Maria Viloria on January 12, 1944. On
August 21, 1914 Maria Viloria sold the said
property together with another parcel of land
to Melencio Manansala and to Ciriaco Casio,
Fidela Valdez and spouses Ariston Andaya
and Micaela Cabrito. On October 18, 1947,
Eustaquia Llanes instituted a civil case to
quiet title and to recover possession of said
parcel from Ciriaco Casino. On June 9, 1949,
Melencio Manansala sold the property in
question to the spouses Ciriaco Casino and
Fidela Valdez warranting that it was free from
all kinds of liens and encumbrances and in
case of eviction. Thereafter, a judgement was
rendered in favor of the case filed by
Eustaquia Llanes. On March 23, 1956, herein
Plaintiffs filed a case against Melencio
Manansala to recover damages suffered by
them by reason of the latters breach of his
warranty. The defendant denied the liability
and alleged that it was the plaintiffs who
pleaded with him to sell the land to them at a

low price. The court ruled in favor of the


plaintiffs and applied those obligations
applicable to a vendor in cases of rescission
of a contract. Thus, ordering the defendant to
return the sum of the purchase price with
interest.

Issue:

Whether or not the lower court erred in


holding him liable as in rescission of sale and
ordering him to return to plaintiffs the price
of the land in question with interests.

Held:

No. When the vendee has waived the right to


warranty in case of eviction, and eviction
shall occur, the vendor shall only pay the
price which the thing sold had at the time of
the eviction, unless the vendee has made the
waiver with knowledge of the danger of
eviction and assumed its consequences.
Appellees knew of the danger of eviction at

the time they purchased the land in question


from
appellant,
and
assumed
its
consequences, therefore, the vendor is not
obliged to restore to the purchaser the price
of the land at the time of eviction, but is
completely exempt from liability whatsoever.

Art. 1555

If the vendee is evicted from a property


purchased by final judgment or by an act
imputable to the vendor, the vendee may
demand from the vendor (a) the value of the
When the warranty has been agreed upon or thing purchased, (b) income or fruits of the
nothing has been stipulated on this point, in thing purchased, (c) costs, (d) expenses of
case eviction occurs, the vendee shall have the contract, and (e) damages, interests, and Facts:
the right to demand of the vendor:
ornamental expenses.

(1)The return of the value which the


thing sold had at the time of the
eviction, be it greater or less than
the price of the sale;
(2)The income or fruits, if he has been
ordered to deliver them to the party
who won the suit against him;

Sta. Romana vs. Imperio


15 SCRA 625 (1965)

Silvio R. Viola executed a special power of


attorney appointing Dr. Jose R. Viola as his
agent to take chage of manage and
administer seven parcel of land. On June 18,
1946, Jose Viola executed, in favor of Pablo
Ignacio, a deed in which he undertook to sell
on installments six lots covered by TCT No.
19556, with an aggregate area of 3,804
square meters. Four months later Silvio Viola
sold a land of about thirty hectares, including
Lot No. 622, to appellant herein. A week

(3)The costs of the suit which caused


the eviction, and, in a proper case,
those of the suit brought against the
vendor for the warranty;

(4)The expenses of the contract, if the


vendee has paid them;

(5) The damages and interests, and


ornamental expenses, if the sale was
made in bad faith. (1478)

later, or on October 25, 1946, the latter, in


turn, conveyed said land to the appellee, by
virtue of the deed, which was filed with the
office of the register of deeds on November
4, 1946. Thereupon, TCT No. 19556 was
cancelled and, in lieu thereof, TCT No. 28946
was issued in appellee's name. On December
14, 1946, appellee sold portions of said lot
No. 622 to the following persons, hereinafter
referred to as occupants, who had been and
were holding, as lessees thereof, the portions
respectively purchased by them, to wit: (a)
665 sq. m. to Domingo Manabat, Patricia
Lopez and Calixta Bautista (to whom TCT No.
T-1635 was issued); (b) 600 sq. m. to
Conrado Manabat and Eladio Sioson (to
whom TCT No. T-1634 was issued); (c) Lot No.
14 of Block 13 of the subdivision to Reynaldo
Salvador and Graciano Garcia (to whom TCT
No. T-1633 was issued); and (d) 682 sq. m. to
Hilario de Jesus, Apolonio Pablo and Ismaela
Jimenez (to whom TCT No. T-1632 was
issued).

Having failed to take possession of the land,


Pablo Ignacio commenced this action in the
Court of First Instance of Bulacan, against
said occupants, as well as against appellee,
appellant, and the Principal, to annul the
sales made by the latter to appellant, by

appellant to appellee and by appellee to said


occupants, as well as for the possession of
the land in question and damages.

The lower court rendered judgment in favor


of Ignacio.

Hence this petition.

Issue:

Whether or not reimbursement is proper.

Held:

Yes. it is an elementary principle of law, as


well as of justice and equity that, unless a
contrary intention appears, the vendor
warrants his title to the thing sold, and that,
in the event of eviction, the vendee shall be

entitled to the return of the value which the


thing sold has at the time of the eviction, be
it greater or less than the price of the sale. In
the case at bar, it has been established that
the land in dispute was, at the time of the
eviction, worth at least the sum of P8,463,
which is the aggregate amount charged by
the appellee from said occupants.

