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Transcript of Sales Warranty cases
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Art. 1545
The law protects vendorsand vendees from
contractual liability by
providing that the
fulfillment of conditions arenecessary for the perfection
of a contract and that theabsence of such fulfillment
from the other party, eitherparty may rescind the
contract or waive the
fulfillment of the condition.
Such action is not breach ofcontract as there will have
been no perfection binding
the parties and making them
liable.
This protectionreflects the reciprocity of
contracts and their potentialfor gratuity by wavier of thefulfillment of conditions.
landmark
lim vs ca[G.R. No. 118347. October 24, 1996.]
VICENTE and MICHAEL LIM, petitioners, vs. COURT OF APPEALS and LIBERTY H.
LUNA, respondents.
FACTS:On September 2, 1988 private respondent Liberty Luna sold her 1,013.6 square meters parcel of land (l
corner of G. Araneta Avenue and Quezon Avenue in Quezon City. ) to petitioners Vicente and MichP3,547,600.00. She received P200k as earnest money from Zapata Ralty (petitioners' broker) and the balance
in full afer the squatters/occupants have totally vacated the premises. It was also stated in their agreemassumes responsibility to eject said squatters within 60 days from the date of receipt of earnest money;; an
seller shall fail in her commitment to eject the squatters/occupants within said period, the seller shall refund
this sum of P200,000.00; [plus another sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS
damages]; however, if the buyer shall fail to pay the balance after the seller has ejected the squatters/occupof P200,000.00 shall be forfeited by the seller. Luna signed the agreement but crossed out the additional P10
damages. Private respondent Luna failed to eject the squatters from the land despite her alleged efforts to do
that private respondent asked the help of a building official and a city engineer to effect ejectment.
petitioners did not demand the return of their earnest money. Thereafter, parties met again to negotiate a pri
facilitate the ejectment of the squatters. The parties agreed to an increase of P500.00 per square meter, by routotal purchase price to P4,000,000.00, with the remaining 13.6 square meters of the 1,013.6 square mete
discount. Less the P200,000.00 given as earnest money, the balance to be paid by petitioners was P3,800,0few days, private respondent tried to return the earnest money alleging her failure to eject the squatters. Sheas a result of her failure to remove the squatters from the land, the contract of sale ceased to exist and she n
the obligation to sell and deliver her property to petitioners.
ISSUE:
Whether the non-fulfillment of the condition of ejecting the squatters resulted in defendant's losing the rig
that plaintiff sell the land to them.HELD:
NO.
The agreement, as quoted above, shows a perfected contract of sale. Under Art. 1475 of the Civil Cod
perfected contract of sale if there is a meeting of the minds on the subject and the price. Indeed, the earnestis proof of the perfection of the contract. . It is true that private respondent undertook to eject the squatters be
of the property within a certain period and that for her failure to carry out her obligation she could be orde
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the P200,000.00 earnest money. But whether she would be obliged to do so depends on petitioners who c
condition and opt to proceed with the sale instead. Private respondent Luna contends that as the condition osquatters was not met, she no longer has an obligation to proceed with the sale of her lot. This contention
Private respondent fails to distinguish between a condition imposed on the perfection of the contract and
imposed on the performance of an obligation. Failure to comply with the first condition results in the failure
while failure to comply with the second condition only gives the other party the option either to refuse to prosale or to waive the condition. Thus, Art. 1545 of the Civil Code states: ART. 1545.Where the obligation of e
contract of sale is subject to any condition which is not performed, such party may refuse to proceed with thhe may waive performance of the condition. If the other party has promised that the condition should h
performed, such first mentioned party may also treat the nonperformance of the condition as a breach of wathe ownership in the things has not passed, the buyer may treat the fulfillment by the seller of his obligation
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 andpay for the thing. (Emphasis added)
In this case, there is already a perfected contract. The condition was imposed only
on the performance of the obligation. Hence, petitioners have the right to choose
whether to demand the return of P200,000.00 which they have paid as earnest money or
to proceed with the sale. They have chosen to proceed with the sale and privaterespondent cannot refuse to do so.
Indeed, private respondent is not the injured party. She cannot rescind the contractwithout violating the principle of mutuality of contracts, which prohibits allowing thevalidity and performance of contracts to be left to the will of one of the parties.
affirming
Catungal vs. Rodriguez Facts: Agapita Catungal owned a parcel of land in her name situated in Talamban, Cproperty was allegedly the exclusive paraphernal property o f Agapita. Agapita, with the consent of her h
entered into a Contract to Sell with respondent Rodriguez. Subsequently, the Contract to Sell was up
Conditional Deed of Sale between the same parties. In accordance with theConditional Deed of Sale, Rodri
negotiated for the road right of way. Spouses Catungal requested an advance of P5,000,000.00 on the purchpersonal reasons. However, Rodriguez refused on the ground that the amount was not due under the t
agreement. Further, he learned that the Catungals were offering the property for sale to third parties. R
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received letterssigned by Atty. Jose Catungal demanding that the former to make up his mind about buyin
exercising his option to buy because the Catungals received other offers and they needed money to obligations, and that should Rodriguez fail to exercise his option to buy the land, the Catungals warned tha
consider the contract cancelled and that they were free to look for other buyers
On the other other hand, respondent Rodriguez contended that the Catungals unilateral rescission of the
Conditional Deed of Sale was unjustified. Spouses Catungal alleged that they have the right to rescind thecoof respondents failure to negotiate the road right of way and his refusal to pay the
additional P5,000,000.00. Catungal likewise contended that respondent Rodriquez did not have right to resand that the contract being reciprocal, meant both parties had the right to rescind. Held: A provision in a Con
of Sale stating that the vendee shall pay the balance of the purchase price when he has successfully negotiatea road right of way is not a condition on the perfection of the contract nor on the validity of the entire c
compliance as contemplated by Article 1308 of the Civil Code- such condition is not purely potestative- suc
is likewise dependent on chance as there is no guarantee that the vendee and the third-party landowners wou
agreement regarding the road right of way, a type mixed condition expressly allowed under Article1182 of thWhere the so-called potestative condition is imposed not on the birth of the obligation but on its fulfillm
condition is avoided, leaving unaffected the obligation itself
Art. 1546
The law provides vendee's
with protection fromvendors making fraudulent
claims and assertions bymaking any guarantees the
vendors make express
warranties on the product, ifthe vendee relies upon such
guarantee or makes it a
determining factor inpurchasing the goods.
However, the law grants
vendors latitude in their
statements and bargaining in
that a warranty becomesexpressed if the vendor's
landmark
Harrison Motors vs Navarra (Canada)Facts: June of 1987 Harrison Motors Corporation through its pres
Claros, sold two (2) Isuzu Elf trucks to private respondentRachel Navarro, owner of RN Freight Lines, a fraoperating and maintaining a fleet of cargo trucks all over Luzon. Petitioner, aknown importer, as
manufacturer, assembled the two (2) trucks using imported component parts. Prior to the sale, RenatoClaroto private respondent that all the BIR taxes and customs duties for the parts used on the two (2) trucks had be
September 1987 the Bureau of Internal Revenue (BIR) and the Land Transportation Office (LTO) entered int
Memorandum of Agreement(MOA) which provided that prior to registration in the LTO of any assembled or re-assembled motor v
usedimported parts, a
Certificate of Paymentshould first be obtained from the BIR to prove payment of all taxes required under existing laws.On 12 Octo
Bureau of Customs (BOC) issued
Customs Memorandum Order No. 44-87
promulgating rules, regulations andprocedure for the voluntary payment of duties and taxes on imported m
assembled by non-assemblers. Pursuant to the 10 September 1987 MOA between the BIR and the LTO, the B18 December 1987
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words and actions amount
to them. Simply stating anopinion or likeliness that the
goods shall suffice is not a
warranty.
The vendor need notuse the words warrant,
guarantee, warranty, orsimilar language in order to
establish an expresswarranty. Any statement
clearly amounting to such
serves as an express
warranty.
