LAW ON SALES – Chapter 4
Obligations of the vendor
SECTION 3 – conditions and warranties
Article 1545. Where the obligation of either party to a
contract of sale is subject to any condition which is not
performed, such party may refuse to proceed with the
contract or he may waive performance of the condition.
If the other party has promised that the condition
should happen or be performed, such first mentioned
party may also treat the nonperformance of the
condition as a breach of warranty.
Where the ownership in the thing has not passed, the
buyer may treat the fulfillment by the seller of his
obligation to deliver the same as described and as
warranted expressly or by implication in the contract of
sale as a condition of the obligation of the buyer to
perform his promise to accept and pay for the thing.
Meaning of condition.
A condition, as used in Article 1545, means an uncertain
eventor contingency on the happening of which the
obligation (or right)of the contract depends. In such a
case, the obligation of the contract does not attach until
the condition is performed.
Effect of non-fulfillment of condition.
A contract of sale may be absolute or conditional. (Art.
1458.)
(1) If the obligation1 of either party is subject to any
condition and such condition is not fulfilled, such party
may either:
(a) refuse to proceed with the contract; or
(b) proceed with the contract, waiving the performance
of the condition.
(2) 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.
Article 1546. Any affirmation of fact or any promise by
the seller relating to the thing is an express warranty if
the natural tendency of such affirmation or promise is
to induce the buyer to purchase the same, and if the
buyer purchases the thing relying thereon. No
affirmation of the value of the thing, nor any statement
purporting to be a statement of the seller's opinion
only, shall be construed as a warranty, unless the seller
made such affirmation or statement as an expert and it
was relied upon by the buyer.
Meaning of warranty.
A warranty is a statement or representation made by
the seller of goods, contemporaneously and as a part of
the contract of sale, having reference to the character,
quality, or title of the goods, and by which he promises
or undertakes to insure that certain facts are or shall be
as he then represents them.
Kinds of Warranty
 Express (Art 1546) - An express warranty is any
affirmation of fact or any promise by the seller
relating to the thing, the natural tendency of
which is to induce the buyer to purchase the
thing and the buyer thus induced, does
purchase the same.
 Implied (Art 1547)
Effect of expression of opinion.
A mere expression of opinion, no matter how positively
asserted, does not import a warranty unless the seller is
an expert and his opinion was relied upon by the buyer.
Thus, assertions that things are fine or valuable or
better than products of rival manufacturers are in their
nature so dependent on individual opinion that no
matter how positive the seller’s assertion may be, they
are not held to create a warranty.
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.
LAW ON SALES – Chapter 4
This article shall not, however, be held to render liable SECTION 3 – Conditions and Warranties
a sheriff, auctioneer, mortgagee, pledgee, or other
person professing to sell by virtue of authority in fact or SUBSECTION 1. Warranty in Case of Eviction
law, for the sale of a thing in which a third person has a
Article 1548. Eviction shall take place whenever by a
legal or equitable interest.
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.
Meaning of implied warranty.
The vendor shall answer for the eviction even though
An implied warranty is that which the law derives by
nothing has been said in the contract on the subject.
implication or inference from the nature of the
transaction or the relative situation or circumstances of The contracting parties, however, may increase,
the parties irrespective of any intention of the seller to diminish, or suppress this legal obligation of the vendor.
create it.

Implied warranties in sale.

