Art. 1561 OBLIGATIONS OF THE VENDOR 317 318 SALES Art.

1561
Conditions and Warranties

mistake. (Art. 1331; see Arts. 1556, 1566; see Pineda vs. Santos, 56 fitness for such use to such an extent that, had the
Phil. 583 [1982].) vendee been aware thereof, he would not have ac-
Note: A servitude (or easement) is an encumbrance imposed quired it or would have given a lower price for it; but
upon an immovable for the benefit of another immovable belong- said vendor shall not be answerable for patent defects
ing to a different owner. (Art. 615.) An example of an apparent or those which may be visible, or for those which are
servitude is a right of way establishing a permanent passage (Art. not visible if the vendee is an expert who, by reason
649, par. 2.), which is continually kept in view by external sign. of his trade or profession, should have known them.
An example of a non-apparent easement is a party wall (Art. 659.) (1484a)
which has no exterior sign. (Art. 660.)
Definition of terms.
(2) When right cannot be exercised. — The alternative rights
granted by Article 1560 cannot be exercised in the following cases: (1) Redhibition is the avoidance of a sale on account of some
vice or defect in the thing sold, which renders its use impossible,
(a) If the burden or servitude is apparent, that is, “made
or so inconvenient and imperfect that it must be supposed that
known and is continually kept in view by external signs that
the buyer would not have purchased it had he known of the vice.
reveal the use and enjoyment of the same’’ (Art. 615, par. 4.);
(Civil Code La., Art. 2406.)
(b) If the non-apparent burden or servitude is registered;
(2) Redhibitory action is an action instituted to avoid a sale on
and
account of some vice or defect in the thing sold which renders its
(c) If the vendee had knowledge of the encumbrance, use impossible, or so inconvenient and imperfect that it must be
whether it is registered or not. supposed that the buyer would not have purchased it had he
The registration of the non-apparent burden or servitude in known of the vice. (Cyc., Law Dictionary, 3rd ed., 945.) The ob-
the Registry of Property operates as a constructive notice to the ject is the rescission of the contract. If the object is to procure the
vendee. Hence, the vendor is relieved from liability unless there return of a part of the purchase price paid by the vendee, the rem-
is an express warranty that the immovable is free from any such edy is known as accion quanti minoris or estimatoris. (10 Manresa
burden or encumbrance. If the burden is known to the vendee, 226-227; see Art. 1567.)
there is no warranty. (par. 1.)
(3) Redhibitory vice or defect is a defect in the article sold against
(3) When action must be brought. — The action for rescission or which defect the seller is bound to warrant. (see Cyc., Law Dic-
damages must be brought within one year from the execution of tionary, 3rd ed., 1945.) The vice or defect must constitute an im-
the deed of sale. If the period has already elapsed, the vendee may perfection, a defect in its nature, of certain importance; and a
only bring an action for damages within one year from the date of minor defect does not give rise to redhibition. The mere absence
the discovery of the non-apparent burden or servitude. (pars. 2 and of a certain quality in the thing sold which the vendee thought it
3.) to contain is not necessarily a redhibitory defect. One thing is that
the thing lacks certain qualities and another thing is that it posi-
SUBSECTION 2. — Warranty Against Hidden Defects tively suffers from certain defects. (10 Manresa 227-228.)
of, or Encumbrances Upon, the Thing Sold
ART. 1561. The vendor shall be responsible for Requisites for warranty against
warranty against the hidden defects which the thing hidden defects.
sold may have, should they render it unfit for the use The following requisites must concur for the existence of the
for which it is intended, or should they diminish its warranty against hidden defects:
Art. 1561 OBLIGATIONS OF THE VENDOR 319 320 SALES Art. 1561
Conditions and Warranties

