PART 6

OBLIGATIONS OF THE SELLER (Art. 1495)

ART. 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the
sale. (1461a)
Principal (1) to transfer the ownership of the determinate thing sold;
obligations of the (2) to deliver the thing, with its accessions and accessories, if any, in the condition in which they were upon the
vendor. perfection of the contract (Art. 1537.);
(3) to warrant against eviction and against hidden defects (Arts. 1495, 1547.);
(4) to take care of the thing, pending delivery, with proper diligence (see Art. 1163.); and
(5) to pay for the expenses of the deed of sale, unless there is a stipulation to the contrary. (Art. 1487.
Obligation to (1) Ownership by vendor at time of perfection of contract not essential. — The vendor need not be the owner of the
transfer thing at the time of perfection of the contract; it is sufficient that he has “a right to transfer the ownership thereof at
ownership and the time it is delivered.” (Art. 1459.) When a property belonging to a person is unlawfully taken by another, the former
deliver. has the right of action against the latter for the recovery of the property. Such right may be transferred by the sale or
assignment of the property and the transferee can maintain such action against the wrongdoer.

(2) Transfer not essential to perfection of contract. —But if the seller does not deliver at the time stipulated, the
buyer may ask for the rescission of the contract or fulfillment with the right to damages in either case. (Art. 1191.)

(3) No obligation to make delivery during period of redemption. — The purchaser in execution sales, however, is not
entitled to immediate possession of the property sold. The effective conveyance of the land is accomplished by the
deed which is issued only after the period of redemption has expired. In other words, the debtor is not obliged to
make delivery during the period of redemption. In all cases of extra-judicial foreclosure sale, the mortgagor may
redeem the real property sold within one year from the date of registration of the sale. In judicial foreclosure of real
estate mortgage, the general rule is that the mortgagor cannot exercise his right of redemption after the sale is
confirmed by the court.

(4) Right of vendee to transfer of certificate of title. — In a sale of registered land, the vendee has a right to receive
and the vendor the corresponding obligation to transfer to him, not only the possession and employment of the land
but also the certificate of title.

(5) Right of buyer to recover the price paid. —The purchaser is entitled to recover the money paid by him where the
contract is set aside by reason of the mutual material mistake of the parties as to the identity or quantity of the land
sold. And where the purchaser recovers the purchase price from a vendor who fails or refuses to deliver the title, he is
entitled, as a general rule, to interest on the money paid from the time of payment.

1. Preservation of the object of sale (NCC Art. 1163) see also Art. 1164, 1165, 1170, 1173
Art. 1163 Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father
of a family, unless the law or the stipulation of the parties requires another standard of care. (1094a)
Art. 1164 The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall
acquire no real right over it until the same has been delivered to him. (1095)
Art. 1165 When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article
1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the
debtor.
If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same
interest, he shall be responsible for any fortuitous event until he has effected the delivery. (1096)
Art. 1170 Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are liable for damages. (1101)
Art. 1173 The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of
the obligation and corresponds with the circumstances of the persons, of the time and of the place. When
negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to be observed in the performance, that which is
expected of a good father of a family shall be required. (1104a)
2. Transfer of ownership and delivery of the object (Art. 1477)
ART. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price.
Ownership of  It is only after the delivery of the thing sold that the purchaser acquires a real right or
thing transferred ownership over it. (Arts. 1164, 1496-1497.)
by delivery.  This is true even if the purchase has been made on credit.
 Payment of the purchase price is not essential to the transfer of ownership, as long as the
property sold has been delivered.
 Non-payment only creates a right to demand payment or to rescind the contract, or to criminal
prosecution in the case of bouncing checks.
 The contract is consummated by the delivery of the thing sold and of the purchase money.
 In all forms of delivery, it is necessary that the act of delivery, whether actual or constructive,
should be coupled with the intention of delivering the thing sold.
 The act without the intention is insufficient; there is no tradition.
 It has been held that the issuance of a sales invoice does not prove transfer of ownership of the
thing sold to the buyer, an invoice being nothing more than a detailed statement of the nature,
quantity, and cost of the thing sold, and considered not a bill of sale.
Exceptions to the (1) Contrary stipulation. — The ownership of things is transferred by delivery, and not by mere payment.
rule. However, the parties may stipulate that despite the delivery, the ownership of the thing shall remain
with the seller until the purchaser has fully paid the price
 known as pactum reservati dominii or contractual reservation of title, and is common in sales
on the installment plan.
 this kind of stipulation is considered a contract to sell. The agreement may be implied.
(a) such stipulation cannot make the seller liable in case of loss of the goods
(b) If there is doubt by the wording of the contract whether the parties intended a
suspensive condition or a suspensive period for the payment of the stipulated
price, the doubt shall be resolved in favor of the greatest reciprocity of
interests.
(c) A stipulation that ownership in the thing sold shall not pass to the purchaser
until after he has fully paid the price thereof could only be binding upon the
contracting parties, their assigns, and heirs but not upon third persons without
notice.
(2) Contract to sell. — such payment is a positive suspensive condition, the failure of which is not a
breach, casual or serious, but simply an event that prevents the obligation of the vendor to convey title
from acquiring binding force.

(3) Contract of insurance. —a perfected contract of sale between the vendee-consignee and the shipper
of goods operates to vest in the former an equitable title even before delivery or before he performed
the conditions of the sale, the contract of shipment, whether under F.O.B., or C.I.F., or C & F, being
immaterial in the determination of whether the vendee has an insurable interest or not in the goods.

a. Concept of delivery or tradition - “Delivery has been described as a composite act, a thing in which both parties must join
and the minds of both parties concur.
 It is an act by which one party parts with the title to and the possession of the property, and the other acquires the
right to and the possession of the same.
 it means transfer of possession.
Daus v. Sps. De Leon, GR No. 149750,
June 16, 2003

Sampaguita Pictures, Inc. v. Jalwindor

Manufacturers, Inc., GR No. L-43059,
October 11, 1979

Norkis Distributor, Inc. v. CA, G.R. No.

91029, February 7, 1991

c. Ways of effecting delivery (NCC Art. 1496-1501)

ART. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways
specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the
vendor to the vendee. (n)
Ways of effecting (1) by actual or real delivery (Art. 1497.);
delivery. (2) by constructive or legal delivery (Arts. 1498-1501.);
(3) by delivery in any other manner signifying an agreement that the possession is transferred to the
vendee. (Arts. 1496-1499.)

 the critical factor which gives legal effect to the act is the actual intention of the vendor to
deliver, and its acceptance by the vendee.
 law does not admit the doctrine of transfer of ownership of property by mere consent.
 The delivery must be made to the vendee or his authorized representative. Where the vendee
did not name any person to whom the delivery shall be made in his behalf, the vendor is
bound to deliver exclusively to him.
Ways of effecting (1) Equivalent to actual/real delivery. — Constructive delivery is a general term comprehending all
constructive those acts which, although not conferring physical possession of the thing, have been held by
delivery construction of law equivalent to acts of real delivery.
 may be effected in any of the following ways:
(a) by the execution of a public instrument
(b) by symbolical tradition or traditio symbolica
(c) by traditio longa manu (Art. 1499.);
(d) by traditio brevi manu (Ibid.);
(e) by traditio constitutum possessorium (Art. 1500.); or
(f) by quasi-delivery or quasi-traditio. (Art. 1501.)
 As a specie of constructive delivery, the execution of a public document is also considered a
form of symbolic delivery.
(2) Contrary may be stipulated. — The parties, however, may stipulate that ownership in the thing shall
pass to the purchaser only after he has fully paid the price (Art. 1478.) or fulfilled certain conditions. In a
contract of absolute sale, ownership is transferred simultaneously with the delivery of the thing sold.

▪ actual or real (NCC Art. 1497) (see also Art. 1232-1251)

ART. 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee.
(1462a)
Concept of tradition or Tradition is a derivative mode of acquiring ownership by virtue of which one who has the right
delivery and intention to alienate a corporeal thing, transmits it by virtue of a just title to one who accepts
the same. (10 Manresa 122.)
Importance of tradition (1) Transfer of ownership. — Article 1496 emphasizes the necessity of tradition for the transfer of
ownership of the thing sold. Our law does not admit the doctrine of transfer of property by mere
consent.
 Contracts only constitute titles or rights to the transfer or acquisition of ownership,
while delivery or tradition is the method of accomplishing the same, the title and the
method of acquiring it being different in our law.

(2) Liability in case of loss. — When the thing subject of the sale is placed in the control and
possession of the vendee or his agent, the delivery is complete and the vendee cannot avoid
liability in case the thing is subsequently lost without the fault of the vendor.

(3) Right of vendor to claim payment. —Where the buyer has not become the owner for lack of
delivery, his action is not accion reinvidicatoria but one against the vendor for specific
performance or rescission, with damages in either case. (Art. 1191.)

(4) Consummation of contract.

 (5) Enjoyment of thing sold. — Delivery is also necessary to enable the vendee to enjoy and make
use of the property purchased.
Actual delivery of the (1) When deemed made. — There is actual delivery when the thing sold is placed in the control
thing sold and possession of the vendee or his agent. This involves the physical delivery of the thing and is
usually done by the passing of a movable thing from hand to hand.

Art. 1232 Payment means not only the delivery of money but also the performance, in any other manner, of an obligation.
(n)
Art. 1233 A debt shall not be understood to have been paid unless the thing or service in which the obligation consists has
been completely delivered or rendered, as the case may be. (1157)
Art. 1234 If the obligation has been substantially performed in good faith, the obligor may recover as though there had
been a strict and complete fulfillment, less damages suffered by the obligee. (n)
Art. 1235 When the obligee accepts the performance, knowing its incompleteness or irregularity, and without expressing
any protest or objection, the obligation is deemed fully complied with. (n)
Art. 1236 The creditor is not bound to accept payment or performance by a third person who has no interest in the
fulfillment of the obligation, unless there is a stipulation to the contrary.
Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to
the debtor. (1158a)
Art. 1237 Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the
creditor to subrogate him in his rights, such as those arising from a mortgage, guaranty, or penalty. (1159a)
Art. 1238 Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a
donation, which requires the debtor's consent. But the payment is in any case valid as to the creditor who has
accepted it. (n)
Art. 1239 In obligations to give, payment made by one who does not have the free disposal of the thing due and capacity
to alienate it shall not be valid, without prejudice to the provisions of Article 1427 under the Title on "Natural
Obligations." (1160a)
Art. 1240 Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it. (1162a)
Art. 1241 Payment to a person who is incapacitated to administer his property shall be valid if he has kept the thing
delivered, or insofar as the payment has been beneficial to him.
Payment made to a third person shall also be valid insofar as it has redounded to the benefit of the creditor.
Such benefit to the creditor need not be proved in the following cases:
(1) If after the payment, the third person acquires the creditor's rights;
(2) If the creditor ratifies the payment to the third person;
(3) If by the creditor's conduct, the debtor has been led to believe that the third person had authority to receive
the payment. (1163a)
Art. 1242 Payment made in good faith to any person in possession of the credit shall release the debtor. (1164)
Art. 1243 Payment made to the creditor by the debtor after the latter has been judicially ordered to retain the debt shall
not be valid. (1165)
Art. 1244 The debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the
same value as, or more valuable than that which is due.
In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance
against the obligee's will. (1166a)
Art. 1245 Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be
governed by the law of sales. (n)
Art. 1246 When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and
circumstances have not been stated, the creditor cannot demand a thing of superior quality. Neither can the
debtor deliver a thing of inferior quality. The purpose of the obligation and other circumstances shall be taken
into consideration. (1167a)
Art. 1247 Unless it is otherwise stipulated, the extrajudicial expenses required by the payment shall be for the account of
the debtor. With regard to judicial costs, the Rules of Court shall govern.
Art. 1248 Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the
prestations in which the obligation consists. Neither may the debtor be required to make partial payments.
However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the debtor
may effect the payment of the former without waiting for the liquidation of the latter.
Art. 1249 The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such
 currency, then in the currency which is legal tender in the Philippines.
The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall
produce the effect of payment only when they have been cashed, or when through the fault of the creditor they
have been impaired.
In the meantime, the action derived from the original obligation shall be held in the abeyance. (1170)
Art. 1250 In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the
currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an
agreement to the contrary. (n)
Art. 1251 Payment shall be made in the place designated in the obligation.
There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be
made wherever the thing might be at the moment the obligation was constituted.
In any other case the place of payment shall be the domicile of the debtor.
If the debtor changes his domicile in bad faith or after he has incurred in delay, the additional expenses shall be
borne by him.
These provisions are without prejudice to venue under the Rules of Court. (1171a)

▪ constructive or legal (NCC Arts. 1498-1501)

ART. 1498. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. With
regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is
stored or kept. (1463)
Execution of a (1) Possession transferred to buyer by notarized deed of conveyance. — The execution of a public
public instrument instrument (i.e., an instrument or document attested and certified by a public officer authorized to
or document. administer oath, such as a notary public) as a manner of delivery applies to movable as well as
immovable property since the law does not make any distinction and it can be clearly inferred by the use
of the word “also” in paragraph 2 of Article 1498.
 e.g., right to eject tenants or squatters from the property in question.

(2) Delivery presumptive only. —It confines itself to providing that “the execution thereof shall be
equivalent” to delivery, which means that there is only a presumptive (not conclusive) delivery which can
be rebutted by evidence to the contrary.
 Such presumption is destroyed when the delivery is not effected because of a legal
impediment.
(a) Such would be the case, for instance, where a certain date is fixed when the purchaser
should take possession of the thing, or where the vendor reserves the right to use and enjoy
the property until a certain period, or where it is stipulated that until payment of the last
installment is made, the title to the property should not be deemed to have been transmitted,
or where the vendor has no control over the thing sold at the moment of the sale, and,
therefore, its material delivery could not have been made.

(b) Presumptive delivery by execution of public instrument can also be negated by failure of the
vendee to take material possession of the land subject of the sale in the concept of purchaser-
owner.

(3) Sale of thing not subject to control of vendor. — Symbolic delivery by the execution of a public
instrument is equivalent to actual delivery only where the thing is subject to the control of the vendor
and there is no impediment that may prevent the passing of the property from the hands of the vendor
into those of the vendee.
 if the sale had been made under the express agreement of imposing upon the vendee the
obligation to take the necessary steps to obtain the material possession of the thing sold and if
it were proven that he knew that the thing was in the possession of a third person claiming to
have property rights thereon, such agreement would be perfectly valid. (Ibid.)

(4) Sale of registered land. —modified by the provisions of the Property Registration Decree (Pres.
Decree No. 1529.) insofar as registered land is concerned.
 Section 51 of the decree is very clear that no deed purporting to convey or affect registered
land, shall take effect as a conveyance or bind the land (as against third persons) until its
registration.
  no act of the parties can transfer the ownership of real estate under the Torrens System.

(5) Possession of a part as constructive possession of whole. — purchaser took actual possession of the
considerable portion of the land sold by the exercise of possessory acts of clearing the area of trees and
of cultivating the same through tenants, such possession and cultivation of a part is logically and legally
constructive possession of the whole.
Symbolic tradition Constructive delivery is symbolic when to effect the delivery, the parties make use of a token symbol to
represent the thing delivered.
 ex: delivery of key.

ART. 1499. The delivery of movable property may likewise be made by the mere consent or agreement of the contracting
parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale, or if the latter already
had it in his possession for any other reason. (1463a)
Traditio longa This mode of delivery takes place by the mere consent or agreement of the contracting parties as when
manu the vendor merely points to the thing sold which shall thereafter be at the control and disposal of the
vendee.
 is qualified by the phrase “if the thing sold cannot be transferred to the possession of the
vendee at the time of the sale.”
Traditio brevi This mode of legal delivery happens when the vendee has already the possession of the thing sold by
manu virtue of another title as when the lessor sells the thing leased to the lessee.

ART. 1500. There may also be tradition constitutum possessorium.

Traditio  opposite of traditio brevi manu.
constitutum  It takes place when the vendor continues in possession of the property sold not as owner but in
possessorium. some other capacity, as for example, when the vendor stays as a tenant of the vendee.
 In this case, instead of the vendor delivering the thing to the vendee so that the latter may, in
turn, deliver it back to the vendor, the law considers that all these have taken place by mere
consent or agreement of the parties.

ART. 1501. With respect to incorporeal property, the provisions of the first paragraph of article 1498 shall govern. In any other
case wherein said provisions are not applicable, the placing of the titles of ownership in the possession of the vendee or the use
by the vendee of his rights, with the vendor’s consent, shall be understood as a delivery. (1464)
Quasi-traditio  Tradition can only be made with respect to corporeal things.
 In the case of incorporeal things, delivery is effected:
(1) by the execution of a public instrument; or
(2) when that mode of delivery is not applicable, by the placing of the titles of ownership in the
possession of the vendee; or
3) by allowing the vendee to use his rights as new owner with the consent of the vendor.

Ten Forty Realty v. Cruz, G.R.

No. 151212, September 10,
2003

Rudolph Leits, Inc. vs. CA, 478

SCRA 451

Raymundo De Leon vs. Ong,

G.R. No. 170405, 2 February
2010

Asset Privatization Trust vs. TJ

Enterprises, G.R. No. 167195,
8 May 2009
d. Special rules on:
▪ contract of sale or return (NCC Art. 1502)
▪ contract of sale on trial or approval (NCC Art. 1502)
ART. 1502. When goods are delivered to the buyer “on sale or return” to give the buyer an option to return the goods instead
of paying the price, the ownership passes to the buyer on delivery, but he may revest the ownership in the seller by returning
or tendering the goods within the time fixed in the contract, or, if no time has been fixed, within a reasonable time. (n)

When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar terms, the ownership therein
passes to the buyer.
(1) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
(2) If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of rejection, then if
a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the
expiration of a reasonable time. What is a reasonable time is a question of fact. (n)
Contract of sale or (1) In general. The duty of the buyer with regard to the return of the goods requires, ordinarily, that
return, and of sale on they be returned in the same or substantially the same condition in which they were when the
trial or approval or contract was made. Undoubtedly, if they are injured or damaged substantially through negligence or
satisfaction. misuse of the buyer, his right to return is lost and the sale becomes absolute.

