consent to the contract the seller or the buyer with

CHAPTER 12: CONDITIONS AND of sale respect to the perfo rmance

of his obligation
WARRANTIES
Examples “Sale with A stipulation that the deed of
Assumption of sale and corresponding
I. CONDITIONS
Mortgage” – a certificate of title would be
Condition on Perfection vs. Condition on Performance stipulation that that the issued only after full payment
seller will only sell the Condition: Full payment of
property to buyer only buyer Obligation: Issuance of
Condition

Condition imposed on Condition imposed on

PERFECTION of PERFORMANCE of when the buyer deed of sale and
contract obligation executes a mortgage in corresponding certificate of
favor of seller title on the part of the seller
Failure to Results in the failure of Only gives the other party the Condition: Assumption There is already a valid
comply the contract option to either: of mortgage in favor of contract of sale, however, the
1. Refuse to proceed with seller condition of full payment by
the sale Essential element the buyer is imposed before
2. Waive the condition lacking: Consent of the the seller performs his
Such choice is given to the seller obligation to issue DoS and
injured party CoT

Status of No perfected contract There is already a valid Letter of agreement A stipulation that buyer
the of sale yet. It lacks all contract of sale since all provides that buyer would take immediate
contract the essential requisites essential requisites of a should clear the possession of the lots upon
for a valid contract of contract of sale are present. property of its present down payment, and the rest
sale. Non-happening does not tenants at his own of the payment would be
Non-happening affects affect the validity of the expense. made upon seller’s
the validity of the contract, only the effectivity. Condition: Clear the presentation of clean titles
contract. tenants in the property over the lot.
Essential element Condition: Presentation of
When a condition is When consent is already lacking: Consent of the clean titles
imposed before the given but a condition is seller Obligation: Payment by buyer
buyer or seller gives imposed either on the part of

CHAPTER 12: Conditions and Warranties | Evangelista | Orteza | Narciso | Rodis | J. Santos | Torres | Villarosa
 Condition Warranty

Relatable “I will be your girlfriend “I will be your girlfriend but I Non-happening: not a breach of Non-fulfillment: breach of contract
example as soon as you become can only introduce you to my contract
a billionaire.” parents once you top the
bar.” Existence of the obligation Performance of the obligation

When The parties would Injured party may either:

Must be stipulated May not be
condition stand as if the
1. Refuse to proceed with the
not conditional obligation contract; or
Obligation of the seller or of the Obligation of the seller
performed never existed. Thus, 2. Waive performance of the
there is a failure of condition buyer
contract.

III. EXPRESS WARRANTY (ART. 1546)

Laforteza v. Machuca
DOCTRINE: Failure to comply with condition imposed upon
perfection of the contract results in failure of a contract, while the
failure to comply with a condition imposed on the performance
of an obligation only gives the other party the option either to
refuse to proceed with sale or waive the condition.
II. CONDITION VS. WARRANTY
Power Commercial Industrial Corp vs. CA
The alleged failure of the sellers to eject the lessees from the lot
in question and to deliver actual and physical possession cannot
be considered a substantial breach of a condition for two
reasons: 1.) such “failure” was not stipulated as a condition in the
contract; and 2.) its effects and consequences were not specified
either.
· Definition of Warranty
A warranty is a statement or representation made by the
seller of goods, contemporaneously and as part of the contract of
sale, having reference to the character, quality or title of the
goods, and by which he promises or undertakes to insure that
certain facts are or shall be as he then represents them. In other
words, A warranty is an affirmation of fact or any promise made
by a vendor in relation to the thing sold.
The decisive test is whether the vendor assumes to
assert a fact of which the vendee is ignorant.
Breach of an express warranty makes the seller liable for
damages.

