CONDITIONS and WARRANTIES

CONDITIONS

A condition is a future and uncertain event upon which the existence of an obligation is made to depend or that which
subordinates the existence of a liability under a contract to a certain future event. It was a condition that was imposed on
an obligation after the consummation of the contract of sale, not a condition on the perfection of the contract itself (non-
fulfillment of which could have prevented the juridical relation from coming into existence). (Gonzales v Lim)

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

Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the seller of his obligation to
deliver the same as described and as warranted expressly or by implication in the contract of sale as a condition of the
obligation of the buyer to perform his promise to accept and pay for the thing.

Conditions v Warranties

Unlike in the non-fulfillment of a warranty which would constitute a breach of the contract, the non-happening of the
condition, although it may extinguish the obligation upon which it is based, generally does not amount to a breach of the
contract of sale.

A condition is an uncertain event or contingency fixed by the 
 parties, the existence or happening of which, is necessary
to the 
 efficacy of the contract 


Where a condition is not performed the other party may either (1545)

i. refuse to proceed with the contract 


ii. proceed with the contract, waiving the 
 performance of the contract 


If the condition is in the nature of a promise that it should 
 happen, the non-performance of such condition may be

 treated by the other party as a breach of warranty 


Warranties Conditions
Goes into the performance of Goes into the root of the
such obligation and in fact may existence of the obligation
constitute an obligation in itself

May form part of the obligation or Must be stipulated by the parties

contract by provision of the law in order to form part of an
without the parties having agreed obligation
thereto

Whether express or implied May attach itself either to the

relates to the subject matter itself obligation of the seller to deliver
or to the obligations of the seller possession and transfer
as to the subject matter of the ownership over the subject
sale matter of the sale

ROMERO v CA and VDA. DE ONGSIONG

ABSOLUTE v CONDITIONAL COS:

A perfected contract of sale may either be absolute or conditional depending on whether the agreement is devoid of, or
subject to, any condition imposed on the passing of title of the thing to be conveyed or on the obligation of a party thereto.
When ownership is retained until the fulfillment of a positive condition the breach of the condition will simply prevent the
duty to convey title from acquiring an obligatory force.

CONDITION IMPOSED ON PERFECTION v CONDITION IMPOSED ON PERFORMANCE

When the condition is imposed upon the perfection of the contract itself, the failure of such condition would prevent the
juridical relation itself from coming into existence. While the failure to comply with the second condition only gives the
other party the option to either refuse to proceed with the sale or to waive the condition as mandated under Article 1545;
and that the choice is not with the obligor but with the injured party.

Under the agreement, private respondent is obligated to evict the squatters on the property. The ejectment of the
squatters is a condition the operative act of which sets into motion the period of compliance by petitioner of his own
obligation, i.e., to pay the balance of the purchase price. Private respondent's failure "to remove the squatters from the
property" within the stipulated period gives petitioner the right to either refuse to proceed with the agreement or waive that
condition in consonance with Article 1545 of the Civil Code. This option clearly belongs to petitioner and not to private
respondent.

In contracts of sale particularly, Article 1545 of the Civil Code, aforementioned, allows the obligee to choose
between proceeding with the agreement or waiving the performance of the condition. It is this provision which is the
pertinent rule in the case at bench. Here, evidently, petitioner has waived the performance of the condition imposed on
private respondent to free the property from squatters.

RESCISSION: Private respondent's action for rescission is not warranted. She is not the injured party. The right of
resolution of a party to an obligation under Article 1191 of the Civil Code is predicated on a breach of faith by the other
party that violates the reciprocity between them. Tender of payment / offer to pay, made prior to the demand for
rescission, assuming for the sake of argument that such a demand is proper under Article 1592 of the Civil Code, would
likewise suffice to defeat private respondent's prerogative to rescind thereunder.

GONZALES v LIM

In Romero v. CA, we declared that if the condition was imposed on an obligation of a party which was not complied with,
the other party may either (1) refuse to proceed with the agreement or (2) waive the fulfillment of the condition.

In the case at bar, respondents obviously did not choose the first option as they proceeded with their contract with
petitioner despite the latter’s non-fulfillment of the condition in the agreement. In fact, in their comment, they stated that
they "took possession of the properties and caused extensive improvement and installed facilities and equipment"
thereon.

Did respondents, however, waive fulfillment of the condition? Yes.

The records reveal that respondents negotiated directly with Tanglaw for a new lease contract even without the required
official communication that petitioner was supposed to obtain for them, a condition in the "Agreement" which they
themselves imposed on the latter. Although they had the right to require his compliance with the condition or compel his
performance of the undertaking, they opted otherwise.