(2) Sale or return. — It is a contract by which property is sold but the buyer, who becomes the owner
of the property on delivery, has the option to return the same to the seller instead of paying the
price.
(a) The seller cannot, in this type of sale, prevent the revesting of title by refusing to accept the return
of the property.
(b) Since title passes to the buyer on delivery, the loss or destruction of the property prior to the
exercise of the buyer’s option to return falls upon him and renders him responsible to the seller for
the purchase price or such part thereof as remains unpaid.
 The word “return” itself implies a previous transfer of title

(3) Sale on trial or approval. — It is a contract in the nature of an option to purchase if the goods
prove satisfactory, the approval of the buyer being a condition precedent.
 In this kind of contract, the title shall continue in the seller until the sale has become
absolute either by the buyer’s approval of the goods, or by his failing to comply with the
express or implied conditions of the contract as to giving notice of dissatisfaction or as to
returning the goods, or by his doing any other act adopting the transaction such as
mortgaging the property or selling it to a third person.
 The buyer cannot accept part and reject the rest of the goods since this falls outside the
normal intent of the parties.
“Sale or return” The distinctions are the following:
distinguished from (1) “Sale or return” is a sale subject to a resolutory condition, while sale on trial is subject to a
sale on trial. suspensive condition;
(2) “Sale or return” depends entirely on the will of the buyer, while sale on trial depends on the
character or quality of the goods;
(3) In “sale or return,” the ownership of the goods passes to the buyer on delivery and subsequent
return of the goods reverts ownership in the seller, while in sale on trial, the ownership remains in
the seller until the buyer signifies his approval or acceptance to the seller; and
(4) In “sale or return,” the risk of loss or injury rests upon the buyer, while in sale on trial, the risk still
remains with the seller.

Cases:
Industrial Textile
Manufacturing
Company vs. LPJ
Enterprises, Inc.,
G.R. No. 66140, 21
January 1993
 ▪ sale of specific goods with reserved title (NCC Art. 1503)
▪ delivery to carrier on behalf of the buyer (NCC Art. 1503)
ART. 1503. Where there is a contract of sale of specific goods, the seller may, by the terms of the contract, reserve the right of
possession or ownership in the goods until certain conditions have been fulfilled. The right of possession or ownership may be
thus reserved notwithstanding the delivery of the goods to the buyer or to a carrier or other bailee for the purpose of
transmission to the buyer.

Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order of the
seller or of his agent, the seller thereby reserves the ownership in the goods. But if, except for the form of the bill of lading, the
ownership would have passed to the buyer on shipment of the goods, the seller’s property in the goods shall be deemed to be
only for the purpose of securing performance by the buyer of his obligations under the contract.

Where goods are shipped, and by the bill of lading the goods are deliverable to the order of the buyer or of his agent, but
possession of the bill of lading is retained by the seller or his agent, the seller thereby reserves a right to the possession of the
goods as against the buyer.

Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading together to the
buyer to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not
honor the bill of exchange, and if he wrongfully retains the bill of lading he acquires no added right thereby. If, however, the bill
of lading provides that the goods are deliverable to the buyer or to the order of the buyer, or is indorsed in blank, or to the
buyer by the consignee named therein, on who purchases in good faith, for value, the bill of lading, or goods from the buyer will
obtain the ownership in the goods, although the bill of exchange has not been honored, provided that such purchaser has
received delivery of the bill of lading indorsed by the consignee named therein, or of the goods, without notice of the facts
making the transfer wrongful. (n)
When ownership not As a general rule, the ownership in the goods sold passes to the buyer upon their delivery to the
transferred upon carrier. There are, however, certain exceptions and they are:
delivery. (1) if a contrary intention appears by the terms of the contract;
(2) in the cases provided in the second and third paragraphs of Article 1523; and
(3) in the cases provided in the first, second, and third paragraphs of Article 1503
Transfer of ownership (1) General rule. —The risk of loss, therefore, as between the buyer and the seller, falls upon the
where goods sold buyer. If a seller consigns goods to another specified person it indicates an intention to deliver to the
delivered to carrier. carrier as bailee for the person named, and, if such shipment was authorized by that person as a
buyer, the ownership vests in him. The same result follows it, after the goods have been shipped
without a named consignee, the carrier at the consignor’s request, agrees to deliver to a specified
person.

(2) Where right of possession or ownership of specific goods sold reserved. —if the seller directs the
carrier to redeliver the goods at their destination to the seller himself, or to his order, it indicates an
intention that the carrier shall be the bailee for the seller and the ownership will remain in the latter.
Where seller or his (1) Carrier becomes bailee for seller.
agent is consignee. (2) Rights of seller. — The seller may not only retain the goods until the buyer performs his obligation
under the contract, but he may, even in violation of the contract, dispose of them to third persons. If
the seller does this, of course, he is liable for damages to the buyer but the second purchaser from
the seller acquires a better right.
Where seller’s title (1) Form of bill of lading not conclusive. —The specification in the bill of lading to the effect that the
only for purpose of goods are deliverable to the order of the seller or his agent does not necessarily negate the passing of
security title to the goods upon delivery to the carrier.
(2) Where ownership would have passed but for the form of bill of lading. — The circumstances may
be such that were it not for the form of the bill of lading, the ownership would have passed to the
buyer or shipment of the goods. By shipping the goods, the seller has definitely lost all use of them to
the buyer.
Significance where (1) Risk of loss on buyer. — In the first place, the beneficial owner (buyer), not the one who holds for
title held merely as security (seller), will be subject to the risk of loss or from the time the goods are delivered to the
security. carrier even though the legal title remains in the seller. That the risk should be borne by the buyer if
the seller retains title merely to secure performance by the buyer of his obligations under the
contract is a consequence of the theory that such a bargain is, in effect, although not in form, a sale
to the buyer and a mortgage back by him of the goods to secure the price. The title does not pass to
the buyer until he receives the order bill of lading properly indorsed.
 (2) Buyer’s right of action based on ownership. — In the second place, the buyer has more than a
mere contract right in regards to the goods. As beneficial owner, he may, as against any one except
an innocent purchaser for value of the bill of lading from the consignee, bring an action based on
ownership on making tender of the price.
Where buyer or his Where goods are shipped and by the bill of lading the goods are deliverable to the order of the buyer
agent is consignee but or of his agent, but possession of the bill of lading is retained by the seller or his agent, the seller
seller retains order bill thereby retains a right to the possession of the goods as against the buyer.
of lading.
(1) Effect of retention. — Although the property in the goods will ordinarily pass to the buyer on
delivery, the latter is unable to obtain the goods without the bill. The effect of the retention of the bill
of lading, under such circumstances, controlling as it does the possession of the goods, is, therefore,
closely analogous to the retention of a lien by the seller after the property has passed to the buyer.

(2) Surrender of order bill necessary. — The carrier cannot be compelled to surrender possession of
the goods until the order bill (properly indorsed) has been surrendered. In an order bill, it cannot with
certainty be determined who is the person named to whose order the goods are deliverable unless
the bill of lading itself is presented.

(3) Identification of consignee sufficient in case of straight bill. —the shipper who issues a straight
bill of lading (goods are by its terms deliverable not to the order of the consignee but to the
consignee only) ordinarily does not require the surrender of the bill by the consignee in order for the
latter to get the goods. The consignee need only to identify himself. Hence, where the buyer is the
consignee, the seller must use an order bill of lading.
Where a third person Two devices have already been considered by which the seller of goods retains a hold upon them by
who retains the bill is means of the bill of lading after he has shipped them;
consignee. first, by consigning the goods to himself, either by an order bill or a straight bill and
second, by consigning the goods to the order of the buyer and retaining possession of the bill of
lading.
A third method also in common use is to consign the goods to a third person (usually a banker)
requesting the latter to retain the bill of lading or goods until payment of the price.
When the price is (1) Immaterial whether bill an order or straight bill. — For the success of this third device, it is
paid, the consignee of immaterial, so far as the protection of the seller is concerned, whether the bill is a straight bill or an
the goods indorses order bill.
the bill or delivers the (a) If it is an order bill, the carrier will not deliver the goods until the bill is surrendered and the buyer
goods to the buyer cannot get it so as to make the necessary surrender except from the holder, the consignee.
(b) Even if it is not an order bill, the carrier, though it may not require the surrender of the bill of
lading, will deliver only to the consignee.

(2) Legal title vested in third person. — By naming a third person as consignee of the bill of lading,
the seller vests a legal title in the third person. This title is held merely for the benefit of the seller if
the third person is the seller’s agent only and has not advanced money of his own to the seller.
Frequently, however, the third person is a banker and by discounting a draft drawn on the buyer by
the shipper, or under an arrangement with the buyer by paying or accepting a draft drawn on himself,
has acquired a personal interest in the goods. (Ibid., pp. 164-165.)

(3) Risk of loss on buyer. — The buyer as is true where the seller consigns the goods to himself, or his
agent, or to a third person, bears the risk of loss. Where bill of lading sent forward with draft
attached. Where the seller draws on the buyer for the price and transmits the bill of exchange and
the bill of lading together to the buyer to secure acceptance or payment of the bill of exchange the
title is regarded as retained in the seller until the bill of exchange is paid.
 The fact that the bill of lading and a bill of exchange are attached together indicates that
the seller intends to make the delivery of the goods conditional upon the payment or
acceptance of the draft.
(1) Duty of buyer if draft not paid. — The buyer is bound to return the bill of lading if he
does not honor the bill of exchange. If he wrongfully retains the bill of lading, he acquires
no additional right thereby. In carrying out the device in question, it is customary to send
the bill of lading with the draft attached thereto to some person other than the buyer, for if
the bill of lading and the draft are sent directly to the buyer, the latter may obtain the
 goods without paying the draft and the seller, even if he has a good right of action against
the buyer on this account, is compelled to enter upon litigation in order to enforce his
rights, whereas if the bill of lading and draft are sent through the third person, ordinarily a
bank, the buyer is unable to obtain the goods without paying the price. (see Ibid., pp. 178-
180.)

(2) Effect of buyer obtaining possession of bill of lading without honoring draft. — As regard
third persons, however, if the bill of lading provides that the goods are deliverable to the
buyer or to the order of the buyer or is indorsed in blank or is indorsed to the buyer by the
consignee named therein, a purchaser in good faith for value of the bill of lading or goods
from the buyer will obtain the ownership in the goods although the bill of exchange has not
been honored.
Distinctions in regard (1) If the seller has named the buyer as consignee, the property has passed to the consignee or at
to the form of the bill least it seems to have been so to one who inspects the document;
of lading. (2) If the bill of lading, though naming the seller as consignee, is indorsed by him to the buyer or in
blank, the possession of the document by the buyer gives him, if not the actual title, at least an
apparent ownership; and
(3) If the bill of lading names the seller or a third person as consignee and no indorsement of the
document had been made, possession by the buyer would not indicate that the buyer had title.
Where the document gives the buyer apparent ownership and a third person purchases the goods
relying thereon, it seems clear on broad principles of justice that since one of two innocent parties
must suffer, he should suffer whose act has brought about the loss. Consequently, the seller ought
not to be allowed to recover the goods from the third person. (see Ibid., pp. 191-192.)

▪ shipping terms – C.O.D., F.O.B., C.I.F.

C.O.D If the goods are marked C.O.D., the carrier acts for the seller in collecting the purchase price. The
“collect on delivery” buyer must pay for the goods before he can obtain possession. C.O.D. terms do not prevent title from
passing to the buyer on delivery to the carrier where they are solely intended as security for the
purchase price (see Art. 1503.);
F.O.B. They mean that the goods are to be delivered free of expense to the buyer to the point where they are
“free on board” F.O.B. In general, the point of F.O.B., either the point of shipment or the point of destination,
determines when the ownership passes. Here, title presumably passes when the goods are so
delivered F.O.B.; and
C.I.F. They signify that the price fixed covers not only the cost of the goods, but the expense of freight and
“cost, insurance and insurance to be paid by the seller up to the point of destination. Title passes to the buyer at the
freight” moment of delivery to the point especially named.
Presumption arising Both the terms “F.O.B.” and “C.I.F.” merely make rules of presumption which yield to proof of contrary
from payment of intention. If the buyer is to pay the freight, it is reasonable to suppose that he does so because the
freight goods become his at the point of shipment. On the other hand, if the seller is to pay the freight, the
inference is equally strong that the duty of the seller is to have the goods transported to their ultimate
destination and that title to property does not pass until the goods have reached their destination.

▪ when person selling is not the owner (NCC Art. 1505)

Art. 1505. Presumption arising from payment of freight. Both the terms “F.O.B.” and “C.I.F.” merely make rules of presumption
which yield to proof of contrary intention. If the buyer is to pay the freight, it is reasonable to suppose that he does so because
the goods become his at the point of shipment. On the other hand, if the seller is to pay the freight, the inference is equally
strong that the duty of the seller is to have the goods transported to their ultimate destination and that title to property does
not pass until the goods have reached their destination. (Ibid.; see General Foods Corp. vs. National Coconut Corp., 100 Phil.
337 [1956].) tory power of sale or under the order of a court of competent jurisdiction; (3) Purchases made in a merchant’s
store, or in fairs, or markets, in accordance with the Code of Commerce and special laws. (n)
Sale by a Sale is a derivative mode of acquiring ownership and the buyer gets only such rights as the seller had. A
person not the derivative right cannot exist higher than its source. The exceptions to the rule are given below.
owner (1) Where the owner of the goods is, by his conduct, precluded from denying the seller’s authority to sell. —
Thus, where a parcel of land is sold by one not the owner or the agent of the owner, but the real owner
thereof upon being questioned in a criminal case instituted against the vendor states that he authorized such
sales so that the vendor was acquitted of the charge against him, a purchaser in good faith acquires a valid
title to the property as it is not lawful nor permissible for said owner to deny or retract his former sworn
statement that he had consented to said sale.
(2) Where the law enables the apparent owner to dispose of the goods as if he were the true owner thereof.
— The Philippines, unlike other jurisdictions as England and several states of the United States, has no such
law as the Factors’ Act. The law referred to here, therefore, must be found in the provisions of our Civil Code
on agency. (C. Alvendia, Law on Sales, 1950 ed., p. 153.) (a) Factors Acts are designed to protect third
persons who (under specified conditions) deal with an agent (e.g., a person to whom the owner delivered
goods for sale or as security, or entrusted documentary evidence of title thereto) believing him to be the
owner of goods. (Babb & Martin, Business Law, 1952 ed., p. 117.) (b) Examples of the recording laws which
may have a bearing on the validity of a sale made by a person who is not the owner or the agent of the
owner are: P.D. No. 1529 (Property Registration Decree), R.A. No. 4136 (Land Transportation and Traffic
Code), and the Revised Administrative Code with regards to the sale of large cattle (Sec. 529.) and sale of
vessels. (Sec. 1171.) Examples of “any other provision of law” referred to in No. (1) are Act No. 2031
(Negotiable Instruments Law) and Act No. 2137. (Warehouse Receipts Law) (see Arts. 1507- 1520.) (c) In a
case, the car in question which was acquired by the respondent by purchase from its registered owner for a
valuable consideration under a notarial deed of absolute sale was seized and impounded by land
transportation agents as stolen property. It was held that the acquirer or the purchaser in good faith of a
chattel or movable property is entitled to be respected and protected in his possession as if he were the true
owner thereof until a competent court rules otherwise. In the meantime, he cannot be compelled to
surrender possession nor to be required to institute an action for the recovery of the chattel, whether or not
an indemnity bond is issued in his favor. The filing of an information charging that the chattel was illegally
obtained through estafa from its true owner by the transferor of the bona fide possessor does not warrant
disturbing the possession of the chattel against the will of the possessor. Finally, under Section 60 of R.A. No.
4136, the right of the Land Transportation Commission to impound motor vehicles is only good for the
proper enforcement of lien upon motor vehicles of unpaid fees for registration, re-registration, or delinquent
registration of motor vehicles. (Edu vs. Gomez, 129 SCRA 601 [1984].) (d) With respect to real property, it has
been ruled that a “fraudulent and forged document of sale may become the root of a valid title if the
certificate of title has already been transferred from the name of the true owner to the name indicated by
the forger.” Every person dealing in good faith and for valuable consideration with registered land may safely
rely upon what appears in the certificate of title and does not have to inquire further. If the rule were
otherwise, the efficacy and conclusiveness of Torrens Certificates of Titles would be futile and nugatory.”
(Duran vs. Intermediate Appellate Court, 138 SCRA 489 [1985].) The remedy of the person prejudiced is to
bring an action for damages against those who employed the fraud, within four (4) years after the discovery
of the deception (see Art. 1391.), and if the latter are insolvent, an action against the Treasurer of the
Philippines may be filed for recovery of damages against the Assurance Fund. (Veloso vs. Court of Appeals,
73 SCAD 303, 260 SCRA 593 [1996]; Delos Reyes vs. Court of Appeals, 285 SCRA 81 [1998].) (3) Where the
sale is sanctioned by statutory or judicial authority. — According to Article 559 of the Civil Code, “the
possession of movable property acquired in good faith is equivalent to title. Nevertheless, one who has lost
any movable, or has been unlawfully deprived therefor, may recover it from the person in possession of the
same. If the possessor of a movable lost or of which the owner has unlawfully been deprived has acquired it
in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid
therefor.” (see Art. 1537, par. 2.) Different laws apply to different types of forced or involuntary sales under
our jurisdiction, namely: (a) an ordinary execution sale, which is governed by the pertinent provisions of Rule
39 of the Rules of Court on Execution, Satisfaction and Effect of Judgments; (b) judicial foreclosure sales,
which are governed by Rule 68 of the Rules of Court, captioned “Foreclosure of Mortgage’’; and (c) extra-
judicial foreclosure sales of real estate mortgages, which are governed by Act No. 3135, as amended by Act
No. 4118, otherwise known as “An Act to Regulate the Sale of Property Under Special Powers Inserted in or
Annexed to Real Estate Mortgages.’’ (Supena vs. De la Rosa, 78 SCAD 409, 267 SCRA 1 [1997].) The
government, however, does not warrant the title to properties sold by the sheriff at public auction or judicial
sales. (see Art. 1570. (4) Where the sale is made at merchant’s stores, fairs or markets. — No. 3 of Article
1505 is a case of an imperfect or void title ripening into a valid one as a result of some intervening due
causes. The sale is necessary not only to facilitate commercial sales on movables but also to give stability to
business transactions especially in a country like the Philippines, where free enterprise prevails, for a buyer
cannot be reasonably expected to look behind the title of every article when he buys at a store. (Sun
Brothers Co. vs. Velasco, [C.A.] 54 O.G. 5103.) (5) Where the seller has a voidable title which has not been
avoided at the time of the sale. — See Article 1506. (6) Where seller subsequently acquires title. — When a
person conveys property to another of which at the time he is not the owner, his subsequent acquisition of
title validates his previous conveyance. (Llacer vs. Munoz, 12 Phil. 328 [1908]; Abella vs. Gonzaga, 56 Phil.
132 [1931]; see Art. 1434.) This doctrine is equally applicable to conveyance of usufructs as well as to
 transfers of full ownership. (Feria vs. Silva, [C.A.] No. 6151-R, Aug. 10, 1951.)