Art. 1556
Should the vendee lose, by reason of the
eviction, a part of the thing sold of such
importance, in relation to the whole, that he
would not have bought it without said part,
he may demand the rescission of the Rules
contract; but with the obligation to return the
thing without other encumbrances that those
which it had when he acquired it.
a.
He may exercise this right of action, instead
of enforcing the vendor's liability for eviction.
The same rule shall be observed when two or
more things have been jointly sold for a lump
sum, or for a separate price for each of them,
if it should clearly appear that the vendee
would not have purchased one without the
other. (1479a)

Andaya, et al. vs. Manansala


G.R. No. L-14714 April 30, 1960
in Cases of Partial Eviction:
Facts:
Rescission
The vendee may demand rescission, in
cases when he lose a part of the thing
sold that without such part he would
not bought the thing, with the
obligation to return the thing without
other encumbrances than those which
it had when he acquired it.

b. Enforcement of Warranty

The land in question was sold by one Isidro


Fenis to Eustaquia Llanes on June 13, 1934
and Maria Viloria on January 12, 1944. On
August 21, 1914 Maria Viloria sold the said
property together with another parcel of land
to Melencio Manansala and to Ciriaco Casio,
Fidela Valdez and spouses Ariston Andaya
and Micaela Cabrito. On October 18, 1947,

If the encumbrances set in paragraph 1 Eustaquia Llanes instituted a civil case to


are not present, the only remedy is to quiet title and to recover possession of said
enforce warranty. (Paras 2013)
parcel from Ciriaco Casino. On June 9, 1949,
Melencio Manansala sold the property in
question to the spouses Ciriaco Casino and
Fidela Valdez warranting that it was free from
all kinds of liens and encumbrances and in
case of eviction. Thereafter, a judgement was
rendered in favor of the case filed by
Eustaquia Llanes. On March 23, 1956, herein
Plaintiffs filed a case against Melencio
Manansala to recover damages suffered by
them by reason of the latters breach of his
warranty. The defendant denied the liability
and alleged that it was the plaintiffs who
pleaded with him to sell the land to them at a
low price. The court ruled in favor of the
plaintiffs and applied those obligations
applicable to a vendor in cases of rescission
of a contract. Thus, ordering the defendant to
return the sum of the purchase price with
interest.

Issue:

Whether or not the lower court erred in


holding him liable as in rescission of sale and
ordering him to return to plaintiffs the price

of the land in question with interests.

Held:

No. The remedy of rescission contemplates


that the one demanding it is able to return
whatever he has received under the contract,
and when it cannot be done rescission cannot
be carried out. Furthermore, during the time
of the purchase of the land in question by the
plaintiffs, danger or eviction was present.
Thus, the defendant is not obliged to restore
the price of the land at the time of eviction
and completely exempted from liability.

Art. 1557

The warranty cannot be enforced until a final


judgment has been rendered, whereby the
vendee loses the thing acquired or a part
thereof. (1480)

Final judgment is necessary before warranty


can be enforced.

Art. 1558

A formal summon to the seller in suit for the


eviction of the buyer is necessary.

Jovellano vs. Lualhati, et al.


G.R. No. L-22488 February 2, 1925

The vendor shall not be obliged to make good


the proper warranty, unless he is summoned
in the suit for eviction at the instance of the
vendee. (1481a)

Facts:

On November 6, 1911, Dionisia Solmirano,


Lucio Solmirano, and Macario Solmirano sold
a parcel of land, together with a deed of sale
contained the usual covenant against
eviction to Enrique Jovellano. On March 4,
1913, one Maxima Dorado filed an action
against Jovellano to recover the possession of
the land and won over the case. Thereafter,
Jovellano filed a new complaint to determine
the ownership of the land and the court ruled
in favor of Dorado. Sometime after, Jovellano
filed an action to recover from Solmirano,
Solmirano, and Lualhati the price paid for the
land, together will all the expenses incurred
in improving it and in maintaining the two
suites.

Issue:

Whether or not Solmirano, Solmirano, and


Lualhati is liable to pay the price of the land,
together will all the expenses incurred in
improving it and in maintaining the two
suites.

Held:

No. Formal notice to the vendor in case of


suit for eviction must be given by the vendee
in order to make the vendor liable. As ruled
by the Supreme Court, warranty is lost in the
absence of notification to the vendor,
provided that the vendor can prove that he
had good grounds of defense which he had
lost in consequence of the vendees failure to
call him.

Art. 1559

The defendant vendee threatened with


eviction who wishes to preserve his right of

Jovellano vs. Lualhati, et al.

warranty, should call in the vendor to defend


the action which has been instituted against
G.R. No. L-22488 February 2, 1925
him.
(De
Leon
2010)
The defendant vendee shall ask, within the
time fixed in the Rules of Court for answering
the complaint, that the vendor be made a coFacts:
defendant. (1482a)

On November 6, 1911, Dionisia Solmirano,


Lucio Solmirano, and Macario Solmirano sold
a parcel of land, together with a deed of sale
contained the usual covenant against
eviction to Enrique Jovellano. On March 4,
1913, one Maxima Dorado filed an action
against Jovellano to recover the possession of
the land and won over the case. Thereafter,
Jovellano filed a new complaint to determine
the ownership of the land and the court ruled
in favor of Dorado. Sometime after, Jovellano
filed an action to recover from Solmirano,
Solmirano, and Lualhati the price paid for the
land, together will all the expenses incurred
in improving it and in maintaining the two
suites.

Issue:

Whether or not Solmirano, Solmirano, and

Lualhati is liable to pay the price of the land,


together will all the expenses incurred in
improving it and in maintaining the two
suites.

Held:

No. The purchaser threatened with eviction,


who wishes to preserve his right of warranty
against his vendor, should call in the vendor
to defend the action which has been
instituted against the purchaser.

Art. 1560

When in cases of Non-apparent servitudes,


the vendee may ask for the rescission of the
contract of for the appropriate indemnity,
within one year to be computed from the
execution of the deed. When one year
elapsed, only action for damages may bring,
within one year to be computed from the
date on which he discovered the burden or
servitudes.

If the immovable sold should be encumbered


with any non-apparent burden or servitude,
not mentioned in the agreement, of such a
nature that it must be presumed that the
vendee would not have acquired it had he
been aware thereof, he may ask for the No remedy can be exercised in the burden is

registered unless there is an express


rescission of the contract, unless he should warranty that the thing is free from all burden
prefer the appropriate indemnity. Neither and encumbrances.
right can be exercised if the non-apparent
burden or servitude is recorded in the
Registry of Property, unless there is an
express warranty that the thing is free from
all burdens and encumbrances.

Within one year, to be computed from the


execution of the deed, the vendee may bring
the action for rescission, or sue for damages.