CATUNGAL v RODRIGUEZ

Article 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of
them.

The condition in their Conditional Deed of Sale stating that respondent vendee shall pay the balance of the purchase price
when he has successfully negotiated and secured a road right of way, is not a condition on the perfection of the contract
nor on the validity of the entire contract or its compliance as contemplated in Article 1308. It is a condition imposed only
on respondent's obligation to pay the remainder of the purchase price. In our view and applying Article 1182, such
acondition is not purely potestative as petitioners contend. It is not dependent on the sole will of the debtor but also on the
will of third persons who own the adjacent land and from whom the road right of way shall be negotiated. Ina manner of
speaking, such a condition is likewise dependent on chance as there is no guarantee that respondent and the third party-
landowners would come to an agreement regarding the road right of way. This type of mixed condition is expressly
allowed under Article 1182 of the Civil Code.
WARRANTIES:

EXPRESS WARRANTIES

Since the breach of an express warranty makes the seller liable for damages, it is important to note that the following
requisites must be present in order that there be an express warranty in a contract of sale:

(a) It 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; and 


(c) The buyer purchases the thing relying on such affirmation or promise thereon.

Dealer’s Talk: An affirmation of the value of the thing, or any statement purporting to be a statement of the seller’s
opinion only, shall not be construed as a warranty, unless:

(a) the seller made such affirmation or statement as an expert; and

(b) it was relied upon by the buyer.

Article 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has
relied on the former's special knowledge.

HARRISON VS NAVARRO

Issue: who should pay the BIR taxes and customs duties which the administrative regulations sought to enforce?

Ruling: Harrison.
It is true that the ownership of the trucks shifted to private respondent after the sale. But petitioner must remember that
prior to its consummation it expressly intimated to her that it had already paid the taxes and customs duties. Such
representation shall be considered as a sellers express warranty under Art. 1546 of the Civil Code which covers any
affirmation of fact or any promise by the seller which induces the buyer to purchase the thing and actually purchases it
relying on such affirmation or promise. It includes all warranties which are derived from express language, whether the
language is in the form of a promise or representation. Presumably, therefore, private respondent would not have
purchased the two (2) Elf trucks were it not for petitioners assertion and assurance that all taxes on its imported parts
were already settled.

This express warranty was breached the moment petitioner refused to furnish private respondent with the corresponding
receipts since such documents were the best evidence she could present to the government to prove that all BIR taxes
and customs duties on the imported component parts were fully paid. Without evidence of payment, she was powerless to
prevent the trucks from being impounded.

Under Art. 1599 of the Civil Code, once an express warranty is breached the buyer can accept or keep the goods and
maintain an action against the seller for damages. This was what private respondent did. She opted to keep the two (2)
trucks which she apparently needed for her business and filed a complaint for damages, particularly seeking the
reimbursement of the amount she paid to secure the release of her vehicles.

JERRY MOLES v. IAC and MARIANO DIOLOSA

FACTS: Petitioner wrote private respondent that the secondhand printing machine was not functioning properly. The
petitioner found out that the said machine was not in good condition as experts advised and it was worth lesser than the
purchase price. After several telephone calls regarding the defects in the machine, private respondent sent two
technicians to make necessary repairs but they failed to put the machine in running condition and since then the petitioner
wan unable to use the machine anymore.

ISSUE/S:

1. Whether there is an implied warranty of its quality or fitness.

2. Whether the hidden defects in the machine is sufficient to warrant a rescission of the contract between the parties.

RULING:

1. It is generally held that in the sale of a designated and specific article sold as secondhand, there is no implied
warranty as to its quality or fitness for the purpose intended (GENERAL RULE), at least where it is subject to
 inspection at the time of the sale. On the other hand, there is also authority to the effect that in a sale of secondhand
articles there may be, under some circumstances, an implied warranty of fitness for the ordinary purpose of the
article sold or for the particular purpose of the buyer. Said general rule, however, is not without exceptions. Article
1562 of our Civil Code, which was taken from the Uniform Sales Act, provides: "Art. 1562. In a sale of goods, there is
an implied warranty or condition as to the quality or fitness of the goods, as follows: (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;"

Here, the inescapable conclusion is that private respondent is indeed bound by the express warranty he executed in favor
of herein petitioner.