Revenue MemorandumOrder No. 44-87
which provided the procedure governing the processing and issuance of theCertificate of Payment
of internal revenuetaxes for purposes of registering motor vehicles. On 16 June 1988 the BIR, BOC and LTO
a tripartite MOA which provided that prior to the registration in the LTO of any locallyassembled motor v
imported component parts, aCertificate of Payment
should first be obtained from the BIR and the BOC toprove that all existing taxes and customs duties haveDecember of 1988 government agents seized and detained the two (2) Elf trucks of respondent after discover
were stillunpaid BIR taxes and customs duties thereon. The BIR and the BOC ordered private respondeproper assessments or hertrucks would be impounded. Private respondent went to Claros to ask for the receip
payment of BIR taxes and customsduties; however, Claros refused to comply. Private respondent then de
Claros that he pay the assessed taxes and warnedhim that he would have to reimburse her should she be forc
the assessments herself. Her demands were again ignored.M- But wanting to secure the immediate release ofcomply with her business commitments, private respondent paid theassessed BIR taxes and customs duties
P32,943.00.
Consequently, she returned to petitioners office to ask for
reimbursement, but petitioner again refused, prompting her to send a demand letter through her lawyer. Wstill ignored herletter, she filed a complaint for a sum of money on 24 September 1990 with the Regional T
Makati Trial Court: ordering petitioner to reimburse private respondent in the amount of P32,943.00 foduties and internal revenuetaxes the latter had to pay to discharge her two (2) Elf trucks from governmPetitioner was also required to pay P7,500.00 for
attorneys fees plus the costs.[15]
CA: sustained the lower court, hence this recourse of petitioner.
Petitioners Arguments:
a. that it was no longer obliged to pay for the additional taxes and customs duties imposed on the importepartsby the Memorandum Orders and the two (2) Memoranda of Agreement since such administrative reg
took effect after theexecution of its contract of sale with private respondent.Holding it liable for paymen
specified in the administrative regulations, which have the force and effect of laws,would not only vio
impairment clause of the Constitution but also the principle of non-retroactivity of laws provided in Art. Code.b. that private respondent should be the one to pay the internal revenue taxes and customs duties.
It claims that at the timethe Memorandum Orders and the two (2) Memoranda of Agreement took effect th
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trucks were already sold to privaterespondent, thus, it no longer owned the vehicles.
Whatever payments private respondent made to the government after the sale weresolely her concern andshould not be passed on to petitioner.c. that it had paid the taxes due on the imported parts otherwise it wo
been able to obtain their release from theBOC and to register the vehicles with the LTO.
Issue (under warranty
): WON Petitioner is liable for warranty.YESRuling(under warranty
): It is true that the ownership of the trucks shifted to private respondent after the sale. But petitioner mustrprior to its consummation it expressly intimated to her that it had already paid the taxes and customs duties.
representation shall be considered as a sellers express warranty under Art. 1546 of the Civil Code whicaffirmat
ion of fact orany promise by the seller which induces the buyer to purchase the thing and actually purchases
such affirmation or promise.
It includes all warranties which are derived from express language, whether the language is in the form of
representation.Presumably, therefore, private respondent would not have purchased the two (2) Elf trucks we
t not for petitioners assertion andassurance that all taxes on its imported parts were already settled.This express warranty was breached
petitioner refused to furnish private respondent with the corresponding receipts sincesuch documents wevidence she could present to the government to prove that all BIR taxes and customs duties on theimporteparts were fully paid. Without evidence of payment, she was powerless to prevent the trucks from beingimpo
Art. 1599 of the Civil Code, once an express warranty is breached the buyer can accept or keep the goods an
actionagainst the seller for damages. This was what private respondent did. She opted to keep the two (2) tru
apparently neededfor her business and filed a complaint for damages, particularly seeking the reimburs
amount she paid to secure the releaseof her vehicles.Ruling(based on other arguments. For recit?
):a.
Customs Memorandum Order No. 44-87 is concerned with the Rules, Regulations and Procedures in theDuties and Taxes on Imported Vehicles Locally Assembled by Non-Assemblers.
It does not charge any new tax
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. It simply provides the procedure on how owners/consignees or their purchasers couldvoluntarily initiate pa
unpaid customs duties on locally assembled vehicles using imported component parts.Neither does BMemorandum Order No. 44-87[19] exact any tax.
It merely outlines the procedure which governsthe processing and issuance of the Certificate of Payment
of internal revenue taxes for purposes of registering motor vehicleswith the LTO.What Sec. 10, Ar
Constitution prohibits is the passage of a law which enlarges, abridges or in any manner changesthe intcontracting parties. The Memorandum Orders and the two (2) Memoranda of Agreement do not imposea
taxes which would unduly impair the contract of sale between petitioner and private respondtheseadministrative regulations were passed to enforce payment of existing BIR taxes and customs duties a
importation.b. although private respondent is the one required by the administrative regulations to secure the Payment forthe purpose of registration, petitioner as the importer and the assembler/manufacturer of the two
is still the one
liable for payment of revenue taxes and customs duties. Petitioners obligation to pay does not ar
administrativeregulations but from the tax laws existing at the time of importation. Hence, even if private respondent alrea
two(2) trucks when the Memorandum Orders and Memoranda of Agreement took effect, the fact remains t
was stillthe one duty-bound to pay for the BIR taxes and customs duties.It is also quite obvious that as betwe
who is the importer-assembler/manufacturer, and private respondent, whois merely the buyer, it is petition
the obligation to pay taxes to the BIR and the BOC.c. Non-sequitur. The fact that petitioner was able to securof the parts from customs and to register the assembledtrucks with the LTO does not necessarily mean that
customs duties were legally settled. As a matter of fact, the provisions of the two (2) Memoranda of Agreeestablish that the government is aware of the widespread registration of assembled motorvehicles with the LTtaxes due on their imported component parts remain unpaid. Paragraph 1 of the 10 September 1987
affirmingJAIME D. ANG v. COURT OF APPEALS AND BRUNO SOLEDAD
567 SCRA 53 (2008)
Even under the principle of solutio indebiti, Ang cannot recover from Soledad the amount he paid BA Finan
settled the mortgage debt on his own volition and that Soledad did not benefit therein, the latter not being
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mortgaged the vehicle.
Under a car-swapping scheme, Bruno Soledad sold his Mitsubishi GSR sedan 1982 model to Jaime Ang.
Ang conveyed to Soledad his Mitsubishi Lancer model 1988. Ang, a buyer and seller of used vehicles, late
Mitsubishi GSR for sale through Far Eastern Motors, a second-hand auto display center. The vehicle was ev
to Paul Bugash. Before the deed could be registered in Bugashs name, however, the vehicle was seized by vof replevin on account of the alleged failure of Ronaldo Panes, the owner of the vehicle prior to Soleda
mortgage debt constituted thereon.
To secure the release of the vehicle, Ang paid BA Finance. Soledad refused to reimburse, despite repeadrawing Ang to charge him for Estafa with abuse of confidence. By Resolution, the City Prosecutors Off
the complaint for insufficiency of evidence, drawing Ang to file for consecutive complaints for damages ag
before the Regional Trial Court (RTC) of Cebu City. Subsequently, the RTC rendered judgment in favor of
sake of justice and equity, and in consonance with the salutary principle of non-enrichment at anothers RTC then ordered Soledad to pay Ang the amount the latter paid to BA Finance.
Soledad then appealed to the Appellate Court, which reverses the decision of the RTC. The Court of Appe
Angs petition on the ground that the filing of said complaint seeking the awarding of damages for breach of
already prescribed.
Hence, this petition to the High Court.
ISSUE:
Whether or not Angs cause of action had not yet prescribed when he filed the complaint
HELD:
First Issue
The resolution of the sole issue of whether the complaint had prescribed hinges on a determination of warranty is provided in the Deed of Absolute Sale subject of the present case.
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A warranty is a statement or representation made by the seller of goods, contemporaneously and as part of t
sale, having reference to the character, quality or title of the goods, and by which he promises or undertakescertain facts are or shall be as he then represents them. Warranties by the seller may be express or implied.
the Civil Code defines express warranty Any affirmation of fact or any promise by the seller relating to t
express warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the
the buyer purchases the thing relying thereon. On the other hand, an implied warranty is that which the laapplication or inference from the nature of the transaction or the relative situation or circumstances o
irrespective of any intention of the seller to create it.
The ruling in Engineering & Machinery Corporation vs. Court of Appeals states that the prescriptivinstituting actions based on a breach of express warranty is that specified in the contract, and in the abs
period, the general rule on rescission of contract, which is four years (Article 1389, Civil Code).
As for actions based on breach of implied warranty, the prescriptive period is, under Art. 1571 (warranty agdefects of or encumbrances upon the thing sold) and Art. 1548 (warranty against eviction), six months from
delivery of the thing sold.
