ART.

1545 When there is no deliberate lie on the part of the

A condition means an uncertain event or contingency seller, no action will lie against him. (Gochangco v.
on the happening of which the obligation of the Dean, 47 Phil 687).
contract depends. That is, the obligation of the
contract does not attach until the condition is Azarraga v. Gay, 5 Phil 599 If a purchaser has ample
performed. opportunity to investigate the land before purchase,
and the seller did not prevent such an investigation,
Presence of Conditions and Warranties and the purchaser does investigate, the purchaser is
(a) Conditions may be waived. not allowed afterwards to say that the vendor made
(b) Conditions may be considered as warranties. false representations to him.
Effect of non-fulfillment of condition:
1. The other party may: ART. 1547
a. Refuse to proceed with the contract; or Implied warranty by the seller –an implied warranty is
b. proceed with the contract, waiving the that which the law derives by inference from the
performance of the condition. nature of the transaction or the relative situation or
2. If the condition is in the nature of a promise circumstances of the parties, irrespective of any
that it should happen, the non-performance intention of the seller to create it.
of such condition may be treated by the
other party as breach of warranty It is a natural element of a contract, deemed
WARRANTY CONDITION incorporated in the contract of sale. It may be
Goes into the goes into the root of the waived or modified by express stipulation.
performance of such existence of the
obligation & in fact may obligation A buyer at a tax sale is supposed to take all the
constitute an obligation chances because there is no warranty on the part of
in itself the State & a sheriff does not guarantee title to the
May form part of the Must be stipulated by the property he sells.
obligation or contract by parties in order to form
provision of the law part of an obligation Actions based on the implied warranties prescribe in
without the parties 10 years since those obligations are imposed by law.
having agreed thereto Special provisions will naturally prevail.
Whether express or May attach itself either
implied, relates to the to the obligation of the If a person purchases a piece of land on the
subject matter itself or seller to deliver assurance that the seller’s title thereto is valid, he
to the obligations of the possession & transfer should not run the risk of being told later that his
seller as to the subject ownership over the acquisition was ineffectual after all. The further
matter of the sale subject matter of the consequence would be that land conflicts could be
sale even more numerous & complex than they are now &
ART. 1546 possibly also more abrasive if not even violent.
When is there a warranty?
A good test: WARRANTY IN CASE OF EVICTION
(a) If buyer is ignorant, there is a warranty. EVICTION –the judicial process whereby the vendee
(b) If the buyer is expected to have an opinion is deprived of the whole or part of the thing
AND the seller has no special opinion, there is purchased by virtue of a final judgment based on a
no warranty. right prior to the sale or an act imputable to the
Par.1 express warranty –any affirmation of fact, or vendor.
any promise by the seller relating to the thing, the
natural tendency of which is to induce the buyer to ART. 1548
purchase the things, and the buyer thus induced, The warranty in case of eviction is a natural element
does purchase the same. in the contract of sale; hence the vendor answers for
eviction even if the contract be silent on this point.
Dealer’s talk cannot be considered an express
warranty. A little exaggeration is allowed by the law The disturbance referred to in the case of eviction is
as a concession to human nature. This is in a disturbance in law, and not a mere trespass in fact,
accordance with “simplex commmendatio non-obligat” which requires that a person go to the courts of
or “caveat emptor.” justice claiming the thing sold, or part thereof &
giving reasons. If final judgment is rendered
A mere expression of opinion, no matter how depriving the vendee of the thing sold or any part
positively asserted, does not import a warranty thereof, the doctrine of eviction becomes applicable.
UNLESS the seller is an expert and his opinion was
relied upon by the buyer. The buyer & the seller are allowed to add to,
subtract from, or suppress this legal obligation on
the part of the seller. It has been held that the
vendor’s liability for warranty against eviction in a
contract of sale is generally waivable and may be
renounced by the vendee.
The government is not liable for the eviction of the
purchaser at a tax sale, but the owner of the
property sold under execution at the instance of the
judgment creditor is liable for eviction, unless
otherwise decreed in the judgment.
Serfino v. CA. Where a purchaser of real estate at
the tax sale obtains such title as that held by the
taxpayer, the principle of caveat emptor applies.