1. We have to consider the rule on redhibitory defects contemplated in Article 1562. A redhibitory defect must be an
imperfection or defect of such nature as to engender a certain degree of importance. An imperfection or defect of
little consequence does not come within the category of being redhibitory. As already narrated, an expert witness for
the petitioner categorically established that the machine required major repairs before it could be used. This, plus the
fact that petitioner never made appropriate use of the machine from the time of purchase until an action was filed,
attest to the major defects in said machine, by reason of which the rescission of the contract of sale is sought. The
factual finding, therefore, of the trial court that the machine is not reasonably fit for the particular purpose for which it
was intended must be upheld, there being ample evidence to sustain the same.

PRESCRIPTION: While it is true that Article 1571 of the Civil Code provides for a prescriptive period of six months for a
redhibitory action, 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 an express warranty. Consequently, the general rule on rescission of contract, which
is four years shall apply. Considering that the original case for rescission was filed only one year after the delivery of the
subject machine, the same is well within the prescriptive period. This is aside from the doctrinal rule that the defense of
prescription is waived and cannot be considered on appeal if not raised in the trial court, and this case does not have the
features for an exception to said rule.

IMPLIED WARRANTIES

Implied warranties are those which by law constitute part of every contract of sale, whether or not the parties were aware
of them, and whether or not the parties intended them.

Although only a seller is bound by the implied warranties of law, nevertheless, by express contractual stipulation, an agent
of the seller may bind himself to such warranties.

What are the implied warranties in relation to contracts of sale?

1. The warranty of the seller that he has the right to sell 


2. The warranty against eviction 

3. The warranty against non-apparent servitudes 

4. The warranty against hidden defects 

5. The warranty of merchantability
6. The warranty as to fitness or quality 

Article 1547. In a contract of sale, unless a contrary intention appears, there is:
 (1) An implied warranty on the part of
the seller that he has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall from that
time have and enjoy the legal and peaceful possession of the thing;

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

This article shall not, however, be held to render liable a sheriff, auctioneer, mortgagee, pledgee, or other person
professing to sell by virtue of authority in fact or law, for the sale of a thing in which a third person has a legal or equitable
interest.

Article 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.

Article 1549. The vendee need not appeal from the decision in order that the vendor may become liable for eviction.

Article 1550. When adverse possession had been commenced before the sale but the prescriptive period is completed
after the transfer, the vendor shall not be liable for eviction.

Article 1551. If the property is sold for nonpayment of taxes due and not made known to the vendee before the sale, the
vendor is liable for eviction.

Article 1552. The judgment debtor is also responsible for eviction in judicial sales, unless it is otherwise decreed in the
judgment.

Article 1554. If the vendee has renounced the right to warranty in case of eviction, and eviction should take place, the
vendor shall only pay 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 vendor shall not be liable.

Article 1555. When the warranty has been agreed upon or nothing has been stipulated on this point, in case eviction
occurs, the vendee shall have the right to demand of the vendor:

(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;

(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.

Article 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 contract; but with the
obligation to return the thing without other encumbrances that those which it had when he acquired it.

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.

Article 1557. The warranty cannot be enforced until a final judgment has been rendered, whereby the vendee loses the
thing acquired or a part thereof.

Article 1558. 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.

Article 1560. 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 rescission of the contract, unless he should prefer the appropriate indemnity. Neither 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.
Article 1561. The vendor shall be responsible for warranty against the hidden defects which the thing 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.

Article 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he
was not aware thereof.

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.

Article 1567. In the cases of articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between withdrawing from
the contract and demanding a proportionate reduction of the price, with damages in either case. (1486a)

Article 1568. If the thing sold should be lost in consequence of the hidden faults, and the vendor was aware of them, he
shall bear the 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 thereon, and reimburse the expenses of the contract
which the vendee might have paid. (1487a)

Article 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.

If the vendor acted in bad faith, he shall pay damages to the vendee.

Article 1570. The preceding articles of this Subsection shall be applicable to judicial sales, except that the judgment
debtor shall not be liable for damages.

Article 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.

 Implied Warranty of Title

Unless a contrary intention appears, there is an implied warranty 
 on the part of seller:

1. that he has a right to sell the thing; and 


2. that the buyer shall, from that time, have and enjoy the 
 legal and peaceful possession of the thing 

There is a violation of this warranty when: 


1. the vendee is deprived, in whole or in part, of the thing purchased 


2. the deprivation is by virtue of a final judgment (1557)
3. the judgment is based on a prior right to the sale or an act 
 imputable to the vendor 

4. the vendor was summoned in the suit for eviction at the 
 instance of the vendee (1558); AND 

5. no waiver of the warranty by the vendee 

Liability of vendor

1.Total eviction (1555)

(a) Value of the thing at the time of the eviction 


(b) Income or fruits if he has been ordered to deliver 
 them to the party who won the suit 