▪ seller’s title is voidable (NCC Art. 1506)

ART. 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the
buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller’s
defect of title. (n
Sale by one having a voidable title. (1) Requisites for acquisition of good title by buyer. — If the seller has
only a voidable title to the goods, the buyer acquires a good title to the goods provided he buys them: (a)
before the title of the seller has been avoided; (b) in good faith for value; and (c) without notice of the
seller’s defect of title. (see Arts. 1385, 1388.) (2) Basis of rule. — Article 1506 seems to be predicated on
the principle that where loss has happened which must fall on one of two innocent persons, it should be
borne by him who is the occasion of the loss. It is similar to the rule in P.D. No. 1529 (Property Registration
Decree) referring to an innocent purchaser for value in good faith (Sec. 51 thereof.) and to the rule in Act
No. 2031 (Negotiable Instruments Law) referring to a holder in due course to whom a negotiable
instrument is negotiated for value and in good faith. (see Sec. 57 thereof.

e. When obligation to deliver arises (NCC Art. 1524)

ART. 1524. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price, or if no period for
the payment has been fixed in the contract. (1466)
Delivery, simultaneous with payment of price. As a general rule, the obligation to deliver the thing subject
matter of a contract arises from the moment of its perfection and from that time the obligation may be
enforced. (see Art. 1315.) But the contract of purchase and sale is bilateral and from it arises not only the
obligation to deliver the thing but also that of paying the price. The obligations are reciprocal.
Consequently, if the vendor is bound to deliver the thing sold, it is no less certain that the vendee must
pay the price. If the vendee does not pay the price, the consideration for the obligation of the vendor is
absent and if the consideration is absent, the obligation likewise does not exist or at least is suspended.
(10 Manresa 138; see Lafont vs. Pascacio, 5 Phil. 391 [1905].) The vendor is not also obliged to make
delivery if no period has been fixed in the contract and the vendee has not paid the price. A vendor who
continued to effect sales and deliveries to the vendee even without promptly getting paid is considered for
all intents and purposes, to have sold on credit. (Castro vs. Mendoza, 44 SCAD 995, 226 SCRA 611 [1993].)
When delivery must be made before payment of price. The provisions of Article 1524 contain a rule and an
exception: the rule is that the thing shall not be delivered unless the price be paid; and the exception is
that the thing must be delivered though the price be not first paid, if time for such payment has been fixed
in the contract. (see Warner, Barnes & Co. vs. Inza, 43 Phil. 505 [1922]; Ocejo, Perez & Co. vs. International
Bank, 37 Phil. 631 [1918]; Lafont vs. Pascasio, supra.) If this period was fixed, the vendor notwithstanding
such period has not terminated, nor, consequently, that he has not collected the price, is obliged to deliver
the thing sold. The vendor’s obligation to convey the thing arises from the force and validity of the
contract. (Florendo vs. Foz, 20 Phil. 388 [1911]; 10 Manresa 131-134.) But even if a period has been fixed
for the payment of the price, the vendor is not bound to deliver in case the vendee has lost the right to
make use of the period and still has not paid the price. (Art. 1536.)

f. Other rules on delivery:

▪ sale of real property by unit of measure or number (NCC Art. 1539- 41)
ART. 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in
the contract, in conformity with the following rules: If the sale of real estate should be made with a statement of its area, at the
rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should
demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a
proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be
not less than one-tenth of that stated. The same shall be done, even when the area is the same, if any part of the immovable is
not of the quality specified in the contract. The rescission, in this case, shall only take place at the will of the vendee, when the
inferior value of the thing sold exceeds one-tenth of the price agreed upon. Nevertheless, if the vendee would not have bought
the immovable had he known of its smaller area or inferior quality, he may rescind the sale. (1469a)
Sale of real property by unit of measure or number. (1) Entire area stated in contract must be delivered. —
If the sale of real estate should be made with a statement of its area, at the rate of a certain price per unit
 of measure or number, the cause of the contract with respect to the vendee is the number of such units
or, if you wish, the thing purchased as determined by the stipulated number of units. The vendor must
deliver the entire property agreed upon. (pars. 1 and 2.) Thus, if the parcel of land is stated in the contract
as having an area of 500 square meters and sold at P1,000.00 per square meter, the vendor must deliver
the entire area as stated. (see Santa Ana, Jr. vs. Hernandez, 18 SCRA 973 [1966].) Furthermore, the
immovable must be of the quality specified in the contract. (par. 3.) (2) Where entire area could not be
delivered. — If all that is included within the stipulated boundaries is not delivered, then the object of the
contract, its cause as far as the vendee is concerned, is not delivered. Hence, he is entitled to rescind it. He
may, however, enforce the contract with the corresponding decrease in price. (Teran vs. Villanueva Viuda
de Riosa, 56 Phil. 677 [1932].) When vendee entitled to rescind sale of real property. Under the above
article, the right of rescission is available to the vendee in the following cases: (1) If the lack in area is at
least 1/10th than that stated or stipulated. (par. 2.) The 1/10th mentioned must be based on the area
stipulated in the contract, and not on the real area which the thing may actually have (see 10 Manresa
149-154.); (2) If the deficiency in the quality specified in the contract exceeds 1/10th of the price agreed
upon (par. 3.); and Sale of real property by unit of measure or number. (1) Entire area stated in contract
must be delivered. — If the sale of real estate should be made with a statement of its area, at the rate of a
certain price per unit of measure or number, the cause of the contract with respect to the vendee is the
number of such units or, if you wish, the thing purchased as determined by the stipulated number of units.
The vendor must deliver the entire property agreed upon. (pars. 1 and 2.) Thus, if the parcel of land is
stated in the contract as having an area of 500 square meters and sold at P1,000.00 per square meter, the
vendor must deliver the entire area as stated. (see Santa Ana, Jr. vs. Hernandez, 18 SCRA 973 [1966].)
Furthermore, the immovable must be of the quality specified in the contract. (par. 3.) (2) Where entire
area could not be delivered. — If all that is included within the stipulated boundaries is not delivered, then
the object of the contract, its cause as far as the vendee is concerned, is not delivered. Hence, he is
entitled to rescind it. He may, however, enforce the contract with the corresponding decrease in price.
(Teran vs. Villanueva Viuda de Riosa, 56 Phil. 677 [1932].) When vendee entitled to rescind sale of real
property. Under the above article, the right of rescission is available to the vendee in the following cases:
(1) If the lack in area is at least 1/10th than that stated or stipulated. (par. 2.) The 1/10th mentioned must
be based on the area stipulated in the contract, and not on the real area which the thing may actually have
(see 10 Manresa 149-154.); (2) If the deficiency in the quality specified in the contract exceeds 1/10th of
the price agreed upon (par. 3.); and
ART. 1540. If, in the case of the preceding article, there is a greater area or number in the immovable than
that stated in the contract, the vendee may accept the area included in the contract and reject the rest. If
he accepts the whole area, he must pay for the same at the contract rate. (1470a
Where immovable of a greater area or number. If the area or number in the immovable is greater than
that stipulated in the contract, the vendee may accept the area included in the contract and reject the
rest. If he accepts the whole, he makes himself liable for the price of the same at the contract rate. (see
comments under Article 1522, par. 2.) The vendee may not withdraw from the contract.
ART. 1541. The provisions of the two preceding articles shall apply to judicial sales. (n)
Application of Articles 1539 and 1540 to judicial sales. The provisions of Articles 1539 and 1540 are
applicable to both private (voluntary) and judicial sales when the immovable sold is lacking in area or is of
inferior quality or is greater in area than stated in the contract. (see Arts. 1552 and 1570.) The reason is
tha the rules they contain are derived from the very nature of the contract of sale. The rules, however,
may be varied or suppressed by agreement between the contracting parties. (10 Manresa 138.)

▪ sale of real estate made for a lump sum (NCC Art. 1542)
ART. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number,
there shall be no increase or decrease of the price, although there be a greater or less area or number than that stated in the
contract. The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning
the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or
number specified in the contract; and should he not be able to do so, he shall suffer a reduction in the price, in proportion to
what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to
deliver what has been stipulated. (1471)
Sale of real (1) Mistake in area stated in contract immaterial. — If the sale is made for a lump sum, and not so much
estate made for a per unit of measure or number, the cause of the contract is the thing sold independent and irrespective of
lump sum. its number or measure. (see 10 Manresa 145.) In this case, the law presumes that the purchaser had in
mind a determinate price for the real estate and that he ascertained its area and quality before the
contract was perfected. (Teran vs. Villanueva, 56 Phil. 677 [1932].) In other words, it is presumed that the
purchaser intended to buy a determinate object in its entirety and not just any unit of measure or number,
and the price is determined with relation to it; hence, its greater or lesser area cannot influence the
increase or decrease of the price agreed upon, whether the object be single realty or whether they are
two or more immovables. The boundaries of the land stated in the contract determine the effects and
scope of the sale, not the area thereof. (Semira vs. Court of Appeals, 49 SCAD 93, 230 SCRA 577 [1994]; 10
Manresa 156-157.) Hence, the vendor is obligated to deliver all the land included within the boundaries,
regardless of whether the real area should be greater or smaller than that recited in the deed (Balantakbo
vs. Court of Appeals, 65 SCAD 74, 249 SCRA 323 [1995].) inasmuch as it is the entirety thereof that
distinguishes the determinate object. (Roble vs. Arbasa, 152 SCAD 115, 362 SCRA 69 [2001], citing
Tolentino Civil Code of the Philippines, Vol. V, 1992 ed., p. 94.) The possibility of error is a hazard which
the parties must be presumed to have assumed. This hazard is not one-sided but works both ways.
(Gonzales-Mondragon vs. Santos, 87 Phil. 471 [1950].) The rule in Article 1542, however, admits of
exceptions. (infra.) (2) Where area or number stated together with boundaries. — If the vendor cannot
deliver to the vendee all that is included within the boundaries mentioned in the contract, the latter has
the option to reduce the price in proportion to the deficiency or to set aside the contract. (Art. 1542, par.
2.) The phrase “should he not be able to do so” refers to a situation when the vendor, either because a
part or parcel of the real estate does not belong to him, cannot deliver all that is included within the
boundaries. (see 10 Manresa 145-154.
(3) Where there is conflict between area stipulated and title to property. — In case of conflict between the
area included within the stipulated boundaries and that which the title shows, the former shall prevail
when the boundaries are certain and no alteration thereof has been proven. (Government vs. Abaya, 52
Phil. 261 [1928].) That which really defines a piece of ground is not the area, calculated with more or less
certainty mentioned in its description, but the boundaries therein laid down as enclosing the land and
indicating its limits. It is not of vital consequence that a contract on sale of land should disclose the area
with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to
enable one to identify it. An error as to the superficial area is immaterial. (Erico vs. Heirs of Chigas, 98
SCRA 575 [1980]; Dichoso vs. Court of Appeals, 192 SCRA 169 [1990].) (4) Where identity of erroneously
designated property clearly established. — Where the identity of the disputed property has been clearly
established by both parties’ pleadings, the mistake in designating the property in the deed of sale “does
not vitiate consent of the parties or affect the validity and binding effect of the contract. The reason is that
when one sells or buys real property — a piece of land, for example — one sells or buys the property as he
sees it in its actual setting and by its physical metes and bounds, and not by the mere lot number assigned
to it in the certificate of title.” (Dihiansen vs. Court of Appeals, 153 SCRA 712 [1987]; Atilano vs. Atilano, 28
SCRA 231 [1969].) The remedy for such a situation is to have the document reformed. (Art. 1359, et seq.)
(5) Where words “about,’’ “more or less,” etc. are used. — The words when used in connection with
quantity or distance, are words of safety and caution, intended to cover some slight or unimportant
inaccuracy, and, while enabling an adjustment to the imperative demands of fixed monuments, they do
not weaken or destroy the statements of distance and quantity when no other guides are furnished. The
rule in measuring distances is that words of qualification (e.g., “50 feet, more or less’’) should be
disregarded and the exact distance adopted. The words “about,’’ “approximately,” and “more or less’’ in
connection with courses and distances may be disregarded if not controlled or explained by monuments,
boundaries and other expressions of intention. In a case, the petitioner insists that there should have been
an allowance of around 300 meters since the technical description of the land in question states that the
boundary line should be for around 16,000 meters more or less; held: The disputed gap of 300 meters is
not an insignificant distance. Thus, the petitioner cannot capitalize on the phrase “around 16,000 meters
more or less’’ for the words “more or less’’ only cover an incidental and insubstantial inaccuracy. (Sta. Ines
Melale Forest Products Corp. vs. Macaraig, Jr., 299 SCRA 491 [1998].) In another case, an area of “644
square meters more’’ was held not a reasonable excess or deficiency, to be deemed included in the deed
of sale relating to a piece of land with an “approximate area of 240 square meters more or less.’’ A vendee
of land when sold in gross or with the description “more or less’’ with reference to its area, does not
thereby ipso facto take all risk of quantity in the land for such description or similar words in designating
quantity covers only a reasonable excess or deficiency. (Roble vs. Arbasa, 152 SCAD 115, 362 SCRA 69
[2001].) Conflict between area stated and boundaries. (1) Where boundaries given are sufficiently certain.
— The proposition of law is to the effect that “where it appears that the land is so described by boundaries
as to put its identification beyond doubt,” an erroneous statement relative to the area of the questioned
parcel may be disregarded because what really defines a piece of ground is not the area mentioned in its
description but the boundaries therein laid down as enclosing the land and indicating its limits. (Vda. De
 Tan vs. Intermediate Apppellate Court, 213 SCRA 95 [1992]; Loyola vs. Bartolome, 39 Phil. 546 [1919].) This
proposition, however, holds true only where the boundaries given are sufficiently certain, and the identity
of the land proved by the boundaries clearly indicates that an erroneous statement concerning the area
can be disregarded or ignored. (Paterno vs. Salud, 9 SCRA 81 [1963].) (2) Where boundaries do not identify
land or overlapping of boundaries exists. — The above rule is not applicable where the boundaries relied
upon do not identify the land beyond doubt. (Buiser vs. Cabrera, 81 Phil. 669 [1948].) In such case, the
area stated in the document should be followed. (Paterno vs. Salud, supra.) In a case, the deed of sale did
not even indicate with particularity the area of the land covered thereby. The parties merely pointed at
boundaries which were even beyond what could have been bought by the vendee. An area delimited by
boundaries properly identifies a parcel of land. However, in controversial cases, where there appeared to
be an overlapping of boundaries, the actual size of the property gains importance. It is well-settled that
anyone who claims that he has a better right to a property must prove both ownership and identity of the
said property. (Oclarit vs. Court of Appeals, 52 SCAD 337, 238 SCRA 239 [1994].) (3) Where discrepancy in
measurement is so great. — In a case where petitioner claimed in his application to be entitled for
registration of a parcel of land whose area after the survey turned out to be 626 hectares while the grant
given to him only mentions 92 hectares, the court rejected the claim ruling that “when the land sought to
be registered is almost seven times as much as that described in the deed, the evidence as to natural
boundaries must be very clear and convincing before that rule (that natural boundaries will prevail over
area) can be applied.” (Pamintuan vs. Insular Gov‘t., 8 Phil. 512 [1907]; see also Paras vs. Insular Gov‘t., 11
Phil. 378 [1908]; Carillo vs. Insular Gov‘t., 11 Phil. 379 [1908]; Waldorf vs. Castañeda, 25 Phil. 50 [1913];
Sales vs. Director of Lands, 61 Phil. 759 [1935].) In another case, the court properly rejected the
contention of the plaintiff that the property sought to be recovered was originally a portion of a bigger
portion of land belonging to him, it appearing that “it is only on the north and south sides of the property
in question where the natural boundaries are identical because on the east and west sides there are no
natural boundaries. . . The discrepancy in the measurement . . . is so great that there could hardly be any
room to suppose that a 30-hectare land area might have been wrongly or inaccurately estimated to be
only 1,200 square meters.” (Paterno vs. Salud, supra.)

3. Rules in case of double sale (NCC Art. 1544)

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the
ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be
no inscription, the ownership shall pertain to the person, who in good faith was first in the possession; and, in the absence
thereof, to the person who presents the oldest title, provided there is good faith. (1473)
Rules as to preference of ownership in case of a double sale. If the same property is sold by the same
vendor to different vendees, the conflicting rights of said vendees shall be resolved in accordance with
the following rules:

(1) If the property sold is movable, the ownership shall be acquired by the vendee who first takes
possession in good faith (see Villa Rey Transit, Inc. vs. Ferrer, 25 SCRA 861 [1968].);
(2) If the property sold is immovable, the ownership shall belong, in the order hereunder stated, to:
(a) The vendee who first registers the sale in good faith in the Registry of Property (Registry of Deeds)
has a preferred right over another vendee who has not registered his title even if the latter is in actual
possession of the immovable property. More credit is given to registration than to actual possession.
When a conveyance has been properly recorded, such record is constructive notice to the whole world
of its contents and all interests, legal and equitable, included therein. Because of this principle of
constructive notice, one who deals with registered property which is the subject of an annotated levy or
attachment cannot invoke the rights of a purchaser in good faith. (Biñan Steel Corporation vs. Court of
Appeals, 391 SCRA 90 [2002].) However, the mere registration is not enough; good faith must concur
with the registration. To be entitled to priority, the second purchaser must have also acted in good
faith, without knowledge of the previous alienation by the vendor to another. (Bautista vs. Court of
Appeals, 48 SCAD 629, 230 SCRA 446 [1994].) The defense of indefeasibility of torrens title does not
extend to a transferee who takes the certificate of title in bad faith with notice of its flaw. (Occeña vs.
Esponilla, 431 SCRA 116 [2004].) The requirement of the law then is two-fold: acquisition in good faith
and registration in good faith. The rule applies to the annotation of an adverse claim in double sales.
(Bucad vs. Court of Appeals, 216 SCRA 423 [1992].) The governing principle is prius tempore, patior jure
(first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first
buyer’s right except when the second first registers in good faith the second sale. (Olivares vs. Gonzales,
159 SCRA 33 [1988].) Conversely, knowledge gained by the second buyer of the first sale defeats his
rights even if he is first to register, since such knowledge taints his registration with bad faith. (Astorga
vs. Court of Appeals, 133 SCRA 748 [1984]; Santiago vs. Court of Appeals, 63 SCAD 636, 247 SCRA 336
[1995].)

