Sales Part 7

COVERAGE OF DISCUSSION:
• CONDITIONS AND WARRANTIES
Conditions in a contract of sale

 If the obligation of a party is subject to a condition which is not fulfilled, the other party
may choose to do any of the following:
1. Refuse to proceed with the contract
2. Waive the performance of the condition. (Art. 1545)
Kinds of warranties

 Express warranties – refers to affirmation of fact or any promise by the seller relating to the thing whose natural
tendency is to induce the buyer to purchase the same, and if the buyer purchase the thing relying on such
affirmation or promise.
 Statement of seller’s opinion: This shall not be construed as a warranty unless made by an expert and it was relied upon
by the buyer (Art. 1546).
 Implied warranties – are those that are inherent in contract of sale and accompany them unless they are
suppressed by the parties. They are two kinds:
 Warranty against eviction – refers to implied warranty on the part of the seller that he has the right to sell the thing at the
time when, ownership is to pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession
of the thing.
 Warranty against hidden defects – refers to the 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. (Art 1547)
Persons not liable for breach of warranty

 Sheriff
 Auctioneer
 Mortgagee
 Pledgee
 Other persons professing to sell by virtue of authority in fact or law. (Art. 1546)
Warranty against eviction

 Eviction, Concept
 Is the deprivation of the vendee of the whole or a part of the thing sold be virtue of a final judgment based on a
right prior to the sale or an act imputable to the vendor.
 Requisites in order that the seller’s warranty against eviction may be enforced:
 The purchaser has been deprived of the whole or part of the thing sold.
 The eviction is by final judgment.
 The deprivation is based on a right prior to the sale or an act imputable to the vendor (Art. 1548)
 The vendor must have been notified of the suit for eviction at the instance of the vendee.
Illustration:

 S sold his lot to B in private instrument. B took immediate actual possession of the lot.
Two days later, S sold the same lot in a public instrument to X who recorded the sale with
the Registry of Deeds. Neither one was aware of the sale made to the other. When X
visited the lot to take actual possession of it, he saw that B was occupying the same and
learned from B that S has sold the lot to B earlier. Accordingly, X filed a complaint for
eviction against B. upon receipt of the summons and the complaint, B notified S of the
suit brought against him. After hearing, the court rendered judgment evicting B from the
lot. B can hold S liable for breach of warranty against eviction because all the elements
for liability for breach of warranty against eviction are present.
Other instances when seller is liable for breach
of warranty against eviction

 Sale of the property for non-payment of taxes

 If the property is sold for non-payment of taxes due and not made known to the vendee before
the sale, the vendor is liable for eviction.
 Judicial sales
 The judgment debtor is liable for eviction unless otherwise decreed in the judgment.
 Vendor’s liability in case of eviction

 If there is a stipulation exempting the vendor from the obligation to answer for eviction
 Vendor acted in bad faith i.e., he had a knowledge at the time of sale of the existence of a fact that may give rise to eviction, the waiver is void – vendor
shall be liable for the following:
A. Value of the thing at the time of eviction
B. Income or fruits, if the vendee has been ordered to deliver them to the party who won the suit against them.
C. Cost of suit which caused the eviction; and, in proper case, those of the suit brought against the vendor for the warranty.
D. Expenses of the contract, If the vendee has paid them, and
E. Damages and interests, and ornamental expenses, if the sale was made in bad faith.
 Vendor acted in good faith – vendor’s liability shall be as follows:
A. If the vendee made the waiver without knowledge of the risks of eviction (waiver consciente), the vendor shall pay only the value of the thing sold at the time of
eviction.
B. If vendee made the waiver with knowledge of the risks of eviction and assumed the consequences (waiver intencionada), the vendor shall not be liable.
 Where no warranty has been agreed upon or there was no stipulation exempting the vendor from liability
1. Vendor acted in bad faith – vendor’s liability shall be the same as items (a) to (e) in the above rule
2. Vendor acted in good faith – vendor’s liability shall be the same as items (a) to (d) in the above rules, there is no liability for damages and interests.
Vendee’s remedies in case of partial eviction

 If the vendee loses, by reason of 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:
1. Rescission of the contract; or
2. Enforcement of the vendor’s liability for eviction.
Rules on easement or servitude

 Easement or servitude, concept

 Is an encumbrance imposed upon immovable for the benefit of another immovable belonging to
a different owner.
 Example: A and B are owners of adjoining lot. The only way by which B can have access to his lot from
the road is to pass through A’s lot so he enters into an agreement with A for A to give him a right of way.
The right of way is an easement or servitude imposed upon the lot of A for the benefit of the lot
belonging to B.
 Kinds of easement or servitude
 Apparent easement
 Non-apparent easement
 Requisites for vendor's liability should the immovable sold be encumbered with easement or servitude.
a. The easement must be non-apparent.
b. It must not have been mentioned in the agreement.
c. It must be of such nature that it must be presumed that the vendee would not have acquired the immovable had he been aware
thereof. (Art. 1560)
 Vendee's remedies should the immovable sold be encumbered with any non-apparent easement or servitude
a. Within one year from the execution of the deed of sale, the vendee may ask for:
1. Rescission, or
2. Damages.