(c) Costs if the suit 

(d) Expenses of the contract; and
(e) Damages and interests if the sale was in bad faith 

2. Partial eviction (1556)

(a) All of no. 1 ; OR 


(b) Rescission if vendee would not have bought the thing without said part; but with the obligation to return the
thing without other encumbrances than those which it had at the time he acquired it 

Warranty may be renounced, limited

(a) The contracting parties may increase, diminish, or 
 suppress this legal obligation of the vendor (1548) 


(b) Any stipulation exempting the vendor from the obligation to answer for eviction shall be void, if he acted in bad
 faith 
 (1553) 


(c) Consequence of waiver, renunciation (1554) 


a. should take place, the vendor shall only pay the value which the thing sold had at the time of the
eviction

b. if the vendee made the waiver with knowledge of the risks of eviction and assumed its consequences,
the vendor shall not be liable.

 Implied Warranty Against Non-apparent Encumbrances

Unless a contrary intention appears, there is an implied warranty 
 that the thing shall be free from any charge or
encumbrance not declared or known to the buyer [1547] 


When there is a breach of this warranty, such that it may be presumed that vendee would not have bought its, vendee
may [1560]

if within 1 year from the execution of the deed

a. ask for rescission of the contract within 1 year from 
 the execution of the deed; or
b. sue for damages within the same period

if period has elapsed, sue for damages within 1 year from the discovery of the burden of servitude 

When there is no breach [1560]

- If the non-apparent burden or servitude is registered in the 
 Registry of Deeds, unless there was an express
warranty 

- if the vendee had knowledge of the encumbrance 


 Implied Warranty Against Hidden Defects


1.Unless a contrary intention appears, there is an implied warranty 
 that the thing shall be free from any hidden
faults or defects[1547]

2.When there is a breach of this warranty [1561] 


a. Hidden defect would render the thing unfit for the use intended ; or 


b. would diminish its fitness for such use to an extent that had the vendee been aware thereof, he would not
have acquired it or would have given a lower price for it 


NOTE:

Vendor shall be answerable even if he was unaware of 
 such defects [1566] 


This implied warranty applies to judicial sales, except that 
 the judgment debtor shall not be liable for damages
[1570] 


When two or more things are sold together, the hidden 
 defect of one shall not affect the validity of the other
things sold, unless the vendee would not have bought them without the defective one [1573] 


This warranty may be validly waived, unless the vendor acted in bad faith [1566] 


There is no implied warranty for:

 patent defects; and

 those hidden, but would have been known to the vendee if the latter is an expert who, by reason of his trade or
profession, should have known such defects
Remedies of the Vendee: vendee may either [1567]

 Withdraw from the contract and ask for damages 


 Demand for a proportionate reduction of the price and ask 
 for damages 


 Implied Warranty of Merchantability

When the goods are brought by description from a seller who 
 deals in goods of that description, whether he is the
grower, manufacturer or not, there is an implied warranty that the goods correspond with the description and that they
shall be of merchantable quality 
 [1481,1561(2)] 


 There is no implied warranty of merchantability where the goods are in the presence of the parties at the
time of the sale, and adequate examination was made. 


 Merchantable quality- the goods are reasonably fit for the general purpose for which they are sold.

 Implied Warranty as to Fitness or Quality [1562 (1)] 


1. Where the buyer, expressly or impliedly, made known to the seller the particular purpose for which the
goods are acquired,
2. and the buyer relied on the seller’s skill or judgment, whether the latter is a grower or manufacturer of the
goods or not, there is an implied warranty that the goods shall be fit for such purpose

o In a sale of a specified article under its patent or trade name, there is no warranty as to its fitness for
any particular purpose, unless there is a stipulation to the contrary [1563]
Prescriptive Period: Actions on warranties against hidden defects shall be barred after six (6) months from the delivery
of the thing sold.

Redhibitory Defects of Animals

Under Article 1576 of the Civil Code, even when professional inspection has been made, if the hidden defect of animals
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.

o The redhibitory action, based on the faults or defects of animals, must be brought within forty (40) days from the
date of their delivery to the buyer.
o If the animal should die within three (3) days after its purchase, the vendor shall be liable if the
disease which cause the death existed at the time of the contract.
o When the buyer returns the objects bought and demands the payment of the purchase price, he is in
effect “withdrawing from the contract” as provided in Article 1567, where the prescriptive period is six
(6) months from the delivery of the thing sold.
Sale of Team

Under Article 1572 of the Civil Code, if two or more animals are sold together, whether for a lump sum or for a separate
price for each of them, the redhibitory defect of one shall only give rise to its redhibition, and not that of the others; unless
it should appear that the buyer would not have purchased the sound animal or animals without the defective one. 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.