Where land is sold for delinquency taxes under the
provisions of the Provincial Assessment Law, rights of
registered but undeclared owners of the land are not
affected by the proceedings and the sale conveys
only such interest as the person who has declared the
property for taxation has therein.
The buyer is allowed to enforce the warranty against
the seller/s of his own immediate seller.
The suit for breach can be directed only against the
immediate seller unless the immediate seller has
expressly assigned to the buyer his own right to sue
his own seller.
The breach cannot be directed to the sellers of the
seller unless such sellers had promised to warrant in
favor of later buyers.
Even if the buyer does not appeal from a judgment
ordering his eviction & the judgment subsequently
becomes final, the seller is still liable for the
eviction.
Even if it was the buyer who instituted the suit
against the 3rd person, if the buyer was defeated,
still the seller would be liable.
All rights acquired prior to the sale by others can be
imputed to the seller. Imputability is really
important, seller is still liable even if the act be made
after the sale.
B bought land from S. B did not register. C then
bought the same land from S. C registers. B is
defeated. Can B hold S liable for the eviction
although C’s right came after the sale to him?
YES, because although it came after the sale yet it
was attributable to S’s own fault & bad faith.
The SELLER is RESPONSIBLE for:
(a) His own acts; and
(b) Those of his predecessors-in-interest.
He is NOT responsible for dispossession due to:
(a) Acts imputable to the buyer himself; and
(b) Fortuitous events
ESSENTIAL ELEMENTS FOR EVICTION
(a) There is a final judgment;
(b) The purchaser has been deprived in whole or
in part of the thing sold;
(c) The deprivation was by virtue of a right prior
to the sale effected by the seller; and
(d) The vendor has been previously notified of
the complaint for eviction at the instance of
the purchaser.
It is only the buyer in good faith who may sue for the
breach of warranty against eviction. If he knew the
possible dangers, chances are that he assumed the
risk of eviction.
ART. 1549
If the lower court evicts the buyer, he does not need
to appeal to the appellate courts before he can sue
for damages. However, the decision must be final.
ART. 1550
The vendor shall not be liable for eviction if there
was reasonable opportunity to interrupt the
prescription; otherwise, it would be unfair.
Effect of prescription:
Completed before sale. The vendee may lose the
thing purchased to a 3rd person ho has acquired title
thereto by prescription. When prescription has
commenced to run against the vendor & was already
completed before the sale, the vendee can enforce
the warranty against eviction. So, deprivation is
based on a right prior to the sale & an act imputable
to the vendor.
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. This is because the vendee could
easily interrupt the running of the prescriptive
period by bringing the necessary action.
Art. 1550 will have no application to a property sold
and registered under the Torrens system as
ownership of the land is not subject to prescription.
ART. 1551
Deprivation for nonpayment of taxes:
A has land, the taxes on which he has not paid. A
sells it to B. The land is sold at public auction for the
non-payment of taxes and B is evicted. A is
responsible, but only if B did not know at the time of
the sale that A had not paid the taxes thereon.
ART. 1552
In case of failure of title, a purchaser in good faith
at a judicial sale is entitled to recover the purchase
money from the officer if the funds are still in his
hands or from the judgment debtor.
Bobis v. Prov. Sheriff of Camarines Norte A buyer at
an execution sale acquires nothing if the judgment
debtor had already assigned or transferred the
property to another before the levy on execution.
A sheriff who merely adheres to the terms of a writ
of execution as well as a buyer at the public auction,
is not liable for damages.
This article is based on the principle of solution
indebiti. Thus, if the purchaser of real property sold
on execution be evicted therefrom because the
judgment debtor had no right to the property sold,
the purchaser is entitled to recover the price paid
with interest, from the judgment debtor. If the sale
was effected by the judgment creditor, he should not
be permitted to retain the proceeds of the sale, at
the expense of the purchaser.
ART. 1553
EFFECT of Stipulation waiving liability for eviction
SELLER in GOOD FAITH – exemption is VALID,
without prejudice to Art. 1554
SELLER in GOOD FAITH –stipulation is VOID.
