Art. 1568
1572
- 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.
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 vendee may demand the
vendor the price 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.
Art. 1570
- Preceding articles of shall apply to
judicial sales
- Judgment debtor shall not be liable for
damages
Art. 1571
- Prescriptive period: six months from
delivery.
- The buyer notifies the seller of the
existence of the hidden defect, but
does not sue within 6 months, the
action will prescribe.
Art.
- 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
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.
- Redhibitory defect: it is a defect in
the article sold against which defect
the seller is bound to warrant. The
vice must constitute an imperfection,
a defect in its nature, of certain
importance; and a minor defect does
not give rise to redhibition.
- GR: A defect in one should not affect
the sale of the others.
- XPN: Team, yoke, pair, or set
Art. 1573
- Provisions of the preceding article
shall apply to the sale of other things.
Art. 1574
- There is no warranty against hidden
defects of animals sold at fairs or at
public auctions, or of livestock sold as
condemned.
- The fact that the livestock is
condemned must be communicated to
the buyer, otherwise, the seller is still
liable.
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.
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.
- Redhibitory defect: a defect in the
article sold against which defect the
seller is bound to warrant. The vice
must constitute an imperfection, a
defect in its nature, of certain
importance; and a minor defect does
not give rise to redhibition.
Art. 1577
- The redhibitory action, based on the
faults or defects of animals, must be
brought within 40 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.
- 40 days: the redhibitory action based
on the frauds or defects of animals.
- 6 months
a. Breach of warranty
against hidden defects
b. Rescission of contract
because of breach
c. Proportionate reduction in
the price due to breach
d. Rescission or
proportionate reduction in
the price for sales of real
estate either by the unit or
for a lump sum due to
failure to comply with the
provisions of the contract
Art. 1578
- If the animal should die within 3 days
after its purchase, the vendor shall be
liable if the disease which cause the
death existed at the time of the
contract.
Art. 1579
- If the sale is 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 the redhibitory fault or
defect.
Art. 1580
- In the sale of animals with redhibitory
defects, the vendee shall also enjoy
the right mentioned in Art. 1567; but
he must make use thereof within the
same period which has been fixed for
the exercise of the redhibitory action.
- Remedies of buyer:
1. Withdrawal or rescission (plus
damages)
2. Proportionate reduction in price
(plus damages)

Art. 1581
- The form of sale of large cattle shall be
governed by special laws.
- Act No. 1147, May 03, 1904.
Obligations of the vendee
Art. 1582
- The vendee is bound to:
a. Accept delivery
b. Pay the price of the thing sold at
the time and place stipulated in
the contract
- If the time and place should not have
been stipulation, the payments must
be made at the time and place of the
delivery of the thing sold.
- Tender of payment ought to be made
in legal tender (not check), unless
another mode is accepted by the
creditor.
- Unless the deed of conveyance is
executed, the buyer as a rule is not
required to pay the price.
- If seller has delivered but no time has
been fixed for the payment of the
price, the seller may require payment
to be made at any time after delivery.
The buyer here has the duty to pay
the price immediately upon demand.
- If the seller is forced to deviate from
the provision of the contract, but the
purchaser consents or agrees to such
deviations, the purchaser should still
pay the price.
Art. 1583
- The buyer of the goods is not bound
to accept delivery thereof by
installments, unless otherwise agreed.
- Where there is a contract of sale of
goods to be delivered by stated
installments, which are to be
separately paid for, and the seller
makes defective deliveries in respect
of one or more installments, or the
buyer neglects or refuses without just
cause to take delivery of or pay for
one or more installments, it depends
to each case on the terms of the
contract and the circumstances of the
case, whether the breach is so
material as to justify the injured party
in refusing to proceed further and
suing for damages for breach of the
entire contract, or whether the breach
is severable, giving rise to a claim for
compensation but not to a right to
treat the whole contract as broken.
- Sec. 23, PD 957
Art. 1584
- When buyer has right to examine:
a. Prior to delivery even if the goods
are shipped FOB.
b. Such opportunity to examine
should be availed of within a
reasonable time in order that the
seller may not be subjected to
undue delay or prejudice in the
payment of his raw materials,
workers, and other damages
which may be incurred due to the
deterioration of his produces.
c. The buyer is deemed to have
accepted the goods when, after
the lapse of a reasonable time he
retains them without intimating
to the seller that he has rejected
them.
- When buyer has no right to examine:
a. When there is a stipulation
b. Goods are delivered COD unless
there is an agreement or a usage
 of trade permitting such ownership in the corporation or partnership
examination is less than 60%, only the number of shares
corresponding to such percentage shall be
counted as of Philippine nationality.
The Grandfather Rule
It would appear therefore that under
RTLA 2000 does not defi ne when a domestic RTLA 2000, which provides for a more liberal
partnership, association or corporation is policy towards foreign investments and
deemed “foreign-owned,” to qualify to invest foreign participation in retail trade activities,
or engage in retail activities, although it is the definition of when a domestic
clear that no amount of foreign equity is partnership, association or corporation is
allowed under Category A retail trade “foreign-owned” can be expected to follow a
enterprises. more liberal application of the grandfather
rule under the DOJ-SEC formula when
When it comes to Categories B, C and determining the nationality of equity
D, foreign-owned partnerships, associations investments made by juridical entities into an
or corporations are allowed to engage in operating corporation.
covered activities only when they comply
with the capital and per-store investments
requirements. Therefore, when the capital
and per-store investments requirements are
not met, it becomes critical to determine
whether the entity is Filipino or “foreign-
owned.”
Since the old Retail Trade
Nationalization Law prohibited corporations
whose shares of stock are not 100% owned
by Filipino citizens from engaging in retail
trade, the question arose as to how to
determine the citizenship of the shares of the
selling corporation when they are not held
directly by individuals, but in turn held by
another entity. Both the SEC and the DTI have
applied the so-called “grandfather rule”
which is a process of characterizing the
citizenship of shares in one corporation held
by another corporation by attributing the
controlling interest of individual stockholders
in the second layer of corporate ownership.
For purposes of investments (as
distinguished from engaging), the SEC has
adopted the rule that shares belonging to
corporations or partnerships at least 60% of
the capital of which is owned by Filipino
citizens shall be considered as Philippine
nationality, but if the percentage of Filipino