One year having elapsed, he may only bring


an action for damages within an equal
period, to be counted from the date on which
he discovered the burden or servitude.
(1483a)

SUBSECTION 2: WARRATY AGAINST HIDDEN DEFECTS OF OR ENCUMBRANCES UPON THE THING SOLD
Art. 1561
The vendor shall be responsible for warranty Generally, vendor is responsible for warranty
against the hidden defects which the thing against the hidden defects which the thing

E.C. Mccullough vs. R. Aenlle & Co.

sold may have, should they render it unfit for


the use for which it is intended, or should
they diminish its fitness for such use to such
an extent that, had the vendee been aware
thereof, he would not have acquired it or
would have given a lower price for it; but said
vendor shall not be answerable for patent
defects or those which may be visible, or for
those which are not visible if the vendee is an
expert who, by reason of his trade or
profession, should have known them. (1484a)

sold may have. However, he is not


answerable for patent defects on those which
G.R. No. 1300 February 3, 1904
may be visible, or for those which are not
visible if the vendee is an expert who should
have known them by reason of his trade and
profession.
Facts:
The requisites for warranty against hidden
defects are: (a) the defect must be important
and serious; (b) it must be hidden; (c) it must
exist at the time of the sale; (d) the vendee
must give notice of the defect to the vendor
within a reasonable time; and (e) the action
for rescission or reduction of the price must
be brought within the proper period.

R. Aenlle & Co. sold to E. C. Mccullough the


tabbacco cigarette factory known as "La
Maria Cristina," together with all that belongs
to it with the execution of three contracts.
Sometime after plaintiff sold all the tobacco
bought by him from the defendant. The
buyer, rejected the two lands of tobacco
claiming that tobacco in such land is
worthless. Plaintiff filed for the recovery of his
payment.

Issue:

Whether or not the plaintiff can recover.

Held:

No. Where the agreement between the


parties is that the buyer is to take all the
tobacco in a certain building and to pay
therefor the price named, the obligation
resulting is absolute, and in 110 wise
depends upon the quality of the tobacco or
its value and statements in an inventory
subsequently drawn as to the quality of the
tobacco do not affect the rights and
obligations of the parties. The warranty
against hidden defect cannot apply in the
case because the consideration on the party
of the plaintiff is to buy the building and the
only way to do so is to buy the whole tobacco
company.

Nutrimix Feeds Corporation vs. Court of


Appeals
441 SCRA 357

Facts:

Evangelista spouses purchased feeds from

Nutrimix. They refused to pay the unsettled


debt claiming that thousands of livestock
were poisoned by the Nutrimix feeds.
Nutrimix sued them for collection of money.
The spouses countered with a suit for that
time, they may have already been
contaminated.

Issues:

Whether or not Nutrimix is guilty of breach of


warranty due to hidden defects.

Held:

No. In alleging that there was a violation of


warranty against hidden defects, the spouses
assumed the burden of proof. However, this
they failed to overcome. Under the law the
defect must exist at the time that the sale
was made and at the time the product left
the hands of the seller, which the spouses
failed to prove. The feeds were belatedly
tested 3 months after the death of the

broilers and hogs. This means that that time,


they may have already been contaminated.
They failed to prove that the feeds delivered
to be tested were the same feeds that
allegedly poisoned the animals.

Implied warrant or condition as to the quality Pacific Commercial Company vs. Ermita
or fitness of the goods is present (a) where
Market & Cold Stores, Inc.
the buyer made known to the seller the
particular purpose for which the goods are
G.R. No. L-34727 March 9, 1932
acquired
and
the
buyer
relies
on
the
sellers
In a sale of goods, there is an implied
warranty or condition as to the quality or skill or judgment; or (b) where the goods are
brought by description from a seller who
fitness of the goods, as follows:
deals in goods of that description.
Facts:
Art. 1562

(1) Where the buyer, expressly or by


implication, makes known to the
seller the particular purpose for
which the goods are acquired, and it
appears that the buyer relies on the
seller's skill or judgment (whether
he be the grower or manufacturer or
not), there is an implied warranty
that the goods shall be reasonably
fit for such purpose;
(2) Where the goods are brought by

Plaintiff contracted to sell to defendants an


automatic refrigerating machine as per
description stated in the sales contract. The
machine was delivered and by mutual
agreement the vendor installed the machine.
The machine did not give the results
expected from it and the defendant refused
to pay the balance of its purchase price and
the cost of the installation of the machine.
Plaintiff brought this action to recover the
balance of the price and the cost of
installation.

description from a seller who deals


in goods of that description
(whether he be the grower or
manufacturer or not), there is an
implied warranty that the goods
shall be of merchantable quality. (n)

Issue:

Whether or not the defendant is liable.

Held:

Yes. The fact that the defendant could not


use the machine satisfactorily in the three
cold stored divisions cannot be attributed to
plaintiffs fault; the machine was strictly in
accordance with the written contract
between the parties, and the defendant can
hardly honestly say that there was any
deception by the plaintiff.

Art. 1563
In the case of contract of sale of a specified
article under its patent or other trade name,
there is no warranty as to its fitness for any
particular purpose, unless there is a
stipulation to the contrary. (n)

No warranty of fitness for particular purpose


in cases of contact of sale of a specified
article under its patent or other trade names,
otherwise there is a contrary stipulation.

Art. 1564

Usage of trade may appropriate an implied


warranty or condition of the quality or fitness
for a particular purpose.

An implied warranty or condition as to the


quality or fitness for a particular purpose may
be annexed by the usage of trade. (n)

Art. 1565

In the case of a contract of sale by sample, if


the seller is a dealer in goods of that kind,
there is an implied warranty that the goods
shall be free from any defect rendering them
unmerchantable
which
would
not
be
apparent on reasonable examination of the
sample. (n)

Implied warranty of merchantability is


present in cases of a contract of sale by
sample.

Chang Yong Tek vs. Generosa Santos


G.R. No. L-4386 February 24, 1909

Facts:

Plaintiff sold to the defendant a certain


quantity of tobacco, without specification as
to quality, at a fixed price. Defendant
examined the tobacco at the time of the sale,
makes no allegation of fraud, and admits the
quantity and the price. He made a partial

payment and after a lapse of three years,


refuses to pay the balance, alleging as a
defense that the tobacco was not of good
quality.