Na-confuse ko, puro seller, puro in good faith…
According to de Leon:
EFFECT of VENDOR’s BAD FAITH: The vendor’s bad
faith consists in his knowing beforehand at the time
of the sale of the presence of the fact giving rise to
eviction. Thus, if the vendor after selling his
property to another, sold it again to another
purchaser, he cannot, even by stipulation, be exempt
from warranty against eviction, because he acted in
bad faith.
EFFECT of VENDEE’s BAD FAITH: It is a requisite,
however, that the vendee is not himself guilty of bad
faith in the execution of the sale. If he knew the
defect of the title at the time of sale, he cannot
claim that the vendor has warranted his legal and
peaceful possession of the property sold. He
proceeded with the sale with the assumption of risk
of eviction and is not entitled to warranty against
eviction nor to right to recover
damages.
ART. 1554 –this treats of total eviction
WAIVER by the BUYER may have been made:
(a) WITHOUT knowledge of risk of eviction
(waiver consciente); -general presumption
Waiver is voluntarily made by the vendee without the
knowledge and assumption of the risks of eviction.
Value at the time of eviction should be returned
because this is a case of solutio indebiti.
and
(b) WITH knowledge of risk of eviction (waiver
intencionada). –must be clearly proved
The waiver is made by the vendee with knowledge of
the risk of eviction & assumption of its consequences.
Here, nothing need be returned as it is aleatory in
nature and buyer assumes the consequences. The
vendor is exempted from the obligation to answer for
eviction provided he did not act in bad faith.
ART. 1555
What SELLER must give in case of eviction:
V –Value
I –Income (or fruits)
C –Costs
E –Expenses
D –Damages (and interests & ornamental expenses) if
seller was in bad faith
If the court does not order the buyer to deliver the
income or fruits to the winner, said buyer would be
entitled to them. This is fair for after all, in the
meantime, the seller was using the price money
without interest.
Par. 3 does not include transportation & other
incidental expenses.
The interests in par. 5 refer to interests on costs,
expenses, & damages. Here, the sale must have been
made in BAD faith, which must be proved.
Rescission cannot be carried out in case the vendee is
totally evicted from the thing sold, for he can no
longer restore the subject matter of the sale to the
vendor. In case of partial eviction, however,
rescission may still be allowed with respect to the
subject matter that remains, as in the case
contemplated in Art. 1556.
ART. 1556
REMEDY in case of PARTIAL EVICTION:
Rescission, or
Enforcement of warranty (Art. 1555)
If he chooses rescission, there should be no new
encumbrances, like a mortgage.
If the circumstances set forth in par.1 are not
present, the only remedy is to enforce the warranty.
ART. 1557
A judgment becomes final if on appeal, the decision
decreeing the eviction is affirmed; or if within the
period within which to appeal, no appeal was made.

Under Art. 1549, the vendee need not appeal from
the decision of the lower court. It is sufficient that
the judgment be FINAL before the warranty can be
enforced.
ART. 1558
The necessity of summoning the seller in the suit for
the eviction of the buyer is a condition sine qua non.
In the absence of such summons, the vendee is not
bound to his warranty.
Reason for the summoning: to give vendor opportunity
to show that the action against he buyer is unjust.
ART. 1559
Seller must be made Co-defendant with the Buyer
(a) Seller was notified but did not appear. The
buyer won in the suit filed by the 3rd person.
Can buyer recover expenses? NO, because
there really was no breach of warranty.
(b) In an eviction suit, it is permissible for the
buyer to file a cross-claim against the seller
for he enforcement of the warranty should
the buyer lose. This can be done in some
cases to save time & prevent inconvenience.
If the buyer wins, there is no necessity for
the enforcement of the warranty since there
has been no breach thereof.
The suit against the seller may be in the form
of a 3rd-party complaint if the vendor has not
been made a co-defendant.
ART. 1560
The defect contemplated here is a sort of “hidden
defect” but remedy is similar to that provided in the
case of eviction.