CHAPTER 12: Conditions and Warranties | Evangelista | Orteza | Narciso | Rodis | J. Santos | Torres | Villarosa
 · Requisites for existence of Express warranty (A-I-R)
1. It must be an affirmation of fact or any promise by the
seller relating to the subject matter of the sale
2. The natural tendency of such affirmation or promise is to
induce the buyer to purchase the thing; and
3. The buyer purchases the thing relying on such
affirmation or promise thereon.
The law allows considerable latitude to seller’s
statements, or dealer’s talk.
Assertions concerning the property’s characteristics are
the usual and ordinary means of sellers to obtain a higher price.
A man who relies upon such affirmation does at his own peril.
Art. 1341 of the Civil Code: A mere expression of an
opinion does not signify fraud, unless made by an expert and the
other party has relied on the former's special knowledge.
GR: An affirmation of the value of the thing or the
statement of seller’s opinion Is not a warranty.
Ex: When it is made by an expert an the other party
relies on such special knowledge
• Guinhawa v. People (on Caveat Emptor)
o Caveat Emptor is the principle that the buyer alone is
responsible for checking the quality and suitability of
goods before a purchase is made.
CHAPTER 12: Conditions and Warranties | Evangelista | Orteza | Narciso | Rodis | J. Santos | Torres | Villarosa
o The principle of Caveat emptor only requires the
purchaser to exercise care and attention ordinarily
exercised by prudent men in like business affairs, and
only applies to defects which are open and patent to the
service of one exercising such care.
o Caveat Emptor can only be applied where it is shown or
conceded that the parties to the contract stand on equal
footing and have equal knowledge or equal means of
knowledge and there is no relation of trust or confidence
between them.
IV. IMPLIED WARRANTIES
Definition: Those which by law constitute every part of the sale,
whether or not the parties were aware or intended them.
Who are liable for implied warranties?
o General: seller
o Exception: by express stipulation, agent may also
be bound
A. Warranty that seller has the right to sell (Art. 1547)
● The implied warranty that seller has the right to sell the
thing at the time the ownership is to pass refers only to
the transfer of ownership at the point of consummation,
NOT to any representation as to ownership at the point
of perfection.
 ● It is not applicable to render a sheriff, auctioneer, b. Eviction is by final judgment
mortgagee, pledgee or any other person professing to c. Basis thereof is by virtue of a right prior to the
sell by virtue of authority in fact or law sale made by the seller
● Although the provision states “unless a contrary d. Seller has been summoned and made co-
intention appears”, there can be no legal waiver of the defendant in the suit for eviction at the instance of
warranty of the seller that he has the capacity to sell the buyer
unless it amounts to a clear assumption of risk on the
part of the buyer o To constitute notice of eviction to the seller, seller must
o can’t waive the seller’s warranty of his capacity to be made a party to the case. He must be summoned in
sell because his capacity to sell is the very the the suit for eviction and be made a co-defendant or third
essence of a sale party defendant. Merely mailing a copy of the opposition
o can waive if the buyer assumes the risk in of buyer to the eviction suit cannot enforce the warranty
contracting with the seller. For example, when against a seller. (Escaler v. CA)
the seller’s obligation is subject to a condition
iii. Eviction in Part (Art. 1556)
B. Warranty against eviction • If the buyer loses a part of the thing sold of such importance, in
i. Ang v. CA relation to the whole, that he would not have bought it without
The seller, in declaring that he owned and had clean title said part
to the vehicle, gave an implied warranty of title, and in • Two or more things which have been jointly sold foro a lump
pledging that he “will defend the same from all claims or sum, or for a separate price for each of them, when it clearly
any claim whatsoever [and] will save the vendee from any appears that the buyer would not have purchased one without
suit by the government of the Republic of the the other.
Philippines,” he gave a warranty against eviction, and o Buyer’s remedy in both situations:
the prescriptive period to file a breach thereof is six • demand rescission and return the thing without
months after the delivery of the vehicle other encumbrances than those which it had when he
acquired it
ii. When is there a breach of this warranty? • demand eviction
a. Purchaser has been deprived of or evicted from
the whole or part of the thing sold iv. Particular Causes by law (Art. 1550-52)

CHAPTER 12: Conditions and Warranties | Evangelista | Orteza | Narciso | Rodis | J. Santos | Torres | Villarosa
 • When adverse possession had been commenced before
the sale, but the prescriptive period is completed after
the transfer
→ the seller shall not be liable for breach of
warranty against eviction
● If the property sold for nonpayment of taxes due
and not made known to the buyer before the
sale
→ seller is liable for eviction
v. Amounts for which seller is liable in case of eviction (Art.
1555)
• According to Art. 1555, CC
§ In case eviction occurs, whether warranty is
agreed upon or nothing has been stipulated, the
buyer has the right to demand from the seller:
■ Return of the value which the thing sold had
at the time of the eviction, be it greater or
lesser than the price of the sale
■ Income of fruits, if buyer has been ordered to
deliver them to the party who won the suit
against him
■ Costs of the suit which caused the eviction,
and, in a proper cae, those of the suit
brought against the seller for the warranty
■ Expenses of the contract, if the buyer has
paid them
■ Damages and interests and ornamental
expenses, if the sale was made in bad faith
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vi. Judicial Sales
● Judgment debtor is responsible for eviction in
judicial sales, unless otherwise decreed in the
judgment
● Unlike in voluntary sales, an owner whose land is
sold in an execution sale, does not have the
obligation to defend his title to the vendees
○ the buyers at execution sales take the
property subject to the superior right of
other parties
● Caveat emptor applies
○ sheriff does not warrant the title to the
property sold by him, and it is not incumbent
on him to place the purchaser in possession
of the property
vii. Waiver of Warranty and Effects thereof (Art. 1553)
• Effect of waiver depends on the nature of such
waiver
o General or specific waiver
o Seller acted in good faith or bad faith
 General Buyer waives the liability in general terms
Waiver without knowledge of any particular risk an express warranty that the thing is free from all
Effect → limits the liability of the seller burdens and encumbrances
3. Remedies and Prescriptive Period
Specific Buyer waives specific case of expected eviction
- Buyer may bring action for rescission or sue for damages
waiver (knowledge of the risks of eviction and assumes
its consequences) within one year from execution of the deed
Effect → wipes out the warranty as to that - If this has elapsed, he may bring an action for damages
specific risk, but NOT as to eviction caused by within one year from when he discovered the servitude
other reasons not covered in the waiver
D. Warranty Against Hidden Defects
Seller acted -Buyer must be in good faith
in good faith -Buyer cannot hold seller liable if he is aware of
a third-party claim Requisites (H-E-E-U-S)
1. Defect must be hidden
Seller acted Effect → Any stipulation exempting seller from 2. It must exist at time of sale
in bad faith his obligation to answer for eviction shall be
3. Must ordinarily be excluded from the contract
void
4. Must render thing unfit or decrease fitness considerably
5. Action must be instituted in the Statute of Limitations