In declaring that he owned and had clean title to the vehicle at the time the Deed of Absolute Sale was for
gave an implied warranty of title. In pledging that he will defend the same from all claims or any claim whwill save the vendee from any suit by the government of the Republic of th e Philippines, Soledad gav
against eviction.
Given Angs business of buying and selling used vehicles, he could not have merely relied on Soledads af
the car was free from liens and encumbrances. He was expected to have thoroughly verified the cars re
related documents.
Since what Soledad, as seller, gave was an implied warranty, the prescriptive period to file a breach thereof after the delivery of the vehicle, following Art. 1571. But even if the date of filing of the action is reckoned
petitioner instituted his first complaint for damages on November 9, 1993, and not on July 15, 1996 when
complaint subject of the present petition, the action just the same had prescribed, it having been filed 16 mon
28, 1992, the date of delivery of the vehicle.
Art. 1547 Landmark same ang v. ca
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Implied warranties are
natural warranties that areexpected and need not be
expressed by either vendor
or vendee. There is a
presumption of good faith intheir transaction that
automatically renderscertain warranties to the
vendee, regardless of thevendor's statements. The
presumption is that the
vendor has a right to sell the
goods and that they are ingood condition, which gives
rise to the implied
warranties to the seller's title
and against hidden defects
or unknown encumbrances.However, this does
not apply to sales by virtueof authority or law wherethe sale of a thing is in the
legal or equittable interest
of a third person.
Art. 1548
The warranty of againsteviction is meant to protect
the vendee against fraud or
lack of diligence on the part
of the vendor, since it
hinges on a right existingprior to the sale. This means
landmark
G.R. No. L-42636, 1 August 1985Escaler vs. CAFacts: S
pouses Africa V. Reynoso and Jose L, Reynoso sold topetitioners several others, a parcel of land w
Salecontained a covenant against eviction. On April 21, 1961, theRegister of Deeds of Rizal and A. Doroni
Development,Inc. filed a case before the CFI of Rizal for the cancellation of the OCTissued in the name
Reynoso (predecessor-in-interest of private respondents-vendors) on the ground that the propertycovered balready previously registered under a TCTissued in the name of A. Doronilla Development, Inc. In that case
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that the vendee is in good
faith.The law also
protects the vendee by
virtue of the nature of
eviction where the vendeewould be deprived wholly
or partly of his right to theuse of the land. Considering
the socioeconomic value ofthe land and the security it
provides, it is only right that
a vendee be protected
against eviction from rightsexisting prior to the sale of
the land.
issued declaring the OCT null and void. Petitioners,spouses Maria de Leon Escaler and Ernesto
spousesCecilia J. Roxas and Pedro Roxas, filed a civil case before the CFI of Rizal against their vendors, hrespondents, spouses JoseL. Reynoso and Africa Reynoso for the recovery of the value of theproperty sold
damages on the ground that the latterhave violated the vendors' "warranty against eviction."The CFI rendere
ordering the return to the plaintiffsMaria Luisa de Leon Escaler and Ernesto Escaler, Cecilia J. Roxas and
the value of the property sold to them at the time of eviction. The CA reversed this decision and ruled thasvendees had not given private respondents-vendors, formal noticeof the eviction case as mandated by A
1559 of the NewCivil Code.Issue:
WON a vendors liability for eviction may be enforced in thecase at bar.
Held:
The Court ruled that the petition is devoid of merit.Consequently, it must be dismissed.Article 1548, in relati
1558. and 1559 of the New CivilCode reads as follows:Art. 1548, Eviction shall take place whenever by a fbased on a right prior to the sale or an actimputable to the vendor, the vendee is deprived of thewhole or o
thing purchased.The vendor shall answer for the eviction even thoughnothing has been said in the co
subject.The contracting parties, however, may increase, diminish,or suppress this legal obligation of the ven
1558. The vendor shall not be obliged to make goodthe proper warranty,
unless he is summoned in the suit for eviction at the instance of the vendee. (emphasis supplied)Art. 1559. The defendant vendee shall ask, within the timefixed in the Rules of Court f
the complaintthat the vendor be made as co-defendantIn n order that a vendor's liability for eviction may be enforced, thefollowing requisites must concur:
a) there must be a final judgment; b) the purchaser has been deprived of the whole or partof the thing
deprivation was by virtue of a right prior tothe sale made by the vendor; and d) the vendor has beensummon
co-defendant in the suit for eviction at theinstance of the vendee.In the case at bar, the fourth requisite
that of being summoned inthe suit for eviction (Case No. 4252) at the instance of the vendee
is not present. All that the petitioners did, per their very admission,was to furnish respondents, by registered
copy of theopposition they (petitioners filed in the eviction suit. Decidedly, thisis not the kind of notice presaforequoted Articles 1558and 1559 of the New Civil Code. The term "unless he is summoned inthe suit for e
instance of the vendee" means that therespondents as vendor/s should be made parties to the suit at th
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petitioners-vendees, either by way of asking that theformer be made a co- defendant or by the filin
partycomplaint against said vendors. Nothing of that sort appeared tohave been done by the petitioners in the
affirming
quirong vs dbpHere, the Quirong heirs alleged in their complaint that they were entitled to the rescission of the contract of
between the DBP and Sofia Quirong because the decision in Civil Case D-7159 deprived her heirs of nearlythat lot. But what was the status of that contract at the time of the filing of the action for rescission? App
contract of sale had already been fully performed when Sofia Quirong paid the full price for the lot aexchange, the DBP executed the deed of absolute sale in her favor. There was a turnover of control of the p
DBP to Sofia Quirong since she assumed under their contract, the ejectment of squatters and/or occupants
her own expense.
Actually, the cause of action of the Quirong heirs stems from their having been ousted by final judgm
ownership of the lot that the DBP sold to Sofia Quirong, their predecessor, in violation of the warranty aga
that comes with every sale of property or thing. Article 1548 of the Civil Code provides:
Article 1548. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an ato the vendor, the vendee is deprived of the whole or of a part of thing purchased.
x x x x
With the loss of 80% of the subject lot to the Dalopes by reason of the judgment of the RTC in Civil Case
Quirong heirs had the right to file an action for rescission against the DBP pursuant to the provision of Artic
Civil Code which provides:
Article 1556. Should the vendee lose, by reason of the eviction, a part of the thing sold of such importance,
the whole, that he would not have bought it without said part, he may demand the rescission of the contract;
obligation to return the thing without other encumbrances than those which it had when he acquired it. x x x
Finally, the Court concluded that the action for rescission was barred by prescription as it was filed beyo
prescriptive period:
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And that action for rescission, which is based on a subsequent economic loss suffered by the buyer, was action that the Quirong heirs took against the DBP. Consequently, it prescribed as Article 1389 provides
from the time the action accrued. Since it accrued on January 28, 1993 when the decision in Civil Case D-
final and executory and ousted the heirs from a substantial portion of the lot, the latter had only until Janu
within which to file their action for rescission. Given that they filed their action on June 10, 1998, they did sfour-year period.
Art. 1549The law protects the vendee
in cases where no appeal is
made. The absence of anappeal does not absolve the
vendor of liability, nor can
the vendor blame the
vendee for lack of diligenceas it was the vendor's lack
of diligence that created the
situation of eviction.
Art. 1550
The law contemplates that a
vendee, in making a claimto his right to the land he is
to purchase, must exercise
due diligence in bringingaction to protect his right to
the land. Should he fail to
exercise diligence and the
prescriptive period endsafter the transfer of the title,
the vendor has no liability
as it was the vendee's failure
to act that caused his loss.
No case
Art. 1551 No case
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The law protects the vendee
from the vendor's fraudulentand illegal acts of non-
payment of taxes. The
vendee, being unaware of
such a condition, isprotected from loss due to
the negligence orfraudulence of the vendor
should the property be soldin public auction due to the
non-payment of taxes.
Art. 1552
Article 1552 is based upon
the principle of non-enrichment at the expense
of another, therefore
rendering the judgment
debtor liable for the sale ofproperty that he has no right
to sell. In case the judgmentcreditor effected the sale, he
may not retain the proceeds
at the expense of thepurchaser.
Art. 1553
The law provides the vendor
with protection at the will ofthe vendee if the vendor acts
in good faith. This being the
case, the vendee may
exempt the vendor fromanswering for eviction.
Landmark jm tuason to be digested
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However, if the vendee
knew of the defect of thetitle, he is in bad faith, and
therefore has not right to the
warranty against eviction.
