Obligations Which Cannot Be Waived also seek rescission, even after he has chosen fulfillment, if

latter should become impossible.

1. Obligation to transfer
2. Obligation to deliver

Obligation Which Can Be Waived 2. Implied – that which the law derives by implication or
inference from the nature of the transaction or relative
1. Obligation to warrant the thing situation or circumstances of the parties
Art. 1545 – Where the obligation of either party to a contract of sale is  Principle of implied warranties is an exception to the rule of
subject to any condition which is not performed, such party may caveat emptor [1547]
refuse to proceed with the contract or waive performance of the  Natural element of contract which may be waived or modified by
condition express stipulation

 If the other party has promised that condition should happen or Rule of Caveat Emptor (Buyer Beware)
be performed, such 1st party may also treat non-performance as  One who purchases real property, which is in actual possession
breach of warranty of others, should make some inquiry concerning rights of those
in possession
-Kinds of Warranties-  Purchased must exercise care and attention ordinarily exercised
by a prudent man in like business affairs
1. Express – any Affirmation of fact or any promise by the
seller relating to the thing, the natural tendency is to Induce Samples
the buyer to purchase the thing [1546] (4 years) 1. Warranty that a seller has a right to sell
Requisites [AIR] 2. Warranty against eviction/title
3. Warranty against non-apparent burden or servitudes
a. Affirmation of fact 4. Warrant against hidden defects or unknown encumbrance
b. Fact must pertain to the thing either to the quality, 5. Warrant against redhibitory defects on animals
character or title of the thing 6. Warranties as to fitness or merchantable quality
 Any other matter may not be considered express warranty 7. Warranties for consumer goods
 Statement of opinion is not considered an express warranty
 As long as the seller is not an expert on that field, that would be
treated merely as an opinion and no liability for breach WARRANTY AGAINST EVICTION/TITLE [1548]
- Law allows latitude to seller’s talk. A man who relies on Q: If the seller was able to transfer ownership to the buyer may
such does so as his peril the seller nonetheless be held liable for breach of warranty
Dealer or Seller’s Talk – “excellent quality”. Misrepresentation in GF against eviction?
no liability for breach
A: Yes. There are 2 different obligations: obligation to transfer
Q: A sold a land to B for Php1million. As agreed, upon, dp of P100 ownership and the obligation to warrant the thing
000 will be paid upon signing of DOS. The balance would be paid
within 30 days from the time the squatters of the land are evicted.
It was stipulated that if within 6 months the squatters have not yet  Warranty against eviction includes warranty that the buyer from
been evicted, seller would return the dp. Another stipulation states the moment of sale would have and be able to enjoy and will not
– within 6 months, the land value would double. be disturbed in his legal and peaceful possession over the thing
After 6 months, squatters were still there. Buyer refused to accept sold
P100 000 and said he would still buy the land despite the
squatters. The buyer offered to pay and demanded the DOS but Elements (beda)
seller refused. He filed an action to rescind contract, would the 1. Vendee is deprived, in whole or in part, of the thing
action prosper?
purchased
2. Deprivation is by virtue of a final judgment
A: The action will not prosper because rescission may only be
3. Judgment is based on a right prior to the sale or an act
invoked by the aggrieved party. The seller is not an aggrieved
party. imputable to the vendor
4. Vendor was summoned in the suit for eviction at the
instance of the vendee
Art. 1191 – The power to rescind obligations is implied in reciprocal 5. No waiver of warranty by the vendee
ones, in case one of the obligors should not comply with what is
incumbent upon him. Requisites

 Injured party may choose between fulfillment and rescission of 1. There has to be final judgment depriving vendee of the
the obligation, with payment of damages in either case. He may thing wholly or partially [1557]
 A case was filed by a 3rd person against the buyer which
resulted in a favorable decision as to the plaintiff resulting in
deprivation of property by the buyer
2. Deprivation must either be
a. Based on 3rd person’s right over the thing prior to the
sale; or
b. Based on an act after the sale imputable to the vendor
3. There should be no valid waiver of warranty
4. Action to hold vendor liable should be filed within the period
prescribed by law
Prescription of Action – 6 months for implied warranties and 4 years
for express unless another period is stipulated
 Warranty is waivable and seller is not liable when buyer knew of
the risks or danger of eviction
GR: Obligation of the vendor to warrant against eviction is not an
essential element in a contract of sale and therefore may be modified
by agreement of the parties [1548,3]
E: Rights may be waived unless waiver is contrary to law, public
order, public policy, morals, or good customs, or prejudicial to 3rd
person with a right recognized by law [6]
WARRANTY AGAINST HIDDEN DEFECTS [1561, 1566-1580]
 Seller guarantees that the thing sold is free from any hidden
faults or defects or any charge or encumbrance not declared or
known to buyer
Requisites
1. Defect must exist at the time of the sale
 Started after the sale there can be no such liability
2. Defect must be hidden
 If defect is patent and buyer nonetheless bought the thing he
cannot hold seller liable [1561]
GR: Seller is liable even though he is unaware [1566]
E: Stipulation to contrary and vendor was not aware of the defect
3. Defect must result in the thing being unfit for the purpose of
the buyer
 Or at least it diminishes fitness of the thing that the buyer would
not have bought it at the price had he known