(b) In the absence of registration, the vendee who first takes possession in good faith; and
(c) In the absence of both registration and possession, the vendee who presents the oldest title (who
first bought the property) in good faith. Article 1544 has no application to lands not registered with the
Torrens system. If the sale is not registered, it is binding only as between the seller and the buyer; it
does not affect innocent third persons. Possession of property sold. The taking of possession of the
property sold may be in any of the ways provided in Articles 1497 to 1501. The phrase “who first took
possession” is equivalent to tradition, real or symbolic, such as that which is acquired by the execution
of a public instrument. Thus, after the sale of realty by means of a public instrument, the vendor, who
resells it to another does not transmit anything to the second vendee, and if the latter, by virtue of this
second sale, takes material possession of the thing, he does it as mere detainer, and it would be unjust
to protect this detention as against the rights to the thing lawfully acquired by the first vendee.
(Quimson vs. Rosete, 89 Phil. 159 [1950]; Navera vs. Court of Appeals, 184 SCRA 584 [1990].)

Registration of immovable sold. (1) Sale merely presented for registration. — The mere presentation to
the office of the register of deeds of a document on which acknowledgment of receipts is written is not
equivalent to registration. Registration in its juridical aspect must be understood as the entry made in a
book or public registry of deeds. (Po Sun Tun vs. Price Prov. Gov’t. of Leyte, 54 Phil. 192 [1912].) (2) Sale
registered in bad faith. — Article 1544 does not declare void a deed of sale registered in bad faith. It
does not mean, however, that said contract is not void. Article 1544 specifically provides who shall be
the owner in case of a double sale of an immovable property. To give full effect to this provision, the
status of the two contracts must be determined and clarified. One contract must be declared valid so
that one vendee may exercise all the rights of an owner, while the other contract must be declared void
to cut off all rights which may arise from said contract. (Caram, Jr. vs. Laureta, 102 SCRA 7 [1981].
Accordingly, where the second purchaser had knowledge of the other sale, prior to or at the time of the
sale to him, his knowledge taints his purchase with bad faith. The applicable rule in this case would be
that the ownership shall pertain to the person who, in good faith, first entered into possession of the
property or in the absence of possession, to the person who presents the oldest title, provided there is
good faith. (Gatmaitan vs. Court of Appeals, 200 SCRA 37 [1992]; Berico vs. Court of Appeals, 44 SCAD
84, 225 SCRA 469 [1993].) (3) Issuance of transfer certificate of title noted/not noted on original
certificate of title. — In a case, it appears that the issuance of a transfer certificate of title to the first
buyers was never noted on the original certificate of title which was not cancelled at all, whereas the
issuance of a transfer certificate of title to the second buyers was noted in the original certificate of title
which was cancelled by virtue of said issuance. It was held that the second buyers acquired ownership
over the disputed lot since they were the first to register in good faith their sale in the registry of
property. (Astorga vs. Court of Appeals, 133 SCRA 748 [1984].) (4) Immovable registered/not registered.
— Article 1544 (2nd and 3rd pars.) covers all kinds of immovables, including land, and makes no
distinction as to whether the immovable is registered or not. But insofar as registered land is concerned,
the rule is in perfect accord with Section 508 of the Land Registration Law (Act No. 496.) which provides
that no deed, mortgage, lease or other voluntary instrument, except a will, purporting to convey or
affect registered land shall take effect as a conveyance or bind the land until its registration. (Revilla vs.
Galindez, 107 Phil. 480 [1960].) One who buys from a person who is not the registered owner of
property is not a purchaser in good faith. (Liu vs. Lay, Jr., 405 SCRA 316 [2003].) The peculiar force of a
title under Act No. 496 is exhibited only when the purchaser has sold to innocent third parties the land
described in the conveyance. (Medina vs. Imaz and Warner Barnes Co., 27 Phil. 314 [1914].) With
respect to banks, the rule that persons dealing with registered lands can rely solely on the certifi cate of
title does not apply to banks because their business is one affected with public interest keeping in trust
money belonging to their depositors. They are expected to exercise greater case and prudence before
entering into a contract involving registered lands. (Navarro vs. Second Laguna Development Bank, 398
SCRA 227 [2003].) Note: The defense of indefeasibility of torrens title refers to sale of lands, and not to
sale of properties situated therein. Thus, the mere fact that the lot where a factory and disputed
properties stand is in a person’s name does not automatically make such person the owner of
everything found therein. (Tsai vs. Court of Appeals, 156 SCAD 28, 366 SCRA 324 [2001].) (5) Property
attached while still registered in the name of judgment debtor. — A sale of real estate, whether made
as a result of a private transaction or of a foreclosure or execution sale, becomes legally effective
against third persons only from the date of its registration. Consequently, where the property was
actually attached and levied upon at a time when said properties stood in the official records of the
Registry of Deeds as still owned by and registered in the name of the judgment debtor, the attachment,
levy and subsequent execution sale made in favor of the judgment creditor transferred to him all the
rights of the judgment debtor in the said property, unaffected by any prior transfer or unencumbrance
not so recorded therein. While purchasers at execution sales should bear in mind that the rule of caveat
emptor applies to such sales (see Art. 1566.), that the sheriff does not warrant the title to real property
sold by him as sheriff, and that it is not incumbent upon him to place the purchaser in possession of
such property, still the rule applies that a person dealing with registered land is not required to go
behind the register to determine the condition of the property and he is merely charged with notice of
the burdens on the property which are noted on the face of the register or the certificate of title.
(Campillo vs. Court of Appeals, 129 SCRA 513 [1984].) Accordingly, in case of a conflict between a
vendee and an attaching creditor who registers the order of attachment and the sale of the property to
him as the highest bidder, the latter acquire a valid title to the property as against the former who had
previously bough the same property from the registered owner but who failed to register his deed of
sale, but where the attaching creditor has knowledge of a prior existing interest which is unregistered at
a time he acquired a right to the same land, his knowledge of that prior unregistered interest has the
effect of registration as to him. (Ruiz, Sr. vs. Court of Appeals, 152 SCAD 86, 362 SCRA 40 [2001].) (6)
Unregistered property sold at execution sale was previously sold by judgment debtor. — A sale of
unregistered land which sale has not been registered in the office of the register of deeds is valid and
binding as between the parties themselves. (Galasicao vs. Austria, 97 Phil. 83 [1955].) The rule in Article
1544 applies to lands covered by Torrens title, where the prior sale is neither recorded nor known to the
execution purchaser prior to the levy. But where the land is not registered under the Torrens System,
the rule is different. While under Article 1544, registration in good faith prevails over possession in the
event of a double sale by the vendor of the same piece of land to different vendees, said article is of no
application even if the latter vendee, at a sheriff’s execution sale which was registered, was ignorant of
the prior sale made by his judgment debtor in favor of another vendee. The reason is that the purchaser
of unregistered land at a sheriff’s execution sale only steps into the shoes of the judgment debtor, and
merely acquires the latter’s interest in the property sold as of the time the property was levied upon.
This is specifically provided by Section 35 of Rule 39 of the Rules of Court. (Carumba vs. Court of
Appeals, 31 SCRA 558 [1970]; see Hernandez vs. Katigbak, 69 Phil. 744 [1940]; Executive Commission vs.
Abadilla, 74 Phil. 68 [1943].) (7) Notice of adverse claim was registered previous to sale to possessor. —
Since the owner’s copy of the certificate of title was not delivered in due time to the first buyer despite
the promise by the seller (attorney-in-fact) to deliver the same in a few days, the buyer registered with
the Register of Deeds on September 6, 1982 his notice of adverse claim as vendee over the property
sold. The second sale was registered only on November 11, 1982 whereby a new title was issued in
favor of the second buyer. The first buyer has a superior right to the property in question. Article 1544 is
clear that a prior right is accorded to the vendee who first recorded his right in good faith over an
immovable property. (Valdez vs. Court of Appeals, 194 SCRA 360 [1991].) (8) Sale was registered before
the execution sale but after its levy. — The doctrine is that a levy on execution duly registered takes
preference over a prior unregistered sale, and that even if the prior unregistered sale is subsequently
registered before the sale on execution but after the levy was duly made, the validity of the execution
sale should be maintained because it retroacted to the date of the levy. This rule applies by analogy as
regards encumbrances made after the registration of the levy on execution. The reason therefor is that
if the rule were otherwise, the preference enjoyed by the levy on execution in a case would be
meaningless and illusory. In short, the priority enjoyed by the levy on execution extends with full force
and affect to the buyer at the auction sale conducted by virtue of such levy. (First Integrated Bonding &
Insurance Co. vs. Court of Appeals, 73 SCAD 731, 261 SCRA 203 [1996]; Biñan Steel Corporation vs.
Court of Appeals, 391 SCRA 90 [2002]; Du vs. Stronghold Insurance Co., Inc., 432 SCRA 43 [2004].)
Requirement of good faith. The fundamental premise of the preferential rights established by Article
1544 is good faith (Bernas vs. Bolo, 81 Phil. 16 [1948]; see Manacop vs. Cansino, 1 SCRA 572 [1961];
Paylago vs. Jarabe, 22 SCRA 247 [1968].), that is to say, ignorance of the rights of the first vendee.
(Gallardo vs. Gallardo, [CA] 46 O.G. 5568.) He is deemed a possessor in good faith who is not aware that
there exists in his title or mode of acquisition any flaw which invalidates it. (Art. 526.) (1) Mere
registration of sale not enough. — Good faith is an essential requisite of registration to acquire new title
because “public records cannot be converted into instruments of fraud and oppression by one who
secures an inscription thereon in bad faith.” (Leung Yee vs. F.L. Strong Machinery Co., 37 Phil. 644
[1918]; Fernandez vs. Mercader, 43 Phil. 581 [1922]; Cagaoan vs. Cagaoan, 43 Phil. 554 [1922].) Bad
faith renders the registration nothing but an exercise in futility. (Cardente vs. Intermediate Appellate
Court, 155 SCRA 685 [1987]. It does not vest title to an immovable property, it is merely evidence of
such title. (Berico vs. Court of Appeals, 44 SCAD 84, 225 SCRA 469 [1993].) The law will not protect
anything done in bad faith. (Palanca vs. Director of Lands, 43 Phil. 149 [1922].) It is presumed, however,
that the registration of sale was made in good faith. (2) Purchase must be for valuable consideration. —
And it is not only required that the purchaser of real property who has registered the same should have
done so in good faith, but also for a valuable consideration. (Arcenas vs. Del Rosario, 67 Phil. 238
[1939].) Thus, a “purchaser in good faith” is defined as one who buys property of another, without
notice that some other person has a right to, or interest in, such property and pays a full and fair price
for the same at the time of such purchase, or before he has notice of the claim or interest of some other
person in the property. (Cui vs. Henson, 57 Phil. 696 [1932]; David vs. Malay, 115 SCAD 820, 318 SCRA
711 [1999]; Tanongon vs. Samson, 167 SCAD 455, 382 SCRA 130 [2002]; Castro vs. Miat, 397 SCRA 271
[2003].) One cannot close his eyes to facts that should put a reasonable person on guard and still claim
to have acted in good faith. Thus, a person engaged in business would be wary of buying from a
company that is closing shop because it may be dissipating its assets to defraud its creditors. (Tanongon
vs. Samson, supra.) (3) Continuation of good faith. — The mere fact that the second contract of sale was
perfected in good faith is not sufficient if, before title passes, the second vendee acquires knowledge of
the first transaction. The good faith or innocence of the posterior vendee needs to continue until his
contract ripens into ownership by tradition or registration. (Gallardo vs. Gallardo, supra; Palanca vs.
Director of Lands, 46 Phil. 149, supra.) The second buyer must show that he acted in good faith
throughout (i.e., ignorance of the first sale and the first buyer’s right) — from the time of acquisition
until the title is transferred to him or registration or, failing registration, by delivery of possession. (Cruz
vs. Cabana, 129 SCRA 656 [1984]; Uraca vs. Court of Appeals, 86 SCAD 734, 278 SCRA 702 [1997];
Bautista vs. Court of Appeals, 118 SCAD 327, 322 SCRA 365 [2000]; Tan vs. Court of Appeals, 369 SCRA
255 [2001]; Consolidated Rural Bank, Inc. vs. Court of Appeals, 448 SCRA 347 [2005].) In other words,
where title to the property is recorded in the Register of Deeds, the requirement of the law, as
mentioned before, is two-fold: acquisition in good faith and recording in good faith. (Martin vs. Court of
Appeals, 358 SCRA 38 [2001].) (4) Burden of proof. — Good faith is always presumed. It is upon those
who allege the bad faith on the part of the possessor rests the burden of proof. But the burden of
proving the status of one as a purchaser in good faith and for value lies upon him who asserts that
status where the seller had none to transmit to the purchaser and the other claimant is himself a
purchaser in good faith from the successor-in-interest of the original title holder. In discharging that
burden, it is not enough to invoke the ordinary or legal presumption of good faith, i.e., that every one is
presumed to act in good faith. The good faith that is essential here is an integral part with the very
status which must be proved. (Baltazar vs. Court of Appeals, 168 SCRA 354 [1988]; see Mathay vs. Court
of Appeals, 98 SCAD 489, 295 SCRA 556 [1998]; Aguirre vs. Court of Appeals, 421 SCRA 310 [2004].)
Insinuations and inferences will not overcome the presumption that a sale was concluded in all good
faith, for value, and without secret reservations. (see Naguit vs. Deang, [C.A.] No. 6319-R, August 13,
1952.) In a case, the first buyer failed to prove that the second buyer knew of the prior sale to the
former. Since the second buyer was considered to have registered his deed of sale in good faith, it was
held that the ownership of the disputed property should belong to them. (Bucad vs. Court of Appeals,
216 SCRA 423 [1992].) (5) Good faith/bad faith, a question of intention. — “Good faith or the want of it
is not a visible, tangible fact that can be seen or touched but rather a state or condition of mind which
can only be judged by actual or fancied tokens or signs.” (Leung Yee vs. F.L. Strong Machinery Co., 37
Phil. 644 [1918]; Manacop, Jr. vs. Cansino, 1 SCRA 572 [1961].) It consists in an honest intention to
abstain from taking any unconscientious advantage of another. It is the opposite of fraud and bad faith
and its non-existence may be established by competent proof. (Cui vs. Henson, 57 Phil. 696 [1932]; Fule
vs. De Legare, 7 SCRA 351 [1963]; Lizardo vs. Herrera, 98 Phil. 603 [1956].) Bad faith does not simply
connote bad judgment or negligence; it imputes a dishonest purpose, some moral obliquity and
conscious doing of a wrong. It partakes of the nature of fraud. (Llorente, Jr. vs. Sandiganbayan, 92 SCAD
418, 287 SCRA 382 [1998].) In ascertaining the intention by which one is actuated on a given occasion,
the courts are necessarily controlled by the evidence as to the conduct and outward acts by which
alone, the inward motive may, with safety, be determined. (Dayao vs. Diaz, 91 Phil. 919 [1952].) The
purchaser is obligated to make a reasonable investigation as to the identity of the thing sold and the
seller’s title thereto. He cannot close his eyes to facts which should put a reasonable man upon his
guard and then claim that he acted in good faith under the belief that there was no defect in the title of
the vendor. (see J.M. Tuazon & Co., Inc. vs. Court of Appeals, 93 SCRA 146 [1979]; Vital vs. Anore, 90
Phil. 855 [1952]; Cruz vs. Pahati, 98 Phil. 788 [1956]; Conspecto vs. Fruto, 51 Phil. 144 [1927]; Leung Yee
vs. F.L. Strong Machinery Co., supra; Republic vs. Court of Appeals, 148 SCRA 480 [1987]; Cardente vs.
Intermediate Appellate Court, 155 SCRA 685 [1987].) (6) Property purchased already peaceably
possessed by another. — A purchaser cannot close his eyes to facts which should put a reasonable man
upon his guard, and then claim that he acted in good faith under the belief that there was no defect in
the title of the vendor. Thus, the vendee who purchased property which was already peaceably
possessed by another, without inquiring into the status of the property or the vendor’s title thereto,
takes the risks and losses consequential to such failure. He is required to go beyond the certificate of
title and make inquiries concerning the rights of the actual possessor. (Salvoro vs. Tanega, 87 SCRA 349
[1978]; Lucena vs. Court of Appeals, 111 SCAD 227, 313 SCRA 47 [1999]; see also Caram, Jr. vs. Laureta,
103 SCRA 7 [1981]; Heirs of T. de Leon Vda. de Roxas vs. Court of Appeals, 422 SCRA 101 [2004].) The
absence of such inquiry will remove him from the realm of bona fide acquisition. (Bautista vs. Court of
Appeals, 48 SCAD 629, 230 SCRA 446 [1994]; Heirs of Ramon Durano, Sr. vs. Sps. Uy, 137 SCAD 111, 344
SCRA 238 [2000].) A cautious and prudent purchaser would usually make an ocular inspection of the
premises, this being standard practice in the real estate industry. Should such prospective buyer find
out that the land he intends to buy is being occupied by anybody other than the seller, who is not in
actual possession, it would then be incumbent upon him to verify the extent of the occupant’s
possessory rights. The failure of a prospective buyer to take such precautionary steps would mean
negligence on his part and would thereby preclude him from claiming or invoking the rights of a
purchaser in good faith. (Dela Merced vs. GSIS, 365 SCRA 11 [2001]; Heirs of Amado Celestial vs. Heirs of
Editha Celestial, 408 SCRA 293 [2003]; Occeña vs. Esponilla, 431 SCRA 116 [2004].) (7) Purchaser with
notice of right of repurchase which has already elapsed. — Similarly, one who buys property with notice
that it is subject to right of repurchase from his vendor (the vendee a retro in a previous sale of the
property), although such right has already elapsed and there is no annotation of any repurchase by the
vendor a retro but the title has not yet been cleared of the encumbrance, without looking into the right
of redemption inscribed on the title, cannot be said to be a purchaser in good faith for he has notice
that some other person could have a right or interest in the property. (Conde vs. Court of Appeals, 119
SCRA 245 [1982].) Actual notice is equivalent to, and indeed more binding than, presumed notice by
registration. (Guzman, Bocaling & Co. vs. Bonnevie, 206 SCRA 668 [1992].) (8) Adverse claim previously
annotated on title of property sold. — A subsequent sale of land cannot prevail over an annotated
adverse claim which was previously annotated in the certificate of title of the property. A prior judicial
determination of the validity of the adverse claim before it can flaw the title of subsequent transferees
is not required. A contrary rule contradicts the very essence of adverse claims. The annotation of an
adverse claim is a measure designed to protect the interest of a person over a piece of real property,
and serves as a notice and warning to third parties dealing with said property that someone is claiming
an interest in the same or has a better right than the registered owner thereof. (Gardner vs. Court of
Appeals, 131 SCRA 585 [1984].) It has been held, however, that a buyer cannot be considered as being
aware of a flaw which invalidates his acquisition where the alleged flaw, the notice of lis pendens, was
already being ordered cancelled at the time of the purchase. (Po Lam vs. Court of Appeals, 347 SCRA 86
[2000]. (9) Purchaser examined only the latest certificate of title. — In order that a purchaser may be
considered as a purchaser in good faith, it is enough that he examines the latest certificate of title. He is
not bound by the original certificate of title but only by the certificate of title of the person from whom
he purchased the property. (Cangas and Basco vs. Tan Chuan Leung, 110 Phil. 168 [1960].) Good faith is
presumed. (Art. 527.) Under the established principles of land registration law, the presumption is that
the transferee of registered land is not aware of any defect in the title of the property he purchased.
(Lopez vs. Court of Appeals, 169 SCRA 271 [1989].) He may rely on the Torrens title of the seller. In the
absence of anything to excite suspicion, the buyer is not obligated to look beyond the certificate to
investigate the title of the seller appearing on the face of the certificate. (Republic vs. Intermediate
Appellate Court, 209 SCRA 90 [1992]; Heirs of Spouses B. Gavino and J. Euste vs. Court of Appeals, 95
SCAD 358, 291 SCRA 495 [1998]; AFP Mutual Benefit Association, Inc. vs. Court of Appeals, 122 SCAD
389, 327 SCRA 203 [2000].) Where the seller is not the registered owner himself, the law requires a
higher degree of prudence, even if the land object of the transaction is registered. (Bautista vs. Court of
Appeals, supra.) The principle under the torrens system does not apply where the vendee has actual
knowledge of facts and circumstances that would impel a reasonably cautious man to make an inquiry
with respect to the title in his vendor. (Domingo vs. Rocos, 401 SCRA 197 [2003].)
Other rulings on application of rules. (1) Contract to sell/promise to sell. — Article 1544 is applicable not
only to a contract of sale but also to a contract to sell because in the Civil Law, where tradition is
necessary for the transfer of ownership, there is no real distinction between a contract of sale and a
contract to sell. (Alterado vs. Jimenez, [C.A.] 57 O.G. 9213; see Dela Merced vs. GSIS, 154 SCAD 816, 365
SCRA 1 [2001].) It has been held, however, that the provision does not apply to a case where there was
a sale to one party of the land itself while the other contract was a mere promise to sell the land or at
most an actual assignment of the right to repurchase the same land. There is no double sale of the same
land in this case. (Dichoso vs. Roxas, 11 Phil. 768 [1908]; San Lorenzo Development Corp. vs. Court of
Appeals, 449 SCRA 99 [2005].) (2) Donation. — It applies to donations. A deed of donation executed
with all the formalities of the law is on the same footing as a deed of sale in the form of a public
instrument. (Cagaoan vs. Cagaoan, 43 Phil. 554 [1922]; Ortiz vs. Court of Appeals, 97 Phil. 46 [1955]; see
Art. 744.) (3) Subsequent mortgage registered under Act No. 3344. — An unrecorded sale of a house of
a prior date is preferred to a recorded mortgage of the same house of a later date for the reason that, if
the original owner had parted with his ownership of the thing sold, then he no longer had the
ownership and full disposal of that thing so as to be able to mortgage it. The registration of a mortgage
under Act No. 3344 is without prejudice to the better right of third parties. (Lanuza vs. De Leon, 20 SCRA
361 [1967].) (4) Subsequent mortgage of land registered under the torrens system, registered by
mortgagee. — In a case, Z, after selling his land to M (under a contract to sell) which sale was not
registered, mort gaged the same property to GSIS which registered the mortgage and acquired the
property as the highest bidder in the extrajudicial foreclosure sale. The registered right of GSIS as
mortgagee of the property was held inferior to the unregistered right of M, the previous buyer, the
unrecorded sale between M as the vendee, and Z, the original owner, is preferred for the reason that if
Z had parted with his ownership of the land sold, then he no longer had ownership and free disposal of
the same so as to be able to mortgage it.10 (Dela Merced vs. GSIS, supra.) (5) Sale of unregistered land.
— A bona fide purchaser of a registered land at an execution sale acquires a good title as against a prior
transferee, if such transfer was unrecorded. However, if the land is unregistered, a different rule
applies. Under Act No. 3344, registration of documents affecting unregistered land is “without prejudice
to a third party with a better right.” The quoted phrase has been held to mean that the mere
registration of a sale in one’s favor does not give him any right over the land if the vendor was not
anymore the owner of the land, having previously sold the same to somebody else, even if the earlier
sale was unrecorded. Article 1544 has no application to land not registered under the land registration
law. (Pres. Decree No. 1529, formerly Act No. 496.) Thus, it cannot be invoked to benefit the purchaser
at the execution sale, though the latter was a buyer in good faith and even if the second sale was
registered. (Radiowealth Finance Company vs. Palileo, 197 SCRA 245 [1991]; Carumba vs. Court of
Appeals, 31 SCRA 558 [1970].) Registration, however, by the first buyer under Act No. 3344 can have the
effect of constructive notice to the second buyer that can defeat his right as such buyer in good faith
(see Arts. 708-709; Revilla vs. Galindez, 107 Phil. 480 [1960]; Taguba vs. Peralta, 132 SCRA 700 [1984];
Santiago vs. Court of Appeals, 63 SCAD 636, 247 SCRA 336 [1995], citing Vitug, supra.) On account of the
registration under Act No. 3344 by the first buyer, necessarily there is absent good faith in the
subsequent registration of the second sale by the second buyer for said registration has the effect of
constructive notice to the second buyer that can defeat his right as such buyer. (Bayoca vs. Nogales, 340
SCRA 154 [2000].) If the property in dispute is already registered under the Torrens system, the
registration of the sale under Act No. 3344 is not effective for purposes of Article 1544. (Abrigo vs. De
Vera, 432 SCRA 544 [2004].) (6) Sale to different vendees. — Clearly, Article 1544 applies to a situation
where the same property is sold to different vendees. There must be at least two (2) deeds of sale over
the same property. It is not applicable where there is only one sale. (Remalente vs. Tibe, 158 SCRA 138
[1988].) Thus, in a case, although the deed of extra-judicial partition which merely mentioned the
alleged sale in favor of petitioners of the subject property was registered while the pacto de retro sale
in favor of private respondents was not, but the alleged deed of sale was never offered in evidence by
the petitioners, it was held that such registration did not operate as a registration of the deed of sale
because insofar as third persons are concerned, what could validly transfer or convey the vendee’s right
to the property to petitioners was the deed of sale and not the deed of extra-judicial partition which
only mentioned the former. (Vda. de Alcantara vs. Court of Appeals, 67 SCAD 347, 252 SCRA 457
[1996].) There is, of course, no double sale where after the sale of the property in favor of a person, the
vendor did not anymore execute another sale over the same property in favor of another. (Land
Authority vs. De Leon, 120 SCRA 128 [1983].) Article 1544 cannot be involved when two different
contracts of sale are made to two different persons, one of them not being the owner of the property
sold, and even if the sale was made by the same person, if the second sale was made when such person
was no longer the owner of the property. (Consolidated Rural Bank, Inc. vs. Court of Appeals, 449 SCRA
347 [2005].) (7) Pacto de retro sale. — It is not applicable to a case which involves an earlier pacto de
retro sale of an unregistered land and the subsequent donation thereof by the vendor a retro to
 another who, in turn, sold it to a third party while the property was still in the possession of the vendee
a retro who had already acquired title before the donation because of the failure of the vendor a retro
to repurchase the same. There being no title to the property which the vendor a retro could convey to
the supposed donee, since he was no longer the owner thereof, no title could be conveyed by the
donee by the sale of the property. (De Guzman, Jr. vs. Court of Appeals, 156 SCRA 701 [1987].) (8)
Contract of sale fictitious or forged, or seller without right to sell. — It does not apply if the contract of
sale first registered is fictitious or forged or if the vendor is not the owner of the property sold and had
no right to sell the same. (see Espiritu vs. Valerio, 9 SCRA 761 [1963]; Cruzado vs. Bustos & Escolar, 34
Phil. 17 [1917].) But a forged deed of sale of registered land can legally be the root of a valid title when
an innocent purchaser for value intervenes. A deed of sale executed by an impostor without authority
of the owner of the land sold is a nullity, and registration will not validate what otherwise is an invalid
document. However, the certificate of title was already transferred from the name of the true owner to
the forger, and, while it remains that way, the land is subsequently sold to an innocent purchaser, the
vendee has the right to rely upon what appears in the certificate and, in the absence of anything to
excite suspicion, is under no obligation to look beyond the certificate and investigate the title of the
vendor appearing on the face of said certificate. The remedy of the true owner is to bring an action for
damages against the one who caused or employed the fraud and if the latter is insolvent, an action
against the Treasurer of the Philippines may be filed for recovery of damages against the Assurance
Fund. (TenioObsequio vs. Court of Appeals, 49 SCAD 68, 230 SCRA 550 [1994].) (9) Sale of property to
one party and assignment of right to the property to another. — The provisions of paragraph 3, Article
1544 do not apply to a case where the sale in favor of one party was the property itself, while the
transaction in favor of another was a mere promise to assign or, at most, an actual assignment of the
right to repurchase the same property. (Dichoso vs. Roxas, 5 SCRA 781 [1962].) (10) Sale of property
subject of contract to sell/conditional sale to a third person. — In a contract to sell, there being no
previous sale of the property, a third person buying such property despite the fulfillment of the
suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a
buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property.
There is no double sale in such case. Title to the property will transfer to the buyer after registration
because there is no defect in the owner-seller’s title per se, but the latter, of course, may be sued for
damages by the intending buyer. In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will definitely affect the seller’s title thereto.
In fact, if there had been previous delivery of the subject property, the seller’s ownership or title to the
property is automatically transferred to the buyer such that, the seller will no longer have any title to
transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property
who may have had actual or constructive knowledge of such defect in the seller’s title, or at least was
charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second
buyer cannot defeat the first buyer’s title. In case a title is issued to the second buyer, the first buyer
may seek reconveyance of the property subject of the sale. (Coronel vs. Court of Appeals, 75 SCAD 141,
263 SCRA 15 [1996].)

