Art. 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.

Effect of ignorance of vendor of hidden defects.

The ignorance of the vendor does not relieve him from liability to the vendee for any hidden faults or
defects in the thing sold. In other words, good faith cannot be availed of as a defense by the vendor.

However, the parties may provide otherwise in their contract (see Art. 1548, par.

3.) provided the vendor acted in good faith, that is, he was unaware of the existence of the hidden fault
or defect. (Arts. 1566, par. 2; 1553.)

Doctrines of “caveat venditor” and “caveat emptor.”

At early common law, the implied warranty of quality was not recognized and the rule was then caveat
emptor (buyer beware). Our old Civil Code, following the Roman Law, rejected the maxim caveat
emptor. The doctrine of Caveat venditor 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 Civil Code.) The doctrine is based on the principle that a sound price
warrants a sound article.

With respect to third persons, however, the rule of caveat emptor still applies. Thus, one who buys real
property without checking the vendor’s title where persons other than the vendor are in possession,
takes all the risks and losses consequent to such failure in case the vendor’s title is defective. (see
Salvoro vs. Tañega, 87 SCRA 349.)

Art. 1567. In the cases of Articles 1561,1562,1564, and 1566, the vendee may elect between
withdrawing from the contract or demanding a proportionate reduction of the price, with damages in
either case.
Alternative remedies of the buyer to enforce warranty.

Under this article, the vendee has the option either (1) to withdraw from the contract; or (2) demand a
proportionate reduction of the price, with a right to damages in either case. This first is known as accion
redhibitoria while the second is known as accion quanti minoris.

The same right is given to the vendee in the sale of animals with redhibitory defects. (Art. 1580.)

Art. 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) 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) If the vendor was not aware of them, he shall be obliged only to return (a) the price; (b) the 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.

Art. 1569. If the thing sold had any hidden fault at the time of the sale, and should thereatter 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.

Effect of lost of defective thing sold

If the thing sold had no hidden defects, its loss through a for tuitous event or through the fault of the
vendee is, of course, to be borne by the vendee. However, the vendor is obliged to return the price paid
less the value of the thing at the time of its loss in case where hidden defects existed. In other words,
under Article 1569, the vendor is still made liable on his warranty.
The difference between the price paid for the thing and the value at the time of the loss, represents the
damage suffered by its vendee and is at the same time the amount with which the vendor enriched
himself at the expense of the vendee. If the vendoracted in bad faith, he shall also be liable for damages.

EXAMPLE:

S sold to B a vessel for P500,000.00. 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 P50,000.00 for repairs was necessary.

If through the fault of B, the vessel was burned, S is nevertheless bound to return the purchase price of
P500,000.00 paid by B, less P450,000.00, the value of the vessel at the time of the loss.

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

Warranty in judicial sales.

In a judicial sale, it is not really the sheriff who sells but the judgment debtor. Hence, the provisions
regarding warranty are also applicable to judicial sales. However, since he is forced to sell, there can be
no liability for damages.

Art. 1571. Actions arising from the provisions of the pre ceding ten articles shall be barred after six
months, from the delivery of the thing sold.

Limitation of action.

The action for rescission ofv the contract or reduction of the purchase price (Art. 1567.) prescribes six (6)
months from the date of delivery of the thing sold. This means that the action shall be barred unless
brought with the said period.