Note that the foregoing rules with respect to the sale of animals shall in like manner be applicable to the sale of other
things.

Other Rules on Sale of Animals

There is no warranty against hidden defects of animals sold at fairs or at public auctions, or of live stock sold as
condemned.59

The sale of animals suffering from contagious diseases shall be void.

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.

Obligation of Buyer to Return

If the sale be rescinded, the animal shall be returned in the condition in which it was sold and delivered, the buyer being
answerable for any injury due to his negligence, and not arising from the redhibitory fault or defect.

Remedies of Buyer
In the sale of animals with redhibitory defects, the buyer may also elect between withdrawing from the contract and
demanding a proportionate reduction of the price, with damages in either case; but he must make use thereof within the
same period which has been fixed for the exercise of the redhibitory action.

POWER COMMERCIAL AND INDUSTRIAL CORPORATION

vs CA
*legal effect bet condition and warranty

Is the sellers failure to eject the lessees from a lot that is the subject of a contract of sale with assumption of mortgage a
ground (1) for rescission of such contract and (2) for a return by the mortgagee of the amortization payments made by the
buyer who assumed such mortgage.

FACTS: Petitioner Power Commercial & Industrial Development Corporation, assumed, as part of the purchase price, the
existing mortgage on the land. However, PNB denied the application for assumption of mortage and such was forclosed
for failure to pay. Petitioner still made payments for the loan and requested PNB for the removal of actual occupants of the
land to make use of the lots inasmuch as the previous owner has not been able to keep his commitment to remove them.

CA: Deed of sale did not obligate the sps to eject the lessees from the land in question as a condition of the sale, nor was
the occupation thereof by said lessees a violation of the warranty against eviction. Hence, there was no substantial breach
to justify the rescission of said contract or the return of the payments made.

Issues:
(1) Was the stipulation a condition or a warranty?

(2) w/n there was a substantial breach of the contract between the parties warranting rescission (applicability of 1547);

HELD:
The petition is devoid of merit. It fails to appreciate the difference between a condition and a warranty and the
consequences of such distinction. the provision adverted to in the contract pertains to the usual warranty against eviction,
and not to a condition that was not met.
Conspicuous Absence of an Imposed Condition
The alleged failure of respondent spouses to eject the lessees from the lot in question and to deliver actual and
physical possession thereof cannot be considered a substantial breach of a condition for two reasons: first, such failure
was not stipulated as a condition -- whether resolutory or suspensive -- in the contract; and second, its effects and
consequences were not specified either.

Absent a stipulation therefor, we cannot say that the parties intended to make its nonfulfillment a ground for
rescission. If they did intend this, their contract should have expressly stipulated so

Breach of Warranty; Requirements.—Obvious to us in the ambivalent stance of petitioner is its failure to establish any
breach of the warranty against eviction. Despite its protestation that its acquisition of the lot was to enable it to set up a
warehouse for its asbestos products and that failure to deliver actual possession thereof defeated this purpose, still no
breach of warranty against eviction can be appreciated because the facts of the case do not show that the requisites for
such breach have been satisfied. A breach of this warranty requires the concurrence of the following
circumstances:

(1) The purchaser has been deprived of the whole or part of the thing sold;
(2) This eviction is by a final judgment;
(3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee. In the
absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be declared.

In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be declared
Petitioner argues in its memorandum that it has not yet ejected the occupants of said lot, and not that it has been evicted
therefrom. The presence of lessees does not constitute an encumbrance of the land, nor does it deprive petitioner of its
control thereof. However, petitioners deprivation of ownership and control finally occurred when it failed and/or
discontinued paying the amortizations on the mortgage, causing the lot to be foreclosed and sold at public auction. But
this deprivation is due to petitioners fault, and not to any act attributable to the vendor-spouses. Because petitioner failed
to impugn its integrity, the contract is presumed, under the law, to be valid and subsisting.
 ESCALER
vs.
COURT OF APPEALS, JOSE L. REYNOSO,

On March 7, 1958, the spouses Africa V. Reynoso and Jose L, Reynoso sold to petitioners Escaler a parcel of land
 The Deed of Sale contained covenant against eviction.

 ROD of Rizal and A. Doronilla Resources Development, Inc. filed for the cancellation of title issued in the name of
Angelina C. Reynoso (predecessor-in-interest of private respondents-vendors) because property is already
previously registered under A. Doronilla Development, Inc.