Issue:

Whether or not the defendant is liable.

Held:

Yes. In the absence of an express warranty,


the vendor only impliedly warrants the legal
and peaceful possession of the thing sold and
that there are no hidden defect and the
defendant is therefore liable for the balance
of the purchase price.

Bryan vs. Hankins


44 Phil 87 (1922)

Art. 1566
Facts:

The vendor is responsible to the vendee for


any hidden faults or defects in the thing sold, Generally, the vendor is responsible to the
vendee for any hidden faults or defect in the
even though he was not aware thereof.
thing sold except:

This provision shall not apply if the contrary


has been stipulated, and the vendor was not
aware of the hidden faults or defects in the
thing sold. (1485)

a. if there is stipulation that if the vendor


acted in good faith, he is relieved; or
b. if the vendee is aware of the defect ,
he cannot complain.

Plaintiff purchase the vessel for his own


personal use, and it involved an investment
of P55,000. At the time of its inspection, it
was seaworthy and it had but little, if any,
commercial value. The defects of its
construction were hidden and concealed and
were unknown to the plaintiff until the official
inspection was made, when he promptly
brought this action.
Issue:

Whether or not the seller is guilty of breach


According to Manresa, the seller remains of warranty due to hidden defects
responsible for the purpose of reparation of
the error under which the vendee contracted, Held:
but not as a punishment of bad faith
Yes. The Court found that the proof was
conclusive that such hidden defects rendered
the vessel unfit for the use for which it was
Caveat venditor: let the seller beware
intended, and that the plaintiff did not have
any knowledge of such defects; and that no
Caveat emptor: let the buyer beware
sane man would have purchased it, with such
knowledge.
The Court applying the provisions of Article
1485 of the Spanish Civil Code held that the
seller was liable to the buyer for any latent
faults or defect of the thing sold, even if they
were unknown to him.

Nutrimix Feeds Corporation vs. Court of


Appeals
441 SCRA 357
Facts:
Evangelista spouses purchased feeds from
Nutrimix. They refused to pay their unsettled
debt claiming thousands of their livestock
were poisoned by the Nutrimix Feeds.
Nutrimix sued them for collection of money.
The spouses countered with a suit , they may
have already been contaminated.
Issue:
Whether or not Nutrimix is guilty of breach of
warranty due to hidden defects.
Held:
No. A manufactured or seller of a product
cannot, however, be held liable for any
damage allegedly caused by the product in
the absence of any proof that the product in
question was defective. The defect must be
present upon delivery or manufacture of the
product, or when the product left the sellers
or manufacturers control; or when the
product left the sellers or manufacturers
control; or when the product was sold to a
purchaser; or the product must have reached
the user or consumer without substantial

change in the condition it was sold.


La Fuerza Inc. vs. Court of Appeals
G.R. No. 24069, 23 SCRA 1217 (1968)

Art. 1567

Facts:
La Fuerza, a winemaker engaged Associated
Engineering to manufacture and install a flat
belt conveyor system for La Fuerza wine
bottles.La Fuerza discovered that the
conveyor system, when operated caused
contract several bottles to collide with each other.
When Associated Engineering billed La Fuerza
for thebalance of the contract price, La
2. Demanding a proportionate reduction Fuerza refused to payas the conveyor system
of the price (accionquantiminoris)
installed did not serve the purpose for which
it was manufactured and installed.Associated
Engineering filed a court action to collect
thebalance.

In the cases of Articles 1561, 1562, 1564,


1565 and 1566, the vendee may elect The vendee may elect between:
between withdrawing from the contract and
demanding a proportionate reduction of the
price, with damages in either case. (1486a)
1. Withdrawing
from
the
(accionredhibitoria);

Issue:
Whether or not Associated Engineering is
liable.
Held:
No . The Court, while finding that the seller
failed to live up its representations, found
that the action to rescind the contract was
barred by the Statute of Limitations under

Article 1571. The Court laid down a policy in


this wise:
Indeed, in contract of the latter type,
especially
when
goods,
merchandise,
machinery or parts or equipments thereof
are involved, it is obviously wise to require
the parties to define their position in relation
thereto, within the short probable time.
Public policy demands that the status
relations between the vendor and the vendee
be not left to a condition of uncertainty for an
unreasonable time, which would be the case,
if the lifetime of the vendees right to
rescission were four years.

Art. 1568

If the thing sold should be lost in


consequence of the hidden faults, and the The vendor bears the loss of the thing sold if
vendor was aware of them, he shall bear the loss is caused by reason of its hidden defects
and the seller was aware of its defects
loss, and shall be obliged to return the price
and refund the expenses of the contract, with
damages. If he was not aware of them, he
shall only return the price and interest
(1)The seller shall be obliged to:
thereon, and reimburse the expenses of the
(a) Return the price;
contract which the vendee might have paid.
(b)Refund the expenses; and
(1487a)
(c) Pay damages

If he does not know the hidden defects, his


liability is limited to:
(a) return the price and its interest;
(b) reimbursement of the expenses of
the contract

Art. 1569

If the thing sold had any hidden fault at the


time of the sale, and should thereafter be lost
by a fortuitous event or through the fault of
the vendee, the latter may demand of the
vendor the price which he paid, less the
value which the thing had when it was lost.

Where the thing sold with a hidden defect, at


the time of sale, is lost through a fortuitous
event or the fault of the vendee, the sellers
obligation is to reimburse the price paid by
the buyer less the value of the thing sold at
the time of its loss.

If the vendor acted in bad faith, he shall pay


damages to the vendee. (1488a)

Art. 1570

Reyes vs. Intermediate Appellate Court


135 SCRA 214 (1985)
Although, there may be hidden defects, the
debtor may not have been in bad faith Facts:

especially if the property was not his own but


the guarantors. As such, the judgment- A land was sold at a public auction for unpaid
The preceding articles of this Subsection shall debtor cannot be held liable for the damages realty taxes
be applicable to judicial sales, except that the for the hidden defects.
Issue:
judgment debtor shall not be liable for
There are warranties but no damages on
damages. (1489a)
judicial sale
Whether or not there is a valid sale.
Held:
The sale by the buyer of the land to a
purchaser in good faith for value was valid
even if there was no compliance with all the
requirements of the law concerning tax sale
of delinquent property.