Cases:
Consolidated Rural Bank of Cagayan Valley v. CA, G.R. No. 13216, January 17, 2005
Martinez v. CA, GR No. 123547, May 21, 2001
Fudot v. Cattleya Land Inc., GR No. 175942, September 13, 2007
Amancio et al. vs. CA et. al., G.R. No. 152627, September 16, 2005
Mercado v. Allied Bank, GR No. 171460, July 27, 2007
Amancio v. CA, GR No. 152627, September 16, 2005
Gabriel v. Mabanta, GR No. 142403, March 26, 2003
Leoncio and Barrera vs. CA, et al., G.R. No. 123935, 14 December 2001
De Leon vs. Ong, G.R. No. 170405, 2 February 2010
San Lorenzo Development Corporation vs. CA, G.R. No. 124242, 21 January 2005

4. Delivery of fruits and accessories (NCC Art. 1537)

ART. 1537. The vendor is bound to deliver the thing sold and its accessions and accessories in the condition in which they were
upon the perfection of the contract. All the fruits shall pertain to the vendee from the day on which the contract was perfected.
(1468a)
 Condition of thing to be delivered. In entering into a contract of sale, the parties take into consideration not
only the particular thing which is the subject matter of the contract, but also its condition at the time such
contrac was perfected. The vendor is, therefore, obliged to preserve the thing pending delivery (see Arts.
1163, 1164.) because the thing sold and its accessions and the accessories must be in the condition in which
they were upon the perfection of the contract. (Art. 1537, par. 1.) It is the seller’s duty to deliver the thing
sold in a condition suitable for its enjoyment by the buyer for the purposes contemplated. Thus, a
subdivision lot seller should not shift to the buyer the burden of providing access to and from the
subdivision. It is seller’s duty to construct the necessary roads in the subdivision that could serve as outlets.
Proper access to the residence is essential to its enjoyment. (Consing vs. Court of Appeals, 177 SCRA 14
[1989].) While a sale of a determinate thing (e.g., land) includes all its accessions (e.g., house) and
accessories even though they may not have been mentioned (see Art. 1166.), a sale of the latter is not
sufficient to convey title or right to the former. (see Pornellosa vs. Land Tenure Administration, 1 SCRA 375
[1961].) Note: Accessions are the fruits of a thing; or additions to, or improvements upon, a thing such as
the young of animals, house or trees on a land, etc. Accessories are anything attached to a principal thing
for its completion, ornament, or better use such as picture frame, key of a house, etc

Right of vendee to the fruits. (1) When vendee entitled. — The vendee has a right to the fruits of the thing
sold from the time the obligation to deliver it arises. (Art. 1164.) The obligation to deliver arises upon the
perfection of the contract of sale. (see Art. 1475 (2) When vendee not entitled. — In the following cases,
the vendee is not entitled to the fruits: (a) When the rule provided in Article 1537 (par. 2.) is modified by
agreement of the parties, their agreement shall, of course, govern; (b) If the vendee rescinds the contract of
sale instead of exacting the fulfillment thereof, he is entitled only to damages like interest, attorney’s fees
and costs but he may not also claim the fruits of the thing sold (Hodges vs. Granada, 59 Phil. 429 [1934]; see
Art. 1385.); and (c) In a contract of promise to sell, the vendee is not entitled to the fruits. The only right of
the contracting parties is to reciprocally demand the fulfillment of the contract. Prior to the sale and
conveyance of the subject matter of the contract, the promisee or would-be vendee acquires no right to the
fruits thereof. (De Vera vs. De Vera, [C.A.] O.G. 3318, Sept., 1948.)

5. Payment of expenses for execution and registration (NCC Art. 1487)

ART. 1487. The expenses for the execution and registration of the sale shall be borne by the vendor, unless there is a stipulation
to the contrary. (1455a)
Expenses for execution and registration. Under this article, the vendor has the duty to pay not only the
expenses for the execution of the sale but also for the registration of the same in the absence of any
agreement between the parties to the contrary. Expenses incurred subsequent to the transfer of title are to
be borne by the buyer, unless caused by the fault of the seller.

6. Conditions and warranties

a. Condition; concept (NCC Art. 1545)
ART. 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such
party may refuse to proceed with the contract or he may waive performance of the condition. If the other party has promised
that the condition should happen or be performed, such first mentioned party may also treat the non-performance of the
condition as a breach of warranty. Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the
seller of his obligation to deliver the 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 and pay for the thing. (n
Meaning of condition. A condition, as used in Article 1545, means an uncertain event or contingency on the
happening of which the obligation (or right) of the contract depends. In such a case, the obligation of the
contract does not attach until the condition is performed. (see Art. 1462, par. 2.) (1) The term, in the context
of a perfected contract of sale, pertains, in reality, to the compliance by one party of an undertaking, the
fulfillment of which would beckon, in turn, the demandability of the reciprocal prestation of the other party.
(Romero vs. Court of Appeals, 65 SCAD 621, 250 SCRA 223 [1995].
Effect of non-fulfillment of condition. A contract of sale may be absolute or conditional. (Art. 1458.) (1) If the
obligation1 of either party is subject to any condition and such condition is not fulfilled, such party may
either: (a) refuse to proceed with the contract; or (b) proceed with the contract, waiving the performance of
the condition. (2) If the condition is in the nature of a promise that it should happen, the non-performance of
such condition may be treated by the other party as a breach of warranty. (see Art. 1546.)

b. Warranty
 ▪ express warranty (NCC Art. 1546)
ART. 1546. Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the natural
tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchases the thing
relying thereon. No affirmation of the value of the thing, nor any statement purporting to be a statement of the seller’s opinion
only, shall be construed as a warranty, unless the seller made such affirmation or statement as an expert and it was relied upon
by the buyer. (n
Meaning of warranty. A warranty is a statement or representation made by the seller of goods,
contemporaneously and as a 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. (see Black L.D. vs. Estes, 122 Ga. 807.) Terminology used by parties not controlling. It is not
necessary that the word “warranty” or “warrant” be used by the seller to constitute a warranty. Any word is
sufficient to show the intention of the parties to consider the representation or promise as an express
warranty; and the fact that a stipulation in the contract of sale is specially called a “warranty” does not of
itself establish that the agreement thus referred to is a warranty.
Kinds of warranty. Warranties by the seller may be express, as in the above article, or implied, as in Article
1547. The seller is liable for his express warranties (Art. 1546.) and for the implied warranties of title (Art.
1547.), absence of hidden defects (Ibid.), fitness or merchantability (Art. 1562.), description (Arts. 1481,
1562.), and sample. (Arts. 1481, 1565.)
Meaning of express warranty. An express warranty is any affirmation of fact or any promise by the seller
relating to the thing, the natural tendency of which is to induce the buyer to purchase the thing and the
buyer thus induced, does purchase the same. Effect of express warranty. Under the definition, statements
not only relating to quality or title of the thing but relating to other incidents to it may be warranties. A
warranty being a part of the contract of sale, it is immaterial whether the seller did not know that it was true
or false. No intent is necessary to make the seller liable for his warranty. It is the natural consequences of
what the seller says and the reliance thereon by the buyer that alone are important. (see 1 Williston, op. cit.,
pp. 498-501.) Accordingly, where the seller (importer-assembler) expressly intimated to the buyer that the
taxes and customs duties on two (2) assembled trucks were already paid, such representation shall be
considered, as a seller’s warranty under Article 1546 which covers any affirmation of fact or any promise by
the seller which induces the buyer to purchase the object of sale and actually purchases it relying on the
affirmation or promise. (Harrison Motors Corporation vs. Navarro, 125 SCAD 673, 331 SCRA 202 [2000].) It
has been held that where there is no dispute that the defendant (seller), in bad faith and with gross
negligence, infringed the express warranty made by it to the general public with respect to its products sold
to and installed in the house of the plaintiff (buyer), who relied on the warranty, the identity of the individual
who actually dealt with the defendant and asked the latter to make the delivery and installation by its
workers is pointless. (Del Rosario vs. Court of Appeals, 78 SCAD 542, 267 SCRA 158 [1997].)

Effect of expression of opinion. A mere expression of opinion, no matter how positively asserted, does not
import a warranty unless the seller is an expert and his opinion was relied upon by the buyer. Thus,
assertions that things are fine or valuable or better than products of rival manufacturers are in their nature
so dependent on individual opinion that no matter how positive the seller’s assertion may be, they are not
held to create a warranty. The tendency of the courts, however, is in the direction of greater strictness
against the seller’s untruthful puffing of his wares. (see Ibid., pp. 517-518.) The following provisions of law
are pertinent: “The usual exaggerations in trade, when the other party had an opportunity to know the facts,
are not in themselves fraudulent.” (Art. 1340.) “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.” (Art. 1341.)
“Misrepresentation made in good faith is not fraudulent but may constitute error.” (Art. 1343.)

