Article 1524: Summary - Key Terms:

- Seller's Right: The seller (vendor) does not have to deliver the item if: o Lien: A legal right to hold onto someone else's property until a debt is paid.
o The buyer (vendee) hasn't paid. Example: If you take out a mortgage to buy a house, the bank has a lien on your property. They don’t need to hold onto
the house physically, but if you fail to pay the mortgage, they have the legal right to foreclose on the property to recover
o There's no agreed payment deadline in the contract.
their money.
- Reasoning: A sales contract requires both parties to fulfill their obligations. o Possessory Lien: The right to keep possession of the property until the debt is satisfied.
Reasoning: In a sales contract, both the buyer and the seller have obligations to fulfill. The seller’s obligation to deliver
Example: If you leave your car at a repair shop for repairs, and you don’t pay the repair bill, the repair
the item is dependent on the buyer’s obligation to pay. If the buyer hasn’t paid and there’s no agreed deadline, the sell
Note: shop has a possessory lien on your car. They can keep the car until you pay for the repairs. They must
- Different Delivery and Payment Times: If the contract sets different times for delivery and have the car in their possession to enforce this lien.
payment:
Article 1527 - Seller's Right to Keep Goods
o The seller must still deliver the item on time, even if the buyer hasn't paid yet.
- Unpaid Seller's Lien: A seller can keep possession of goods until they get paid in these cases:
o Payment is only due when the agreed time period ends.
1. No Credit Terms: Goods were sold with no credit terms.
No Credit Terms: The goods were sold without agreeing to credit terms (payment expected immediately or within a set
Article 1525: Summary period).
- Unpaid Seller: A seller is considered "unpaid" when: 2. Credit Terms Expired: Goods were sold on credit, but the credit period is over.
1. The full price hasn't been paid or offered. 3. Buyer Insolvent: Buyer can’t pay because they’re financially troubled.
2. A bill of exchange or negotiable instrument was accepted as conditional payment, but: - Agent or Bailee: The seller can still keep the goods if they’re holding them as an agent or bailee for
o It was dishonored (not accepted or paid). the buyer.
o The buyer became insolvent (unable to pay debts).
- "Seller" Includes: Article 1528 - Seller's Lien on Part Delivery
o An agent of the seller (someone acting on behalf of the seller). - General Rule:
o A consignor (someone sending goods) or agent responsible for the price. o If a seller has delivered part of the goods and hasn’t been paid, they can keep the rest of the
Definitions: goods until payment is made.
- Bill of Exchange: A written order for payment from one person to another. - Exception:
- Negotiable Instrument: A signed document promising to pay a specific amount. o If the part delivery suggests that the seller intended to give up their right to keep the
- Dishonor: Refusing to pay or accept a negotiable instrument. remaining goods, they cannot enforce the lien on the rest.
- Insolvency: Being unable to pay debts when they are due. Partial Delivery: Suppose the seller delivers a few items and during delivery, they make a statement or action that
- Agent: A person authorized to act on behalf of another. suggests they are giving up their right to hold onto the rest of the electronics (for instance, they mention, "I trust you’ll
- Bill of Lading: A document confirming the receipt of goods for shipment. pay later for the rest"). In this case, the partial delivery implies the seller might have intended to relinquish their right to
- Indorsed: Signing a document to transfer responsibility or make it payable to another. keep the remaining goods until full payment.
- Consignor: The person who sends goods for shipment
Conditional Payments: If the seller accepts a bill of exchange or negotiable instrument as a form of payment, it’s Article 1529 - When a Seller Loses the Right to Keep Goods
considered conditional. This means that the seller is only considered paid once the instrument is honored (accepted or - Seller Loses Right to Keep Goods If:
paid). If the instrument is dishonored or the buyer becomes insolvent, the seller is still considered unpaid and retains 1. Delivery to Carrier: The seller sends the goods to a delivery service without keeping any claim
certain rights to the goods. to ownership or possession.
Scenario: A furniture store sells a sofa to a customer but needs to send it via a delivery service. The store gives the sofa
Article 1526: Rights of an Unpaid Seller to the delivery service without any conditions attached, meaning they don’t keep any claim to the sofa. Once the sofa is
- Unpaid Seller's Rights (Even if the Buyer Owns the Goods): with the delivery service, the store can no longer hold onto the sofa for non-payment.
1. Lien: The right to keep the goods until the buyer pays. 2. Buyer Gets Goods: The buyer or their agent legally takes the goods.
2. Stopping Goods in Transit: If the buyer becomes insolvent, the seller can stop the goods while Scenario: A bookstore sells a set of books to a customer and the customer picks up the books from the store. Since the
customer has legally taken the books, the bookstore cannot keep the books or hold them for payment.
they are being delivered, even after giving up possession.
3. Waiver: The seller decides to give up their right to keep the goods.
3. Right to Resell: The seller can resell the goods under certain conditions.
Scenario: A clothing retailer agrees to hold a jacket for a customer who promises to pay later. However, the retailer
Right to Resell: The seller has the right to sell the goods to someone else if the original buyer fails to pay or meet other
decides to cancel the hold and allows the customer to take the jacket immediately, giving up their right to keep the
agreed conditions. This right ensures that the seller can still recover some or all of the money owed, even if the original
jacket until payment is made.
deal falls through.
- Exception:
4. Right to Rescind: The seller can cancel the sale under certain conditions.
Right to Rescind: The seller has the right to cancel the sale if the buyer doesn't meet certain conditions, like not paying
o The seller doesn’t lose their right to keep the goods just because they’ve won a court order to
for the goods. This means the seller can legally back out of the deal and take back the goods if the buyer fails to fulfill get paid.
their part of the agreement. Explanation: The court order to get paid does not remove the seller's right to keep the goods as security for the
- If the Buyer Does Not Own the Goods Yet: payment. The seller can hold onto the goods until they are paid, regardless of the legal ruling.
o The unpaid seller can withhold delivery, just like they can keep a lien or stop the goods in
transit. Article 1530 - Stopping Goods in Transit
- Right to Stop Goods in Transit: 2. Principal: To the principal (the person who hired the carrier or bailee) if the actual holder is not
o Available When: reachable. The notice must be given in time for the principal to prevent delivery to the buyer.