(1) The defect must be important or serious; & Co., 3 Phil. 284 [1904].) It is one which is hidden to the eyes and
(2) It must be hidden; cannot be discovered by ordinarily careful inspection or exami-
nation. Hence, there is no warranty if the defect is patent or vis-
(3) It must exist at the time of the sale; ible. For the same reason, the vendor’s liability for warranty can-
(4) The vendee must give notice of the defect to the vendor not be enforced although the defect is hidden if the vendee is an
within a reasonable time (Art. 1586.); expert who, by reason of his trade or profession, should have
(5) The action for rescission or reduction of the price must be known it.
brought within the proper period — 6 months from the delivery The same defect, therefore, may be hidden with respect to one
of the thing sold (Art. 1571.) or within 40 days from the date of person, but not hidden with respect to another.
the delivery in case of animals (Art. 1577, par. 1.); and
(6) There must be no waiver of warranty on the part of the EXAMPLE:
vendee. (Art. 1548, par. 3.) S sold to B a house. After the sale, B discovered that the
main posts of the house and other interior parts had been de-
When defect important. stroyed by “anay” and “bukbok” and as a result, many parts of
The defect is important if: (1) it renders the thing sold unfit for the house were in danger of collapsing. The defects of the house
were hidden and concealed and were unknown to B until a
the use for which it is intended; or (2) if it diminishes its fitness
closer inspection was made by him.
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 Under the circumstances, S is liable for the defects even
though he was not aware thereof (Art. 1566.) and B may elect
price for it. (see Bryan vs. Hankins, 44 Phil. 87 [1922]; Gochangco
between the rescission of the contract and a proportionate re-
vs. Dean, 47 Phil. 687 [1925].)
duction of the price, with damages in either case. (Art. 1567.)
The use contemplated must be that stipulated, and in the ab-
sence of stipulation, that which is adopted to the nature of the ILLUSTRATIVE CASE:
thing and to the business of the purchaser. (see 10 Manresa 227-
280.) Buyer refused, three years after acceptance, to pay balance of pur-
chase price of tobacco claiming it was not of good quality.
An imperfection or defect of little consequence does not come
Facts: S sold to B at a fixed price certain quantity of tobacco
within the category of being redhibitory. But where an expert
without specification as to quality. After receiving the merchan-
witness categorically established that a printing machine sold is dise, B fully examined the same by opening many of the bun-
in A-1 condition, required major repairs before it could be used, dles and examining the contents thereof and admitted the quan-
plus the fact that the buyer never made appropriate use of the tity and the price.
machine from the time of purchase until an action was filed, at- Without making any allegation of fraud, B made a partial
test to the major defects in said machine justifying rescission of payment. After a lapse of three years, B refused to pay the bal-
the contract. (Moles vs. Intermediate Appellate Court, 169 SCRA ance, claiming that the tobacco was not of good quality.
777 [1989].) Issue: Is B liable for the balance of the purchase price?
Held: Yes. In the absence of an express warranty, the ven-
When defect hidden.
dor only impliedly warrants the legal and peaceful possession
The defect is hidden (or latent) if it was not known and could of the thing sold and that there are no hidden defects. (see Art.
not have been known to the vendee. (see McCullough vs. Aenille 1547.) B is, therefore, liable for the balance of the purchase price.
Art. 1561 OBLIGATIONS OF THE VENDOR 321 322 SALES Art. 1562
Conditions and Warranties

(Chong Yong Tek vs. Santos, 13 Phil. 52 [1909]; see Phil. Manufac- The steel door has transparent glass frames, with no hid-
turing Co. vs. Go Juco, 48 Phil. 621 [1925].) den parts nor intricate mechanism that could not have been
seen by B by means of cursory examination at the time of its
Where defect patent or made known. delivery.