 Spouses Escaler and spouses Roxas filed case against spouses Reynoso for the recovery of the value of the
property bcos sps Reynoso violated the vendors' "warranty against eviction."

 alleged that the order issued of cancellation of the title of Angelina C. Reynoso and all subsequent TCTs, is now
final, and so they lost their right over the property sold; and that in said Case No. 4252, the respondents were
summoned and/or given their day in court at the instance of the petitioners.

 TC ruled in favour of petitioners.

 Parties have expressly warranted their valid title

 said warranties were violated

 Cancellation of Original Registration has become final and executory

 ordered the return to petitioners the value of the property sold to them at the time of eviction

 CA: reversed. petitioners as vendees had not given private respondents-vendors, formal notice of the eviction case
as mandated by Arts. 1558 and 1559 of the New Civil Code.

Whether CA is correct in ruling that notice is needed pursuant to Arts 1558 and 1559.

 Requisites for a vendor's liability for eviction to be enforced:

1. there must be a final judgment;

2. purchaser has been deprived of the whole or part of the thing sold;

3. said deprivation was by virtue of a right prior to the sale made by the vendor;

4. the vendor has been summoned and made co-defendant in the suit for eviction at the instance of the
vendee.

 In the case at bar, the fourth requisite—that of being summoned in the suit for eviction—is not present.

 Petitioners admitted what they did was to furnish respondents, by registered mail, with a copy of the opposition they
filed in the eviction suit.

 SC: this is not the kind of notice prescribed by Articles 1558 and 1559.

 The term "unless he is summoned in the suit for eviction at the instance of the vendee" means that the respondents
as vendor/s should be made parties to the suit at the instance of petitioners-vendees, either by way of asking that
the former be made a co-defendant or by the filing of a third-party complaint against said vendors.

 Nothing of that sort appeared to have been done by the petitioners in this case.

NUTRIMIX FEEDS CORPORATIONvs. COURT OF APPEALS and SPOUSES EFREN AND MAURA EVANGELISTA

ISSUE: WON Nutrimix is guilty of breach of warranty due to hidden defects

HELD: NO.
The provisions on warranty against hidden defects are found in Articles 1561 and 1566 of the New Civil Code of the
Philippines. A hidden defect is one which is unknown or could not have been known to the vendee. Under the law, the
requisites to recover on account of hidden defects are as follows:

a) the defect must be hidden;

b) the defect must exist at the time the sale was made;

c) the defect must ordinarily have been excluded from the contract;

d) the defect, must be important (renders thing UNFIT or considerably decreases FITNESS);

e) the action must be instituted within the statute of limitations

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 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 at 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. It is also
common practice for them to mix different kinds of feeds.

The mere death of the animals does not raise a prima facie case of breach of warranty. In this case, the evidence
presented by the spouses are only circumstantial. The remedies of breach of warranty against hidden defects are either
withdrawal from the contract or to demand a proportionate reduction of the price plus damages in either case. In this case,
though the spouses failed to make out their case, hence they should be liable for their debt.

In the sale of animal feeds, there is an implied warranty that it is reasonably fit and suitable to be used for the purpose
which both parties contemplated. To be able to prove liability on the basis of breach of implied warranty, three things
must be established by the respondents. The first is that they sustained injury because of the product; the second
is that the injury occurred because the product was defective or unreasonably unsafe; and finally, the defect
existed when the product left the hands of the petitioner.

A difference of approximately three months enfeebles the respondents’ theory that the petitioner is guilty of breach of
warranty by virtue of hidden defects. In a span of three months, the feeds could have already been contaminated by
outside factors and subjected to many conditions unquestionably beyond the control of the petitioner.

SUPERCARS VS FLORES

Respondent's complaint filed with the RTC seeks to recover from petitioner the money he paid for the vehicle due to the
latter's breach of his warranty against hidden defects under Articles 1547, 1561, and 1566 of the Civil Code. The vehicle,
after it was delivered to respondent, malfunctioned despite repeated repairs by petitioner. Obviously, the vehicle has
hidden defects. A hidden defect is one which is unknown or could not have been known to the vendee.

It is well within respondent's right to recover damages from petitioner who committed a breach of warranty against hidden
defects. Article 1599 of the Civil Code partly provides:

"Article 1599. Where there is a breach of warranty by the seller, the buyer may, at his election:

xxx

(4) Rescind the contract of sale and refuse to receive the goods, or if the goods have already been received, return them
or offer to return them to the seller and recover the price or any part thereof which has been paid.