REMEDIES:
If made WITHIN a year:
Rescission;
Damages;
If AFTER 1 YEAR, only damages
RIGHTS of vendee CANNOT be exercised in the
following cases:
(1) If the burden or servitude is apparent;
(2) If the non-apparent burden or servitude is
registered; and
(3) If the vendee had knowledge of the
encumbrance whether it is registered or not
This article is applicable whether sale is in public or
private instrument, or made orally.
WARRANTY AGAINST HIDDEN DEFECTS OF, OR
ENCUMBRANCES UPON, THE THING SOLD
ART. 1561
REQUISITES to RECOVER because of HIDDEN
DEFECTS:
(a) The defect must be hidden (not known &
could not have been known);
(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.
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.
ART. 1562
Merchantable quality is fit for the general purpose of
a thing, and not necessarily the particular purpose for
which it has been acquired.
The purpose of holding the seller on his implied
warranties is to promote high standard in business
and to discourage unfair dealings, e.g. IW of fitness,
IW of merchantability,
Where the agreement is that all the tobacco in a
certain place would be taken, the obligation is
absolute, and does not depend upon the quality of the
tobacco, since here it was not the quality that
counted.
ART. 1563
Effect of Sale under the patent or trade name: here
there is generally no warranty as to the article’s
“fitness for any particular purpose.”
Art. 1563 limits the application of Art. 1562.
ART. 1564
The parties are presumed to be acquainted with the
usages of trade.
ART. 1565
RULE in case of SALE by SAMPLE;
(1) Where sample not merchantable –all the
buyer is entitled to is that the goods be like
the sample. So he has no right to have the
goods merchantable if the sample which he
has inspected is not.
(2) Where sample subject to latent defect –in
the case of a sale by sample, if the sample si
subject to a latent defect, & the buyer
reasonably relies on the seller’s skill or
judgment, the buyer is entitled not simply to
goods like the sample, but to goods like those
which the sample seems to represent, i.e.,
 merchantable goods of that kind and
character.
ART. 1566
Why is the seller responsible for hidden defects even
if he is in good faith? BECAUSE he has to repair the
damage done. The object of the law is reparation.
S & B agreed that S would be exempted from hidden
defects. But S knew of hidden defects. Would S be
liable? YES, because of his bad faith. To hold
otherwise would be to legalize fraud.
CAVEAT EMPTOR vs. CAVEAT VENDITOR
The rule before was caveat emptor (let the buyer
beware). This was rejected and caveat venditor was
adopted in accordance with which “the vendor is
liable to the vendee for any hidden faults or defects
in the things sold, even though he was not aware
thereof. This is based on the principle that a sound
price warrants a sound article.
With respect to 3rd persons, however, caveat emptor
still applies.
ART. 1567
In the cases of Arts. 1561, 1562, 1564, 1565 & 1566,
the vendee may elect between withdrawing from the
contract and demanding a proportionate reduction of
the price, with damages in either case.
Remedies in case of hidden defects:
(a) Withdrawal or rescission (accion redhibitoria)
plus damages;
(b) Proportionate reduction (accion quanti minors
o estimatoria) –reduction in the price, plus
damages.
This warranty in sales is applicable to lease.
ART. 1568
Effect of loss of the thing because of the hidden
defects
Whether the seller knew or did not know of
the defects, he is still responsible. However, in case
of ignorance, there will be no liability for damages.
ART. 1569
Effect if cause of loss was a fortuitous event and not
the hidden defect
(a) Here the hidden defect was NOT the cause
of the loss. The cause was either:
1) A fortuitous event;
2) Or thru the fault of the buyer.
(b) The difference (price minus value at loss)
represents generally the decrease in value to
the hidden defect (hence, the amount by
which the seller was enriched at the buyer’s
expense). It is understood that the decrease
in value due to wear and tear should not be
compensated.
e.g. S sold a car for P300, 000 to B. Unknown to B,
the car then had a cracked engine block, the
replacement of which would cost about P175, 000.
Despite his knowledge of this defect, he obtained a
waiver from B of the latter’s right under the
warranty against hidden defects. Subsequently, the
car was wrecked due to the recklessness of B who
only then discovered the defects. What right, and to
what extent, if any, has B against S?