Meaning of eviction.
The term implied warranty is reserved for cases where
Eviction may be defined as the judicial process, whereby
the law attaches an obligation to the seller which is not
the vendee is deprived of the whole or part of the thing
expressed in any words. Implied warranties under
purchased by virtue of a final judgment based on a right
Articles 1547 and 1562 are:
prior to the sale or an act imputable to the vendor.
(1) Implied warranty as to seller’s title.
Essential elements of warranty against eviction.
(2) Implied warranty against hidden defects or
The essential elements are:
unknown encumbrance.
1) The vendee is deprived in whole or in part of
(3) Implied warranty as to fitness or
the thing purchased;
merchantability.
2) He is so deprived by virtue of a final judgment
(Art. 1557.);
Nature of implied warranty.
3) The judgment is based on a right prior to the
An implied warranty is a natural, not an essential, sale or an act imputable to the vendor;
element of a contract, because it is presumed to exist
4) The vendor was summoned in the suit for
even though nothing has been said in the contract on
eviction at the instance of the vendee (Art.
the subject. It is, therefore, deemed as incorporated in
1558.); and
the contract of sale.
5) There is no waiver on the part of the vendee.
An implied warranty may, however, be waived or
modified by express stipulation.

When implied warranty not applicable.
(1) “As is and where is” sale.
(2) Sale of second-hand articles.
(3) Sale by virtue of authority in fact or law.
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.
LAW ON SALES – Chapter 4
Effect of prescription.
By prescription, one acquires ownership and other real
rights through the lapse of time in the manner and
under the conditions prescribed by law. In the same
way, rights and actions are lost by prescription. (Art.
1106.)
(1) Completed before sale. — The vendee may lose the
thing purchased to a third person who has acquired title
thereto by prescription. When prescription has
commenced to run against the vendor and was already
complete before the sale, the vendee can enforce the
warranty against eviction. In this case, the deprivation is
based on a right prior to the sale and an act imputable
to the vendor.
(2) Completed after sale. — Even if prescription has
started before the sale but has reached the limit
prescribed by law after the sale, the vendor is not liable
for eviction. The reason is that the vendee could easily
interrupt the running of the prescriptive period by
bringing the necessary action.
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 1553. Any stipulation exempting the vendor
from the obligation to answer for eviction shall be void,
if he acted in bad faith.
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.
Kinds of waiver of eviction.
Article 1554 treats of two kinds of waiver, namely:
(1) Consciente, that is, the waiver is voluntarily
made by the vendee without the knowledge
and assumption of the risks of eviction; and
 the vendor shall pay only the value
which the thing sold had at the time of
eviction. This is a case of solutio
indebiti.
(2) Intencionada, that is, the waiver is made by the
vendee with knowledge of the risks of eviction and
assumption of its consequences.
 the vendor is exempted from the
obligation to answer for eviction,
provided he did not act in bad faith.
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
LAW ON SALES – Chapter 4
appear that the vendee would not have purchased one
without the other.
EXAMPLE:
S sells to B a parcel of land, represented by S as
containing 500 square meters, at the rate of P200.00
per square meter. B needs a lot of at least 500 square
meters on which to build a factory. B is evicted from a
20-square-meter portion of the land. B would not have
bought the land had he known of its smaller area.
Under the facts, B can either sue for damages for
breach of warranty or demand rescission of the
contract. He can also exercise his alternative rights if
these were two parcels of land sold and he should lose
one of them by reason of eviction.
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 1559. The defendant vendee shall ask, within the
time fixed in the Rules of Court for answering the
complaint, that the vendor made a co-defendant.
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.
Where immovable sold encumbered with non-
apparent burden.
(1) Right of vendee. — Although the vendee is not
deprived of the thing sold, totally or partially, the
vendee may still rescind the contract or ask for
indemnity, if the thing sold should be encumbered with
any non-apparent burden or servitude, not mentioned
in the agreement of such a nature that the vendee
would not have acquired it had he been aware thereof.
The lack of knowledge on the part of the vendor is not a
defense. The contract can still be invalidated on the
ground of mistake.
Note: A servitude (or easement) is an encumbrance
imposed upon an immovable for the benefit of another