1. Seller No Longer Has Possession: The unpaid seller has already sent the goods and doesn’t - Handling of Goods:
have them anymore. o The carrier or bailee must return the goods to the seller or follow the seller's instructions if they
2. Buyer Is Insolvent: The buyer can’t pay because their liabilities are greater than their assets. receive a notice of stoppage. The seller pays for the return.
- Effect: o If a negotiable document (like a bill of lading) representing the goods is issued, the carrier or
o The seller can take back the goods while they are still being shipped. Once the seller takes them bailee does not have to deliver the goods until this document is returned and canceled.
back, they get the same rights as if they had never given up possession of the goods.
Article 1533 - Right of Resale
- When Seller Can Resell Goods:
Article 1531 - When Goods Are "In Transit" 1. Perishable Goods: The goods can spoil or go bad quickly.
- Goods Are In Transit: 2. Express Reservation: The seller said in the contract they can resell if the buyer doesn’t pay.
1. From Carrier to Delivery: Goods are considered "in transit" from the moment they are given to 3. Unreasonable Delay: The buyer hasn’t paid for an unreasonable amount of time.
a delivery service (like a truck or ship) until the buyer or their agent receives them. - Key Points:
2. Rejected Goods: If the buyer rejects the goods and the delivery service still has them, the o No Liability: After reselling, the seller isn’t responsible to the original buyer and can claim
goods are still "in transit," even if the seller doesn’t want them back damages for any loss.
Example: Imagine a seller sends a shipment of furniture to a buyer. Upon arrival, the buyer decides they do not want the o Good Title: The new buyer gets valid ownership, overriding the original buyer’s claim.
furniture and rejects the shipment. The delivery service still holds the furniture. In this case, the furniture remains in o No Notice Needed: The seller doesn’t have to notify the original buyer about the resale details.
transit, and the seller retains their rights related to the goods as if they were still in transit. o Reasonable Care: The seller must handle the resale carefully and can sell the goods publicly or
- Goods Are No Longer In Transit: privately. The seller cannot buy the goods themselves.
1. Delivered Early: If the buyer or their agent gets the goods before they reach their final
destination.
Example: A seller ships a batch of electronics to a store, but the store’s employee receives the shipment at the
warehouse before the delivery service completes its route. At this point, the electronics are no longer in transit because
they have been received by the store. The seller’s rights related to the goods change since the goods have reached the
buyer.
2. At Destination: Once the goods arrive at their destination, and the carrier confirms they are Article 1534 - Right to Rescind Transfer of Title
holding the goods for the buyer, even if the buyer has plans for the goods to go somewhere - When Seller Can Rescind:
else. 1. Express Reservation: The seller included a specific term in the contract that allows them to
Example: A seller sends a shipment of furniture to a store. The delivery service confirms that the furniture has arrived at reclaim ownership of the goods if the buyer fails to meet their obligations.
the store’s warehouse and is being held for the store, even if the store plans to distribute the furniture to other locations
2. Unreasonable Default: The buyer hasn’t paid within an unreasonable time.
later. At this point, the furniture is no longer in transit because it has reached the store’s warehouse.
- Effect of Rescinding:
3. Wrongful Refusal: If the carrier wrongfully refuses to deliver the goods to the buyer or their
o No Liability: After rescinding, the seller isn’t responsible to the buyer under the contract.
agent.
Status: The goods are still considered "in transit" because the delivery has not been completed properly. The seller’s o Claim for Damages: The seller can still claim damages for any loss due to the buyer’s breach.
rights are maintained until proper delivery is made. - How to Rescind:
o Chartered Transport: If the goods are delivered to a transport service hired by the buyer, it o Notice or Overt Act: The seller must show their intention to rescind by giving notice to the
depends on the situation whether the transport is seen as the buyer's agent or just a delivery buyer or taking some clear action. The notice doesn’t have to be communicated to the buyer
service. but is important in determining if the buyer was in default for an unreasonable time.
Status: In this case, the goods are still considered "in transit" until the transport service delivers the goods to the buyer
or their designated location Article 1535 - Seller’s Rights and Changes in Goods
- Partial Delivery: - General Rule:
o If the seller has delivered part of the goods, they can still stop the rest from being delivered o The seller can still keep or stop the goods, even if the buyer sells or changes the goods, unless
unless it’s clear they agreed to let go of the whole shipment. the seller agrees to the buyer’s actions.
- Exception:
Article 1532 - How to Exercise the Right to Stop Goods in Transit o If a document (like a bill of lading) for the goods has been issued, the seller’s right to keep or
- How to Exercise the Right:
stop the goods does not affect anyone who buys that document in good faith, no matter if they
1. Get Possession: The seller can take physical possession of the goods.
buy it before or after the seller has claimed their right to the goods.
2. Give Notice: The seller can give notice of their claim to the carrier or bailee holding the goods. Example: If the buyer transfers the goods to a third party with a bill of lading, and the third party buys the bill in good
- Notice Details: faith, the seller’s claim to the goods cannot affect the third party’s right to the goods, even if the seller tries to enforce
o To Whom: their rights after the transfer.
1. Actual Holder: To the person who physically has the goods.
 3. Deterioration Without Fault: If the goods get worse without the seller’s fault, the buyer
Article 1536 - When Seller Doesn’t Have to Deliver absorbs the loss.
The seller does not have to deliver the goods if the buyer loses the right to use a payment term due to: 4. Deterioration With Fault: If the goods deteriorate due to the seller’s fault, the buyer can
1. Buyer Insolvent: The buyer becomes insolvent (unable to pay) after agreeing to the purchase, either cancel the contract or continue with it and get damages.
unless they provide a guarantee or security for their debts. 5. Improvement by Nature or Time: Any natural or time-related improvements to the goods
Example: A buyer who agrees to purchase goods but later goes bankrupt may not receive the goods unless they provide benefit the buyer.
a guarantee or security for payment. 6. Improvement at Seller’s Expense: If the seller improves the goods at their own expense, they
2. No Guarantee: The buyer fails to provide the guarantees they promised. only have the rights of a usufructuary, meaning they can only enjoy the benefits of the
Example: If the buyer promised to provide a bank guarantee but fails to do so, the seller can refuse to deliver the goods.
property temporarily
3. Impaired Guarantees: The buyer damages or loses the guarantees or securities, and doesn’t
provide new, satisfactory ones immediately. Article 1539 - Delivery of Real Estate and Adjustments
Example: If the buyer’s provided collateral is damaged and they don’t provide new, acceptable collateral right away, the
- Delivery Requirement:
seller can withhold the goods.