 B can recover approximately P175,000, which may
represent the difference between the purchase
price and the true value. The waiver is void because
S knew of the defect.
ART. 1570
While the preceding articles apply to judicial sales,
still no liability for damages will be assessed against
the judgment debtor in view of the compulsory
nature of the sales.
ART. 1571
Prescriptive period: 6 months from delivery
Effect of mere notification: the buyer notifies the
seller of the existence of the hidden defect, but
does not sue within 6 months, the action will of
course prescribe.
ART. 1572
Sale of 2 or more animals together
(a) Generally, a defect in 1 should not affect the
sale of the others
(b) This is true whether the price was a lump
sum, or separate for each animal.
(c) Note the exception: team
ART. 1573
The rule stated in Art. 1572 has been made applicable
to the sale of other things.
ART. 1574
When no warranty against hidden defects exists
Re “livestock sold as condemned,” the fact that the
livestock is condemned must be communicated tot eh
buyer; otherwise, the seller is still liable.
ART. 1575
The article speaks of 2 kinds of void sales with
respect to animals.
ART. 1576
Redhibitory defect: the hidden defect of animals,
even after professional inspection has been made,
should be of such a nature that expert knowledge is
not sufficient to discover it.
ART. 1577
For what causes of action, if any, does the NCC
provide a period of limitation of:
40 days? The redhibitory action, based on the
frauds or defects of animals (Art. 1577)
6 months?
1) breach of warranty against hidden defects;
rescission of the contract because of the
same; proportionate reduction in the price
because of the same (Arts. 1561-1571).
2) Rescission or proportionate reduction in the
price for sales of real estate wither by the
unit or for a lump sum, because of failure to
comply with the provisions of the contract.
ART. 1578
If the animal should die within 3 days after its
purchase, the vendor shall be liable if the disease
which cause the death existed at the time of the
contract.
ART. 1579
If the sale of the animal is rescinded, the condition
of the animal must generally be the same.
ART. 1580
Remedies of buyer of animals with redhibitory
defects:
(a) Withdrawal or rescission (plus damages)
(b) Proportionate reduction in price (plus
damages)
Prescriptive period for either remedy 40 days from
date of delivery to the buyer
ART. 1581
The form of sale of large cattle shall be governed by
special laws.
OBLIGATIONS OF THE VENDEE
ART. 1582
Principal obligations of the buyers:
(a) Accept delivery;
(b) Pay the price.
Tender of payment ought to be made in legal tender
(not a check), unless another mode is accepted by the
creditor.
On Jan. 5, A sold & delivered his truck, together with
the corresponding certificate of public convenience
(CoPC) to B for P600,000, payable w/in 60 days. 2
weeks after the sale, & while the CoPC was still in the
name of A, the cert. was revoked by the Public
Service Commission thru no fault of A. Upon the
expiration of the 60-day period, A demanded
payment of the price from B. B refused to pay,
alleging that the contract of sale was VOID because
the CoPC w/c was the main consideration of the sale
no longer existed. Is the contention of B tenable?
Under the circumstances, the contention of B is not
tenable for the following reasons:
(a) It cannot be correctly contended that the
sale is void, since the consideration actually
existed at the time of the perfection of the
sale. The subsequent revocation of the
certificate thru no fault of A is immaterial.
(b) What B should have done immediately after
the sale was to take steps to have the Public
Service Commission transfer the certificate
to his name.
(c) While the Public Service Law requires that
the sale or assignment of a CoPC, together
with the property used in the operation of
the same, should be approved by the Public
Service Commission –for the protection of
the public, still as between A & B, the
contract is efficacious as all the essential
requisites of the contract were resent at the
time of the perfection thereof.
If the seller has delivered but no time has been fixed
for the payment of the price, the seller may require
payment to be made at any time after delivery. The
buyer here has the duty to pay the price immediately
upon demand.
If the seller is forced to deviate from the provision
of the contract, but the purchaser consents or
agrees to such deviations, the purchaser should still
pay the price.
ART. 1583
Generally NO DELIVERY by INSTALLMENTS
Reason: performance must generally be complete
Exception to rule: express provisions
The second par.states the rules for delivery by
installments, & distinguishes WON the breach is
severable.