(1) A warranty, in general terms, does not cover defects which Issue: Is B’s claim tenable?
the buyer must have observed. Thus, if the seller of a horse which Held: No. If the steel door had any defect, it could not be
is obviously blind and which both parties know to be blind, says hidden within the contemplation of implied warranty against
it is sound, the meaning of “sound” as used in that connection hidden defects, but rather patent and visible for which S is not
must be sound except as to its eyes. answerable pursuant to Article 1561. It appeared that the first
complaint of defect was due to the fact that the door was used
(2) The same rule is applicable to a defect which is not obvi- before the cement placed to secure its anchor clips had hard-
ous but of which the seller tells the buyer, or which the buyer ened, thereby completely loosening the steel frame and subse-
knows or should have known. A well-recognized limitation on quently, the breakage of the glass panels was due to extraordi-
any doctrine freeing the seller from liability for statements or nary force occasionally applied in closing the door or to the
promises in regard to obvious defects is that, if the seller success- hard blow of the wind. There was no showing that the proxi-
fully uses art to conceal the defects, the seller is liable. (see 1 mate cause of the glass breakage was defect in the steel door
Williston, op. cit., Sec. 207.) itself. (Hahn vs. Hercules Steel Works, 5 C.A. Rep. 2d 118 [1964].)
(3) As a general rule, there is no implied warranty against
hidden defects in the sale of second-hand goods. Again, as an ART. 1562. In a sale of goods, there is an implied
exception, the seller shall be liable if he has been shown to have warranty or condition as to the quality or fitness of
made misrepresentation or acted in bad faith. (see Peralta vs. the goods, as follows:
Jornada Enterprises, Inc., 7 C.A. Rep. 2d, 270 [1965].) (1) Where the buyer, expressly or by implication,
(4) The seller may bind himself against patent or obvious makes known to the seller the particular purpose for
defects (manifest upon casual inspection) if the intent to do so is which the goods are acquired, and it appears that the
clearly evident. In such a case, the seller cannot allege as a defense buyer relies on the seller’s skill of judgment (whether
that inspection (which the buyer failed to make) would have dis- he be the grower or manufacturer or not), there is an
closed the defect or that the buyer relied on his own judgment. implied warranty that the goods shall be reasonably
(Babb & Martin, op. cit., pp. 92-93.) fit for such purpose.
(2) Where the goods are bought by description
ILLUSTRATIVE CASE: from a seller who deals in goods of that description
Buyer refused to pay balance of purchase price of a steel door on (whether he be the grower or manufacturer or not),
ground of hidden defects. there is an implied warranty that the goods shall be of
Facts: Under a contract, S manufactured and installed a steel merchantable quality. (n)
door on B’s building. B complained of defects on the door and
repairs were made by S’s employees. Subsequently, S made a Implied warranties of quality.
new door but B refused to accept the same. B claimed that the
defect of the steel door in question was hidden within the con- Quality of goods includes their state or condition. (Art. 1636.)
templation of Article 1561, and, therefore, he was not liable to The purpose of holding the seller on his implied warranties is to
pay the balance of the purchase price. promote high standard in business and to discourage sharp deal-
Art. 1562 OBLIGATIONS OF THE VENDOR 323 324 SALES Art. 1562
Conditions and Warranties

ings. They are based on the principle that “honesty is the best tity between what is described in the contract and what is ten-
policy.” (see Bekkevold vs. Potts, 216 N.W. 790.) dered, in the sense that the latter is of such quality to have
(1) Implied warranty of fitness. — There is no implied warranty some value. Judicial synonyms for “merchantability” include
as to the quality or fitness for any particular purpose of goods “salable’’ (or “saleable,”) “standard,” or “average quality” of
under a contract of sale, except as follows: where: (a) the buyer, goods sold under a particular description. (Babb & Martin, op.
expressly or by implication, manifests to the seller the particular cit., p. 95.)
purpose for which the goods are required, and (b) the buyer re- (b) Causes of unmerchantability. — Goods may be unmer-
lies upon the seller’s skill or judgment. Then, whether he be the chantable not because of any defect in their physical condition
grower or manufacturer or not — there is an implied warranty but because of some other circumstances, e.g., their infringe-
that the goods are reasonably fit for such purpose. (Babb & Mar- ment of trademarks of others renders them unsalable. Other
tin, op. cit., p. 94.) goods than food may be unmerchantable because the use of
(a) Particular purpose of goods. — It is not some purpose them is dangerous or injurious in ways not to be expected from
necessarily distinct from a general purpose. For example, the the goods of the kind. Thus, if an ingredient of a face powder
general purpose for which all food is bought is to be eaten, and is such as to cause irritation of the skin, the goods are not
this would also be the particular purpose in a specific instance. merchantable. Cases of this sort may often involve the ques-
It is, in fact, the purpose expressly or impliedly communicated tion whether the difficulty is due to peculiar sensitiveness of
to the seller for which the buyer buys the goods; and it may the buyer and if so, whether there is ground for a right of ac-
appear from the very description of the article as, for exam- tion when goods would not be injurious to most persons.
ple, “coatings” or a “hot water bottle.” But where an article is
(c) Saleability in a particular market. — The requirement of
capable of being applied to a variety of purpose, the buyer
merchantable quality carries with it no implication that the
must particularize the specific purpose he has in view. (1
goods shall be saleable in a particular market. (1 Williston, op.
Williston, op. cit., p. 661.)
cit., pp. 641-643.)
(b) Test. — It is whether the buyer justifiably relied upon
(d) Applicability to goods in that description. — It must be
the seller’s judgment that the goods furnished would fulfill
made clear that the warranty that the goods are of
the desired purpose, or whether relying on his own judgment,
the buyer ordered or bought what is frequently called “a merchantable quality applies to all goods bought from a seller
known, described, and definite article.” (Ibid., p. 607; see Art. who deals in goods in that description, whether they are sold
1563; Co Cho Chit vs. Henson, Oath & Stevenson, Inc., 103 under a patent or trade name or otherwise. (Ibid., p. 611.)
Phil. 956 [1958].) The occupation of the seller is important
evidence of the justifiableness of the buyer’s reliance. And Warranty of merchantability distinguished
where the buyer has had no opportunity for previous inspec- from warranty of fitness.
tion, he is entitled to rely, and will naturally be presumed to A warranty of merchantability is a warranty that goods are rea-
have relied, upon the seller’s skill and judgment. sonably fit for the general purpose for which they are sold. On
(2) Implied warranty of merchantability. — Where goods are the other hand, a warranty of fitness is a warranty that the goods
bought by description, the seller impliedly warrants that the goods are suitable for the special purpose of the buyer which will not
are of merchantable quality. be satisfied by mere fitness for general purposes. (Dunfor Bros.
(a) Merchantability. — It is not a warranty of quality in the Co. vs. Consolidated Iron-Steel Mfg. Co., C.C.A. Comm. 1928, 23
sense of requiring a particular grade, but it does require iden- F. 2nd 461.)
Art. 1563 OBLIGATIONS OF THE VENDOR 325 326 SALES Art. 1564
Conditions and Warranties