4. Violation of Undertaking: The buyer breaks any promises or conditions that led the seller to agree o The seller must deliver the real estate and all parts mentioned in the contract as they were
to the payment term. when the contract was made.
Example: If the buyer doesn’t meet certain conditions they agreed to, such as making partial payments on time, the - Area-Based Sale:
seller can refuse to deliver the goods. o If the sale price is based on a specific area (e.g., per square meter):
5. Attempt to Flee: The buyer tries to escape or avoid their obligations.  Shortage in Area: If the actual area is less than agreed, the buyer can either:
Example: If the buyer attempts to leave the country or hide their assets to avoid paying for the goods, the seller can
 Ask for a reduction in price based on the actual area.
choose not to deliver the goods.
 Cancel the contract if the shortage is more than 10% of the stated area.
 Quality Issues: If any part of the property is not as described, the buyer can cancel the
Article 1537 - Seller's Obligation to Deliver
contract if the inferior part’s value is more than 10% of the total price.
- Delivery Condition:
- Lump Sum Sale:
o The seller must deliver the goods and any additions or accessories in the same condition they
o If the sale price is a total amount for the property (regardless of area):
were in when the contract was finalized.
Example: If you buy a new laptop with a warranty and accessories like a mouse and a carrying case, the seller must  The buyer accepts the property as described by boundaries, not necessarily the exact
deliver the laptop, mouse, and carrying case in the same condition they were in when you made the purchase. If the area.
laptop was brand new and the case was intact when you bought it, the seller must ensure that the delivery reflects that  Excess or Shortage: Minor differences in area usually don’t affect the price. The
same condition. boundaries specified in the contract are more important than the stated area.
- Fruits of the Goods: - Key Points:
o Any benefits or earnings from the goods (like natural fruits, products, or income) belong to the o For sales based on area, the price can be adjusted based on the actual area delivered.
buyer from the day the contract was completed. o For lump-sum sales, the boundaries take precedence over the stated area.
Example: If you purchase an apple tree, any apples the tree produces after the purchase date are yours. Similarly, if you
buy an apartment and start renting it out, any rental income you earn from the day the contract was completed belongs o The seller must deliver the entire property within the defined boundaries, even if the exact
to you. area differs from what was estimated or stated.
In both cases, the seller is required to deliver the property within the agreed boundaries, ensuring the buyer receives
what was contracted, whether it's based on a specific area or a lump-sum price.

Article 1540 - Handling Excess Area in Real Estate Sale

- Excess Area:
o Option to Reject: If the property has more area than stated in the contract, the buyer can
choose to accept only the area specified in the contract and reject the extra.
o Option to Accept All: If the buyer accepts the entire area, they must pay for the total area at
the agreed rate.
- Example:
o Contract: S sells B a property of 500 square meters at P1,000 per square meter.
o Actual Area: Survey shows 650 square meters.
Article 1538 - Handling Loss, Deterioration, or Improvement Before Delivery
- Rules for Handling Changes Before Delivery:  Reject Extra: B can choose to buy only 500 square meters and pay P500,000 (500 sq.m. x
1. Loss Without Fault: If the goods are lost and it’s not the seller’s fault, the seller’s obligation P1,000).
ends.  Accept All: B can also choose to buy all 650 square meters and pay P650,000 (650 sq.m. x
2. Loss With Fault: If the goods are lost because of the seller’s fault, the seller must pay P1,000)
damages. Loss means the goods are destroyed, disappear, or can’t be recovered.
Article 1541 - Judicial Sales  Bob took possession of the property before Alice registered it.
- Applicability: The rules for handling area discrepancies in real estate sales (as outlined in Articles  Charlie has the oldest title but did not possess or register the property.
1539 and 1540) also apply to judicial sales. - Requisites for Double Sale:
- Judicial Sale: 1. Multiple valid sales contracts.
There must be more than one valid sales contract for the same property. Each contract should be legally binding and
o Definition: A sale conducted under the authority of a court order or judgment. For example, an
valid.
execution sale where property is sold to satisfy a court judgment 2. Conflicting buyers with interests over the same object
This means that even in judicial sales, where a court oversees the sale of property (like to satisfy a debt), the same rules
3. The sales pertain to the exact same object
about area discrepancies (adjustments or cancellations based on area differences) apply as they do in regular property
sales. 4. All sales are from the same seller.
- Exceptions to Double Sale:
Article 1542 - Sale of Real Estate for a Lump Sum 1. If some elements are missing.
- Lump Sum Sale: If one or more required elements for a double sale are missing, such as valid contracts or conflicting buyers, it is not
considered a double sale.
o When real estate is sold for a fixed total amount (lump sum) rather than a rate per unit (like per
2. Sales made by different persons or non-owners.
square meter), the price does not change based on the actual area or number of units, even if it
3. One sale is forged or simulated.
is more or less than stated in the contract.
4. One sale is subject to a suspensive condition, and the other is absolute.
- Multiple Properties Sale:
- Key Principle:
o If several properties are sold together for a single price and their boundaries are defined, the o "First in Time, Stronger in Right": The person who acts first (whether by registration or
seller must deliver everything within those boundaries, even if it exceeds what was initially
possession) and in good faith has the stronger claim to ownership.
stated area or number.
- Good Faith:
o If the area is less than stated, the price should be reduced proportionally, unless the contract is o A buyer who purchases without knowledge of another’s claim and pays a fair price.
canceled. Good Faith: Since Sarah wasn’t aware of the earlier sale to John and acted honestly, she is considered a good faith
If Significant Shortfall: If the shortfall is considered significant (e.g., more than 10% of the total area), the buyer might
buyer. If Sarah registered her sale first, she would have the rightful claim to the property despite John’s prior claim.
have the option to cancel the contract instead of accepting a price reduction.
- Example:
- Exceptions:
o If two buyers purchase the same land, the buyer who registers the sale first in good faith or
o "More or Less" Clause: If the contract includes a "more or less" clause, it means minor
who first takes possession in good faith will have the rightful claim. If the second buyer knew
discrepancies in area are acceptable. This clause covers slight or unimportant differences, not
about the previous sale, their registration is considered in bad faith and does not protect their
substantial ones.
claim.
