Sales Warranty cases

8/12/2019 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


18/44

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


19/44


20/44

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


21/44

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


23/44

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


24/44


25/44

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.


26/44

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


27/44

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


28/44

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


29/44

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


30/44

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


31/44

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


32/44

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


33/44

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.


34/44

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


35/44

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.


36/44

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


37/44

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.

Sales Warranty cases

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