Q: Even if there’s such a hidden defect, it is possible that the
vendee cannot hold the vendor liable despite the fact that there
was hidden defect even if he was not informed because maybe
the seller was not aware?
A: Yes, he may not be able to hold the seller liable if he is an
expert on the thing. He is expected to know the defect. [1561]
Q: If the thing which has a hidden defect was lost or destroyed,
can the vendee hold the vendor liable for this breach of warranty?
Does it matter if the loss was due to a fortuitous event or maybe
the loss was due to the fault of the buyer himself, nonetheless,
can be hold the vendor liable?
A: Yes. Vendee can hold vendor liable for breach of warranty
against hidden defects even if the thing was lost due to fortuitous
event or due to the fault of the vendee himself because of hidden
defects. But of course, if the cause of the loss was the defect
itself, the liability is greater than if the cause of the loss was a
fortuitous even of fault of the buyer.
Rules: [1569]
1. If defect was cause of loss – vendor would be liable for the
return of the price, not only the price less value but also to
refund the expenses and damages because vendor was
aware of the defects
2. If vendor was not aware of the defects – he cannot be held
liable for damages but he would only be held liable for the
price
3. If the cause of the loss of the thing was a fortuitous event –
he can only be held liable for the price less value
 Even if by vendee’s fault
A bought a TV from B at P250,000. It had hidden defects with the
repair will cost P50,000. TV was lost through fortuitous even by
then was worth P200,000. B is liable to refund to A sum of
P50,000
If vendee is the cause, vendor is still liable for defects for the cost
of repairs had it not been lost.
Alternative Remedies
1. Accion Redhibitoria – buyer withdraws from contract
2. Accion Quanti Minoris – proportionate reduction of price
Any Charge or Non-Apparent Encumbrance [1560]
Q: Would there be an encumbrance over an immovable which is a
form of easement or servitude?
A: An example of this is a road right of way
Q: If the buyer bought the land which turned out to have a road
right of way in favor of 3rd person, can he claim breach of warranty
against any charge or non-apparent encumbrance?
A: Encumbrance, easement, burden, or RROW has to be non-
apparent
Q: If there is an encumbrance, what are the remedies of the
buyer?
A:
a. He can seek for the reduction of the price [1539]
b. Rescission – law requires that the action for rescission
must be filed within 1 year from the date of the contract.
If after 1 year, no more rescission
c. If he became aware more than a year, he may file an
action for damages.
The law requires that the action for damages has to be filed within
1 year also but from the time of discovery of encumbrance
If after 2 years, no recovery of damages
Requisites
1. Immovable sold is encumbered with a non-apparent burden
or servitude not mentioned in the agreement
2. Nature of such is that it must be presumed that the buyer
would not have acquired it had he been aware
WARRANTY OF QUALITY [1562]
Purpose: To promote high standards in business and to discourage
sharp dealings. “Honesty is the best policy”
1. Warranty of fitness
2. Warranty of Merchantability
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
Requisites
1. Buyer has to inform the seller of the particular purpose for
which the thing is to be used
2. Seller manifested that the thing would be fit for the purpose
and buyer relied on such representation
Note: If thing sold is under trade name, there can be no warranty of
fitness for a particular purpose unless stipulation to contrary [1563]
Basis: By exactly defining what he wants, buyer exercised his own
judgment instead of relying upon that of the seller
 Thing may not be fit for 1 buyer and he may hold seller liable for
breach of warranty although there is not hidden defect
WARRANTY FOR MERCHANTABILITY [1562]
 Fit for a general purpose if the thing was sold by description or
sample
 Requirement of merchantability carries no implication that goods
with be saleable in a particular market
 What is described in contract and what is tendered must be of
the same quality and value
Causes of Unmerchantability – not physical defect but some other
circumstances (infringement of trademark, use is dangerous)
SALE OF ANIMAL WITH DEFECTS (REDHIBITORY)
Redhibitory Defect When
1. Even by expert examination cannot be discovered [1576]
2. Vet failed to discover or disclose it through ignorance or BF
- He shall be liable for damages
3. Animal dies within 3 days from purchase and disease
which caused death existed at the time of contract [1478]
Period for Action – 40 days from animal’s death [1577]
Q: If one animal has redhibitory effect, can the buyer rescind the
entire contract pertaining to all animals? [1572]
A: GR: No. he can only rescind the contract pertaining to the
animal with the redhibitory defect
Expn.: If he can prove he would not have bought the others had
he known the defect of one
Q: Who has the burden of proof that he would not have bought
others had he known of the defect of one?
A: GR: Buyer.
Expn.: Under certain circumstances the law would provide that he
would not have bought all had he known of defect of one
Example: Lovebirds
 Sale of animal suffering from disease is void if if they are unfit
for the use or service for which they are acquired [1575]
Instances Caveat Emptor May Be Invoked
1. Sale as is where is – vendor makes no warranty as to the
quality or workable condition of goods and vendee takes
them in the conditions in which they are found and the
place they are located
 Does not extend to liens or encumbrances unknown to vendee
and cannot be disclosed by principal examination of the goods
sold
2. Sale of 2nd hand items
Expn. Certification issued by vendor that a 2nd-hand items is an
express warranty
3. Sale of animals in fairs
Basis: It is assumed defects must have been clearly known to the
buyer
4. Sale in public auction (judicial or extrajudicial)
 Still be warranty against eviction
 Applicable to judicial sale
 The law exempts certain persons from liability because they are
not selling for themselves but on behalf of others
Example: Sheriff, auctioneer, mortgagee, pledgee, agents, notary
public
Q: In sale by authority of law or in execution sale, can there be
breach of warranty against eviction?
A: Yes, the judgment debtor and not the sheriff shall be liable.
The law would specifically exempt certain persons above.
-Rights and Obligations of Vendee-
OBLIGATION TO ACCEPT THING DELIVERED
Q: If the buyer received the goods delivered, does it mean that he
already accepted?
A: No, because receiving is preliminary to accepting. In fact, his is
consistent to the right provided by law to the byer which is the
right of inspection or right of examination. Thereafter, he may
reject goods if defective
Acceptance – may precede actual delivery; there may be actual Coverage – transactions or contracts involving sale or financing of
receipt without acceptance and there may be acceptance without real estate on installment payments including residential
receipt condominium apartments