▪ implied warranties (NCC Art. 1547)

ART. 1547. In a contract of a sale, unless a contrary intention appears, there is: (1) An implied warranty on the part of the seller
that he has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall from that time have and
enjoy the legal and peaceful possession of the thing; (2) An implied warranty that the thing shall be free from any hidden faults
or defects, or any charge or encumbrance not declared or known to the buyer. This article shall not, however, be held to render
liable a sheriff, auctioneer, mortgagee, pledgee, or other person professing to sell by virtue of authority in fact or law, for the
sale of a thing in which a third person has a legal or equitable interest. (n)
Meaning of implied warranty. An implied warranty is that which the law derives by implication or inference
from the nature of the transaction or the relative situation or circumstances of the parties (Black L.D. vs.
Estes, 122 Ga. 807.), irrespective of any intention of the seller to create it. Implied warranties in sale. The
term implied warranty is reserved for cases where the law attaches an obligation to the seller which is not
 expressed in any words. (1 Williston, op. cit., p. 498.) Implied warranties under Articles 1547 and 1562 are:
(1) Implied warranty as to seller’s title. — that the seller guarantees that he has a right to sell the thing sold
and to transfer ownership to the buyer who shall not be disturbed in his legal and peaceful possession
thereof (Art. 1548.) (2) Implied warranty against hidden defects or unknown encumbrance. — that the seller
guarantees that the thing sold is free from any hidden faults or defects or any charge or encumbrance not
declared or known to the buyer (Art. 1561.); and (3) Implied warranty as to fitness or merchantability. — that
the seller guarantees that the thing sold is reasonably fit for the known particular purpose for which it was
acquired by the buyer or, where it was bought by description, that it is of merchantable quality. (Art. 1562.)
The right of the seller to sell the thing need not reside in him at the time the contract is perfected. It is
sufficient that the vendor has a right “at the time when the ownership is to pass.” (Art. 1547[1].) This
complements Article 1459 that “the vendor must have a right to transfer the ownership thereof at the time it
is delivered” and Article 1562 which allows the sale of “future goods” or of goods the acquisition of which
depends upon a contangency
Nature of implied warranty. An implied warranty is a natural, not an essential, element of a contract,
because it is presumed to exist even though nothing has been said in the contract on the subject. It is,
therefore, deemed as incorporated in the contract of sale. An implied warranty may, however, be waived or
modified by express stipulation. (see Arts. 1548, 1566.) When implied warranty not applicable. (1) “As is and
where is” sale. — The phrase “as is and where is” (which has been adopted from dispositions of army surplus
property) means nothing more than that the vendor makes no warranty as to the quality or workable
condition of the goods, and that the vendee takes them in the conditions in which that they are found and
from the place where they are located. It does not extend to liens or encumbrances unknown to the vendee
and could not be disclosed by a physical examination of the goods sold. (Monfort vs. Willis, [C.A.] No. 6963-R,
Oct. 15, 1951.) The term “as is” in public auction of (imported) goods refers to the physical condition of the
merchandise and not to the legal situation in which it was at the time of the sale. It has no bearing at all on
the obligation of the seller (Bureau of Customs) under Article 1495 “to transfer the ownership and deliver, as
well as warrant the thing which is the object of sale.” This warranty is as to the right to sell and capacity to
deliver. (Auyong Hian vs. Court of Tax Appeals, 109 SCRA 470 [1981].)
(2) Sale of second-hand articles. — There is no implied warranty as to the condition, adaptation, fitness or
suitability for the purpose for which made, or the quality of an article sold as and for a second-hand article.
But such articles might be sold under such circumstances as to raise an implied warranty. A certification
issued by the vendor that a second-hand machine was in A-1 condition is an express warranty binding on the
vendor. (Moles vs. Intermediate Appellate Court, 169 SCRA 777 [1989].) (3) Sale by virtue of authority in fact
or law. — No warranty of title is implied in a sale by one not professing to be the owner. Accordingly, the
rule on implied warranty does not apply to a sheriff, auctioneer, mortgagee, pledgee or other person who
sells by virtue of authority in fact or law. (see Art. 1570.) In other words, they are not liable to a person with
a legal or equitable interest in the thing sold. (Art. 1547, par. 2.) They do not warrant the title of the person
who is supposed to own the thing sold. (see Art. 1552.) The risk of defective title here is on the purchaser,
the circumstances surrounding such sales being sufficient to put him on notice as to interests of third
persons in the thing sold. (Babb & Martin, op. cit., p. 94.) The persons enumerated are, however, liable for
actual representations, fraud or negligence in the exercise of their duties. (1 Williston, op. cit., p. 567.) (a)
The purchaser of a property sold at public auction for tax delinquency takes all the chances. There is no
warranty on the part of the state. (Government vs. Adriano, 41 Phil. 112 [1920].) The purchaser of real estate
at a tax sale obtains only such title as that held by the taxpayer. (Serfino vs. Court of Appeals, 154 SCRA 19
[1987].) (b) The rule of caveat emptor (buyer beware) applies to execution sales. (see Art. 1570.) The sheriff
does not guarantee the title to real property sold by him as sheriff and it is not incumbent upon him to place
the purchaser in possession of such property. (Pabico vs. Ong Pauco, 43 Phil. 572 [1922]; Juan Lim vs. Laag,
51 Phil. 930 [1928].) It is elementary that a purchaser at a sheriff’s sale acquires no better title or greater
right than the judgment debtor has. (Villegas vs. Tan, 57 Phil. 656 [1932]; Laxamana vs. Carlos, 57 Phil. 722
[1932]; Ruiz vs. Fieldman’s Insurance Co., 9 C.A. Rep. 2d, 105 [1966].)

▪ warranty on seller’s title; liability in case of eviction (NCC Arts. 1548-1559)

SUBSECTION 1. — Warranty in Case of Eviction ART. 1548. Eviction shall take place whenever by a final judgment based on a
right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing
purchased. The vendor shall answer for the eviction even though nothing has been said in the contract on the subject. The
contracting parties, however, may increase, diminish, or suppress this legal obligation of the vendor. (1475a
Meaning of eviction. Eviction may be defined as the judicial process, whereby the vendee is deprived of the
whole or part of the thing purchased by virtue of a final judgment based on a right prior to the sale or an act
imputable to the vendor. Essential elements of warranty against eviction. The essential elements are: (1) The
vendee is deprived in whole or in part of the thing purchased; (2) He is so deprived by virtue of a final
judgment (Art. 1557.); (3) The judgment is based on a right prior to the sale or an act imputable to the
vendor; (4) The vendor was summoned in the suit for eviction at the instance of the vendee (Art. 1558.); and
(5) There is no waiver on the part of the vendee

Trespass contemplated by warranty against eviction. Mere trespass in fact does not give rise to the
application of the doctrine of eviction. (see Art. 1590.) In such case, the vendee has a direct action against
the trespasser in the same way as the lessee has such right. (Art. 1664.) The disturbance referred to in the
case of eviction is a disturbance in law which requires that a person go to the courts of justice claiming the
thing sold, or part thereof, and invoking reasons. If final judgment is rendered depriving the vendee of the
thing sold or any part thereof, the doctrine of eviction becomes applicable. (10 Manresa 184.) Vendor’s
liability is waivable. Warranty is not an essential element of a contract of sale and may, therefore, be
increased, diminished, or suppressed by agreement of the parties. (Art. 1548, par. 3.) Any stipulation,
however, exempting the vendor from the obligation to answer for eviction shall be void if he acted in bad
faith. (Art. 1553.)
ART. 1549. The vendee need not appeal from the decision in order that the vendor may become liable for
eviction.
Vendee has no duty to appeal from judgment. The vendee’s right against the vendor is not lost because he,
the vendee, did not appeal. With a judgment becoming final whatever be the cause of finality, the
requirement of the law is deemed satisfied. Furthermore, the vendor, having been notified of the action,
could have very well followed up the case and made use of all possible remedies. If he did not do that, he
should suffer for his omission. In reality, he does not have the right to demand of the vendee such diligence
that he himself did not have and which he was more obliged to observe, especially if the cause of eviction
was anterior to the sale. (Canizares Tiana vs. Torrejon, 21 Phil. 127 [1912].
ART. 1550. When adverse possession had been commenced before the sale but the prescriptive period is
completed after the transfer, the vendor shall not be liable for eviction. (n
Effect of prescription. By prescription, one acquires ownership and other real rights through the lapse of time
in the manner and under the conditions prescribed by law. In the same way, rights and actions are lost by
prescription. (Art. 1106.) (1) Completed before sale. — The vendee may lose the thing purchased to a third
person who has acquired title thereto by prescription. When prescription has commenced to run against the
vendor and was already complete before the sale, the vendee can enforce the warranty against eviction. In
this case, the deprivation is based on a right prior to the sale and an act imputable to the vendor. (2)
Completed after sale. — Even if prescription has started before the sale but has reached the limit prescribed
by law after the sale, the vendor is not liable for eviction. The reason is that the vendee could easily interrupt
the running of the prescriptive period by bringing the necessary action. If the property sold, however, is land
registered under the Torrens system, Article 1550 will have no application. Under the Torrens system,
ownership of land is not subject to prescription.
ART. 1551. If the property is sold for nonpayment of taxes due and not made known to the vendee before
the sale, the vendor is liable for eviction. (n)

Deprivation for nonpayment of taxes. If the vendee is deprived of the ownership of the property because it is
sold at public for nonpayment of taxes due from the vendor, the latter is liable for eviction for an act
imputable to him. It is required, however, that at the time of the sale, the non-payment of taxes was not
known to the vendee.
ART. 1552. The judgment debtor is also responsible for eviction in judicial sales, unless it is otherwise
decreed in the judgment. (n) Liability of judgment debtor. While the rule on implied warranty does not apply
to a sheriff who sells by virtue of authority in law (Art. 1549, par. 2.), the judgment debtor is responsible for
eviction (Art. 1552.) and hidden defects (Art. 1570.) even in judicial sales, unless otherwise decreed in the
judgment. Article 1552 is based on the general principle that a person may not enrich himself at the expense
of another. Thus, if the purchaser of real property sold on execution be evicted therefrom because the
judgment debtor had no right to the property sold, the purchaser is entitled to recover the price paid with
interest from the judgment debtor. If the sale was effected by the judgment creditor, the latter should not be
permitted to retain the proceeds of the sale, at the expense of the purchaser. (Bonzon vs. Standard, Bill Co. &
Osorio, 27 Phil. 142 [1942].
ART. 1553. Any stipulation exempting the vendor from the obligation to answer for eviction shall be void, if
he acted in bad faith. (1476) Stipulation waiving warranty. (1) Effect of vendor’s bad faith. — The vendor’s
bad faith under Article 1553 consists in his knowing beforehand at the time of the sale, of the presence of
the fact giving rise to eviction, and its possible consequence. (10 Manresa 194; Angelo vs. Pacheco, 56 Phil.
29 [1931].) Thus, if the vendor after selling his property to another, sold it again to another purchaser, he
cannot even by stipulation, be exempt from warranty against eviction, because he acted in bad faith. (2)
Effect of vendee’s bad faith. — It is a requisite, however, that the vendee is not himself guilty of bad faith in
the execution of the sale. If he knew the defect of title at the time of sale, or had knowledge of the facts
which should have put him upon inquiry and investigation as might be necessary to acquaint him with the
defects of the title of the vendor, he cannot claim that the vendor has warranted his legal and peaceful
possession of the property sold on the theory that he proceeded with the sale with the assumption of the
danger of eviction. He is not, therefore, entitled to the warranty against eviction, nor is he entitled to recover
damages. (J.M. Tuazon & Co., Inc. vs. Court of Appeals, 94 SCRA 413 [1979]; Aspiras vs. Dalon, [C.A.] 53 O.G.
8854.)
ART. 1554. If the vendee has renounced the right to warranty in case of eviction, and eviction should take
place, the vendor shall only pay the value which the thing sold had at the time of the eviction. Should the
vendee have made the waiver with knowledge of the risks of eviction and assumed its consequences, the
vendor shall not be liable. (1477) Kinds of waiver of eviction. Article 1554 treats of two kinds of waiver,
namely: (1) Consciente, that is, the waiver is voluntarily made by the vendee without the knowledge and
assumption of the risks of eviction; and (2) Intencionada, that is, the waiver is made by the vendee with
knowledge of the risks of eviction and assumption of its consequences. Effect of waiver by vendee. (1) If the
waiver was only conscious, the vendor shall pay only the value which the thing sold had at the time of
eviction. This is a case of solutio indebiti. The sole effect of a waiver unaccompanied by the knowledge and
assumption of the danger of eviction is to deprive the purchaser of the benefits mentioned in Nos. 2, 3, 4,
and 5 of Article 1555. (Ibid.; Lavina vs. Veloso, [C.A.] 40 O.G. 2331.) (2) In the second kind of waiver, the
vendor is exempted from the obligation to answer for eviction, provided he did not act in bad faith. (Art.
1553; see Andaya vs. Manansala, 107 Phil. 1151 [1960].) Presumption as to kind of waiver. From the terms of
Article 1554, every waiver is presumed to be consciente while the contrary is not proven, but to consider it
intencionada, it is necessary besides the act of waiver that it be accompanied by some circumstance which
reveals the vendee’s knowledge of the risks of eviction and his intention to submit to its consequences. (10
Manresa 180-181; Phil. National Bank vs. Silo, 72 Phil. 141 [1941].)
ART. 1555. When the warranty has been agreed upon or nothing has been stipulated on this point, in case
eviction occurs, the vendee shall have the right to demand of the vendor: (1) The return of the value which
the thing sold had at the time of the eviction, be it greater or less than the price of the sale; (2) The income
or fruits, if he has been ordered to deliver them to the party who won the suit against him; (3) The costs of
the suit which caused the eviction and, in a proper case, those of the suit brought against the vendor for the
warranty; (4) The expenses of the contract, if the vendee has paid them; (5) The damages and interests and
ornamental expenses, if the sale was made in bad faith. (1478)
Rights and liabilities in case eviction occurs. The provisions of the above article specify in detail the rights and
liabilities of the vendor and the vendee in the event eviction takes place “when the warranty has been
agreed upon or nothing has been stipulated on this point,” that is, in the absence of waiver of eviction by the
vendee. (Art. 1554.) (1) Return of value of thing. — If at the time of the eviction the value of the property is
really more or less than its value at the time of the sale, by reason of improvements or deterioration, it is but
just that the vendor should pay the excess or not suffer the damage. (see Sta. Romana vs. Imperio, 12 SCRA
625 [1965].) All kinds of improvements whether useful or necessary or even recreational expense voluntarily
incurred by the vendee (Arts. 546- 548.) or caused by nature or time (Art. 551, ibid.) insofar as they may
affect the value of property, are taken into account in determining the increase in value. (10 Manresa 199-
200.) Note that the law does not speak of interest. Undoubtedly, the law had intended that the interest on
the price shall be set off against the fruits received by the vendee from the thing while in his possession.
(Ibid.) (2) Income or fruits of thing. — The vendee is liable to the party who won the suit against him for the
income or fruits received only if so decreed by the court. The obvious inference from this provision is that to
the vendee belongs the use, free of any liability, of the subject matter of the sale. And this benefit is not by
any means gratuitous. It is offset by the use without interest of the money of the vendee by the vendor.
(Ibid., 207; Lovina vs. Veloso, [C.A.] 40 O.G. 2331.) (3) Costs of the suit. — The vendee is also entitled to
recover the expense of litigation (see Rules of Court, Rule 142, Sec. 1.) resulting in eviction, including the
costs of the action brought against the vendor to enforce his warranty. “Costs of the suit” mentioned in No.
(3) does not include travelling expenses incurred by the vendee in defending himself in the action. (see
Orense vs. Jaucian, 18 Phil. 553 [1911].) He is not entitled to recover damages unless the sale was made by
the vendor in bad faith. (No. 5.) (4) Expenses of the contract. — In the absence of any stipulation to the
contrary, the expenses in the execution and registration of the sale are borne by the vendor. However, if the
vendee should have paid for such expenses, he shall have the right to demand the same from the vendor. (5)
Damages and interests. — The right of the vendee to demand “damages and interests and ornamental
expenses” is qualified by the condition that the sale was made in bad faith. If good faith is presumed, the
vendee is not entitled to recover damages unless bad faith on the part of the vendor is shown in making the
sale. (see Pascual vs. Lesaca, 91 Phil. 920 [1952].) The word “interests” does not cover interest on the
purchase price as in lieu thereof the vendee is entitled to the fruits of the thing, and in cases he has been
ordered by a court to deliver the fruits to the successful party, the vendor must indemnify him. (see No. 2.)