b. After one year from the execution of the deed of sale, the vendee may ask for:
 Damages, within a period a period of one year from the discovery of the easement or servitude. (Art. 1560)
 When vendor not liable for easement or servitude
A. When the easement is apparent.
B. When the non-apparent easement 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. (Art. 1560)
C. When the vendee had knowledge at the time of the sale of the existence of the easement or servitude, though it was non-apparent.
(10 Manresa 222), such as when it was mentioned in the agreement. (Art. 1560)
 Warranty Against Hidden Defects of or
Encumbrances upon the Thing Sold

 Warranty against hidden defects

 Requisites for enforcement of vendor's liability against hidden defects.
A. The defect must exist at the time of sale. (Art. 1561)
B. The defect must be hidden, i.e., not patent or visible. (Art. 1561)
 The vendor, however, shall not be liable for defects that are not visible if the vendee is an expert who, by reason of his trade or
profession, should have known them. (Art. 1561)

C. The defect must render the thing unfit for the use for which it is intended or diminishes 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. (Art.
1561)
D. The action to enforce it must be made within the period provided by law.
 Warranties included
 Implied warranty of fitness for a particular purpose
1. Requisites
A. The buyer makes known to the seller the particular purpose for which the goods are acquired.

B. The buyer has relied upon the seller's skill or judgment. (Art. 1562)

2. Sale of goods under their patent or trade name

 There is no warranty as to the fitness of such goods for a particular purpose, unless otherwise stipulated. (Art. 1563)

3. Usage of trade
 An implied warranty or condition as to the quality or fitness for a particular purpose may be annexed by the usage of trade. (Art. 1564)

 Implied warranty of merchantable quality

 This is an implied warranty that the goods are fit for the general purpose of the thing, and not necessarily for the purpose of the
buyer. This warranty is present when the goods are bought by description from a seller who deals in goods of such description
(whether he is the grower or not.). (Art. 1562)
 Implied warranty of merchantability
 In 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 upon reasonable examination of the sample. (Art. 1565)
 Responsibility for hidden defects
 General rule: The vendor shall be liable to the vendee for any hidden faults or defects in the
thing sold, even though he was not aware thereof.
 Exception: The vendor shall not be liable if there is a stipulation exempting him from such
defects and he was not aware thereof. (Art. 1566)
 Remedies of vendee in case of breach (in the warranties under Arts. 1561, 1562, 1564,
1565 and 1566) The buyer may choose between:
A. Withdrawing from the contract or rescission (accion redhibitoria), and
B. Demanding a proportionate reduction in the price (accion quanti minoris), with damages in
either case. (Art. 1567)
 Rules in case of loss of the thing with hidden
defects
 The cause of the loss is the defect -
A. If the vendor was aware of the defect, he shall be obliged:
1. To return the price;
2. To refund the expenses of the contract; and
3. To pay damages. (Art. 1568)

B. If the vendor was not aware of the defect, he shall be obliged:

1. To return the price,
2. To pay the interest thereon; and
3. To refund the expenses of the contract. (Art. 1568)
 The cause of loss is a fortuitous event or the fault of the vendee -
A. If the vendor was aware of the defect, he shall be obliged:
1. 1) To return the price paid less the value of the thing at the time of loss; and
2. To pay damages. (Art. 1569)

B. If the vendor was not aware of the defect, he shall be obliged:

 To return the price paid less the value of the thing at the time of loss. (Art. 1569)
Period of filing action