Art. 1554
The law contemplates two
situations where wavier ofwarranty against eviction
occurs. In the first situation,
the vendee waives withoutknowledge and assumption
of risks. His ignorance
renders the vendor liable for
the price of the thing sold atthe time of the eviction. The
second situation has a
vendee waiving his right to
warranty against evictionwith full knowledge and
assumption of risk, thisrenders a vendor in good
faith free from liability.
Art. 1555The law outlines the rights
of the vendee against the
vendor in the event of an
eviction. The law seeks toduly protect the vendee and
encourage greater diligence
in vendors by expressly
providing the vendor andvendee with respective
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obligations and rights in the
event of an eviction.The law ultimately
contemplates a situation
where there will be no
eviction of vendees arisingfrom rights, defects, or
encumbrances existing prior
to the sale and known by the
vendor. However, it isunlikely that sellers of land
are fully aware of such
liabilities, nor are the buyers
aware of their rights. So thelaw ultimately serves to
protect buyers in the event
of litigation.
Art. 1556
Here, the law contemplatesthe protection of the
vendee's rights and hisoriginal will paired with his
expectations. The right to
rescind the contract or suefor damages hinges on the
vendee's need for the whole
of the thing due in theformer case of partial
eviction, and the necessary
need to purchase two things
in order to obtain the one
thing needed in the case ofthe latter where the vendee
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purchases two or more
things jointly sold.The law avoids a
lengthy process of
negotiation by granting the
vendee the right to simplyrescind the contract in lieu
of suing for damages.
Art. 1557
This provision simply
reiterates the need for finaljudgment in the
enforcement of warranty in
case of eviction in relation
to the two essentialelements of its enforcement:
(1) whole or partial
deprivation of the thing
sold, and (2) the existenceof a final judgment.
The reason is thatfinal judgment makes the
determination of the
respective rights of thevendor and the vendee.
Enforcement in the absence
of final judgment couldpotentially cause
unnecessary injustice when
simply waiting for judgment
to be final could avoid such
injustice.
Art. 1558
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Summoned in suit refers to
making the vendor a partyto the suit. The absence of
the vendor being a party and
an opportunity to defend
himself unbinds him fromthe warranty.
The laws object is to allow
the vendor a chance to
intervene and defend thetitle he had transferred, as
he would know best the
circumstances behind the
palintiff's claim and be inthe best position to defend
the validity of his title.
Art. 1559
The law simply gives the
guidelines for the vendee toprotect his right by making
the vendor a co-defendant.The vendee should call the
vendor and inform the court
of the vendor becoming aco-defendant within the
time alotted by the Rules of
Court to preserve his rightof warranty. The co-
defendant vendor shal
answer the complaint of the
plaintiff seeking to deprive
the vendee of the propertypurchased
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Art. 1560
The law protects the vendeefrom purchasing any
property he does not wish to
purchase by virtue of
encumbrances or burdensthat would have prevented
the vendee from purchasing
the same had he known of
their existence. Thereforethe vendee is allowed to
rescind the contract due to
these unknown
circumstances.However, the law
prescribes a period for the
vendee's action of one year
from the execution of the
deed, and, one year from theexecution having passed, an
additional provisionallowing the vendee to bringaction one year from the
discovery of the
encumbrance. Failure to
bring action within the
prescribed period serves astacit acceptance of the
encumbrance.
Only genuinely
unknown encumbrances arecontemplated by this
provision. Any prior
No case
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recent affirmingNUTRIMIX FEEDS CORP V. CA 441 SCRA 357 (2004)
FACTS: In 1993, private respondent spouses Evangelista procured various animal feeds from petitioner Nu
Corp. the petitioner gave the respondents a credit period of 30-45 days to postdate checks to be issued as pa
feeds. The accommodation was made apparently because the companys president was a close friend of Evavarious animal feeds were paid and covered by checks with due dates from July 1993-September 1993.
1. Initially, the spouses were good paying customers. However, there were instances when they failed to
despite the delivery of goods. Consequently, the respondents incurred an aggregate unsettled account w
amounting to P766,1512. When the checks were deposited by the petitioner, the same were dishonored (closed account). D
demands from the petitioner, the spouses refused to pay the remaining balance
3. Thereafter, Nutrimix filed a complaint against Evangelista for collection of money with damages.
4. The respondents admitted their unpaid obligation but impugned their liability. The nine checks issued guarantee the payment of the purchases, which was previously determined to be procured from the expecte
the sale of their broilers and hogs. They contended that inasmuch as the sudden and massive death of thei
caused by the contaminated products of the petitioner, the nonpayment of their obligation was based on a j
ground.
5. The respondents also lodged a complaint for damages against the petitioner, for the untimely and unfof their animals supposedly effected by the adulterated animal feeds the petitioner sold to them.
6. Nutrimix alleged that the death of the respondents animals was due to the widespread pestilence in th
petitioner, likewise, maintained that it received information that the respondents were in an unstable finanand even sold their animals to settle their obligations from other enraged and insistent creditors. It, moreo
that it was the respondents who mixed poison to its feeds to make it appear that the feeds were contaminated
7. The trial court held in favor of petitioner on the ground that it cannot be held liable under Articles 156
the Civil Code governing hidden defects of commodities sold. The trial court is predisposed to believe th
feeds were contaminated sometime between their storage at the bodega of the Evangelistas and their consumpoultry and hogs fed therewith, and that the contamination was perpetrated by unidentified or unidentifiabl
mischief-maker(s) over whom Nutrimix had no control in whichever way.
8. CA modified the decision of the trial court, citing that respondents were not obligated to pay the
obligation to the petitioner in view of its breach of warranty against hidden defects. The CA gave much crtestimony of Dr. Rodrigo Diaz, who attested that the sample feeds distributed to the various governmental
laboratory examination were taken from a sealed sack bearing the brand name Nutrimix
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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
Philippines. A hidden defect is one which is unknown or could not have been known to the vendee. Underequisites 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 the sale of animal feeds, there is an implied warranty that it is reasonably fit and suitable to be used fowhich both parties contemplated. To be able to prove liability on the basis of breach of implied warranty
must be established by the respondents. The first is that they sustained injury because of the product; the
the injury occurred because the product was defective or unreasonably unsafe; and finally, the defect exis
product left the hands of the petitioner. A manufacturer or seller of a product cannot be held liable for
allegedly caused by the product in the absence of any proof that the product in question was defective. The dpresent upon the delivery or manufacture of the product; or when the product left the sellers or manufacture
when the product was sold to the purchaser; or the product must have reached the user or consumer withou
change in the condition it was sold. Tracing the defect to the petitioner requires some evidence that tampering with, or changing of the animal feeds. The nature of the animal feeds makes it necessarily di
respondents to prove that the defect was existing when the product left the premises of the petitioner.
A review of the facts of the case would reveal that the petitioner delivered the animal feeds, allegedly c
poison, on July 26, 1993; but it is astonishing that the respondents had the animal feeds examined only on1993, or barely three months after their broilers and hogs had died. A difference of approximately three mon
the respondents theory that the petitioner is guilty of breach of warranty by virtue of hidden defects. In a
months, the feeds could have already been contaminated by outside factors and subjected to man
unquestionably beyond the control of the petitioner.
Art. 1562The law provides the buyer
JERRY T. MOLES VS. INTERMEDIATE APPELLATE COURT AND MARIANO M. DIOLOSAG.R. No. 73913, January 31, 1989
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with a warranty on the
condition of the goods soldby reason of the seller's
profession in dealing with
such goods. The seller is
imbued with impliedexpertise by virtue of his
profession presuming his
diligence in ensuring qualitygoods.
There are two
instances contemplated in
this article. First is the
warranty of fitness thatprovides that the goods are
fit for the specific purpose
that the buyer describes as
their ultimate use when he
consults with the seller. Thesecond it a warranty of
merchantability that
provides that the goods arefit for the general purpose
for which they are sold.
FACTS:
Jerry Moles(petitioner) bought from Mariano Diolosa owner of Diolosa Publishing House a linotmachine(secondhand machine). Moles promised Diolosa that will pay the full amount after the loan from
P50,000.00 will be released. Private respondent on return issued a certification wherein he warrated that the
in A-1 condition, together with other express warranties. After the release of the of the money from DB
required the Respondent to accomplish some of the requirements. On which the dependant complied the reqthe same day.