Right of second purchaser to whom warranty assigned. Where a warranty against eviction was expressly
agreed upon in a contract of sale and the vendee sold the same land to another expressly assigning to him
the right to warranty, the second purchaser has a right of action against the first vendor to make good the
warranty against eviction. The rule that a contract binds only the parties, their assigns and heirs (see Art.
1311, par. 2.) is not applicable to this case. The basis of the second purchaser’s action is the first
vendee’s transfer to him of the right to the warranty, a right which the latter had against the seller and which
the former exercises by virtue of the transfer. (De la Riva vs. Escobar, 51 Phil. 243 [1927].)
ART. 1556. Should the vendee lose, by reason of the eviction, a part of thing sold of such importance, in
relation to the whole, that he would not have bought it without said part, he may demand the rescission of
the contract; but with the obligation to return the thing without other encumbrances than those which it
had when he acquired it. He may exercise this right of action, instead of enforcing the vendor’s liability for
eviction. The same rule shall be observed when two or more things have been jointly sold for a lump sum, or
for a separate price for each of them, if it should clearly appear that the vendee would not have purchased
one without the other. (1479a) Alternative rights of vendee in case of partial eviction. This article
contemplates of partial eviction, while Article 1554 treats of total eviction. It states the rule that if there is
partial eviction, the vendee has the option either to enforce the vendor’s liability for eviction (Art. 1555.) or
to demand rescission of the contract. The above rule is applicable — (1) When the vendee is deprived of a
part of the thing sold if such part is of such importance to the whole that he would not have bought the thing
without said part (par. 1.); or (2) When two or more things are jointly sold whether for a lump sum or for a
separate price for each, and the vendee would not have purchased one without the other. (

Remedy of rescission not available in case of total eviction. In case the vendee is totally evicted from the
thing sold, he cannot avail of the remedy of rescission, because this remedy contemplates that the one
demanding it is able to return whatever he has received under the contract. (Art. 1385.) This is not so when
the vendee loses only a part of the thing sold because there still remains a portion of the thing. In case of
rescission, the vendee can return the thing but it must not be subject to “other encumbrances than those
which it had when he acquired it.” (see Art. 1556.)
ART. 1557. The warranty cannot be enforced until a final judgment has been rendered, whereby the vendee
loses the thing acquired or a part thereof. (1480) Final judgment of eviction essential. The above article
merely reiterates two of the essential elements for the enforcement of warranty in case of eviction, namely:
(1) deprivation of the whole or of a part of the thing sold; and (2) existence of a final judgment. (Art. 1548.)
Eviction may take place by virtue of a final judgment of an administrative office or board, and it is not
indispensable that it be rendered by a court, provided it was rendered by competent authority and in
conformity with the procedure prescribed by law. (Bonzon vs. Standard Oil Co. of New York, 27 Phil. 141
[1914].
ART. 1558. The vendor shall not be obliged to make good the proper warranty, unless he is summoned in the
suit for eviction at the instance of the vendee. (1481a)

Formal summons to vendor essential. Another essential requisite before a vendor may be legally liable for
eviction is that, he should be summoned in the suit for eviction at the instance of the vendee. (see Jovellano
vs. Lualhati, 47 Phil. 371 [1975]; City of Manila vs. Lack, 19 Phil. 324 [1911].) (1) Vendor to be made party in
suit for eviction. — The phrase “unless he is summoned in the suit for eviction” means that the vendor
should be made a party to the suit either by way of asking that the former be made a co-defendant (Art.
1559.) or by the filing of a third-party complaint against said vendor. (a) Furnishing the vendor by registered
mail with a copy of the opposition the vendee filed in the eviction suit is not the kind of notice prescribed by
Articles 1558 and 1559. (Escaler vs. Court of Appeals, 138 SCRA 1 [1985].) (b) It is evident that the
notification must be given in the action brought by the third party against the vendee, because it is there
that the vendor must defend the vendee’s peaceful and legal possession, for which he is responsible, and not
in the action to enforce the warranty itself which already supposes the eviction. (De la Riva vs. Escobar &
Bank of P.I., 51 Phil. 243 [1928].) (2) Object of the law. — The object is to give the vendor an opportunity to
intervene and defend the title that he has transferred, for, after all, he alone would know the circumstances
or reasons behind the claim of the plaintiff and be in a position to defend the validity of his title. (10 Manresa
219-220; De la Riva vs. Escobar & Bank of P.I., supra.) In the absence of such opportunity, the vendor is not
bound to his warranty. (Jovellano vs. Lualhati, supra; Angelo vs. Pacheco, 56 Phil. 70 [1931].)
ART. 1559. The defendant vendee shall ask, within the time fixed in the Rules of Court for answering the
complaint, that the vendor be made a co-defendant. (1482a) Vendor to be made co-defendant. As previously
stated, the notification required by Article 1559 refers to a case where the vendee is the defendant in a suit
instituted to deprive him of the thing purchased The defendant vendee threatened with eviction who wishes
to preserve his right of warranty, should call in the vendor to defend the action which has been instituted
against him. (Jovellano vs. Lualhati, 47 Phil. 371 [1925].) He should ask the court within the time allowed him
to answer (Rules of Court, Rule 11, Sec. 1.), that the vendor be made a co-defendant to answer the complaint
of the plaintiff who seeks to deprive him (the vendee) of the property purchased

▪ warranty against hidden defects of, or encumbrances upon the thing sold; vendor’s responsibility in case
of breach (NCC Arts. 1560, 1561, 1566)
ART. 1560. If the immovable sold should be encumbered with any non-apparent burden or servitude, not
mentioned in the agreement, of such a nature that it must be presumed that the vendee would not have
acquired it had he been aware thereof, he may ask for the rescission of the contract, unless he should
prefer the appropriate indemnity. Neither right can be exercised if the non-apparent burden or servitude is
recorded in the Registry of Property, unless there is an express warranty that the thing is free from all
burdens and encumbrances. Within one year, to be computed from the execution of the deed, the vendee
may bring the action for rescission, or sue for damages. One year having elapsed, he may only bring an
action for damages within an equal period, to be counted from the date on which he discovered the burden
or servitude. (1483a) Where immovable sold encumbered with non-apparent burden. (1) Right of vendee.
— Although the vendee is not deprived of the thing sold, totally or partially, the vendee may still rescind the
contract or ask for indemnity, if the thing sold should be encumbered with any non-apparent burden or
servitude, not mentioned in the agreement of such a nature that the vendee would not have acquired it
had he been aware thereof. The lack of knowledge on the part of the vendor is not a defense. The contract
can still be invalidated on the ground of mistake. (Art. 1331; see Arts. 1556, 1566; see Pineda vs. Santos, 56
Phil. 583 [1982].) Note: A servitude (or easement) is an encumbrance imposed upon an immovable for the
benefit of another immovable belonging to a different owner. (Art. 615.) An example of an apparent
servitude is a right of way establishing a permanent passage (Art. 649, par. 2.), which is continually kept in
view by external sign. An example of a non-apparent easement is a party wall (Art. 659.) which has no
exterior sign. (Art. 660.) (2) When right cannot be exercised. — The alternative rights granted by Article
1560 cannot be exercised in the following cases: (a) If the burden or servitude is apparent, that is, “made
known and is continually kept in view by external signs that reveal the use and enjoyment of the same’’
(Art. 615, par. 4.); (b) If the non-apparent burden or servitude is registered; and (c) If the vendee had
knowledge of the encumbrance, whether it is registered or not. The registration of the non-apparent
burden or servitude in the Registry of Property operates as a constructive notice to the vendee. Hence, the
vendor is relieved from liability unless there is an express warranty that the immovable is free from any
such burden or encumbrance. If the burden is known to the vendee, there is no warranty. (par. 1.) (3) When
action must be brought. — The action for rescission or damages must be brought within one year from the
execution of the deed of sale. If the period has already elapsed, the vendee may only bring an action for
damages within one year from the date of the discovery of the non-apparent burden or servitude. (pars. 2
and 3.)
ART. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold
may have, should they render it unfit for the use for which it is intended, or should they diminish its fitness
for such use to such an extent that, had the vendee been aware thereof, he would not have acquired it or
would have given a lower price for it; but said vendor shall not be answerable for patent defects or those
which may be visible, or for those which are not visible if the vendee is an expert who, by reason of his
trade or profession, should have known them. (1484a)

Definition of terms. (1) Redhibition is the avoidance of a sale on account of some vice or defect in the thing
sold, which renders its use impossible, or so inconvenient and imperfect that it must be supposed that the
buyer would not have purchased it had he known of the vice. (Civil Code La., Art. 2406.) (2) Redhibitory
action is an action instituted to avoid a sale on account of some vice or defect in the thing sold which
renders its use impossible, or so inconvenient and imperfect that it must be supposed that the buyer would
not have purchased it had he known of the vice. (Cyc., Law Dictionary, 3rd ed., 945.) The object is the
rescission of the contract. If the object is to procure the return of a part of the purchase price paid by the
vendee, the remedy is known as accion quanti minoris or estimatoris. (10 Manresa 226-227; see Art. 1567.)
(3) Redhibitory vice or defect is a defect in the article sold against which defect the seller is bound to
warrant. (see Cyc., Law Dictionary, 3rd ed., 1945.) The vice or defect must constitute an imperfection, a
defect in its nature, of certain importance; and a minor defect does not give rise to redhibition. The mere
absence of a certain quality in the thing sold which the vendee thought it to contain is not necessarily a
redhibitory defect. One thing is that the thing lacks certain qualities and another thing is that it positively
suffers from certain defects. (10 Manresa 227-228.) Requisites for warranty against hidden defects. The
following requisites must concur for the existence of the warranty against hidden defects:
(1) The defect must be important or serious; (2) It must be hidden; (3) It must exist at the time of the sale;
(4) The vendee must give notice of the defect to the vendor within a reasonable time (Art. 1586.); (5) The
action for rescission or reduction of the price must be brought within the proper period — 6 months from
the delivery of the thing sold (Art. 1571.) or within 40 days from the date of the delivery in case of animals
(Art. 1577, par. 1.); and (6) There must be no waiver of warranty on the part of the vendee. (Art. 1548, par.
3.) When defect important. The defect is important if: (1) it renders the thing sold unfit for the use for
which it is intended; or (2) if it diminishes its fitness for such use to such an extent that the vendee would
not have acquired it had he been aware thereof or would have given a lower price for it. (see Bryan vs.
Hankins, 44 Phil. 87 [1922]; Gochangco vs. Dean, 47 Phil. 687 [1925].) The use contemplated must be that
stipulated, and in the absence of stipulation, that which is adopted to the nature of the thing and to the
business of the purchaser. (see 10 Manresa 227- 280.) An imperfection or defect of little consequence does
not come within the category of being redhibitory. But where an expert witness categorically established
that a printing machine sold is in A-1 condition, required major repairs before it could be used, plus the fact
that the buyer never made appropriate use of the machine from the time of purchase until an action was
filed, attest to the major defects in said machine justifying rescission of the contract. (Moles vs.
Intermediate Appellate Court, 169 SCRA 777 [1989].) When defect hidden. The defect is hidden (or latent) if
it was not known and could not have been known to the vendee. (see McCullough vs. Aenille & Co., 3 Phil.
284 [1904].) It is one which is hidden to the eyes and cannot be discovered by ordinarily careful inspection
or examination. Hence, there is no warranty if the defect is patent or visible. For the same reason, the
vendor’s liability for warranty cannot be enforced although the defect is hidden if the vendee is an expert
who, by reason of his trade or profession, should have known it. The same defect, therefore, may be hidden
with respect to one person, but not hidden with respect to another.

Where defect patent or made known. (1) A warranty, in general terms, does not cover defects which the
buyer must have observed. Thus, if the seller of a horse which is obviously blind and which both parties
know to be blind, says it is sound, the meaning of “sound” as used in that connection must be sound except
as to its eyes. (2) The same rule is applicable to a defect which is not obvious but of which the seller tells the
buyer, or which the buyer knows or should have known. A well-recognized limitation on any doctrine
freeing the seller from liability for statements or promises in regard to obvious defects is that, if the seller
successfully uses art to conceal the defects, the seller is liable. (see 1 Williston, op. cit., Sec. 207.) (3) As a
general rule, there is no implied warranty against hidden defects in the sale of second-hand goods. Again,
as an exception, the seller shall be liable if he has been shown to have made misrepresentation or acted in
bad faith. (see Peralta vs. Jornada Enterprises, Inc., 7 C.A. Rep. 2d, 270 [1965].) (4) The seller may bind
himself against patent or obvious defects (manifest upon casual inspection) if the intent to do so is clearly
evident. In such a case, the seller cannot allege as a defense that inspection (which the buyer failed to
make) would have disclosed the defect or that the buyer relied on his own judgment. (Babb & Martin, op.
cit., pp. 92-93.
ART. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even
though he was not aware thereof. This provision shall not apply if the contrary has been stipulated, and the
vendor was not aware of the hidden faults or defects in the thing sold. (1485) Responsibility of vendor for
hidden defects. (1) Effect of ignorance of vendor. — The ignorance of the vendor does not relieve him from
liability to the vendee for any hidden faults or defects in the thing sold. (see Bryan vs. Hankins, 44 Phil. 87
[1922].) In other words, good faith cannot be availed of as a defense by the vendor. (2) Exception. — The
parties, however, may provide otherwise in their contract (see Art. 1581, par. 3.) provided the vendor acted
in good faith, that is, he was unaware of the existence of the hidden fault or defect. (Arts. 1566, par. 2;
1553.) (3) Where vendee aware of the defect. — If the vendee is aware of the defect in the thing he buys or
lack of title in the vendor, he cannot later complain thereof. He is deemed to have wilfully and voluntarily
assumed the risk attendant to the sale. (Martinez vs. Court of Appeals, 56 SCRA 647 [1974].) Doctrines of
“caveat venditor” and “caveat emptor.” At early common law, the implied warranty of quality was not
recognized and the rule was then caveat emptor3 (let the buyer beware). The seller’s liability for defects of
 the goods sold was then confined to cases of express promise to warrant the quality of such goods and to
those in which the seller had knowledge of the hidden defects and the sale was made without the seller
revealing them, but in the latter cases, the basis of the seller’s liability was for fraud. The Roman Law, like
the English law, started with the doctrine of caveat emptor. (1) The old Civil Code, following the Roman
Law, rejected the maxim caveat emptor. (see Art. 1547.) The doctrine of caveat venditor (let the seller
beware) was adopted in accordance with which “the vendor is liable to the vendee for any hidden faults or
defects in the thing sold, even though he was not aware thereof.” (Art. 1585, now Art. 1566 of our new Civil
Code.) The doctrine is based on the principle that a sound price warrants a sound article. A manufacturer or
seller of a product cannot be held liable for any damage allegedly caused by the product in the absence of
any proof that the product in question was defective. The defect must be present upon delivery or
manufacture of the product, or when the product left the seller’s or manufacturer’s control; or when the
product was sold to the purchaser; or the product must have reached the user or consumer without
substantial change in the condition it was sold. Tracing the defect to the seller or manufacturer requires
some evidence that there was no tampering with, or changing of the product. (Nutrimix Feeds Corporation
vs. Court of Appeals, 441 SCRA 357 [2004].) (2) The maxim caveat emptor is still applicable, however, in
sheriff’s sales (Pabico vs. Ong Pauco, 43 Phil. 57 [1922]; Allure Manufacturing, Inc. vs. Court of Appeals, 199
SCRA 285 [1991].), sales of animals under Article 1574, and tax sales (see Art. 1547, last par.) for there is no
warranty of title or quality on the part of the seller in such sales. It also applies in double sales of property
where the issue is who between two vendees has a better right to the property. (see Art. 1544.) The rule of
caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys
without checking the vendor’s title takes all the risks and losses consequent to such failure. (Salvoso vs.
Tanega, 87 SCRA 349 [1978].) But a person dealing with registered land is merely charged with notice of the
burdens on the property which are noted on the face of the register or the certificate of title. (Campillo vs.
Court of Appeals, 129 SCRA 513 [1984].)

Cases: Sigaya v. Mayuga, G.R. No. 143254, August 18, 2005

c. quality or fitness of goods (NCC Art. 1562)

ART. 1562. In a sale of goods, there is an implied warranty or condition as to the quality or fitness of the
goods, as follows: (1) 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 of
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. (2) Where the goods are bought 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. (n) Implied warranties of quality. Quality of goods
includes their state or condition. (Art. 1636.) The purpose of holding the seller on his implied warranties is to
promote high standard in business and to discourage sharp dealings. They are based on the principle that
“honesty is the best policy.” (see Bekkevold vs. Potts, 216 N.W. 790.) (1) Implied warranty of fitness. — There
is no implied warranty as to the quality or fitness for any particular purpose of goods under a contract of
sale, except as follows: where: (a) the buyer, expressly or by implication, manifests to the seller the particular
purpose for which the goods are required, and (b) the buyer relies upon the seller’s skill or judgment. Then,
whether he be the grower or manufacturer or not — there is an implied warranty that the goods are
reasonably fit for such purpose. (Babb & Martin, op. cit., p. 94.) (a) Particular purpose of goods. — It is not
some purpose necessarily distinct from a general purpose. For example, the general purpose for which all
food is bought is to be eaten, and this would also be the particular purpose in a specific instance. It is, in fact,
the purpose expressly or impliedly communicated to the seller for which the buyer buys the goods; and it
may appear from the very description of the article as, for example, “coatings” or a “hot water bottle.” But
where an article is capable of being applied to a variety of purpose, the buyer must particularize the specific
purpose he has in view. (1 Williston, op. cit., p. 661.) (b) Test. — It is whether the buyer justifiably relied
upon the seller’s judgment that the goods furnished would fulfill the desired purpose, or whether relying on
his own judgment, the buyer ordered or bought what is frequently called “a known, described, and definite
article.” (Ibid., p. 607; see Art. 1563; Co Cho Chit vs. Henson, Oath & Stevenson, Inc., 103 Phil. 956 [1958].)
The occupation of the seller is important evidence of the justifiableness of the buyer’s reliance. And where
the buyer has had no opportunity for previous inspection, he is entitled to rely, and will naturally be
presumed to have relied, upon the seller’s skill and judgment. (2) Implied warranty of merchantability. —
Where goods are bought by description, the seller impliedly warrants that the goods are of merchantable
quality. (a) Merchantability. — It is not a warranty of quality in the sense of requiring a particular grade, but
 it does require identity between what is described in the contract and what is tendered, in the sense that the
latter is of such quality to have some value. Judicial synonyms for “merchantability” include “salable’’ (or
“saleable,”) “standard,” or “average quality” of goods sold under a particular description. (Babb & Martin,
op. cit., p. 95.) (b) Causes of unmerchantability. — Goods may be unmerchantable not because of any defect
in their physical condition but because of some other circumstances, e.g., their infringement of trademarks
of others renders them unsalable. Other goods than food may be unmerchantable because the use of them
is dangerous or injurious in ways not to be expected from the goods of the kind. Thus, if an ingredient of a
face powder is such as to cause irritation of the skin, the goods are not merchantable. Cases of this sort may
often involve the question whether the difficulty is due to peculiar sensitiveness of the buyer and if so,
whether there is ground for a right of action when goods would not be injurious to most persons. (c)
Saleability in a particular market. — The requirement of merchantable quality carries with it no implication
that the goods shall be saleable in a particular market. (1 Williston, op. cit., pp. 641-643.) (d) Applicability to
goods in that description. — It must be made clear that the warranty that the goods are of merchantable
quality applies to all goods bought from a seller who deals in goods in that description, whether they are sold
under a patent or trade name or otherwise. (Ibid., p. 611.) Warranty of merchantability distinguished from
warranty of fitness. A warranty of merchantability is a warranty that goods are reasonably fit for the general
purpose for which they are sold. On the other hand, a warranty of fitness is a warranty that the goods are
suitable for the special purpose of the buyer which will not be satisfied by mere fitness for general purposes.
(Dunfor Bros. Co. vs. Consolidated Iron-Steel Mfg. Co., C.C.A. Comm. 1928, 23 F. 2nd 461.
Fitness for a particular purpose and merchantability. It should be noticed that fitness for a particular purpose
may be merely the equivalent of merchantability. Thus, the particular purpose for which a reaping machine is
generally designed is reaping. If it will not fulfill this purpose, it is not merchantable. The particular purpose,
however, may be narrower. Thus, a machine may be desired for operation on rough ground and though it
may be a good reaping machine, it may yet be impossible to make it work satisfactorily in the place where
the buyer wishes to use it. (1 Williston, op. cit., p. 467.) Note: The word “of” before “judgment” in Article
1562(1) should read “or.”

d. merchantability and fitness distinguished

▪ rule in case of sale under a patent or trade name (NCC Art. 1563)
ART. 1563. In the case of contract of sale of a specified article under its patent or other trade name, there is
no warranty as to its fitness for any particular purpose, unless there is a stipulation to the contrary. (n) Sale
under a patent or trade name. Under Article 1562(1), the buyer makes known to the seller the particular
purpose for which the goods are desired. Article 1563 is naturally a provision limiting the application of
Article 1562. (1) By exactly defining what he wants, the buyer has exercised his own judgment instead of
relying upon that of the seller. This definition may be given by means of a trade name or in any other way.
The description must be the buyer’s choice, or the goods must not only be described and definite but
known, in order to preclude warranty of fitness. (Williston, op. cit., p. 612.) (2) Article 1563 provides an
exception in case of “a stipulation to the contrary.” Thus, there is still an implied warranty of fitness for
particular purpose where the buyer relied upon the seller’s judgment rather than the patent or trade name.
“Particular purpose,” as used in Article 1563, means a usage different from the ordinary uses the article was
made to meet. (Grant Mfg. Co. vs. Yates American Machine Co., 111 F. 2d. 360.) (3) The provision does not
preclude an implied warranty of merchantability or fitness for a purpose for which such specified article is
ordinarily or generally sold. Thus, if the seller is a dealer in food, and the buyer is buying for immediate
consumption and relies on the seller’s skill or judgment, there is an implied warranty that the article sold is
fit for human consumption. (Babb & Martin, op. cit., p. 93.)