Art. 1571

Moles vs IAC
169 SCRA 777 (1989)
Prescription period: 6 months
Facts:

Actions arising from the provisions of the


preceding ten articles shall be barred after
six months, from the delivery of the thing
sold. (1490)

Petitioner Moles bought from Mariano Diolosa


a second hand linotype printing machine.
Moles promised Diolosa that he will pay the
full amount after the loan from the
Development Bank of the Philippines worth
P50,000 will be released. Private respondent
on return issued a certification wherein he
warranted that the machine was in A-1
condition, together with the other express
warranties. After the release of the money
from the bank, petitioner Moles required

respondent to accomplish some of the


requirements.
On
November
29,1977,
petitioner wrote Diolosa that the machine
was not functioning properly. Moles found out
that the said machine was not in good
condition and it was worth lesser than the
purchase price.
Issue:
Whether or not the action for rescission is
barred by prescriotion
Held:
No. While it is true that Article 1571 of the
Civil Code provides for a prescriptive period
of six months for a redhibitoryaction a
cursory reading of the ten preceding articles
to which it refers will reveal that said rule
may be applied only in case of implied
warranties. The present case involves one
with and express warranty. Consequently, the
general rule on rescission of contract, which
is four years shall apply.

Goodyear Phils, Inc. vs. Sy


G.R. No, 154554, 2005
Facts:
An Isuzu motor vehicle originally owned by

Goodyear Phils, Inc. was sold to Anthony Sy


on September 12, 1996. Sy, in turn, sold it to
Jose Lee on January 29, 1997. Lee, on
December 4,1997, filed an action for
rescission of contract with damages against
Sy because he could not register the vehicle
in his name due to the certification from the
PNP. PNP impounded the vehicle. A third
party complaint was filed by Sy on January
9,1998 impleading Goodyear as the third part
defendant,
Issue:
Whether or not there is breach of warranty
Held:
No. Petitioner did not breach the implied
warranty against hidden encumbrances. The
subject vehicle that had earlier been stolen
by a third party was subsequently recovered
by the authorities and restored to petitioner,
its rightful owner. Whether Sy had knowledge
of the loss and subsequent recovery, the fact
remained that the vehicle continued to be
owned by the petitioner, free from any
charge or encumbrance whatsoever.
Furthermore, an action for damages for
breach of implied warranties must be brought
within six months from the delivery of the
thing sold. The vehicle was understood to
have been delivered to Sy when I was placed

in his control or possession. Whether the


period should be reckoned from the actual or
from the constructive delivery through a
public instrument, more than six months had
lapsed before the filing fo the Third- Party
Complaint.

Art. 1572

It provides for the sellers liability for


redhibitory defects when two or more
animals are sold whether for a lump sum or
If two or more animals are sold together, for a separate price.
whether for a lump sum or for a separate
price for each of them, the redhibitory defect Generally, when the animals are bought by a
team, yoke, pair, or set and when it is shown
of one shall only give rise to its redhibition,
that only one of the animals sold had a
and not that of the others; unless it should
redhibitory defect, the liability of the seller
appear that the vendee would not have shall extend only to the one which had the
purchased the sound animal or animals defect unless the buyer would not have
without the defective one.
purchased the animals without the defective
one. However, the animals that are bought in
fairs or public auction or if sold as
condemned, Article 1572 will not apply.
The latter case shall be presumed when a
team, yoke pair, or set is bought, even if a
separate price has been fixed for each one of
the animals composing the same. (1491)

Art. 1573

The provisions of the preceding article with


respect to the sale of animals shall in like
manner be applicable to the sale of other
things. (1492)

Art. 1574

Article 1572 will be also be applicable to the


sale of other things.
The hidden defect of the merchandise does
not affect the other merchandise of good
quality unless it be shown that the purchases
would not have bought the one without the
other.

Sale of animals as condemned precludes all


idea of warranty against hidden defects.

There is no warranty against hidden defects Such animals are bought not because of their
of animals sold at fairs or at public auctions, quality or capacity for work.
or of live stock sold as condemned. (1493a)

Art. 1575
Sale of Animals are considered void in the
following instances:
1. when animals suffer from contagious

The sale of animals suffering from contagious diseases


diseases shall be void.
2. when animals are unfit for use OR service
stated
A contract of sale of animals shall also be
void if the use or service for which they are
acquired has been stated in the contract, and
they are found to be unfit therefor. (1494a)

Art. 1576

If the hidden defect of animals, even in case


a professional inspection has been made,
should be of such a nature that expert
knowledge is not sufficient to discover it, the
defect shall be considered as redhibitory.

But if the veterinarian, through ignorance or


bad faith should fail to discover or disclose it,
he shall be liable for damages. (1495)

Generally, where a professional opinion has


been sought before the purchase of the
animals, a recourse against the seller for
warranty against redhibitory defect will not
prosper. The exception is when the defect in
the animals, which by reason of its nature, a
professional or expert inspection will not be
sufficient to discover then the seller remain
answerable for his warranty.

Art. 1577

The redhibitory action must be brought within


forty days from the date of their delivery to
the vendee. Such action can only be
The redhibitory action, based on the faults or exercised with respect to faults and defects
defects of animals, must be brought within which are determined by law or local
forty days from the date of their delivery to customs.
the vendee.