immovable belonging to a different owner. (Art. 615.)
An example of an apparent servitude is a right of way
establishing a permanent passage (Art.649, par. 2.),
which is continually kept in view by external sign. An
example of a non-apparent easement is a party wall
(Art. 659.) which has no exterior sign. (Art. 660.)
(2) When right cannot be exercised. — The alternative
rights granted by Article 1560 cannot be exercised in
the following cases:
(a) If the burden or servitude is apparent, that is, “made
known and is continually kept in view by external signs
that reveal the use and enjoyment of the same’’ (Art.
615, par. 4.);
(b) If the non-apparent burden or servitude is
registered; and
(c) If the vendee had knowledge of the encumbrance,
whether it is registered or not.
The registration of the non-apparent burden or
servitude in the Registry of Property operates as a
constructive notice to the vendee. Hence, the vendor is
relieved from liability unless there is an express
warranty that the immovable is free from any such
burden or encumbrance. If the burden is known to the
vendee, there is no warranty.
LAW ON SALES – Chapter 4
SUBSECTION 2. Warranty Against Hidden Defects of or
Encumbrances Upon the Thing Sold
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.
Definition of terms.
(1) Redhibition is the avoidance of a sale on
account of some vice or defect in the thing sold,
which renders its use impossible, or so
inconvenient and imperfect that it must be
supposed that the buyer would not have
purchased it had he known of the vice.
(2) Redhibitory action is an action instituted to
avoid a sale on account of some vice or defect
in the thing sold which renders its use
impossible, or so inconvenient and imperfect
that it must be supposed that the buyer would
not have purchased it had he known of the vice.
(3) Redhibitory vice or defect is a defect in the
article sold against which defect the seller is
bound to warrant. The vice or defect must
constitute an imperfection, a defect in its
nature, of certain importance; and a minor
defect does not give rise to redhibition.
Requisites for warranty against hidden defects.
(1) The defect must be important or serious;
(2) It must be hidden;
(3) It must exist at the time of the sale;
(4) The vendee must give notice of the defect to the
vendor within a reasonable time (Art. 1586.);
(5) The action for rescission or reduction of the price
must be brought within the proper period — 6 months
from the delivery of the thing sold (Art. 1571.) or within
40 days from the date of the delivery in case of animals
(Art. 1577, par. 1.); and
(6) There must be no waiver of warranty on the part of
the vendee.
When defect important.
The defect is important if: (1) it renders the thing sold
unfit for the use for which it is intended; or (2) if it
diminishes its fitness for such use to such an extent that
the vendee would not have acquired it had he been
aware thereof or would have given a lower price for it.
When defect hidden.
The defect is hidden (or latent) if it was not known and
could not have been known to the vendee. It is one
which is hidden to the eyes and cannot be discovered
by ordinarily careful inspection or examination.
Article 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;
(2) Where the goods are brought by 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.
LAW ON SALES – Chapter 4
Implied warranties of quality.
Quality of goods includes their state or condition. (Art.
1636.) The purpose of holding the seller on his implied
warranties is to promote high standard in business and
to discourage sharp dealings. They are based on the
principle that “honesty is the best policy.”
(1) Implied warranty of fitness. — There is no implied
warranty as to the quality or fitness for any particular
purpose of goods under a contract of sale, except as
follows: where:
(a) the buyer, expressly or by implication, manifests to
the seller the particular purpose for which the goods are
required, and
(b) the buyer relies upon the seller’s skill or judgment.
Then, whether he be the grower or manufacturer or not
— there is an implied warranty that the goods are
reasonably fit for such purpose.
(2) Implied warranty of merchantability. — Where
goods are bought by description, the seller impliedly
warrants that the goods are of merchantable quality.
Merchantability is not a warranty of quality in the sense
of requiring a particular grade, but it does require
identity between what is described in the contract and
what is tendered, in the sense that the latter is of such
quality to have some value.
Warranty of merchantability distinguished from
warranty of fitness.
A warranty of merchantability is a warranty that goods
are reasonably fit for the general purpose for which
they are sold. On the other hand, a warranty of fitness is
a warranty that the goods are suitable for the special
purpose of the buyer which will not be satisfied by mere
fitness for general purposes.
Article 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.