Minor vs. Substantial Differences: The "more or less" clause is designed to accommodate small, insignificant changes in
the property’s area. If the discrepancy were more substantial, the buyer might have grounds to seek a reduction or - Note:
cancel the contract, but minor differences like the one in this example are acceptable. o Article 1544 does not apply if the sales are not truly of the same property or if the contracts
- Example: involve different types of agreements (like promises to sell).
o S sold B land for a lump sum of P500,000, with an area stated as 500 square meters. If the
actual area is 450 square meters, the price remains the same. However, if the contract specifies Article 1545: Contract of Sale with Conditions
a "more or less" clause, it only covers minor discrepancies. - Condition Not Performed:
- Important Note: o If one party's obligation depends on a condition, and that condition is not met, the party can:
o The seller's obligation is to deliver everything within the specified boundaries. If the area  Refuse to continue with the contract, or
exceeds what was stated, the buyer can accept it and pay for the additional area, or reject the  Waive the need for the condition to be met.
excess. If the area is less, the price may be adjusted accordingly. Scenario: Alex agrees to buy a car from Jamie, with the condition that Jamie must provide a valid emissions certificate
before the sale. If Jamie fails to provide this certificate:
Article 1544 - Double Sale: - Alex can decide not to go through with the purchase (Refuse to Continue).
- Alternatively, Alex can choose to proceed with the purchase regardless of the missing certificate (Waive the
- Definition:
Condition).
o Occurs when the same property is sold to multiple buyers. o If the other party promised the condition would happen, failure to meet it can be treated as a
- Rules for Transfer of Ownership:
breach of warranty.
1. Movable Property:
- Ownership and Condition:
 Ownership goes to the person who first took possession of the item in good faith. o If ownership has not yet transferred, the buyer can make the seller's obligation to deliver as
2. Immovable Property:
promised a condition before accepting and paying for the item.
 Ownership goes to the person who: Scenario: Alice agrees to buy a car from Bob, but Bob must repair the car before Alice will accept it.
 First registered the sale in good faith. - Condition: Alice's acceptance and payment for the car are contingent on Bob completing the repairs.
 If no registration, the first possessor in good faith. - Ownership: Until the repairs are completed, Alice does not take ownership of the car, and the sale is not finalized.
 If no possession, the person with the oldest title in good faith. Warranty vs. Condition
 Alice registered the sale of a property first. - Warranty:
 o Relates to the performance of an obligation.  It is intended to persuade the buyer to purchase the product.
o Can be part of the contract even if not explicitly agreed upon by the parties.  The buyer relies on this affirmation or promise when buying the product.
o Non-fulfillment leads to a breach of contract. - Types of Statements:
- Condition: o Affirmation of Fact or Promise:
o Relates to the very existence of the obligation.  Creates an express warranty if it aims to induce the purchase and the buyer relies on it.
Affirmation of Fact: A seller states, "This car has been inspected and is guaranteed to be in excellent working condition."
o Must be agreed upon by the parties.
Effect: This statement creates an express warranty that the car is in excellent working condition.
o Non-fulfillment may end the obligation but typically does not breach the contract. o Statement of Opinion:
Warranty Example:
- Scenario: A seller promises that a car's engine will work properly for one year.
 Generally does not create a warranty unless:
- Non-Fulfillment: If the engine fails within that year, the seller has breached a warranty. The buyer can claim  The seller is an expert.
damages or repair, but the contract itself remains in effect.  The buyer relies on the seller’s expert opinion.
Condition Example: Example: A real estate agent claims that a property has no hidden defects based on their expertise. If the buyer relies on
- Scenario: A contract for buying a house states that the purchase is contingent upon the buyer obtaining a this expert opinion, it may be considered a warranty.
mortgage. - Important Points:
- Non-Fulfillment: If the buyer fails to get the mortgage, the condition is not met, and the contract may become
o Exaggerations in Trade:
void. The buyer is not bound to complete the purchase, and the seller cannot enforce the contract.
Condition on Perfection vs. Performance of Obligation  Typical trade exaggerations are not considered fraudulent if the other party can verify the
- Perfection of Contract: facts.
Exaggeration: A seller claims, "This blender is the best in the world!"
o Condition prevents the contract from coming into existence. Effect: If this is a common marketing exaggeration and the buyer can verify the blender’s quality, it is not considered
- Performance of Obligation: fraudulent.
o Condition gives the party the option to refuse or proceed with the contract and waive the o Opinion vs. Warranty:
condition.  A seller’s opinion is not a warranty unless it’s made by an expert and relied upon by the
Case Example 1: Road Right of Way Condition buyer.
- Scenario: o Good Faith Misrepresentation:
o W and H sold land to R, but R needed to secure a road right of way.  Misrepresentations made honestly are not fraudulent but might still be considered a
o R refused to pay an advance on the purchase price when requested by H and W. mistake (error).
o H and W later canceled the contract. Scenario: A seller honestly believes a used car has 50,000 miles on it, but it actually has 60,000 miles.
- Issue: Effect: The seller’s statement is a good faith misrepresentation. It is not fraudulent but may still be seen as a mistake.
o Was the condition about the road right of way a condition on the perfection of the contract or
Article 1547: Implied Warranty Overview
on performance?
Definition
- Answer:
- Implied Warranty:
o The condition (road right of way) was on the performance of R’s obligation to pay, not on the
o Legal Obligation:
perfection of the contract. It’s a "mixed condition" involving third parties, making it valid.
Case Example 2: Lease Contract Condition Imposed by law rather than by specific representation or promise.
- Scenario: Arises due to the circumstances of the sale.
o L and Y bought shares in M, Inc. from F, R, and C, but one of the lease contracts was already Ensures certain standards or conditions even if not explicitly stated.
terminated. Implied Warranties Under Art. 1547
o L and Y negotiated a new lease without F, R, and C’s help and later refused to pay the remaining 1. Right to Sell:
balance, claiming F, R, and C misrepresented the lease status. o Description:
- Issue:  The seller has the right to sell the item at the time of transfer.
o Did L and Y waive the condition in their agreement with F, R, and C?  The buyer will enjoy legal and peaceful possession.
- Answer: o Example:
o Yes, L and Y waived the condition when they negotiated a new lease themselves, indicating  Seller guarantees they own the item and it is free from claims.
they no longer required F, R, and C to fulfill that condition. 2. Hidden Defects:
o Description:
Article 1546: Express Warranty  The item is free from hidden faults or defects.