This action can only be exercised with


respect to faults and defects which are
determined by law or by local customs.
(1496a)

Art. 1578

The vendor is liable if the animal sold is


suffering from any disease at the time of the
sale, should it die with said disease within
If the animal should die within three days three days from the date of the sale
after its purchase, the vendor shall be liable if
the disease which cause the death existed at

the time of the contract. (1497a)

Art. 1579

If the vendee chooses to rescind the contract,


the vendee must return the animal in the
condition in which it was sold and delivered

If the sale be rescinded, the animal shall be


returned in the condition in which it was sold
and delivered, the vendee being answerable
for any injury due to his negligence, and not
arising from the redhibitory fault or defect.
(1498)

Art. 1580

The vendee has the same right to bring at his


option, either a redhibitory action or an
action quantiminoris.

In the sale of animals with redhibitory


defects, the vendee shall also enjoy the right It must be brought within forty days from the
mentioned in article 1567; but he must make date of the delivery of the animals to the
vendee.
use thereof within the same period which has
been fixed for the exercise of the redhibitory

action. (1499)

Art. 1581

It will be governed by Sections 511 to 536 of


the Revised Administrative Code

The form of sale of large cattle shall be The sale must be in a public instrument.
governed by special laws. (n)

ACTIONS FOR BREACH OF CONTRACT OF SALE OF GOODS

Art. 1594
Actions available for breach of the contract of
sale of goods are the following:
Actions for breach of the contract of sale of
goods shall be governed particularly by the
provisions of this Chapter, and as to matters
not specifically provided for herein, by other
applicable provisions of this Title. (n)

(1)Action by seller for payment of the


price;
(2)Action by the seller for damages for
non-acceptance of the goods;

(3)Action by the seller for rescission of the


contract for breach thereof;

(4)Action by the buyer


performance; and

for

specific

(5)Action by the buyer for rescission or


damages for breach of warranty

Art. 1595

McCullough vs Lucena Electric Light, Ice


And Water Company

G.R. No. L-10157


Where, under a contract of sale, the
ownership of the goods has passed to the An action for the price of the goods under a
November 4, 1915
buyer and he wrongfully neglects or refuses contract of sale can be maintained by the
seller:
to pay for the goods according to the terms
of the contract of sale, the seller may
maintain an action against him for the price
Facts:
of the goods.
(1)When the ownership of the goods has
passed to the buyer and he wrongfully
neglects or refuses to pay for the price;
The case involved two cause of actions. First,
Where, under a contract of sale, the price is
(2)When the price is payable on a certain plaintiff alleged that the defendant was

payable on a certain day, irrespective of


delivery or of transfer of title and the buyer
wrongfully neglects or refuses to pay such
price, the seller may maintain an action for
the price although the ownership in the
goods has not passed. But it shall be a
defense to such an action that the seller at
any time before the judgment in such action
has manifested an inability to perform the
contract of sale on his part or an intention
not to perform it.

Although the ownership in the goods has not


passed, if they cannot readily be resold for a
reasonable price, and if the provisions of
article 1596, fourth paragraph, are not
applicable, the seller may offer to deliver the
goods to the buyer, and, if the buyer refuses
to receive them, may notify the buyer that
the goods are thereafter held by the seller as
bailee for the buyer. Thereafter the seller
may treat the goods as the buyer's and may
maintain an action for the price. (n)

day and the buyer wrongfully neglects


or refuses to pay such price,
irrespective of delivery or of transfer of
the title; and

indebted to it in the sum of P13,692.50 as the


balance due and unpaid on account of an
electric light plant sold and delivered to the
defendant. Second, the plaintiff claimed that
the defendant was indebted to it in the sum
of P8,947.15 as the balance due and unpaid
for merchandise sold and delivered to the
(3)When the goods cannot readily be sold defendant.
for a reasonable price and the buyer
wrongfully refuses to accept them even
before the ownership in the goods has
passed, if the provisions of Article Issue:
1596, 4th paragraph
Whether or not the defendant is indebted to
the appellee.

Held:

Yes. a preponderance of the evidence shows


that the defendant is indebted to the plaintiff
in the sum of P12,692.50, as the balance due
on the contract for the purchase of
machinery, together with interest thereon at
8 per cent from the 15th of February, 1913,
until paid, and in the further sum of
P8,947.15 for merchandise sold by the

plaintiff to the defendant, together with


interest at 8 per cent thereon from the 19th
of August, 1913, until paid, and costs.

The defendant had been running the


machinery for a period of eight months. It
made no effort to show that its engineer in
charge of the machinery was a competent
man, in fact the record shows that he was an
incompetent man. The record also shows that
the defendant had not used proper fuel for
the running of the machinery.lawph!1.net The
plaintiff had not guaranteed that the
machines would run with a certain capacity
or would develop certain power under all
conditions, and at all times unless the
defendant should manage the machines by
competent engineers and use proper fuel.
The plaintiff simply guaranteed that the
machines were free from defects; that they
would produce certain power, if properly
managed by competent men, when they
were properly supplied with the right kind of
fuel.

Siuliong& Co. &Nanyo Shoji Kenshia


42 Phil 722 (1922)

Art. 1596

Facts:

Where the buyer wrongfully neglects or


refuses to accept and pay for the goods, the Instances When Sellers Right of Action for
seller may maintain an action against him for Damages May be Maintained:
damages for nonacceptance.

The measure of damages is the estimated


loss directly and naturally resulting in the
ordinary course of events from the buyer's
breach of contract.

Where there is an available market for the


goods in question, the measure of damages
is, in the absence of special circumstances
showing proximate damage of a different
amount, the difference between the contract
price and the market or current price at the
time or times when the goods ought to have
been accepted, or, if no time was fixed for
acceptance, then at the time of the refusal to
accept.