ART. 1584
When buyer has right to examine
Generally, the buyer is entitled to examine
the goods prior to delivery. And this is true even if
the goods are shipped FOB.
Grageda v. IAC On Mar 26 1975, Dino ordered from
Francisco 500 sets of pyrex trays. Prior to Apr 27
1975, Francisco delivered some of the items but Dino
outrightly rejected them. After making the proper
corrections, Francisco made subsequent deliveries on
Apr 27, 30, May 1, 3, 12 & 27, 1975. Dino’s caretaker
duly received the deliveries. On several occasions,
Francisco demanded payment for the total value of
the deliveries but Dino asked for extension of time
within which to pay. On Jun 20 1975, Dino sent a
letter to Francisco, telling the latter that he rejects
the items delivered. Because of this, Francisco sued
Dino for payment.
Here it was held that the delay in the advice or
notice of rejection –almost 2 months after receipt –
was rather too late.
This article accords the buyer the right to examine
the goods to ascertain whether they are in
conformity with the contract. Such opportunity to
examine, however, should be availed of within a
reasonable time in order that the seller may not be
subjected to undue delay or prejudice in the payment
of his raw materials, workers, & other damages which
may be incurred due to deterioration of his products.
The buyer is deemed to have accepted the
goods when, after the lapse of a reasonable time he
retains them without intimating to the seller that he
has rejected them.
When buyer has no right to examine:
(a) when there is a stipulation to this effect
(b) when the goods are delivered COD
ART. 1585
3 ways of accepting the goods:
(a) express acceptance
(b) when buyer does an act which only an owner
can do
(c) failure to return after reasonable lapse of
time
Buyer accepted goods despite delay. Buyer also
promised later on to pay. Subsequently, buyer
asked for damages on account of delay.
Buyer is estopped because of the acceptance
without reservation at the time of acceptance.
ART. 1586
Even if buyer accepts, seller can still be liable
(a) reason for the last sentence: to prevent
afterthoughts or belated claims.
(b) The buyer is allowed to set up the breach of
the warranty or promise as a set-off or
counterclaim for the price.
ART. 1587
Effect if buyer justifiably refuses to accept the
delivery
(a) Buyer has no duty to return the goods to the
seller
(b) Mere notification to seller of refusal will
suffice
(c) But buyer may make himself a voluntary
depositary –in which case he must safely take
care of them in the mean time
ART. 1588
Effect if buyer unjustifiably refuses to accept the
delivery:
Generally, the buyer becomes the owner. Exception –
when there is a contrary stipulation or when the
seller reserves the ownership as a sort of security
for the payment of the price.
ART. 1589
This article answers the question: in what cases is
the buyer liable for interest on the price?
3 cases contemplated:
(a) In No. 1, no demand is needed
(b) In No. 2, the reason for the law is that the
fruits or income is sufficient to warrant the
payment of interest.
(c) In No. 3, “default” is mora, called “in delay”
under the provisions of the Civil Code.
In the absence of stipulation in a monetary obligation,
legal interest takes the place of damages. This is so
even if the damages are actually more or less. The
possibility of gain because of an investment should be
discounted; instead of a gain, there might be a loss.
Therefore, the law has compromised on legal interest.
ART. 1590
The buyer may SUSPEND the payment of the price
if:
(a) There is a well-grounded fear (fundado
temor)
(b) The fear is because of:
(1) A vindicatory action or action to recover,
or
(2) A foreclosure of mortgage.
ART. 1591
When seller may immediately sue for rescission of
the Sale
The seller must have reasonable grounds to
fear:
(a) LOSS of the immovable property sold,
and
(b) LOSS of the price
So if the buyer is squandering his money, but the
immovable property remains untouched, this article
cannot apply.
If neither ground exists, Art. 1191 applies:
“The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation, w/
the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment,
if the latter should become impossible.
The court shall decree the rescission claimed,
unless there be just cause authorizing the fixing of a
period.
This is understood to be w/o prejudice to the
rights of 3rd persons who have acquired the thing, in
accordance with articles 1385 and 1388 and the
Mortgage Law.”