- Definition:  The item does not have undisclosed charges or encumbrances.
o An express warranty is any specific affirmation or promise made by the seller about the o Example:
product if:  Seller ensures there are no unseen defects or liens.
3. Exceptions: o From Sale:
o Non-liability:  Express warranties start from the moment of sale.
 Certain individuals (e.g., sheriff, auctioneer) are not liable if selling an item with a third- o Sales Report:
party interest due to their role or authority.  Distributors must report sales to manufacturers within 30 days.
Examples of Implied Warranties o Liability:
1. Right to Sell:
 Distributors and retailers may be liable for warranty fulfillment if the manufacturer
o Seller guarantees ownership and the right to transfer it. fails to honor it.
2. Warranty Against Eviction: 3. Retailer’s Responsibility:
o Protection if a buyer is dispossessed due to a prior claim. o Subsidiary Liability:
3. Warranty Against Non-apparent Burdens:
 Retailers may be liable if both manufacturer and distributor fail to honor the
o Item is free from unmentioned servitudes or burdens. warranty.
4. Warranty Against Hidden Defects: 4. Enforcement of Warranty:
o Covers defects not visible at the time of sale. o Claim Presentation:
Type of Issue:
- Non-apparent Burdens: Focuses on legal or contractual restrictions related to the property.
 Warranty claims can be made with the warranty card or receipt.
- Hidden Defects: Focuses on physical problems or defects with the property itself. o Immediate Honor:
Visibility:  Immediate sellers or distributors must honor the warranty.
- Non-apparent Burdens: Restrictions or obligations that are not visible or mentioned but are legally binding. 5. Duration of Warranty:
- Hidden Defects: Physical flaws that are not detectable through a normal inspection at the time of purchase.
o Express vs. Implied:
5. Warranty Against Redhibitory Defects on Animals:
 Duration of express and implied warranties must be specified.
o Protection against significant defects in animals sold.
Redhibitory Defects: These are defects that are so severe that they make the animal unfit for its intended use or reduce
 Implied warranties should last between 60 days to 1 year for new products.
its value significantly. 6. Breach of Warranties:
Warranties Under the Consumer Act of the Philippines (R.A. 7394) o Express Warranty:
- Applicability:  Consumer can choose repair or refund.
o Governs warranties in sales of consumer products and services. o Implied Warranty:
1. Express Warranty Requirements:  Consumer can reject the goods or seek a refund or damages.
o Clear Terms:
 Terms must be clear and understandable. SUBSECTION 1
o Identification: Article 1548 - Warranty in Case of Eviction: Simplified
What is Eviction?
 Seller must identify themselves and the warranty's scope.
- Eviction: When a buyer is legally forced to give up the property they bought because someone else
o Coverage:
has a stronger claim to it, which existed before the sale.
 Must specify what is covered and actions to be taken in case of defects. Legal Requirements for Vendor’s Responsibility
o Consumer Actions: For a seller to be held responsible for eviction, these must be true:
 Must outline what the consumer needs to do to claim the warranty. 1. Court Decision:
o Performance Period: o There must be a final court ruling ordering the buyer to leave the property.
 Timeframe for performing warranty obligations must be specified. 2. Loss of Property:
Example: o The buyer must lose the property or part of it.
- Scenario: A consumer buys a laptop with a two-year express warranty. 3. Pre-Sale Right:
- Clear Terms: The warranty clearly states that it covers all hardware defects. o The loss must be due to a right or claim that existed before the buyer purchased the
- Identification: The warranty identifies the manufacturer as the provider and details the scope of property.
coverage. 4. Seller’s Involvement:
- Coverage: It specifies that repairs or replacements will be provided if there are hardware defects o The seller must be formally involved in the court case at the buyer's request.
and outlines the process for obtaining these services.
Case Example
- Consumer Actions: It instructs the consumer to contact customer service and provide proof of
- Final Judgment: Confirmed.
purchase to claim the warranty.
- Loss: The buyer was forced to give up the property.
- Performance Period: The warranty specifies that any necessary repairs or replacements will be
- Pre-Sale Right: The loss was due to an existing right.
completed within 30 days of the warranty claim.
- Seller’s Involvement: In this case, the seller wasn't properly involved in the court case. Just sending
2. Warranty Operation:
a copy of court documents wasn’t enough; the seller needed to be officially included in the lawsuit.
Important Points - Judgment Debt: A debt that has been legally confirmed by a court decision.
- Waiving Responsibility: The buyer can agree to give up the right to claim compensation for - Judicial Sale: A sale carried out under a court order, often to recover debts, which may involve
eviction. selling property at auction
- Known Risks: If the buyer knew about the risk of eviction and accepted it, they can’t later claim Example Case:
compensation for it - 2000: Person A’s property is sold at auction to pay off a debt.
- 2001: The new owner needs to evict tenants from the property.
Art. 1549 - Responsibility: According to Art. 1552, Person A, the original owner, is responsible for any eviction
- Vendor's Liability for Eviction: issues that come up after the sale, unless the court’s judgment specifies otherwise
o The buyer does not have to appeal the court's decision to hold the seller (vendor) responsible
for eviction.
o The court decision must be final for the seller to be liable. Art. 1553: Exemption from Eviction Liability
Simplified Explanation: - General Rule: The vendor can be exempted from the obligation to answer for eviction if the buyer
- If a court rules that a buyer must give up the property because of a pre-existing claim, the seller is agrees (waives this right).
responsible, even if the buyer doesn’t appeal the decision. - Exception: If the vendor acted in bad faith (e.g., knowingly sold a property with legal issues), any
- The court's ruling just needs to be final for this responsibility to apply agreement that exempts the vendor from eviction liability is void and has no effect.
- Key Point: Waivers are allowed, but they do not protect a vendor who deliberately misleads or
Art. 1550: Adverse Possession and Vendor Liability deceives the buye
- Adverse Possession: When someone occupies property openly and continuously without
permission, and this period continues until they legally claim ownership.
- Vendor’s Liability: The seller (vendor) isn't responsible for eviction if: Art. 1554: Renunciation of Warranty in Case of Eviction
o The adverse possession started before the sale. - Renouncing Warranty: If the buyer gives up their right to be protected against eviction (losing the
property), and they are later evicted, the seller only needs to pay what the property was worth
o The time required to claim ownership (prescriptive period) is completed only after the sale. when the eviction happened.