1. when the buyer, WITHOUT lawful


cause, neglects OR refuses to accept
AND pay for the goods he agreed to
buy

2. in an executory contract, where the


ownership has NOT passed AND the
seller CANNOT maintain an action for
the price

3. when the goods are NOT yet identified


at the time of the contract OR
subsequently

Siuliong, is a domestic corporation. Kaisha is


a foreign corporation duly licensed to do
business in the Philippine Islands Chua Chin
and JaoPi are partners doing business at
Manila at 260 Tetuan Street. April 7, 1920,
Kaisha entered into a written contract with
Jao Pi in and by which the corporation agreed
to buy and the firm agreed to sell 3,000
piculs of "IlocosSurtido" sugar at the agreed
price of P21.50 per picul, delivery to be made
on April 19, if the ships can then be
approached, otherwise the sugar will be
placed in "cascos" at the expense of the
company. April 17, 1920, Kaisha entered into
a written contract with Siuliong to sell and
deliver that company the same sugar in the
month of April 1920, at the agreed price of
P25 per picul, or a profit of P3.50 per picul.
For failure of jao Pi to deliver the sugar under
the contract, Kaisha commenced an action
against that firm, in which it alleged that the
contract and the failure to deliver the sugar,
the making of the with Siuliong and its
corresponding failure to deliver the sugar
Issue:

If there is NO available market in which the Whether or not Jao Pi and Kenshia liable for
goods can be sold at the time, the seller is damages.
entitled to the full amount of damage.

If, while labor or expense of material amount


is necessary on the part of the seller to
enable him to fulfill his obligations under the
contract of sale, the buyer repudiates the
contract or notifies the seller to proceed no
further therewith, the buyer shall be liable to
the seller for labor performed or expenses
made before receiving notice of the buyer's
repudiation or countermand. The profit the
seller would have made if the contract or the
sale had been fully performed shall be
considered in awarding the damages. (n)

Held:
Proximate damages of greater amount are
allowed when the same may be reasonably
attributed to the non-performance of the
obligation.

In case of repudiation by the buyer, the


measure of damages to which the seller is
entitled shall include: (a) the labor performed
AND expenses incurred for materials before
receiving notice of the buyers repudiation,
AND (b) profit he would have realized if the
sale had been fully performed.

Art. 1597

Yes. Jao Pi and Kenshia are liable to Siuliong


for their failure to deliver the sugar. . If Jao Pi
ad delivered the sugar according to their
contract, ten Kaisha could have performed its
contract, and neither party would be liable
for any damages. Under the facts shown
here, the failure of Jao Pi to deliver the sugar
under their contract resulted in the failure of
Kaisha to perform its contract with Siuliong.
Of course, if Jao Pi had performed their
contract with Kaisha and Kaisha had then
failed to fulfill its contract with Siuliong, Jao Pi
would not then be liable for the amount of
any
damages
whichSiuliong
sustained
through a breach of its contract by Kaisha.
But that is not this case.. Here, the breach of
the contract by Jao Pi was not direct and
proximate cause of the breach of the contract
by Kaisha, and it was the direct and
proximate cause of damages whichSiuliong
sustained by reason of the breach.

Legarda Hermanos vs Saldana


55 SCRA 324 (1974)

Where the goods have not been delivered to


the buyer, and the buyer has repudiated the Instances When Sellers Right of Rescission
Before Delivery May be Maintained:

contract of sale, or has manifested his


inability
to
perform
his
obligations
thereunder, or has committed a breach
thereof, the seller may totally rescind the
contract of sale by giving notice of his
election so to do to the buyer. (n)

Facts:
1. when the buyer has repudiated the
contract of sale
Private respondent as plaintiff had entered
into two written contracts with petitioner
Legarda Hermanos as defendant subdivision
2. when the buyer has manifested his owner, whereby the latter agreed to sell to
inability to perform his obligations him Lots Nos. 7 and 8 of block No. 5N of the
thereunder
subdivision with an area of 150 square
meters each, for the sum of P1,500.00 per
lot, payable over the span of ten years
divided into 120 equal monthly installments
3. when he buyer has committed a breach of P19.83 with 10% interest per annum, to
of the contract of sale
commence on May 26, 1948, date of
execution of the contracts. Subsequently,
Legarda
Hermanos
partitioned
the
subdivision among the brothers and sisters,
and the two lots were among those allotted
to co-petitioner Jose Legarda who was then
included as co-defendant in the action.

Issue:

Whether or not Legarda Hermanos has the


right to rescind the contract.

Held:

No. Legarda hermanos was not allowed to


totally rescind the contract, it appearing that
the installments paid by Saldana were more
than the value of one lot. The conveyance to
the buyer of one of the two lots was ordered.
______________________________________________

Song Fo & Co. vs. Hawaiian- Phil. Co.


47 Phil 821 (1925)

Facts:

In the court of First Instance of Iloilo, Song Fo


& Company presented a complaint with two
causes of action for breach of contract
against the Hawaiian-Philippine Co., in which
judgment was asked for P70,369.50, with
legal interest, and costs.

In an amended answer and crosscomplaint, the defendant set up the special


defense that since the plaintiff had defaulted
in the payment for the molasses delivered to
it by the defendant under the contract
between the parties, the latter was
compelled to cancel and rescind the said
contract.

Issue:

Whether or not rescission of contract will be


permitted for a slight or causal breach.

Held:

No. The general rule is that rescission of a


contract will not be permitted for a slight or
casual breach but only for such substantial
breach as would defeat the very object of the
parties in making the agreement. A delay in
payment for a small quantity of molasses for
some twenty days is not such a violation of
an essential condition of the contract was

warrants rescission for non-performance. Not


only this, but the Hawaiian-Philippine Co.
waived this condition when it arose by
accepting payment of the overdue accounts
and continuing with the contract.
______________________________________________

Ayala Corp vs Rosa- Diana Realty &


Devt Corp
346 SCRA 663 (2000)

Facts:

Petitioner
Ayala
Corporation
was
the
registered owner of a parcel of land located
in Alfaro Street, Salcedo Village, Makati City
with an area of 840 square meters, more or
less and covered by Transfer Certificate of
Title (TCT) No. 233435 of the Register of
Deeds of Rizal. On April 20, 1976, Ayala sold
the lot to Manuel Sy married to Vilma Po
and Sy Ka Kieng married to Rosa Chan. The
Deed of Sale executed between Ayala and
the buyers contained Special Conditions of

Sale and Deed


Restrictions.

Restrictions. The

Deed

Issue:

Whether or not Ayala has the right to rescind


the sale.

Held:

No. The Supreme Court held that where a


vendor agreed to the resale of the property
by the original vendee to another person
despite the failure of said vendee to comply
with his obligation under its original sale, the
vendor is deemed to have effectively waived
its right to rescind the sale.