When the buyer has claimed and been granted a remedy in anyone of these ways, no other remedy can thereafter be
granted, without prejudice to the provisions of the second paragraph of Article 1191.

Rescission is proper if one of the parties to a contract commits a substantial breach of its provisions.
Rescission is proper if one of the parties to a contract commits a substantial breach of its provisions. It creates an
obligation to return the object of the contract. It can be carried out only when the one who demands rescission can return
whatever he may be obliged to restore. Rescission abrogates the contract from its inception and requires a mutual
restitution of the benefits received.18Petitioner is thus mandated by law to give back to respondent the purchase price
upon his return of the vehicle. Records show that at the time respondent opted to rescind the contract, the vehicle was still
in his possession. He returned it to petitioner who, without objection, accepted it. Accordingly, the 30% down payment
equivalent toP63,600.00, plus the premium for the comprehensive insurance amounting to P7,374.80 paid by respondent
should be returned by petitioner.

Petitioner contends that under Article 1191 of the Civil Code, rescission can no longer be availed of as the vehicle was
already in the hands of an innocent purchaser for value. Is it correct?

NO, as found by the lower courts, appellant Supercars was paid the balance of the purchase price by RCBC and,
therefore, in addition to the downpayment given by Flores, it had been fully paid for the vehicle. Ergo, Supercars had
nothing more to do with the vehicle."

CONSUMER ACT OF THE PHILIPPINES: RA 7394

CHAPTER III

CONSUMER PRODUCT AND SERVICE WARRANTIES

Article 66. Implementing Agency. – The Department of Trade and Industry, shall strictly enforce the provision of this
Chapter and its implementing rules and regulations.

Article 67. Applicable Law on Warranties. – The provisions of the Civil Code on conditions and warranties shall govern
all contracts of sale with conditions and warranties.

Article 68. Additional Provisions on Warranties. – In addition to the Civil Code provisions on sale with warranties, the
following provisions shall govern the sale of consumer products with warranty:

a) Terms of express warranty. – Any seller or manufacturer who gives an express warranty shall:

1) set forth the terms of warranty in clear and readily understandable language and clearly identify himself as the
warrantor;

2) identify the party to whom the warranty is extended;

3) state the products or parts covered;

4) state what the warrantor will do in the event of a defect, malfunction of failure to conform to the written warranty and at
whose expense;

5) state what the consumer must do to avail of the rights which accrue to the warranty; and

6) stipulate the period within which, after notice of defect, malfunction or failure to conform to the warranty, the warrantor
will perform any obligation under the warranty.

b) Express warranty – operative from moment of sale. – All written warranties or guarantees issued by a manufacturer,
producer, or importer shall be operative from the moment of sale.

1) Sales Report. – All sales made by distributors of products covered by this Article shall be reported to the manufacturer,
producer, or importer of the product sold within thirty (30) days from date of purchase, unless otherwise agreed upon. The
report shall contain, among others, the date of purchase, model of the product bought, its serial number, name and
address of the buyer. The report made in accordance with this provision shall be equivalent to a warranty registration with
the manufacturer, producer, or importer. Such registration is sufficient to hold the manufacturer, producer, or importer
liable, in appropriate cases, under its warranty.

2) Failure to make or send report. – Failure of the distributor to make the report or send them the form required by the
manufacturer, producer, or importer shall relieve the latter of its liability under the warranty: Provided, however, That the
distributor who failed to comply with its obligation to send the sales reports shall be personally liable under the warranty.
For this purpose, the manufacturer shall be obligated to make good the warranty at the expense of the distributor.

3) Retail. – The retailer shall be subsidiarily liable under the warranty in case of failure of both the manufacturer and
distributor to honor the warranty. In such case, the retailer shall shoulder the expenses and costs necessary to honor the
warranty. Nothing therein shall prevent the retailer from proceeding against the distributor or manufacturer.

4) Enforcement of warranty or guarantee. – The warranty rights can be enforced by presentment of a claim. To this end,
the purchaser needs only to present to the immediate seller either the warranty card of the official receipt along with the
product to be serviced or returned to the immediate seller. No other documentary requirement shall be demanded from
the purchaser. If the immediate seller is the manufacturer's factory or showroom, the warranty shall immediately be
honored. If the product was purchased from a distributor, the distributor shall likewise immediately honor the warranty. In
the case of a retailer other than the distributor, the former shall take responsibility without cost to the buyer of presenting
the warranty claim to the distributor in the consumer's behalf.

5) Record of purchases. – Distributors and retailers covered by this Article shall keep a record of all purchases covered by
a warranty or guarantee for such period of time corresponding to the lifetime of the product's respective warranties or
guarantees.