Fitness for a particular purpose 1563 is naturally a provision limiting the application of Article
and merchantability. 1562.
It should be noticed that fitness for a particular purpose may (1) By exactly defining what he wants, the buyer has exercised
be merely the equivalent of merchantability. Thus, the particular his own judgment instead of relying upon that of the seller. This
purpose for which a reaping machine is generally designed is definition may be given by means of a trade name or in any other
reaping. If it will not fulfill this purpose, it is not merchantable. way. The description must be the buyer’s choice, or the goods
The particular purpose, however, may be narrower. Thus, a must not only be described and definite but known, in order to
machine may be desired for operation on rough ground and preclude warranty of fitness. (Williston, op. cit., p. 612.)
though it may be a good reaping machine, it may yet be impossi- (2) Article 1563 provides an exception in case of “a stipula-
ble to make it work satisfactorily in the place where the buyer tion to the contrary.” Thus, there is still an implied warranty of
wishes to use it. (1 Williston, op. cit., p. 467.) fitness for particular purpose where the buyer relied upon the
Note: The word “of” before “judgment” in Article 1562(1) seller’s judgment rather than the patent or trade name. “Particu-
should read “or.” lar purpose,” as used in Article 1563, means a usage different from
the ordinary uses the article was made to meet. (Grant Mfg. Co.
ILLUSTRATIVE CASE: vs. Yates American Machine Co., 111 F. 2d. 360.)
Machine purchased was in accordance with specifications in con- (3) The provision does not preclude an implied warranty of
tract but did not give the result expected by buyer. merchantability or fitness for a purpose for which such specified
Facts: Under a contract of sale, S delivered and installed in article is ordinarily or generally sold. Thus, if the seller is a dealer
B’s establishment a refrigerating machine. The machine was in in food, and the buyer is buying for immediate consumption and
perfect accord with the description made in the contract but it relies on the seller’s skill or judgment, there is an implied war-
did not give the result expected by B. S brought action to re- ranty that the article sold is fit for human consumption. (Babb &
cover the balance of the purchase price. Martin, op. cit., p. 93.)
Issue: Is B’s action in refusing to pay such balance justifi-
able considering that he could not use the machine satisfacto- EXAMPLE:
rily in his establishment?
B went to Western Motors, Inc. to buy a car. After he was
Held: No. The inability of B to use the machine satisfacto-
shown cars of different models and makes, he chose a Cougar
rily cannot be attributed to any defect in the machine nor to S’s
car model 1982. B intended to enter the car in a race but this
fault since the machine was strictly in accordance with the speci-
fact was not made known to the seller.
fications in the written contract of sale. (Pacific Commercial Co.
vs. Ermita Market & Cold Stores, 56 Phil. 617 [1932].) If the car should not run as fast as B had expected, Western
Motors, Inc. is not liable because in buying the Cougar car, B
ART. 1563. In the case of contract of sale of a speci- relied upon his own judgment. But if the seller was informed
fied article under its patent or other trade name, there of the purpose of B and B was assured that the car had a maxi-
mum speed of, say, 150 kilometers per hour, there is an express
is no warranty as to its fitness for any particular pur-
warranty for a particular purpose and Western Motors is liable
pose, unless there is a stipulation to the contrary. (n) if the car should not be fit for such purpose.