C. Warranty against Non-Apparent Servitudes Seller shall be responsible when:

1. Requisites for warranty against non-apparent 1. Nature of hidden defect is such that it would render the
servitude subject matter unfit for the use it was intended
a. Immovable sold is encumbered by non-apparent 2. Diminish the fitness to such extent that buyer would not
burden or servitude, not mentioned in the have bought it or he would have paid a lower price for it
agreement
b. The nature of such non-apparent servitude is Note: Seller is still responsible even if unaware of the defects
such that it must presumed that the buyer would
not have acquired it had he been aware thereof Seller not answerable for patent defects (or those which are
2. When warranty is not applicable hidden). Seller is also not liable for invisible defects, when the
a. If the servitude is mentioned in the agreement buyer should know about them by reason of his trade/profession.
b. If the non-apparent burden or servitude is
recorded in the Registry of Deeds, unless there is

CHAPTER 12: Conditions and Warranties | Evangelista | Orteza | Narciso | Rodis | J. Santos | Torres | Villarosa
To be able to prove liability on the basis of breach, three
Seller was aware of defect Seller was NOT aware of defect
things must be established:
1. Injury is sustained because of the product He shall bear the loss Obliged only to return the price and
2. Injury was sustained because the product was defective Return the price and interest
or unreasonably safe expenses for the contract Reimburse expenses for contract
Damages
3. Defect existed when product left the hands of the seller
NO DAMAGES
A seller cannot be held liable for any damage allegedly caused
by the product in the absence of any proof that the product in
When is there a waiver?
question was defective. The defect must be present upon the
delivery or manufacture of the product; or when the product was Art. 1566. The vendor is responsible to the vendee for any
sold to the purchaser; or when the product must have reached hidden faults or defects in the thing sold, even though he was
the user or consumer without substantial change in the condition not aware thereof.
it was sold. (Nutrimix Feeds Corp v. CA) This provision shall not apply if the contrary has been stipulated,
and the vendor was not aware of the hidden faults or defects in
Remedies of buyer: the thing sold.
ART. 1567:
The buyer may either: Thus, WHEN THERE IS AN EXPRESS WAIVER:
1. Withdraw (accion redhibitoria); OR if seller was not aware -> loss will not make seller liable
2. Demand a reduction of the price If seller in BF -> seller is liable on the warranty
* with damages in either case
*remedies are only available when the thing has not been lost Illustrative case:
A lease with option to purchase stipulated that the buyer-lessee
Obligations of seller: “absolutely releases the lessor from any liability whatsoever as to
any and all matters in relation to warranty” was held to be an
If the thing has been lost in consequence of hidden defects: express warranty, which absolved the seller from any defect in
the machinery. (Filinvest Credit Corp v. CA)