6) Contrary stipulations – null and void. – All covenants, stipulations or agreements contrary to the provisions of this
Article shall be without legal effect.

c) Designation of warranties. – A written warranty shall clearly and conspicuously designate such warranty as:

1) "Full warranty" if the written warranty meets the minimum requirements set forth in paragraph (d); or

2) "Limited warranty" if the written warranty does not meet such minimum requirements.

d) Minimum standards for warranties. – For the warrantor of a consumer product to meet the minimum standards for
warranty, he shall:

1) remedy such consumer product within a reasonable time and without charge in case of a defect, malfunction or failure
to conform to such written warranty;

2) permit the consumer to elect whether to ask for a refund or replacement without charge of such product or part, as the
case may be, where after reasonable number of attempts to remedy the defect or malfunction, the product continues to
have the defect or to malfunction.

The warrantor will not be required to perform the above duties if he can show that the defect, malfunction or failure to
conform to a written warranty was caused by damage due to unreasonable use thereof.

e) Duration of warranty. – The seller and the consumer may stipulate the period within which the express warranty shall
be enforceable. If the implied warranty on merchantability accompanies an express warranty, both will be of equal
duration.

Any other implied warranty shall endure not less than sixty (60) days nor more than one (1) year following the sale of new
consumer products.

f) Breach of warranties. – 1) In case of breach of express warranty, the consumer may elect to have the goods repaired or
its purchase price refunded by the warrantor. In case the repair of the product in whole or in part is elected, the warranty
work must be made to conform to the express warranty within thirty (30) days by either the warrantor or his
representative. The thirty-day period, however, may be extended by conditions which are beyond the control of the
warrantor or his representative. In case the refund of the purchase price is elected, the amount directly attributable to the
use of the consumer prior to the discovery of the non-conformity shall be deducted.

2) In case of breach of implied warranty, the consumer may retain in the goods and recover damages, or reject the goods,
cancel and contract and recover from the seller so much of the purchase price as has been paid, including damages.

Article 69. Warranties in Supply of Services. –

a) In every contract for the supply of services to a consumer made by a seller in the course of a business, there is an
implied warranty that the service will be rendered with due care and skill and that any material supplied in connection with
such services will be reasonably fit for the purpose for which it is supplied.
b) Where a seller supplies consumer services in the course of a business and the consumer, expressly or by implication,
makes known to the seller the particular purpose for which the services are required, there is an implied warranty that the
services supplied under the contract and any material supplied in connection therewith will be reasonably fit for that
purpose or are of such a nature or quality that they might reasonably be expected to achieve that result, unless the
circumstances show that the consumer does not rely or that it is unreasonable for him to rely, on the seller's skill or
judgment.

Article 70. Professional Services. – The provision of this Act on warranty shall not apply to professional services of
certified public accountants, architects, engineers, lawyers, veterinarians, optometrists, pharmacists, nurses, nutritionists,
dietitians, physical therapists, salesmen, medical and dental practitioners and other professionals engaged in their
respective professional endeavors.

Article 71. Guaranty of Service Firms. – Service firms shall guarantee workmanship and replacement of spare parts for
a period not less than ninety (90) days which shall be indicated in the pertinent invoices.

Article 72. Prohibited Acts. – The following acts are prohibited:

a) refusal without any valid legal cause by the total manufacturer or any person obligated under the warranty or guarantee
to honor a warranty or guarantee issued;

b) unreasonable delay by the local manufacturer or any person obligated under the warranty or guarantee in honoring the
warranty;

c) removal by any person of a product's warranty card for the purpose of evading said warranty obligation;

d) any false representation in an advertisement as to the existence of a warranty or guarantee.

Article 73. Penalties. –

a) Any person who shall violate the provisions of Article 67 shall be subject to fine of not less than Five hundred pesos
(P500.00) but not more than Five thousand pesos (P5,000.00) or an imprisonment of not less than three (3) months but
not more than two (2) years or both upon the discretion of the court. A second conviction under this paragraph shall also
carry with it the penalty or revocation of his business permit and license.

b) Any person, natural or juridical, committing any of the illegal acts provided for in Chapter III, except with respect to
Article 67, shall be liable for a fine of not less than One thousand pesos (P1,000.00) but not more than Fifty thousand
pesos (P50,000.00) or imprisonment for a period of at least one (1) year but not more than five (5) years, or both, at the
discretion of the court.

The imposition of any of the penalties herein provided is without prejudice to any liability incurred under the warranty or
guarantee.