Article 1564. An implied warranty or condition as to the
quality or fitness for a particular purpose may be
annexed by the usage of trade.
Article 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.
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.
Doctrines of “caveat venditor” and “caveat emptor.”
Before, the implied warranty of quality was not
recognized and the rule was then caveat emptor (buyer
beware). The old Civil Code, following the Roman Law,
rejected the maxim caveat emptor. (see Art. 1547.) The
doctrine of caveat venditor (let the seller beware) was
adopted in accordance with which “the vendor is liable
to the vendee for any hidden faults or defects in the
thing sold, even though he was not aware thereof.”
(Art. 1585, now Art. 1566 of our new Civil Code.) The
doctrine is based on the principle that a sound price
warrants a sound article.
The maxim caveat emptor is still applicable, however, in
sheriff’s sales for there is no warranty of title or quality
on the part of the seller in such sales. It also applies in
double sales of property where the issue is who
between two vendees has a better right to the property.
The rule of caveat emptor requires the purchaser to be
aware of the supposed title of the vendor and one who
buys without checking the vendor’s title takes all the
risks and losses consequent to such failure.
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
LAW ON SALES – Chapter 4
proportionate reduction of the price, with damages in
either case.
The same right is given to the vendee in the sale of
animals with redhibitory defects. (Art. 1580.)
The vendee must present proof that he suffered
damage as a result of the breach of the vendor’s
warranty to be entitled to actual damages.
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.
Effect of loss of thing sold on account of hidden
defects.
(1) Vendor aware of hidden defects. — If the vendor was
aware of the hidden defects in consequence of which
the thing sold was lost, he shall bear the loss because he
acted in bad faith. In such case, the vendee has the right
to recover:
(a) the price paid;
(b) the expenses of the contract; and
(c) damages.
(2) Vendor not aware of hidden defects. — If the vendor
was not aware of them, he shall be obliged only to
return:
(a) the price paid;
(b) interest thereon; and
(c) expenses of the contract if paid by the vendee. He is
not made liable for damages because he is not guilty of
bad faith.
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.
EXAMPLE:
S sold to B a vessel for P5,000,000.00. The defects of the
construction of the vessel were hidden and concealed
and were unknown to B until an official inspection was
made. To make the vessel seaworthy, an investment of
P500,000.00 for repairs was necessary.
If through the fault of B, the vessel was burned, S is
nevertheless bound to return the purchase price of
P5,000,000.00 paid by B less P4,500,000.00 the value of
the vessel at the time of the loss.
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 1571. Actions arising from the provisions of the
preceding ten articles shall be barred after six months,
from the delivery of the thing sold.
Article 1572. 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.
EXAMPLE:
S sold to B two carabaos for P10,000.00. If one carabao
is defective, S is liable for his warranty on the defective
animal only. In other words, B is not entitled to return
the sound carabao unless he can show that he would
not have purchased it without the defective one.
Such intention is presumed when the carabaos bought
are a male and a female but S may prove the contrary
as, for example, B has no present need or use for two
carabaos. In any event, B can accept the defective
carabao and demand a proportionate reduction of the
price.
LAW ON SALES – Chapter 4
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.

Article 1574. There is no warranty against hidden

defects of animals sold at fairs or at public auctions, or
of live stock sold as condemned.

Article 1575. 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.

Article 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.

Article 1577. The redhibitory action, based on the faults

or defects of animals, must be brought within forty days
from the date of their delivery to the vendee.

This action can only be exercised with respect to faults

and defects which are determined by law or by local
customs.

Article 1578. If the animal should die within three days

after its purchase, the vendor shall be liable if the
disease which cause the death existed at the time of the
contract.

Article 1579. 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.

Article 1580. In the sale of animals with redhibitory

defects, the vendee shall also enjoy the right mentioned
in article 1567; but he must make use thereof within the
same period which has been fixed for the exercise of
the redhibitory action.

Article 1581. The form of sale of large cattle shall be

governed by special laws.