▪ effect of usage of trade (NCC Art. 1564)

ART. 1564. An implied warranty or condition as to the quality or fitness for a particular purpose may be
annexed by the usage of trade. (n)
Effect of usage of trade. A warranty as to the quality or fitness for a particular purpose may be attached by
usage to a contract containing no express provision in regard to warranty, though in the absence of usage
no warranty would be implied. The usage is relied on for the purpose of showing the intention of the
parties. If there is no usage, the parties would naturally express their intention. A usage in order to bind
both parties must be known to both or, if unknown to one, the other must be justified in assuming
 knowledge on the part of the person with whom he is dealing. (see 1 Williston, op. cit., pp. 566-655; see
Art. 1522.) The presumption is that the parties are aware of the usage of trade.

▪ rule in case of goods sold y sample (NCC Art. 1565)

ART. 1565. In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind, there
is an implied warranty that the goods shall be free from any defect rendering them unmerchantable
which would not be apparent on reasonable examination of the sample. (n) Merchantability of goods
sold by sample. (1) Where sample not merchantable. — As a general rule, all the buyer is entitled to, in
case of a sale or contract to sell by sample, is that the goods be like the sample, so he has no right to
have the goods merchantable if the sample which he has inspected is not. The reason upon which this
rule is based is identical with that which generally denies an implied warranty to a buyer who has
inspected the goods which he buys. (see PMC vs. Go Juco, 48 Phil. 621 [1926]; Chang Yong Tek vs. Santos,
31 Phil. 152 [1915].) (2) Where sample subject to latent defect. — Where the defect in the goods is of
such a character that inspection will not reveal it, so in the case of a sale by sample, if the sample is
subject to a latent defect, and the buyer reasonably relies on the seller’s skill or judgment, the buyer is
entitled not simply to goods like the sample, but to goods like those which the sample seems to
represent, that is, merchantable goods of that kind and character. (1 Williston, op. cit., pp. 678-679.
Under Article 1481, the contract may be rescinded where the bulk of the goods delivered do not
correspond with the sample.

e. alternative remedies of buyer to enforce the warranties (NCC Arts. 1561- 62, 1564-66); prescriptive period (NCC
Arts. 1567 & 1571)
ART. 1567. In the cases of articles 1561, 1562, 1564, 1565, and 1566, the vendee may elect between
withdrawing from the contract and demanding a proportionate reduction of the price, with damages in
either case. (1486a) Alternative remedies of the buyer to enforce warranty. Under this article, the vendee
has the option either: (1) to withdraw from the contract, or (2) demand a proportionate reduction of the
price, with a right to damages in either case. This first is known as accion redhibitoria (action for rescission),
while the second is known as accion quanti minoris. The remedies are alternative as they are incompatible
with each other. The same right is given to the vendee in the sale of animals with redhibitory defects. (Art.
1580.) The vendee must present proof that he suffered damage as a result of the breach of the vendor’s
warranty to be entitled to actual damages. (De Vera, Jr. vs. Court of Appeals, 157 SCAD 14, 367 SCRA 534
[2001].) Note: The word “and” before “demanding” in Article 1567 should read “or.”
ART. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months,
from the delivery of the thing sold. (1490) Prescription of actions in cases of implied/express warranty. (1)
The action for rescission of the contract or reduction of the purchase price (Art. 1567.) prescribes six months
from the date of delivery of the thing sold. Outside this period the action is barred. It follows that a vendee
should not be permitted to offer as a defense, hidden defects in the thing sold six months after he had
received it. (Gaba vs. Almonidovar, [C.A.] No. 24703-R, Feb. 24, 1960.) If the action is not for breach of
warranty but quasi-delict or negligence, the prescriptive period is four (4) years. (see Art. 1146[2].) The ten
preceding articles referred to define the vendor’s liability for the defects in the thing sold. (Ibid.) A cursory
reading of said articles reveals that Article 1571 may be applied only in cases of implied warranty. (2) With
respect to an express warranty, in accordance with the general rule on rescission of contract, the prescriptive
period which is four (4) years, shall apply (Moles vs. Intermediate Appellate Court, 169 SCRA 777 [1989];
Villostas vs. Court of Appeals, 210 SCRA 490 [1992].) unless another period is specified in the express
warranty. (Engineering & Machinery Corp. vs. Court of Appeals, 67 SCAD 113, 252 SCRA 156 [1996]; Isidoro
vs. Nissan Motor Philippines, Inc., 116 SCAD 702, 319 SCRA 757 [1999].)

f. loss of thing sold due to hidden defects (NCC 1568-1569)

ART. 1568. If the thing sold should be lost in consequence of the hidden faults, and the vendor was aware of
them, he shall bear the loss, and shall be obliged to return the price and refund the expenses of the contract,
with damages. If he was not aware of them, he shall only return the price and interest thereon, and
reimburse the expenses of the contract which the vendee might have paid. (1487a) Effect of loss of thing
sold on account of hidden defects. (1) Vendor aware of hidden defects. — If the vendor was aware of the
 hidden defects in consequence of which the thing sold was lost, he shall bear the loss because he acted in
bad faith. In such case, the vendee has the right to recover: (a) the price paid; (b) the expenses of the
contract; and (c) damages. (2) Vendor not aware of hidden defects. — If the vendor was not aware of them,
he shall be obliged only to return: (a) the price paid; (b) interest thereon; and (c) expenses of the contract if
paid by the vendee. He is not made liable for damages because he is not guilty of bad faith.
ART. 1569. If the thing sold had any hidden fault at the time of the sale, and should thereafter be lost by a
fortuitous event or through the fault of the vendee, the latter may demand of the vendor the price which he
paid, less the value which the thing had when it was lost. If the vendor acted in bad faith, he shall pay
damages to the vendee. (1488a) Effect of loss of defective thing sold. If the thing sold had no hidden defects,
its loss through a fortuitous event or through the fault of the vendee is, of course, to be borne by the
vendee. However, the vendor is obliged to return the price paid less the value of the thing at the time of its
loss in case where hidden defects existed. In other words, under Article 1569, the vendor is still made liable
on his warranty. The difference between the price paid for the thing and the value at the time of the loss,
represents the damage suffered by the vendee and is at the same time the amount with which the vendor
enriched himself at the expense of the vendee. (10 Manresa 238.) If the vendor acted in bad faith, he shall
also be liable for damages.

g. applicability of warranty on judicial sales (NCC Art. 1570)

ART. 1570. The preceding articles of this Subsection shall be applicable to judicial sales, except that the
judgment debtor shall not be liable for damages. (1489a) Warranty in judicial sales. (1) As to judgment
debtor. — In a judicial sale, it is not really the sheriff who sells but the judgment debtor. Hence, the
provisions regarding warranty are also applicable to judicial sales. (see Art. 1574.) The buyer can avail either
of the alternative remedies to enforce the warranty and the provisions of Articles 1568 and 1569. However,
since the judgment debtor is forced to sell, there can be no liability for damages. The publicity surrounding a
judicial sale and the fact that the seller does not take an active part in the sale and in the determination of
the price precludes the existence of bad faith on his part. (see 10 Manresa 242.) While in voluntary sales or
transactions the vendor or transferor can be expected to defend his title because of his warranty to the
vendee, no such obligation is owed by the owner whose land is sold at execution sale. (Santiago Land
Development Corp. vs. Court of Appeals, 78 SCAD 476, 276 SCRA 674 [1997].) In a case, a land was sold at
public auction for unpaid realty taxes. It was held that the sale by the buyer of the land to a purchaser in
good faith for value was valid even if there was no compliance with all the requirements of the law
concerning tax sale of delinquent property. (Reyes vs. Intermediate Appellate Court, 135 SCRA 214 [1985].)
But an auction sale conducted to satisfy a judgment which is null and void, necessarily is also null and void.
(Ver vs. Quetulio, 163 SCRA 80 [1988].) (2) As to government. — In judicial sales, the principle of caveat
emptor applies, according to which the purchaser acquires by his purchase no higher or better title or right
than that of the judgment debtor. If the latter has no right, interest, or lien in and to the property sold, the
purchaser acquires none. (Lanci vs. Yangco, 52 Phil. 563 [1928]; Laxamana vs. Carlos, 57 Phil. 722 [1929];
Parreno vs. Ganancial, 29 SCRA 786 [1969]; Tay Chun Suy vs. Court of Appeals, 47 SCAD 139, 229 SCRA 151
[1994].) The rule of caveat emptor which governs sheriff’s sales puts the purchaser upon inquiry as to the
debtor’s title, there being no warranty of title, such sales being involuntary as distinguished from voluntary
transactions, and if he buys, he must do so at his own peril (Enriquez vs. De Delgado, [C.A.] No. 24466 R, Dec.
8, 1961.), and it is not incumbent on the sheriff to place the purchaser in possession of the property. (Pabico
vs. Ong Pauco, 43 Phil. 572 [1923].) Right of purchaser in judicial sales. (1) The purchaser of property on sale
under execution and levy takes as assignee only. (Pacheco vs. Court of Appeals, 153 SCRA 382 [1987].)
Indeed, at a sheriff’s sale what is sold is not the property advertised, but simply the interest of the debtor in
the property; if it afterwards develops that he has none, the purchaser is still liable on his bid because he has
offered so much for the debtor’s interest in open market and it is for him to determine before he bids what
the debtor’s interest is worth. (Leyson vs. Tañada, 109 SCRA 66 [1981], citing 30 Am. Jur. 2d, pp. 691-692.) (2)
Where a judicial sale is voided or set aside without fault of the purchaser, the latter is entitled to
reimbursement of the purchase money paid by him subject to set-off for benefits enjoyed while he had
possession of the property. As a general rule, a judicial sale can only be set aside upon the return to the
buyer of the purchase price with simple interest and other expenses incurred by him. He is ordinarily entitled
to a lien on the property until he is repaid whatever may be due him. (Seven Brothers Shipping

h. prescriptive period of action (NCC Art. 1571)

 ART. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months,
from the delivery of the thing sold. (1490) Prescription of actions in cases of implied/express warranty. (1) The
action for rescission of the contract or reduction of the purchase price (Art. 1567.) prescribes six months from
the date of delivery of the thing sold. Outside this period the action is barred. It follows that a vendee should
not be permitted to offer as a defense, hidden defects in the thing sold six months after he had received it.
(Gaba vs. Almonidovar, [C.A.] No. 24703-R, Feb. 24, 1960.) If the action is not for breach of warranty but
quasi-delict or negligence, the prescriptive period is four (4) years. (see Art. 1146[2].) The ten preceding
articles referred to define the vendor’s liability for the defects in the thing sold. (Ibid.) A cursory reading of
said articles reveals that Article 1571 may be applied only in cases of implied warranty. (2) With respect to an
express warranty, in accordance with the general rule on rescission of contract, the prescriptive period which
is four (4) years, shall apply (Moles vs. Intermediate Appellate Court, 169 SCRA 777 [1989]; Villostas vs. Court
of Appeals, 210 SCRA 490 [1992].) unless another period is specified in the express warranty. (Engineering &
Machinery Corp. vs. Court of Appeals, 67 SCAD 113, 252 SCRA 156 [1996]; Isidoro vs. Nissan Motor Philippines,
Inc., 116 SCAD 702, 319 SCRA 757 [1999].)

i. rule on sale of animals (NCC Arts. 1572-1581

ART. 1572. If two or more animals are sold together, whether for a lump sum or for a separate price for each
of them, the redhibitory defect of one shall only give rise to its redhibition, and not that of the others; unless
it should appear that the vendee would not have purchased the sound animal or animals without the
defective one. The latter case shall be presumed when a team, yoke, pair, or set is bought, even if a separate
price has been fixed for each one of the animals composing the same. (1491) Sale of two or more animals
together. When two or more animals have been sold at the same time and the redhibitory defect (Art. 1576.)
is in one, or some of them but not in all, the general rule is that the redhibition will not affect the others
without it. It is immaterial whether the price has been fixed for a lump sum for all the animals or for a
separate price for each. The exception is when it can be shown by the vendee that he would not have
purchased the sound ones without those which are defective. (see Art. 1556, par. 1.) Such intention need not
be established by the vendee but shall be presumed when a team, yoke, pair or set is bought unless the
vendor proves the contrary. Although Article 1572 provides only for redhibitory actions, it does not bar the
right of the vendee to bring an action quanti minoris. (see Arts. 1580, 1567.
ART. 1573. The provisions of the preceding article with respect to the sale of animals shall in like manner be
applicable to the sale of other things. (1492)

Sale of two or more things together. The points considered in the preceding article apply also to sale of two or
more things where only one or more of them but not all have hidden defects
ART. 1574. There is no warranty against hidden defects of animals sold at fairs or at public auctions, or of
livestock sold as condemned. (1493a) Sale of animals at fairs or at public auctions or as condemned. This
article is a limitation to the provisions of Article 1570. It is based on the assumption that the defects must
have been clearly known to the buyer. Since the law does not make any distinction, the public auctions
referred to may be judicial or extrajudicial. Sale of animals as condemned precludes all idea of warranty
against hidden defects. (Art. 1561.) Such animals are bought not because of their quality or capacity for work.
ART. 1575. The sale of animals suffering from contagious diseases shall be void. A contract of sale of animals
shall also be void if the use or service for which they are acquired has been stated in the contract, and they
are found to be unfit therefor. (1494a) When sale of animals void. The article declares the class of animals
which cannot be the object of commerce — animals suffering from contagious diseases and those found unfit
for the use or service stated. The sale of such animals is void as against public interest and not merely subject
to rescission or reduction of the price. (Art. 1567.) It is to be governed by the rules relating to nullity of
contracts. (see Art. 1409.) Even if the animals are found fit for the use or service stated in the contract, the
vendee may still rescind the contract under
ART. 1576. If the hidden defect of animals, even in case a professional inspection has been made, should be of
such a nature that expert knowledge is not sufficient to discover it, the defect shall be considered as
redhibitory. But if the veterinarian, through ignorance or bad faith, should fail to discover or disclose it, he
shall be liable for damages. (1495) What constitutes redhibitory defect of animals? Article 1576 is another rule
especially applicable to animals. To be considered redhibitory, the defect must not only be hidden. It must be
of such a nature that expert knowledge is not sufficient to discover it. However, if the veterinarian failed to
discover it through his ignorance, or failed to disclose it to the vendee through bad faith, he shall be liable for
damages. The responsibility is his and not the vendor’s.
ART. 1577. The redhibitory action, based on the faults or defects of animals, must be brought within forty days
from the date of their delivery to the vendee. This action can only be exercised with respect to faults and
defects which are determined by law or by local customs. (1496a) Limitation of action in sale of animals. The
redhibitory action based on the faults of animals shall be barred unless brought within forty days from the
date of their delivery to the vendee. According to the second paragraph, what should be considered
redhibitory defects in the sale of animals are only those determined by law or by local customs. If the defects
are patent, there is no warranty against such defects although there exists a redhibitory vice.
ART. 1578. If the animal should die within three days after its purchase, the vendor shall be liable if the
disease which caused the death existed at time of the contract. (1497a) Responsibility of vendor where animal
dies. If the animal sold is suffering from any disease at the time of the sale, the vendor is liable should it die of
said disease within three days from the date of the sale (not date of delivery). This claim of the vendee must
be based on a finding of an expert that the disease causing the death existed at the time of the contract. If the
death occurs after three days or the defect is patent or visible, he is not liable. If the loss is caused by a
fortuitous event or by the fault of the vendee, and the animal has vices, Article 1569 should be applied.
ART. 1579. If the sale be rescinded, the animal shall be returned in the condition in which it was sold and
delivered, the vendee being answerable for any injury due to his negligence, and not arising from redhibitory
fault or defect. (1498) Liability of buyer in case sale of animal is rescinded. If the vendee avails himself of the
remedies granted by Article 1567 (see Art. 1580.), the vendee must return the animal in the condition in
which it was sold and delivered. In case of injury due to his negligence, the vendee shall be responsible but
this would be no obstacle to the rescission of the contract due to the redhibitory defect or fault of the animal.
(see Art. 1569.) Under Article 1556, the buyer may not ask for rescission where he has created new
encumbrances upon the thing sold.
ART. 1580. In the sale of animals with redhibitory defects, the vendee shall also enjoy the right mentioned in
article 1567; but he must make use thereof within the same period which he has been fixed for the exercise of
the redhibitory action. (1499) Alternative remedies of vendee in sale of animals. The vendee has the same
right to bring at his option, either a redhibitory action or an action quanti minoris. The action must be brought
within forty days from the date of the delivery of the animals to the vendee. (Art. 1577.
ART. 1581. The form of sale of large cattle shall be governed by special laws. (n) Form of sale of large cattle.
The special law governing the sale of large cattle is Act No. 4117, now found in Sections 511 to 536 of the
Revised Administrative Code, as amended, providing for the registration, branding, conveyance, and slaughter
of large cattle. The sale must appear in a public document. (see Art. 1358.