On November 29, 1977, petitioner wrote private respondent that the machine was not functioning properly. T
found out that the said machine was not in good condition as experts advised and it was worth lesser than price. After several telephone calls regarding the defects in the machine, private respondent sent two techninecessary repairs but they failed to put the machine in running condition and since then the petitioner wan
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 th
FACTS:
1. It is generally held that in the sale of a designated and specific article sold as secondhand, there warranty as to its quality or fitness for the purpose intended, at least where it is subject to inspection at th
sale. On the other hand, there is also authority to the effect that in a sale of secondhand articles there may b
circumstances, an implied warranty of fitness for the ordinary purpose of the article sold or for the particulthe buyer.
Said general rule, however, is not without exceptions. Article 1562 of our Civil Code, which was taken from
Sales Act, provides:
"Art. 1562. In a sale of goods, there is an implied warranty or condition as to the quality or fitness of
follows:
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for wh
are acquired, and it appears that the buyer relies on the seller's skill or judgment (whether he be t
manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose;"
Art. 1563The law provides for the
No case
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waiver of warranty of
fitness in cases where thebuyer exercises their own
judgement. But the warranty
subsists should the buyer
inform the seller of thepurpose and the seller
assures the buyer that the
product is capable offulfilling the purpose thebuyer intends.
Art. 1564
A warranty as to quality or
fitness for a particular
purpose may be attached toa contract by usage or trade
in place of execution.
The law provides the
existence of an impliedwarranty based on the
knowledge of the parties on
the usage of the goods. The
knowledge may be
expressed, where bothparties express the usage of
the goods, or implied, where
one party expressesknowledge of the usage of
the goods and reasonably
assumes that the other party
is aware of such usage.
LA FUERZA, INC. vs. COURT OF APPEALS and ASSOCIATED ENGINEERING CO., INC. G.R.
decided on June 28, 1968 illustrates the limitations of the application of these warranties. La Fuerza,
engaged Associated Engineering to manufacture and install a flat belt conveyor system for La Fuerza wine bo
In May 1960 the installation of the flat belt conveyors for wine bottles was completed and several trial r
month of July 1960 were made in the presence of La Fuerza officers. La Fuerza discovered that the conv
when operated caused several bottles to collide with each other. In fact, some bottles jumped off the conv
were broken, causing damage.
When Associated Engineering billed La Fuerza for the balance of the contract price, La Fuerza refused
conveyor system installed did not serve the purpose for which it was manufactured and installed. Associated
filed a court action to collect the balance.
The Supreme Court applied the provisions on sales of the Civil Code, namely Articles 1561, 1564 and156
vendee may choose between withdrawing from the contract and demanding a proportionate reduction of th
damages in either case. The choice of the remedy must be exercised within six months from the delivery of tThe Court held that:
Article 1497 on sales of the Civil Code provides that when the thing subject of the sale is placed in the
possession of the vendee, delivery is complete. Delivery is an act of the vendor. The vendee has nothing to d
of delivery by the vendor. On the other hand, acceptance is an obligation on the part of the vendee (Art. 15and acceptance are two distinct and separate acts of different parties. Consequently, acceptance cannot be
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opportunity to inspect or
examine the same. Toconsititute a sale by sample,
it must appear that the
parties treated the sample as
the standard of quality andthat they contracted with
reference to the sample with
the understanding that theproduct to be deliveredwould correspond with the
sample. In a contract of sale
by sample, there is an
implied warranty that thegoods shall be free from any
defect which is not apparent
on reasonable examination
of the sample and which
would render the goodsunmerchantable.
Art. 1566
If the seller is not aware of
the defects, the loss will not
make the seller liable. If theseller was in bad faith, ther
seller remains liable on the
warranty.The stipulation in a
lease with option to
purchase (treated as a sale
of movable on installments)
that the buyer-lesee"absolutely releases the
CARLOS B. DE GUZMAN,
vs.
TOYOTA CUBAO, INC.,
FACTS:On November 27, 1997, BUYER purchased from SELLER a brand new vehicle. The vehicle was delivere
two days later. On October 18, 1998, BUYER demanded the replacement of the engine of the vehic
developed a crack after traversing Marcos Highway during a heavy rain. As BUYER knows no reason whyengine would crack just like that, the same could only be due to the fact that said engine and/or the vehi
defective even from the time it was bought. BUYER asserted that respondent should replace the engine wi
based on an implied warranty. SELLER refused to answer for this defect saying it is not covered by
warranty. It refused to replace the vehicle as BUYER demanded (or at least its engine, or even repair the
further alleged that the BUYER's cause of action had prescribed as the case was filed more than six months the vehicle was sold and/or delivered.
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lessor from any liability
whatsocer as to any and allmatters in relation to
warranty in accordance with
the provisions hereinafter
stipulated," was held as anexpress wavier of warranty
against hidden defect in
facor of the seller-lessorwhich "absolved the [seller-lessor] from any liability
arising from any defect or
deficiency of the machinery
they bought."
ISSUES:
1) Whether the SELLER is liable for the redhibitory defects of the vehicle.2) Whether the BUYER's cause of action had prescribed.
RULING:
The pertinent provisions of the Code set forth the available remedies of a buyer against the seller on th
warranty against hidden defects:Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may
they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to s
that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price fvendor shall not be answerable for patent defects or those which may be visible, or for those which are not vendee is an expert who, by reason of this trade or profession, should have known them. (Emphasis supplied
Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even th
not aware thereof.
This provision shall not apply if the contrary has been stipulated and the vendor was not aware of the hiddefects in the thing sold.
Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six mon
delivery of the thing sold.
Wherefore, the SELLER is not liable for the defects and a redhibitory action for violation of an implied war
hidden defects has been time-barred.
Art. 1567
The buyer may either:
withdraw (accion
redhibitoria), or demand a
reduction of the price(accion quanti minoris).
Damages are awarded in
either case. The choice ofremedies is available only
when the thing has not been
lost.
landmark
Coca-Cola vs. Court of Appeals, 227 SCRA 293
Facts:
Respondent Lydia Geronimo was the proprietress of Kindergarten Wonderland Canteen, engaged in the sale
and other goods to the students of Kindergarten Wonderland and to the public. On August 12, 1989, some pstudents complained that the Coke and Sprite soft drinks contained fiber-like matter and other foreign sub
discovered the presence of some fiber-like substances in the contents of some unopened Coke bottles and a
in the contents of an unopened Sprite bottle. The Department of Health informed her that the samples she adulterated. Her sales of soft drinks plummeted, and not long after that, she had to close shop. She becam
destitute. She demanded from the petitioner the payment of damages but was rebuffed by it. She then file
before the RTC of Dagupan City, which granted the motion to dismiss filed by petitioner, on the gro
complaint is based on contract, and not on quasi-delict, as there exists pre-existing contractual relation
parties. Thus, on the basis of Article 1571, in relation to Article 1562, the complaint should have been fimonths from the delivery of the thing sold. The CA reversed the RTC decision and held that Geronimos com
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for quasi-delict because of petitioners act of negligently manufacturing adulterated food items intended t
public consumption; and that the existence of contractual relations between the parties does not absolutelaction by one against the other for quasi-delict arising from negligence in the performance of a contract
petition.
Issue:Whether or not the action for damages by the proprietess against the soft drinks manufacturer should be treat
breach of implied warranty against hidden defects, which must be filed within six months from the deliver
sold, or one for quasi-delict, which can be filed within four years pursuant to Article 1146 of the Civil Code.
Held:
The action in based on quasi-delict, therefore, it prescribes in four years. The allegations in the compl
reference to the reckless and negligent manufacture of adulterated food items intended to be sol
consumption. The vendees remedies are not limited to those prescribed in Article 1567 of the Civil Codecould be liable for quasi-delict under Article 2176, and an action based thereon may be brought by the vende
The existence of a contract between the parties does not bar the commission of a tort by the one against the
consequent recovery of damages therefor. Liability for quasi-delict may still exist despite the presence o
relations.
affirming
to be digested no digest available
Art. 1568
If it has been lost,obligations of seller depend
on cause of loss, knowledge
of hidden defect by sellerand wheter there was a
wavier of the warranty.
when lost through hidden
faults while the seller was
aware, he shall bear the lossand the return the price and
No case
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expenses of the contract
with damages. If the sellerwas not aware, he is obliged
only to return the price and
interest thereon, and
reimburse the expenses ofcontract, but no damages.