 The action to withdraw from the contract (accion redhibitoria) or reduction of the price
with damages (accion quanti minoris) (Arts. 1561 to 1567); and all other actions to
enforce the seller's liability for hidden defects when the thing is lost (Arts, 1568 and 1569)
and in judicial sales (Art. 1570), is six (6) months from the delivery of the thing sold.
(Art. 1571)
 Rules in sale of animals with defects or
disease
 Sale of animals with redhibitory defects
 Redhibitory defect, concept; liability of veterinarian
 Redhibitory defect is a defect of such nature that expert knowledge, even after a professional inspection has been made, is not sufficient
to discover it.
 If the veterinarian, through ignorance or bad faith should fail to discover or disclose it, he shall be liable for damages. (Art. 1576)
 Remedies of vendee in case of sale of animals with redhibitory defects
 General rule: 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. Accordingly, the vendee may only ask for:
1. The rescission of the sale of the defective animal (accion redhibitoria), or
2. Ask for a proportionate reduction in its price (accion quanti minoris). (Arts. 1572, 1567, 1580)
 Exception: The redhibitory defect of one shall give rise to the redhibition of all the animals sold, including the
sound ones, if the vendee would not have bought the sound animals without the defective one. This intention
by the vendee is 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. (Art. 1572) Accordingly, the vendee may ask for the rescission
of the whole contract.
 Note: The above rule and exception apply in like manner to the sale of other things. (Art. 1573)
 Example: B bought 6 horses from S. A few days after the sale, one of the horses was found to have a redhibitory defect.
Here, B can only ask for the rescission of the sale of the horse with such defect or for a proportionate reduction in its
price. However, if B bought the 6 horses as a team, such as for his horse-drawn carriage, B may seek the rescission of
the sale of all the horses because he would not have bought the sound horses without the defective horse.
 When must redhibitory action be filed
 The redhibitory action must be filed within forty (40) days from the date of delivery to the vendee. This action can only
be exercised with respect to faults and defects which are determined by law or local customs. (Art. 1577)
 Effect of the rescission of the sale of an animal with redhibitory defect
 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. (Art. 1579)
 When sale of animals is void
 When the animals are suffering from contagious diseases.
 When the animals are found to be unfit for the use or service for which they were acquired as stated in the contract. (Art. 1575)
 Vendor's liability in case the animal sold dies of disease
 The vendor shall be liable for the death of the animal sold, whether the defect is redhibitory or not, if the following requirements are
present:
A. The disease existed at the time of sale;
B. The disease is the cause of death of the animal, and
C. The animal dies within three (3) days from time of purchase. (Art. 1578)
 Sale without warranty against hidden defects of animals
 There is no warranty against hidden defects of animals sold at fairs or at public auctions, or of livestock sold as condemned. (Art. 1574)
 Consumer product warranties under R.A. No. 7394, otherwise
known as the "Consumer Act” approved on April 13, 1992 and
published in the Official Gazette on June 15, 1992

 In addition to the Civil Code provisions on sale with warranties, the following provisions shall govern the sale of
consumer products with warranty:
1. Terms of express warranty Any seller or manufacturer who gives an express warranty shall:
A. Set forth the terms of warranty in clear and readily understandable language and clearly identify himself as the warrantor;
B. Identify the party to whom the warranty is extended;
C. State the products covered;
D. State what the warrantor will do in the event of a defect, malfunction or failure to the written warranty and at whose expense;
E. State what the consumer must do to avail (himself) of the rights which accrue to the warranty; and
F. 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, (Sec, 68 (a)]
 When express warranty operative
 All written warranties or guarantees issued by a manufacturer, producer or importer shall be operative from the moment of sale. (Sec. 68 (b)]
 Persons liable
1. Manufacturer
2. Distributor
3. Retailer.
 The retailer shall be liable only subsidiarily, i.e., when the manufacturer and distributor fail to honor the warranty. In such case, the retailer shall
shoulder the expenses and costs necessary to honor the warranty. He may, however, proceed against the manufacturer and distributor. (Sec. 68
(b) (3)]
 Minimum standards for warranties
 For the warrantor of a consumer product to meet the minimum standards for warranty, he shall:
A. Remedy such consumer product within reasonable time and without charge in case of defect, malfunction or failure to conform to such written
warranty.
B. 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. (Sec. 68 (d)]
 When warrantor not required to perform warranty
 The warrantor will not be required to perform the duties mentioned in No. 4 bullet above, if he can show that defect, malfunction or failure to
conform to a written warranty was caused by damage due to unreasonable use thereof. [Sec. 68 (d)]
 Duration of warranty
A. Period stipulated by the seller and consumer when the express warranty shall be enforceable. If the implied warranty on merchantability accompanies
express warranty, both will be of equal duration
B. Any other implied warranty shall endure not less than sixty (60) days nor more than one (1) year following the sale. (Sec. 68 (e)]
 Remedies for breach of warranty (Sec. 68 (1)]
 Express warranty
 The consumer may elect either of the following:
1. Repair of the product, in whole or in part – The warranty work must be made to conform to the express warranty within thirty (30) days by either the
warrantor or his representative, which period may be extended by conditions beyond the control of the warrantor or his representative.
2. Refund of the purchase price – The amount directly attributable to the use of the consumer prior to discovery of the non-conformity shall be deducted.
 Implied warranty
 The consumer may:
1. Retain in the goods and recover damages, or
2. Reject the goods, cancel the contract and recover from the seller so much of the purchase price as has been paid, including damages.