CHAPTER 12: Conditions and Warranties | Evangelista | Orteza | Narciso | Rodis | J. Santos | Torres | Villarosa
 E. Implied Warranty in Sale of Goods
i. Warranty as to Fineness and Quality
· Where the buyer, expressly or by implication, makes known to
the seller the particular purpose for which the goods are
acquired, and it appears that the buyer relies on the seller's skill
or judgment (whether he be the grower or manufacturer or not),
there is an implied warranty that the goods shall be reasonably fit
for such purpose;
· Where the goods are brought by description from a seller who
deals in goods of that description (whether he be the grower or
manufacturer or not), there is an implied warranty that the goods
shall be of merchantable quality.
· Requisites for breach of warranty that the goods sold are
reasonably fit and suitable to be used of the purpose which
both parties contemplated:
(a) That the buyer sustained injury because of the
product
(b) That the injury occurred because the product was
defective or unreasonably unsafe; and
(c) That the defect existed when the product left the
hands of the seller
· Measure of Damage in case of breach of warranty on quality:
in the absence of special circumstances showing proximate
damage of a greater amount, the difference between the value
of the goods at the time of delivery to the buyer and the value
they would have had if they had answered to the warranty.
CHAPTER 12: Conditions and Warranties | Evangelista | Orteza | Narciso | Rodis | J. Santos | Torres | Villarosa
ii. Sale of goods by sample
· Implied warranty that the foods shall be free from
any defect rendering them unmerchantable which
would not be apparent on reasonable examination of
the sample
iii. Sale of goods by fineness or description
· Seller’s description of the goods which is made part
of the basis of the transaction creates a warranty that
the goods will conform to that description
· Implied warrant that the goods are of merchantable
quality
iv. Buyer’s Option in case of breach of warranty
· Where there is a breach of warranty by the seller, the
buyer may, at his election:
(1) Accept or keep the goods and set up against
the seller, the breach of warranty by way of
recoupment in diminution or extinction of the
price;
(2) Accept or keep the goods and maintain an
action against the seller for damages for the
breach of warranty;
(3) Refuse to accept the goods, and maintain an
action against the seller for damages for the
breach of warranty;
(4) Rescind the contract of sale and refuse to
receive the goods or if the goods have already
 been received, return them or offer to return
them to the seller and recover the price or any
part thereof which has been paid.
v. Waiver of Remedies
· Where the goods have been delivered to the buyer,
he cannot rescind the sale if:
(a) he knew of the breach of warranty when he
accepted the goods without protest
(b) he fails to notify the seller within a
reasonable time of the election to rescind
(c) he fails to return or to offer to return the
goods to the seller in substantially as good
condition as they were in at the time the
ownership was transferred to the buyer
· EXCEPTION: if deterioration or injury of the goods
is due to the breach or warranty, such deterioration
or injury shall not prevent the buyer from returning or
offering to return the goods to the seller and
rescinding the sale.
vi. Obligation of buyer on the price
· Where the buyer is entitled to rescind the sale and
elects to do so, he shall cease to be liable for the
price upon returning or offering to return the goods.
· If the price or any part thereof has already been paid,
the seller shall be liable to repay so much thereof as
has been paid
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vii. Refusal of seller to accept return of goods
· Where the buyer is entitled to rescind the sale and
elects to do so, if the seller refuses to accept an offer
of the buyer to return the goods, the buyer shall
thereafter be deemed to hold the goods as bailee
for the seller, but subject to a lien to secure payment
of any portion of the price which has been paid, and
with the remedies for the enforcement of such lien
allowed to an unpaid seller by Art. 1526.
V. Additional Terms for Warranties for Consumer Goods
“Consumer Products” is defined under the Consumer Act of the
Philippines as those goods “which are primarily for personal,
family, household or agricultural purposes, which shall include
but not limited to, food, drugs, cosmetics and devices.”
Subsidiary Liability of Retailer
- The retailer shall be subsidiarily liable under the warranty
in case of failure of both the manufacturer and distributor
to honor the warranty, and that in such case the retailer
shall shoulder the expenses and costs necessary to honor
the warranty.
Enforcement of Warranty
- The warranty rights can be enforced by presentment to
the immediate seller either the warranty card or the
official receipt along with the produced to be serviced or
returned to the immediate seller.
 Contrary Stipulations
Duration of Warranty - All covenants, stipulations or agreements contrary to the
- The seller and consumer may stipulate the period within provisions of Article 68 are specifically declared null and
which the express warranty shall be enforceable. If the void.
implied warranty on merchantability accompanies an
express warranty, both will be of equal duration. Any
other implied warranty shall endure not less than sixty
days nor more than one year following the sale of new
consumer products.

Breach of Warranties
- In case of breach of express warranty, the consumer may
elect to have the goods repaired or its purchase price
refunded by the warrantor. In case the repair of the
product is elected, the warranty work must be made to
conform to the express warranty within thirty days by
either the warrantor or his representative. The thirty day
period may be extended by conditions which are beyond
the control of the warrantor.
- In case the refund of the purchase price is elected, the
amount directly attributable to the use of the consumer
prior to discovery of the non-conformity shall be
deducted.
- In case of breach of implied warranty, the consumer may
retain the goods and recover damages, or reject the
goods, cancel the contract and recover from the seller so
much of the purchase price as has been paid, including
damages.

CHAPTER 12: Conditions and Warranties | Evangelista | Orteza | Narciso | Rodis | J. Santos | Torres | Villarosa