Art. 1598

It applies only where the goods to be

delivered are specific or ascertained.


Where the seller has broken a contract to
deliver specific or ascertained goods, a court
may, on the application of the buyer, direct
that the contract shall be performed
specifically, without giving the seller the
option of retaining the goods on payment of
damages. The judgment or decree may be
unconditional, or upon such terms and
conditions as to damages, payment of the
price and otherwise, as the court may deem
just. (n)

This article grants the buyer, as a matter of


right, the remedy of specific performance in
case the seller should violate his obligation to
make delivery.
The seller cannot retain the goods on
payment of damages because damages are
imposed by law to insure fulfillment of
contract and not to substitute for it.
In granting specific performance, the court
may impose such terms and conditions as to
damages, payment of the price and
otherwise, as it may deem just.
Embee Transportation Corp vs Camacho
80 SCRA 477 (1977)

Art. 1599

Where there is a breach of warranty by the


seller, the buyer may, at his election:

(1) Accept or keep the goods and set


up against the seller, the breach of
warranty by way of recoupment in

Remedies of the Buyer for Breach of Warranty Facts:


by Seller:
Plaintiff-appellant
Embee
Transportation
1. accept the goods AND set up the Corporation was the holder of a certificate of
sellers breach to reduce OR extinguish public convenience to operate 30 units of
the price
taxicabs within the City of Manila. In
September 1969 it sold 15 of these units to
2. accept the goods AND maintain an the defendants-appellees Hospicio Camacho,
action for damages for the breach of Jaime de la Fuente and Herminio Reyes. At
the warranty
the time of the sale,
plaintiff-appellant
showed to them its certificate of public
convenience to operate the 30 units of

diminution
price;

or

extinction

of

the

(2) Accept or keep the goods and


maintain an action against the
seller for damages for the breach of
warranty;

3. refuse to accept the goods AND


maintain an action for damages for the
breach of the warranty

4. rescind the contract of sale by


returning or offering the return of the
goods AND recover the price

taxicabs within the City of Manila. Upon the


execution of the deed of sale over the 15
units, the defendants appellees paid to
plaintiff-appellant the amount of P41,250.00
and agreed to pay the balance upon approval
of the sale and transfer of the corresponding
certificate of public convenience to operate
the 15 units to them by the Public Service
Commission.

Issue:
(3) Refuse to accept the goods, and
maintain an action against the
Whether or not the defendants-appellees are
seller for damages for the breach of Rights and Obligations of the Buyer in Case still bound to pay the plaintiff-appellant the
warranty;
of Rescission:
unpaid balance of the purchase price of the
certificate of public convenience to operate
(4) Rescind the contract of sale and
1. in case of rescission, the buyer shall the fifteen units of taxicabs sold to them by
cease to be liable for the price, his only plaintiff-appellant
refuse to receive the goods or if the
obligation being to return the goods
goods have already been received,
Held:
return them or offer to return them
2.
if
he
has
paid
the
price
OR
any
part
to the seller and recover the price
thereof, he may recover it from the Yes. It appears in the contract that the
or any part thereof which has been
seller
payment of the balance of P41,250.00 is
paid.
subject to the condition that the contract of
sale is finally approved by the Public Service
When the buyer has claimed and
Commission. In refusing to pay the balance of
been granted a remedy in anyone
3. he also has the right to hold the goods P41,250.00 defendants-appellees claim that
of these ways, no other remedy can
as bailee for the seller should the latter they are not bound to pay the amount
thereafter be granted, without
refuse the return of the goods AND to because the deed of sale in question has not
prejudice to the provisions of the
have a lien thereon for any portion of been approved yet by the Public Service
second paragraph of Article 1191.
the price already paid which lien he Commission Their
refusal
to
pay
the
may enforce as if he were an unpaid remaining
balance
of
the
agreed
Where the goods have been
seller
consideration (P41,250.00) on the alleged

delivered to the buyer, he cannot


rescind the sale if he knew of the
breach of warranty when he
accepted the goods without protest,
or if he fails to notify the seller
within a reasonable time of the
election to rescind, or if he fails to
return or to offer to return the
goods to the seller in substantially
as good condition as they were in
at the time the ownership was
transferred to the buyer. But if
deterioration or injury of the goods
is due to the breach or warranty,
such deterioration or injury shall
not prevent the buyer from
returning or offering to return the
goods to the seller and rescinding
the sale.
Where the buyer is entitled to
rescind the sale and elects to do so,
he shall cease to be liable for the
price upon returning or offering to
return the goods. If the price or any
part thereof has already been paid,
the seller shall be liable to repay so
much thereof as has been paid,
concurrently with the return of the
goods, or immediately after an offer

ground of vice or defect in the subject matter


in the contract while at the same time
possessing and enjoying the same is
untenable both on the grounds of law and
equity. From all indications it would appear to
Us, that defendants-appellees made use of
this Court's injunction in Civil Case No. L3114547 as a lame excuse either to escape
liability or to delay the enforcement of a
lawful and valid obligation of paying the
balance to plaintiff-appellant. This can be
deduced from the fact that they continued
enjoying the use of the aforementioned
certificate of public convenience without
paying
the
balance
of
the
agreed
consideration. The taint of bad faith on
defendants-appellee's acts cannot just be
disregarded.

to return the goods in exchange for


repayment of the price.
Where the buyer is entitled to
rescind the sale and elects to do so,
if the seller refuses to accept an
offer of the buyer to return the
goods, the buyer shall thereafter be
deemed to hold the goods as bailee
for the seller, but subject to a lien
to secure payment of any portion of
the price which has been paid, and
with
the
remedies
for
the
enforcement of such lien allowed to
an unpaid seller by Article 1526.
(5) In the case of breach of warranty of
quality, such loss, in the absence of
special
circumstances
showing
proximate damage of a greater
amount, is the difference between
the value of the goods at the time
of delivery to the buyer and the
value they would have had if they
had answered to the warranty. (n)