When lost through
fortuitous event of throughfault of the buyer and theseller was not aware, and
therefore in good faith, the
buyer may demand the price
he paid, less the falue of thething when it was lost. If the
seller is in bad faith, he shall
pay damages to the buyer.
Art. 1569
In the case of loss of thething sold with hidden
defects through fortuitous
event or vende's fault, thevendee may demand price
paid less value of the thingat the time of the loss plus
damages if the vendor acted
in bad faith.
No case
Art. 1570Although there may be
hidden defects, the debtor
may not have been in bad
faith, especially if theproperty was not his own
No case
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but the guarantor's. As such,
the judgement-debtorcannot be held liable for
damages for the hidden
defects.
Art. 1571
The law states theprescriptive period for
breach of warranty of theten preceeding articles as
six months. But if the actionis for negligence or quasi-
delict, the period is for four
years. In express warranties,
the prescriptive period is 4years, in accordance with
the general rule on recission
of contracts, unless another
period is specified in therexpress warranty.
c/o jv
Art. 1572
The law provides that onlythe defective animal will be
subject to the enforcementof the warranty or the
reduction of price, unless
the vendee's actions indicate
that the healthy animalswould not be purchased
without the defective
animals, as may be the case
with male and femaleanimals bought together.
No case
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The law protects the
vendor from full recissionby the vendee except in the
latter case where purchasing
both animals together was
the vendee's intention. Thelaw also protects vendee's
by providing them with
sufficient waranty for thedefective animal.
Art. 1573The law provides that the
previous provision applying
to animals shall also apply
to the sale of things soldtogether with similar
protection from individual
defects in the group.
No case
Art. 1574
The law provides a generalexception to animals that
are purchased at fairs,public autions, or those sold
as condemned. This is dueto the nature of the sales in
these situations where the
animal is not purchased for
their quality or capacity towork.
No case
Art. 1575
The law is meant to protect
vendees from fraudulent
vendors or those not
No case
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exercising the proper
diligence to protect thevendees. The law renders
animals with contagious
diseases as outside the
commerce of man, andrenders sale of animals unfit
for the vendee's intended
purpose void as the vendeewould not purposefullypurchase incapable animals
Art. 1576
The law provides a
defenition for redhibitory
defects, that they are defectshidden even from an expert
exercising due diligence
during examination.
However, a veterenarianexercising negligence will
be held liable due to his
false certification of theanimal.
No case
Art. 1577The article provides vendees
with a protection against the
sale of animals with
diseases and gives them anexpedient remedy in the
event of their failing health
and fitness. The idea is that
the vendor needs to exertproper diligence before the
No case
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sale of the animal.
Art. 1578
Vendor is liable if amimalshould die within 3 days
after its purchase, if causse
of death existed at time of
contract.
No case
Art. 1579
The animal should bereturned in the condition in
which it was sold and
delivered if the sale wasrescinded. Vendee is
anserwerable for any injury
due to his negligence and
not arising from theredhibitory defect.
No case
Art. 1580Remedies of buyer in sale
No case
Art. 1581 No case
Art. 1582
Art. 1583
Art. 1584 No case
Art. 1585
The law prevents confusion
regarding the absence ofexpressed acceptance.
Considering the dynamic
nature of the business of
sales, every vendor cannotreasonably expect every
vendee to inform them of
their expressed acceptance
landmark
Smith Bell & Co. vs Hon Gimenez G.R. No. L-17617 June 29, 1963
Facts:
Upon requisition of the Municipality of Paniqui, Tarlac, Smith Bell and Co. delivered a typewriter
amounting to PhP 820.00. The said typewriter wasreceived on August 30, 1958. However, on September 9,1
the municipal building of Paniqui wastotally razed by fire. Among the office equipment burntwas the netypewriter. Thereafter, theMunicipal Treasurer of Paniqui submitted to the Provincial Treasurer of Tarl
covering the payment forthe lost typewriter. Provincial Treasurer forwarded thedocument to Auditor Gen
who disapprovedof the payment. According to Respondent, Municipality isnot liable for the cost of typewrit
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and vice versa; so the law
provides clear andreasonable modes of
determining implied
acceptance by the acts of the
vendee.The law also
conveys that the act of
delivery is not conclusive ofaccptance, as the vendeemay display actions
indicative of non-
acceptance, as is the case if
the vendee does not treat thegoods as his own property
or treats them as the
property of the vendor.
toGimenez, the article in question was never presented forinspection and verification as agreed upon andcon
ownership of the typewriter did notpass to the consignee, and the risk of loss remained withthe seller.Issuenot there was delivery of thetypewriter.Held: There was a delivery and the Municipality of Paniqui, Tarlac is
loss of the typewriter. Thefact that the municipal officials of Paniqui took delivery of the typewriter in questi
use thereof for aperiod of 10 days, constitutes proof that said typewriterwas accepted and the municipality
buyer,became liable for the payment to the claim.
Article 1585 of the Civil Code provides: The buyer isdeemed to have accepted the goods when he intimat
that he has accepted them, or when thegoods have been delivered to him, and he does any actin relation to thinconsistent with theownership of the seller, or when, after the lapse of areasonable time, he retains the gintimatingto the seller that he has rejected them.
Art. 1586.
The purpose of the law is toprotect the vendor from
vendees making belated
claims to breaches in anypromise of warranty. Such
belated claims impair theability of the vendor to
determine the true extent of
his liability and may allowthe vendee to defraud the
vendor.
Landmark
Goodyear vs Sy on June 29, 2010November 9, 2005, 474 scra 427
Breach of WarrantiesContract of Sale
Goodyear Philippines was the owner of an Isuzu car which was hijacked in 1986. Goodyear reported it to theissued an alert alarm on the stolen vehicle. Later that year the car was recovered. Goodyear told PNP to lift th
the recovered car.
In 1996, Goodyear sold the car to Sy. In 1997, Sy sold the car to Jose Lee. Lee tried to register the car in his
was not able to do so because apparently PNP did not lift the alert alarm over the said car. The car was imPNP sued Lee. Lee told Sy about it.
Sy then sue Goodyear for breach of warranty. Sy argued that Goodyear has the duty to convey the vehicle to
all liens, encumbrances and legal impediments. The RTC ruled in favor of Goodyear. CA reversed the RTC d
ISSUE: Whether or not there was a breach of warranty.
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HELD: No. In a contract of sale, there are implied warranties: first, the vendor has a right to sell the thing atits ownership is to pass to the vendee, as a result of which the latter shall from then on have and enjoy
peaceful possession of the thing; and, second, the thing shall be free from any charge or encumbrance no
known to the vendee.
Goodyear did not break any of those. Certainly, the impoundment of the car was not Goodyears fault and
legal impediment that deprived Sy from ownership of said car. When Sy sold the car to Lee, Sy was already
owner. This is because when Goodyear sold the car to Sy, Goodyear transferred full ownership to Sy.
It was just unfortunate that the PNP did not lift the alert alarm from the said car placed on it in 1986. Certain
has no control over the PNP and PNPs inaction is a purely administrative and government in nature. Hen
did not breach its obligation as a vendor to Sy; neither did it violate Sys right for which he could maintain
the recovery of damages. Without this crucial allegation of a breach or violation, no cause of action exists.
Warranty defined:
A warranty is an affirmation of fact or any promise made by a vendor in relation to the thing sold. As such, a
a natural tendency to induce the vendee relying on that affirmation or promise to purchase the thing
impliedly warrants that that which is being sold is free from any charge or encumbrance not declared or vendee. The decisive test is whether the vendor assumes to assert a fact of which the vendee is ignorant.
Art. 1587.
The law draws a lineregarding the obligations of
the vendor and vendee inthe event of non-acceptance.
The vendee assumes the
position of a bailee in thepossession of good he does
not want; while he may
have no duty to return the
goods, he has a duty to
reasonably preserve themuntil the vendor reclaims the
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goods.
Acceptance of athing that is not desired is
an impairment of rights in
sales as the vendee would
then be bound to pay fortheir agreeed price. This
operates as a loss to the
vendee and not an equalexchange for value.