- Key Point: If someone was taking over the property before you bought it and finishes their claim - Types of Waiver:
after you buy it, the seller isn't at fault for your eviction 1. Waiver Consciente: The buyer gives up the right without knowing there was a risk of eviction.
If the adverse possession started before the sale and the prescriptive period ends after the sale, the seller is not
The seller has to pay the value of the property at the time of eviction to avoid unfair gain.
responsible for the third party's claim of ownership. The seller was not in control of the property after the sale, so they
are not liable for claims made based on adverse possession completed after they sold the property. 2. Waiver Intencionada: The buyer gives up the right, knowing there’s a risk of eviction and
accepting that risk. In this case, the seller is not responsible if eviction happens.
Art. 1551: Vendor Liability for Nonpayment of Taxes - Important Notes:
- Nonpayment of Taxes: If property is sold because the owner failed to pay taxes and this was not  The seller must not have acted in bad faith (dishonestly).
disclosed to the buyer before the sale:  If both parties are honest, the law assumes the waiver is "consciente" (both are in good faith)
- Vendor’s Liability: The seller (vendor) is responsible for eviction if the buyer was not informed
about the tax issue before buying the property. Art. 1555 Explained in Easy Words:
- Key Point: If the buyer discovers after the sale that the property was sold due to unpaid taxes and - When Eviction Happens: If eviction occurs, and there was a warranty or nothing was mentioned
they weren't told about this beforehand, the seller must take responsibility for any resulting about it, the buyer can ask the seller for the following:
eviction 1. Refund: The value of the property at the time of eviction (whether it's more or less than the
Scenario: original sale price).
- Jane buys a house from Bob. Bob doesn’t tell Jane that the house is facing foreclosure due to unpaid property 2. Income or Fruits: If the buyer had to give the income or fruits (benefits) of the property to the
taxes. person who won the eviction case.
- After the sale, Jane finds out that the house was sold because Bob didn’t pay the property taxes.
3. Legal Costs: The costs of the lawsuit that led to eviction and, if applicable, the lawsuit against
- Jane is then forced to leave the house because the new owner of the property (due to the tax foreclosure) claims
the seller for the warranty.
it back.
4. Contract Expenses: The costs of the contract if the buyer paid for them.
Art. 1552: Responsibility for Eviction in Judicial Sales 5. Damages and Interests: If the seller acted in bad faith, the buyer can also claim damages,
Overview: interest, and any extra costs.
- Judgment Debtor’s Responsibility: In a judicial sale (a sale enforced by court order, such as an - No Rescission in Total Eviction:
auction to satisfy a debt), the person who owes the debt (the judgment debtor) is generally o Rescission (Canceling the Contract): This is not an option in total eviction because rescission
responsible for any eviction issues that arise. requires both parties to return what they received. In total eviction, the buyer cannot return
- Exception: If the court's judgment specifies different terms regarding eviction responsibility, those the property because they've lost it.
terms will apply instead.
Key Points: Article 1556
- Partial Eviction: If you lose an important part of the property you bought, and it's so important that 2. The nature of these hidden issues is such that the buyer would not have bought the property
you wouldn't have bought the property without it, you can: if they had known about them.
1. Cancel the contract: Give back the property, but only with the problems (like debts) it had - Remedies:
when you bought it. 3. Rescission: Cancel the sale.
2. Ask the seller to pay you: For the loss you suffered because of the eviction. 4. Indemnity: Seek compensation for the burden.
- Special Rule: If you bought two or more things together, and you wouldn’t have bought one - Time Limits:
without the other, you have the same rights. o For Rescission: Must be done within one year from the date of the sale.
Partial Eviction of a Key Part: o For Damages: If a year has passed, damages can only be claimed within one year from when
- Background: Emma buys a large piece of land from Noah. The land includes a small but valuable orchard, which the burden or servitude was discovered.
was a major reason Emma decided to purchase the property.
- After Sale: Emma discovers that the orchard actually belongs to a neighbor and is evicted from that part of the
land. Without the orchard, the rest of the land isn't as valuable or useful to Emma. Art. 1561: Warranty Against Hidden Defects
Emma’s Options: - What It Means: If the item sold has hidden defects that make it unfit for its intended use or
- Cancel the Contract: Emma can choose to return the entire property to Noah and cancel the sale. However, she significantly reduce its usability, the seller is responsible. However, the seller is not liable for
must return the land in the condition it was in when she bought it, including any issues like existing debts. obvious defects or defects that an expert buyer should have known.
- Ask for Compensation: Alternatively, Emma can keep the rest of the property but demand that Noah compensate - Hidden Defect:
her for the loss of the orchard.
o Definition: A defect that is not visible or known at the time of the sale.
Art. 1557: Enforcement of Warranty and Final Judgment
o Requisites:
- Warranty and Final Judgment: You can only use the warranty to get compensation or other 1. The defect must be hidden.
remedies after a final court decision says you’ve lost the item you bought or part of it. 2. The defect must exist at the time of the sale.
- Final Judgment: It’s the court’s last decision that settles the case completely, except for things like 3. The defect must make the item unfit for its intended use or significantly reduce its
costs or fees. fitness.
Background: Sophia buys a vintage car from Oliver. After the sale, another person, Jack, claims that he owns the car and 4. The complaint must be filed within the legal time limit.
files a lawsuit against Sophia to recover it. The buyer must file a complaint or claim regarding the defect within the period specified by law. If the buyer waits too
Court Case: The case goes to court, and the judge decides in Jack's favor, ruling that Jack is the true owner of the car. long, they may lose the right to seek a remedy for the defect.
The court issues a final judgment stating that Sophia must give the car to Jack. - Vendor Not Liable:
Enforcement of Warranty: 3. For obvious (patent) defects that are visible.
- After this final judgment, Sophia can now enforce the warranty against Oliver.
- Sophia can demand compensation from Oliver because the court's decision has confirmed that she has lost the 4. For defects that an expert buyer should have noticed due to their expertise.
car. Example:
- Obvious Defect: If a buyer purchases a car with a large, visible dent on the side, the seller isn't liable for the dent
since it's something the buyer could see during the purchase.