Acceptance Actual Receipt Requisites

Implies approval of contract. Refers only to the physical act
With the delivery and transfer of taking and receiving goods 1. Transactions or contracts involving sale or financing of real
of title postponed until a later sold estate on installment payments
time 2. Buyer defaults in payment of succeeding installment

Not Included
Modes of Acceptance
1. Sale covering industrial lots
1. Express Acceptance – when the buyer, after delivery of 2. Sale covering commercial buildings
goods intimates to seller, verbally or in writing, that he has 3. Sale of tenants under agrarian reform laws
accepted them 4. Sale of lands payable in straight terms
2. Implied acceptance
In Essence
a. Failure to return goods after reasonable time
b. After delivery, buyer performs acts of ownership 1. After having paid installments for at least 2 years, buyer is
entitled to mandatory grace period of 1 month for every
year to pay unpaid installments without interest
OBLIGATION TO PAY PRICE
- If the contract is cancelled, seller shall refund 50% total
 If warranted, with interest payment plus 5% per year provided not exceed 90%
- Exercised only once in every 5 years
Q: When? 2. If installments paid were less than 2 years, grace period of
not less than 60 days. If buyer is unable to pay, seller may
A: As stipulated. If there’s no stipulation, it would be at time and cancel contract or demand for rescission
place of delivery
 Non-payment does not prove stimulation; resolutory condition Remedies

Seller’s Remedy – collection, or rescind contract 1. Annulment of contract

2. Rescission
- Judicially or notarial act
RIGHT TO INSPECT OR EXAMINE 3. Collection of money – for full payment of cash surrender
value
GR: Reasonable opportunity to examine the goods upon delivery to
ascertain whether they are in conformity with the contract before Cancellation
accepting the same [1584]  30 days from receipt by buyer of notice of cancellation or
E: demand for rescission by notarial act and upon full payment of
cash surrender value
1. Stipulation to the contrary
2. In case of COD, buyer is not entitled to examine until Rights of Buyer
payment is made  Right to assign or sell his rights or reinstate the contract
E2E: There is an agreement permitting examination or usage of trade  Right to pay in advance any installment or full unpaid balance of
permits examination [1523] purchase price without interest and have payment annotated

 Seller is bound to afford buyer right only on “request” Notice of Cancellation – must be notarized to enable the exercise of
 If seller refused to allow inspection, buyer may rescind contract statutory right of unilateral cancellation by seller of perfected contract

 Through an acknowledgement, individuals acting as

MACEDA LAW [6552]
Q: Are the remedies under Maceda Law alternative? Can the
buyer be able to exercise 2 or more remedies all at the same
time?
representatives declared they are authorized and officer signing
for seller indicate he is authorized
 Extends beyond converting private documents into public ones

A: Yes. Remedies under the Maceda Law are cumulative

Purpose – expression of public policy to protect buyers of real estate
on installments against onerous and oppressive conditions