Art. 1588.This law is meant to protect
the vendor from the whims
of the vendee. By not
having a just cause to refusethe goods, the risk transfers
to the vendee regardless of
his refusal
No case
Art .1589 landmark
GREGORIO FULE vs. COURT OF APPEALS, NINEVETCH CRUZ and JUAN BELARMINOPosted on June 24, 2013 by winnieclaire
Standard[G.R. No. 112212. March 2, 1998]
Facts: Petitioner Gregorio Fule, a banker by profession and a jeweler at the same time, acquired a 10-hecta
Tanay, Rizal, which used to be under the name of Fr. Antonio Jacobe. Petitioner, as corporate secretary
looked and found a buyer who might be interested in the Tanay property, herein private respondent Dr. Nine
so happened that at the time, petitioner had shown interest in buying a pair of emerald-cut diamond earrings Cruz which he had seen in January of the same year when his mother examined and appraised them as genui
however declined petitioners offer to buy the jewelry.
Subsequently, however, negotiations for the barter of the jewelry and the Tanay property ensued. Dr. Cr
herein private respondent Atty. Juan Belarmino to check the property who, in turn, found out that no sale feasible because the one-year period for redemption of the said property had not yet expired at the time.
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In an effort to cut through any legal impediment, petitioner executed, a deed of redemption on behalf opurportedly in the amount of P15,987.78, and on even date, Fr. Jacobe sold the property to petitioner for P75
As Dr. Cruz had already agreed to the proposed barter, petitioner went to Prudential Bank once again to take
jewelry. Petitioner, arrived at the residence of Atty. Belarmino to finally execute a deed of absolute sale. Sinwas appraised only at P160,000.00, the parties agreed that the balance of P40,000.00 would just be paid late
Cruz opened the safety deposit box at around 6:00PM, retrieving a transparent plastic or cellophane bag wit
inside and handing over the same to petitioner. The latter took the jewelry from the bag, went near the electrbanks lobby, held the jewelry against the light and examined it for ten to fifteen minutes. After a while, DrOkay na ba iyan? Petitioner expressed his satisfaction by nodding his head. Later, at about 8:00 oc lock i
of the same day, petitioner arrived at the residence of Atty. Belarmino complaining that the jewelry given
fake. He then used a tester to prove the alleged fakery. Thereafter, the group decided to go to the house
Macario Dimayuga, a jeweler, to have the earrings tested. Dimayuga, after taking one look at the earrings,declared them counterfeit.
Petitioner filed a complaint before the RTC against private respondents praying, among other things, that th
sale over the Tanay property be declared null and void on the ground of fraud and deceit.
Trial Court ruled in favour of Dr Cruz and that the contract of sale was valid. Moreover, the trial court c
lapse of two (2) hours (6:00 to 8:00) more or less before plaintiff complained as unreasonable delay. The CAdecision in toto.
Issue: Whether or not under the facts duly established herein, the contract can be voided in accordance withcompel the parties to restore to each other the things that have been the subject of the contract with their f
price with interest.
Held: NO. The Civil Code provides that contracts are perfected by mere consent. From this moment, the part
not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, acconature, may be in keeping with good faith, usage and law.[17] A contract of sale is perfected at the mom
meeting of the minds upon the thing which is the object of the contract and upon the price. Being consensual
sale has the force of law between the contracting parties and they are expected to abide in good faith by the
contractual commitments. Article 1358 of the Civil Code which requires the embodiment of certain contracinstrument, is only for convenience,[19] and registration of the instrument only adversely affects third pa
requirements are, therefore, for the benefit of third parties. Non-compliance therewith does not adverse
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validity of the contract nor the contractual rights and obligations of the parties thereunder.
Contracts that are voidable or annullable, even though there may have been no damage to the contracting p
those where one of the parties is incapable of giving consent to a contract; and (2) those where the consent
mistake, violence, intimidation, undue influence or fraud. Accordingly, petitioner now stresses before this
entered into the contract in the belief that the pair of emerald-cut diamond earrings was genuine. On the pretpieces of jewelry turned out to be counterfeit, however, petitioner subsequently sought the nullification of sa
the ground that it was, in fact, tainted with fraud such that his consent was vitiated.
There is fraud when, through the insidious words or machinations of one of the contracting parties, the otherenter into a contract which, without them, he would not have agreed to. The records, however, are bare of
manifesting that private respondents employed such insidious words or machinations to entice petitioner int
contract of barter. Neither is there any evidence showing that Dr. Cruz induced petitioner to sell his Tanay pr
she cajoled him to take the earrings in exchange for said property. On the contrary, Dr. Cruz did not initiapetitioners proposal to buy the said jewelry. Rather, it appears that it was petitioner, through his agents, who
to believe that the Tanay property was worth exchanging for her jewelry as he represented that its value was
or more than double that of the jewelry which was valued only at P160,000.00. If indeed petitioners prope
worth that much, it was certainly contrary to the nature of a businessman-banker like him to have parted
estate for half its price. In short, it was in fact petitioner who resorted to machinations to convince Dr. Cruzher jewelry for the Tanay property.
Moreover, petitioner did not clearly allege mistake as a ground for nullification of the contract of sale. Even
he did, petitioner cannot successfully invoke the same. To invalidate a contract, mistake must refer to thethe thing that is the object of the contract, or to those conditions which have principally moved one or both p
into the contract.[25] An example of mistake as to the object of the contract is the substitution of a s
contemplated by the parties with another. In his allegations in the complaint, petitioner insinuated that an in
one that had only Russian diamonds was substituted for the jewelry he wanted to exchange with his 10-hec
however, failed to prove the fact that prior to the delivery of the jewelry to him, private respondents endeavsuch substitution.
Likewise, the facts as proven do not support the allegation that petitioner himself could be excused for the
account of his work as a banker-jeweler, it can be rightfully assumed that he was an expert on matters reg
Indeed, the finger of suspicion of switching the genuine jewelry for a fake inevitably points to him. Such a mby manifest negligence cannot invalidate a juridical act. As the Civil Code provides, (t)here is no mistak
alleging it knew the doubt, contingency or risk affecting the object of the contract.
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Both the trial and appellate courts, therefore, correctly ruled that there were no legal bases for the nullifi
contract of sale. Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been tDr. Cruz and petitioner, respectively, upon the actual and constructive delivery thereof. Said contract o
absolute in nature, title passed to the vendee upon delivery of the thing sold since there was no stipulation in
that title to the property sold has been reserved in the seller until full payment of the price or that the vendor
to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. Such stipulamanifest in the contract of sale.
affirmingWell entrenched is the rule that factual findings of the trial court, especially when affirmed by the appelaccorded the highest degree of respect and are considered conclusive between the parties. The rule how
absolute and admits of exceptions:
when the findings of a trial court are grounded entirely on speculation, surmises, and conjectures;
when a lower court's inference from its factual findings is manifestly mistaken, absurd, or impossible;when there is grave abuse of discretion in the appreciation of facts;
when the findings of the appellate court go beyond the issues of the case, or fails to notice certain relevant
properly considered, will justify a different conclusion;
when there is a misappreciation of facts;
when the findings of fact are conclusions without mention of the specific evidence on which they are based,on the absence of evidence, or are contradicted by evidence on record.
None if the laid down exceptions which would warrant a reversal of the assailed decision obtain herein.
As correctly ruled by the court a quo, the parties entered into a CONTRACT OF SALE ON CREDIT and
1589 of the Civil Code applies, to wit:
Article 1589. The vendee shall owe interest for the period between the delivery of the thing and the paymen
in the following three cases:
Art .1590 landmarkBareng vs. Court of AppealsG.R. No. L-12973April 25, 1960FACTS:
Vicente Bareng purchased from respondent Alegria the cinematographic equipmentinstalled at the Pione
Laoag, Ilocos Norte, for the sum of P15,000. P10,000 of which was paid, and Bareng signed 4 promissory
balance. The first promissorynote amounting to P1,000 was duly paid by Bareng. On February 15, 1952, sho
second note fell due, the other respondent Agustin Ruiz informed Bareng that he was aco-owner of the question, and several days later, Ruiz sent Bareng a telegraminstructing him to suspend payments to
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thebalance of the price as he was notagreeable to the sale. When Alegria sought to collect the second note
day,Bareng only paid P400 and refused to make any more payments on account of Ruizs claims.On MarRuiz filed suit against Alegria and Bareng for his share in the price of thecinema equipment. Thereafter i
same year, Alegria and Ruiz reached acompromise wherein the former recognized the latter as co-owner of t
sold toBareng and promised to pay 2/3 of whatever amount he could recover from the latter.Alegria then su
the amount of P13,500, allegedly the unpaid balance of theprice. But Bareng answered that only P3,600 paid, and prayed for therescission of the sale for the supposed violation of Alegria of certain express warra
quality of the equipment, and asked for payment of damages for alleged violation of Alegrias warranty of
added that he is not liable to pay interests to Alegriabecause he was justified in suspending payment of the bprice of theequipment from the time he learned of Ruizs adverse claims over said equipment, pursuantto ArCivil Code.