Art. 1558: Vendor’s Obligation in Eviction Lawsuit
- Expert Buyer: If a professional mechanic buys a used car and later finds that the engine has some issues that were
- Vendor’s Duty: The vendor must respond to the warranty claim only if they are officially included in evident to someone with mechanical knowledge, the seller isn’t liable because the mechanic, as an expert, should
the eviction lawsuit by the buyer. have noticed the defect.
- Why: This gives the vendor a chance to defend their ownership and the sale in court. - Remedies:
This means that the vendor must be made a party to the lawsuit by the buyer if the buyer wants the vendor to be
responsible for defending the claim.
5. Rescind the Contract (accion redhibitoria) – Cancel the sale.
6. Reduce the Price (accion quanti minoris) – Get a price reduction.
Art. 1559: Adding the Vendor as Co-Defendant 7. Seek Damages – Claim compensation for the defect.
- What the Vendee Must Do: If the buyer (vendee) is being sued for eviction, they must request that - Note: The defect must make the item unfit for the use it was bought for or significantly reduce its
the vendor be added as a co-defendant in the lawsuit. fitness.
- Timing: This request must be made within the time allowed for answering the lawsuit according to
court rules. Art. 1562: Warranty of Quality and Fitness
 Timing of Request: You must make this request within the timeframe set by the court rules for - Warranty of Fitness for a Particular Purpose:
responding to the lawsuit, ensuring the vendor is included in the case. o What It Means: If you tell the seller the specific purpose for which you need the item, and you
rely on their expertise, they must ensure the item is suitable for that purpose.
Art. 1560: Warranty Against Non-Apparent Burdens or Servitudes o Requisites:
- What It Means: If the property sold has hidden burdens or servitudes (rights of use) not mentioned
1. The buyer informs the seller of the specific purpose for the item.
in the sale agreement, the buyer can ask for the contract to be canceled or seek compensation.
2. The buyer depends on the seller's skill or judgment.
- Requisites:
Example:
1. The property has hidden burdens or servitudes not mentioned in the sale agreement.
Scenario: A buyer goes to a store and tells the seller they need a camera that works well in low-light conditions for night - Meaning:
photography. The seller recommends a specific model, assuring the buyer that it will meet their needs. After purchasing, o If you buy something based on a sample, and the seller is a professional dealer, the final
the buyer discovers the camera performs poorly in low-light settings.
product should not have hidden defects that would make it unfit for its usual use, beyond what
Warranty of Fitness: Since the buyer relied on the seller's expertise and explicitly stated their need, the seller could be
held responsible for providing an item that doesn’t fit the particular purpose discussed, potentially entitling the buyer to you could see in the sample.
a remedy Example: If you buy furniture based on a sample piece, the final items should not have hidden structural issues that
- Warranty of Merchantability: would render them unsuitable for use, even if these issues weren’t visible in the sample provided.

o What It Means: If you buy goods from a seller who normally sells that type of goods, there is an
Art. 1566: Vendor's Responsibility for Hidden Defects
implied warranty that the goods are of acceptable quality and fit for general use.
- General Rule:
o Requisites:
o The vendor is responsible for any hidden faults or defects in the item sold, even if he didn’t
1. The goods are bought by description from a seller who deals in that type of goods.
know about them.
2. The goods should be of merchantable quality (i.e., fit for ordinary use).
Example: If you buy a used car and it has a hidden engine problem that was not visible or known to the seller, the seller
Scenario: A buyer purchases a new laptop from an electronics store. The laptop is from a well-known brand, and the
is still responsible for addressing this issue.
buyer assumes it will perform basic tasks like web browsing, word processing, and video streaming. However, when the
- Exception:
buyer tries to use it, the laptop frequently crashes and has significant performance issues, making it unusable for even
simple tasks. o This rule doesn’t apply if the contract specifically states otherwise and the vendor didn’t know
Warranty of Merchantability: Since the laptop was bought from a seller who regularly sells electronics, there is an about the hidden defects.
implied warranty that the laptop should work for its ordinary purposes. The seller could be held responsible for Example: If the sale contract includes a clause that absolves the seller from responsibility for hidden defects, and the
providing a defective product, and the buyer may be entitled to a repair, replacement, or refund. seller genuinely did not know about these defects, they may not be liable. For instance, a contract might state that the
- Note: buyer accepts the item "as is" with no warranty for hidden faults.
o Fitness for a Particular Purpose: The seller must ensure the item is fit for the special purpose - Note:
you mentioned. o If the buyer knew about the defect or lack of title when buying, they are considered to have
o Merchantability: The seller must ensure the goods are of acceptable quality for their general accepted the risk of those issues.
use.
Art. 1567: Remedies for Hidden Defects
Art. 1563: Sale of Goods Under Trade Name - Remedies for Hidden Defects:
- General Rule: 1. Accion Redhibitoria: Withdraw from the contract (rescission) plus damages.
o If you buy something that’s sold under a brand name or patent, the seller doesn’t guarantee it 2. Accion Quanti Minoris: Demand a proportionate reduction of the price plus damages.
- Key Points:
will work for any special purpose.
Example: You buy a brand-name blender. The seller is not promising that it will be able to crush ice specifically, only that o The buyer can choose between rescinding the contract or asking for a price reduction, along
it is a blender that works for general blending purposes. with claiming damages in either case.
- Exception: o The remedies provided under this article are not exclusive. The buyer can also pursue other
o If the contract says otherwise, then the seller does guarantee it will work for the specific legal actions like annulment if there was fraud or error involved.
purpose mentioned. o Liability for fraud or negligence cannot be waived and can be demanded in all obligations.
Example: If the contract specifies that the blender is designed to crush ice and you rely on that promise, the seller must
provide a blender that performs this task effectively. Art. 1568: Effect of Loss Due to Hidden Defects
- If the Vendor is Aware of Hidden Defects:
Art. 1564: Implied Warranties and Trade Usage o The vendor bears the loss of the thing sold.
- General Rule: o Must return the price paid.
o An implied warranty about the quality or suitability of a product can be based on common o Must refund the expenses of the contract.
trade practices or customs.
o Must pay damages.
- Meaning:
- If the Vendor is Not Aware of Hidden Defects:
o If it's common in the industry for certain goods to have specific qualities or functions, this
o The vendor only needs to return the price paid.
expectation can be legally implied even if not stated in the contract.