ISSUE:
Whether or not Bareng is liable to pay interest of the unpaid balance of the price of the equipment.
HELD:Bareng is liable to pay interest of the unpaid balance of the price of the equipment inquestion. Art. 1590 of th
provides that: Should the vendee be disturbed in thepossession or ownership of the thing acquired, or sh
reasonable grounds to fearsuch disturbance, by a vindicatory action or a foreclosure of mortgage,
he may suspend the payment of the price until the vendor has caused the disturbance or danger to cease
, unlessthe latter gives security for the return of the price in a proper case, or it has been stipulatedthat, notany such contingency, the vendee shall be bound to make thepayment. A mere act of trespass shall not
suspension of the payment of theprice.It is undisputed that petitioner had the right to suspend payment of t
the priceof the cinema equipment in question to his vendor from the time he was informed by Ruiz of the lattco-ownership thereof, especially upon his receipt of Ruizs telegramwherein the latter asserted that he was
to the sale. However, said right of Barend ended as soon as the vendor has caused the disturbance
cease,which, in this case, was when Alegria reached a compromise with Ruiz whereby Ruizexpressed his
the sale to Bareng, subject to the payment of his share in theprice by Alegria. From the time Alegria and Rui
settlement, there was nolonger any danger of threat to Barengs ownership and full enjoyment of the equipmfrom Alegria, by virtue of which Alegria sued petitioner for the unpaid balance.Bareng admitted his indebt
amount of P3,600, yet he did not tender paymentof said amount nor did he deposit the same in court, but in
for rescission of thesale. It is clear that Bareng was in default on the unpaid balance of the price of theequipm
date of filing of the complaint by Alegria, and under Art. 2209 of theCivil Code, he must pay legal interestssaid date
Art .1591
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Art .1592
Art .1593
Art .1594
Art .1595
Art .1596
Art .1597
Art .1598
Art .1599 Landmark
ididigest pa. no digest availableaffirming
SUPERCARS V.FLORES (2004)
[ G.R. NO. 148173, DECEMBER 10, 2004 ]
Facts:
In the second week of December 1988, Filemon Flores, respondent, purchased from Supercars Man
Development Corporation, petitioner, an Isuzu Carter Crew Cab. Upon delivery of the vehicle on Decemrespondent paid petitioner the 30% down payment, plus premium for the vehicles comprehensive insu
amounting to P7,374.80. The RCBC financed the balance of the purchase price. Its payment was secured
mortgage of the same vehicle.
A day after the vehicle was delivered, respondent used it for his familys trip to Bauang, La Union. While tnational highway in Tarlac, Tarlac, the fan belt of the vehicle snapped. Then its brakes hardened after seve
did not function properly; the heater plug did not also function; the engine could not start; and the fuel
increased. Upon their return to Manila in the first week of January 1989, respondent complained to petitiodefects of the vehicle. Marquez then had the vehicle repaired and returned it to respondent that same day,
latter that it was already in good condition. But after driving the vehicle for a few days, the same defec
prompting respondent to send petitioner a letter dated January 30, 1989 rescinding the contract of sale and
vehicle due to breach of warranty against hidden defects. A copy of the letter was furnished to RCBC.
On March 1, 1989, respondent sent petitioner a letter demanding the refund of his down payment, plus the
paid for the vehicles insurance.
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Petitioner failed to comply with petitioners demand. Consequently, responden t stopped paying the monthly
for the vehicle.
On March 21, 1989, RCBC sent respondent a letter demanding that he settle his past overdue accounts fo
and March 15, 1989. In reply, respondent, through a letter dated March 31, 1989, informed RCBC that he h
the contract of sale and had returned the vehicle to petitioner. This prompted RCBC to file with the Office ofCourt and Ex-Officio Sheriff, Regional Trial Court, Quezon City, a Petition for Extra-judicial Foreclosu
Mortgage.
Issue:
WON Marquez and Catley committed any breach of warranty against hidden defects, claiming that the veh
minor and inconsequential defects which were promptly and satisfactorily repaired by petitioner Superca
its warranty as the seller. For in the part of RCBC, is it's claim that it has no liability whatsoever againscorrect because it merely enforced its right under the chattel mortgage law.
RTC decided in favor to Flores., the decision:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, ordering
jointly and severally pay the plaintiff.
Upon motion for reconsideration the RTC absolved RCBC on their liabilities dismissing the complaint a
decision:WHEREFORE, considering the foregoing premises, the Decision of the court, insofar as it holds def
Commercial Banking Corporation jointly and severally liable to the plaintiff, is hereby MODIFIED and th
said bank DISMISSED. Similarly, the compulsory counterclaim against the plaintiff is likewise dismissed.
From the above Decision and Order, petitioner, Marquez and Catley interposed an appeal to the Court of Decision dated November 29, 2000, the Appellate Court affirmed the RTC Decision with modification in t
the complaint against Marquez and Catley was dismissed.
Petitioner filed a motion for reconsideration but denied.
Hence, the instant petition.
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Petitioners contention that under Article 1191 of the Civil Code, rescission can no longer be availed of as thalready in the hands of an innocent purchaser for value lacks merit. Rescission is proper if one of the parties
commits a substantial breach of its provisions. It creates an obligation to return the object of the contract. It c
out only when the one who demands rescission can return whatever he may be obliged to restore. Rescission
contract from its inception and requires a mutual restitution of the benefits. Records show that at the timopted to rescind the contract, the vehicle was still in his possession. He returned it to petitioner who, witho
accepted it. Accordingly, the cost of the vehicle paid by the respondent including insurance premiums shoul
to Flores.
As further stated by the Court of Appeals:
Appellants invocation of Article 1191 of the Civil Code in support of his argument that as the vehicle had b
third party, rescission can no longer ensue is misplaced.
For, Flores is asking for the refund of the downpayment and payment for insurance premiums. This
appellants final argument.
Appellants professed excuse from their inability to give refund that refund would necessitate the return
motor vehicle which is impossible because it is now in the hands of an innocent purchaser for valuemisera
Supercars was paid the balance of the purchase price by RCBC and, therefore, in addition to the downpaym
Flores, it had been fully paid for the vehicle.
Decision:
WHEREFORE, the petition is DENIED. The assailed Decision dated September 20, 1999 and Resolution d
1, 2000 of the Court of Appeals in CA-G.R. CV No. 52177 are AFFIRMED with MODIFICATION. The awand exemplary damages and attorneys fees are DELETED. Costs against petitioner
Affirming
1599DE GUZMAN V. TOYOTA; COCA-COLA V. GERONIMO;VILLOSTAS; case digest by valbuena
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1. G.R. No. 141480 November 29, 2006CARLOS B. DE GUZMAN, Petitioner,vs. TOYOTA CU
Respondent.
On November 27, 1997, petitioner purchased from respondent a brand new white Toyota Hi-Lux. The
delivered to petitioner two days later. On October 18, 1998, Mr. de Guzman demanded for the replacement
of the vehicle because it showed a crack during a trip that passes Marcos Highway during a heavy rain. Mrdemanded for the Toyota dealer to replace the engine with a new one based on an implied warranty.
On the other hand, Toyota Cubao maintains that Mr De Guzman's claim for replacement was already barred of limitations amd had therefore prescribed under Article 1571 of the Civil Code for claiming cause of acthan six months from the time the vehicle was purchased and/or delivered. Respondent reiterates that A
Republic Act No. 7394 does not apply.
SUPREME COURT HELD:
Under Article 1599 of the Civil Code, once an express warranty is breached, the buyer can accept or keep t
maintain an action against the seller for damages. In the absence of an existing express warranty on th
respondent, as in this case, the allegations in petitioners complaint for damages were clearly anchored on the
of an implied warranty against hidden defects, in which in this case, that the engine of the vehicle which Toto Mr. de Guzman was not defective.
By filing this case, Mr. de Guzman wants to hold Toyota responsible for breach of implied warranty for vehicle with defective engine. Such being the case, petitioner should have exercised this right within six mo
delivery of the thing sold. Since petitioner filed the complaint on April 20, 1999, or more than nineteen mo
from November 29, 1997 (the date of the delivery of the motor vehicle), his cause of action had prescribed.