Example: In the furniture industry, if it’s customary for chairs to be durable and last several years, an implied warranty o Must return the interest on the price.
exists that the chairs should meet this standard, even if the contract doesn’t specifically state it. o Must reimburse the expenses of the contract.

Art. 1565: Warranty of Merchantability in Sale by Sample Art. 1569: Effect if the Defective Thing is Lost Due to a Fortuitous Event or Buyer's Fault
- General Rule: - If the Defective Thing is Lost by a Fortuitous Event (unforeseen event):
o When buying goods by sample from a dealer, there’s an implied warranty that the actual goods o The buyer can ask the vendor to return the price paid.
will be free from defects that would make them unsuitable for sale and that aren’t visible from o The vendor can deduct the value the thing had at the time it was lost.
just looking at the sample.
Suppose a buyer purchased a defective electronic device for $800. If the device is lost due to an unforeseen event, like a Art. 1574: Warranty for Animals Sold at Fairs or Auctions
natural disaster, the buyer can claim a refund. However, if the device had depreciated and was only worth $500 at the - Rule: There is no warranty against hidden defects for animals sold at fairs, public auctions, or
time of the loss, the vendor might only refund $500, considering the loss in value.
livestock sold as condemned.
- If the Vendor Acted in Bad Faith: - Summary: If you buy animals in these situations, you can't claim a warranty for any hidden defects.
o The vendor must also pay damages to the buyer.
Art. 1575: Void Sales of Animals
Art. 1570: Application of Preceding Articles to Judicial Sales - Rule 1: If animals have contagious diseases, the sale is void (invalid).
- The rules in the previous articles (about hidden defects, warranties, etc.) also apply to judicial sales. - Rule 2: If animals are sold for a specific purpose and they are not fit for that purpose, the sale is
- Exception: The judgment debtor (the person whose property is sold by court order) is not void.
responsible for paying damages.
The rules referred to in Art. 1570 are from the preceding articles in the Civil Code, which address the Art. 1576: Hidden Defects in Animals
following: - Redhibitory Defect: If an animal has a hidden defect that even an expert inspection can’t find, the
1. Hidden Defects (Art. 1561): The vendor is responsible for hidden defects that make the item unfit defect is considered redhibitory (serious enough to invalidate the sale).
for its intended use. - Vet’s Liability: If a veterinarian fails to find or reveal the defect due to ignorance or bad faith, they
2. Implied Warranties (Art. 1562, 1564, 1565): These include warranties about the quality or fitness can be held liable for damages.
of goods, such as the implied warranty of merchantability or fitness for a particular purpose.
3. Remedies for Hidden Defects (Art. 1567): The buyer can either rescind the contract (accion Art. 1577: Redhibitory Action for Animal Defects
redhibitoria) or ask for a price reduction (accion quanti minoris) if hidden defects are found. - Time Limit: You must bring a redhibitory action (for defects) within 40 days from when the animals
4. Loss Due to Hidden Defects (Art. 1568, 1569): Rules on who bears the loss and what the buyer are delivered.
can demand if the item sold is lost due to hidden defects. - Basis for Action: This action can only be based on faults or defects recognized by law or local
customs.
Art. 1571: Prescriptive Period for Actions Example:
- Rule: Actions related to warranties and defects (from the previous ten articles) must be brought 1. Scenario:
within six months from the delivery of the item. o Purchase: You buy livestock from a fair or auction.
- Note: This six-month period is specific to sales. For general contracts, a four-year period applies for
o Defect Discovery: After the purchase, you find defects in the animals.
actions like rescission, but the six-month rule takes precedence in cases involving sales.
2. Legal Action:
Example:
1. Scenario:
o Basis for Claim: You can only base your legal claim on defects that are explicitly
o Sales Transaction: You buy a refrigerator and discover a defect within a few months. recognized by law or are commonly accepted issues in your local area.
2. Action Required:
Art. 1578: Liability for Animals Dying Soon After Purchase
o Legal Claim: To address the defect, you must bring your claim within six months from the - Condition: If an animal dies within 3 days after being bought,
delivery date of the refrigerator.
o Vendor's Liability: The vendor is responsible if the disease that caused the death existed at
3. General Contract Context:
the time of sale (not just at delivery)
o If Not a Sale: If the issue were related to a general contract (not a sale), you would have
four years to bring an action. But since this is a sale, the six-month rule applies. Art. 1579: Rescission of Sale of Animal with Defects
- Return Condition: The animal must be returned in the same condition as when it was sold and
Art. 1572: Defects in Multiple Animals Sold Together delivered.
- General Rule: If multiple animals are sold together, a defect in one animal only affects that animal, - Vendee's Responsibility: The buyer is responsible for any damage caused by their negligence, but
not the others. not for issues caused by the hidden defect.
- Exception: If the buyer would not have bought the other animals without the defective one, then
the defect affects all. This is generally presumed if the animals are sold as a set (e.g., a team or yoke Art. 1580: Remedies for Animals with Hidden Defects
pair), even if they have separate prices. - Remedies Available:
- Note: You can challenge the assumption that a defect in one animal affects the whole set if you 1. Accion Redhibitoria: Withdraw from the contract or rescind the sale and receive damages.
can prove otherwise. 2. Accion Quanti Minores: Demand a proportionate reduction in the price and receive damages.
- Time Limit: Both remedies must be exercised within 40 days from the delivery of the animals.
Art. 1573: Sale of Other Things
- Rule: The same rules for handling defects in animals (as in Art. 1572) also apply to the sale of other Art. 1581: Sale of Large Cattle
items or goods. - Special Laws: The sale of large cattle must follow specific laws that govern how the contract should
- Summary: If you buy multiple items together and one has a defect, you generally deal with that be made.
item alone unless you wouldn’t have bought the others without it.
- Focus: This article only addresses the formal requirements for the contract of sale, not other
aspects of the sale.
Special Laws:
- Specific Regulations: The sale of large cattle, such as cattle used for farming or livestock, is
governed by specific laws and regulations.
- Contract Requirements: These laws outline how the contract for the sale should be made, including
any required documentation, procedures, and legal considerations.
Example: If you’re buying a herd of cows for your farm, the sale must comply with special
regulations. These might include having a written contract with specific terms and
documentation proving the cattle’s health and ownership. The contract must meet these legal
requirements to be considered valid and enforceable