Sale under a patent or trade name. ART. 1564. An implied warranty or condition as to
Under Article 1562(1), the buyer makes known to the seller the quality or fitness for a particular purpose may be
the particular purpose for which the goods are desired. Article annexed by the usage of trade. (n)
Art. 1565 OBLIGATIONS OF THE VENDOR 327 328 SALES Art. 1566
Conditions and Warranties

Effect of usage of trade. Under Article 1481, the contract may be rescinded where the
A warranty as to the quality or fitness for a particular purpose bulk of the goods delivered do not correspond with the sample.
may be attached by usage to a contract containing no express
provision in regard to warranty, though in the absence of usage ART. 1566. The vendor is responsible to the vendee
no warranty would be implied. The usage is relied on for the for any hidden faults or defects in the thing sold, even
purpose of showing the intention of the parties. If there is no us- though he was not aware thereof.
age, the parties would naturally express their intention. This provision shall not apply if the contrary has
A usage in order to bind both parties must be known to both been stipulated, and the vendor was not aware of the
or, if unknown to one, the other must be justified in assuming hidden faults or defects in the thing sold. (1485)
knowledge on the part of the person with whom he is dealing.
(see 1 Williston, op. cit., pp. 566-655; see Art. 1522.) The presump- Responsibility of vendor for hidden defects.
tion is that the parties are aware of the usage of trade. (1) Effect of ignorance of vendor. — The ignorance of the ven-
dor does not relieve him from liability to the vendee for any hid-
ART. 1565. In the case of a contract of sale by sam- den faults or defects in the thing sold. (see Bryan vs. Hankins, 44
ple, if the seller is a dealer in goods of that kind, there Phil. 87 [1922].) In other words, good faith cannot be availed of as
is an implied warranty that the goods shall be free a defense by the vendor.
from any defect rendering them unmerchantable (2) Exception. — The parties, however, may provide otherwise
which would not be apparent on reasonable exami-
in their contract (see Art. 1581, par. 3.) provided the vendor acted
nation of the sample. (n)
in good faith, that is, he was unaware of the existence of the hid-
den fault or defect. (Arts. 1566, par. 2; 1553.)
Merchantability of goods sold
by sample. (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
(1) Where sample not merchantable. — As a general rule, all the cannot later complain thereof. He is deemed to have wilfully and
buyer is entitled to, in case of a sale or contract to sell by sample, voluntarily assumed the risk attendant to the sale. (Martinez vs.
is that the goods be like the sample, so he has no right to have the Court of Appeals, 56 SCRA 647 [1974].)
goods merchantable if the sample which he has inspected is not.
The reason upon which this rule is based is identical with that Doctrines of “caveat venditor”
which generally denies an implied warranty to a buyer who has and “caveat emptor.”
inspected the goods which he buys. (see PMC vs. Go Juco, 48 Phil.
At early common law, the implied warranty of quality was
621 [1926]; Chang Yong Tek vs. Santos, 31 Phil. 152 [1915].)
not recognized and the rule was then caveat emptor3 (let the buyer
(2) Where sample subject to latent defect. — Where the defect in beware). The seller’s liability for defects of the goods sold was
the goods is of such a character that inspection will not reveal it, then confined to cases of express promise to warrant the quality
so in the case of a sale by sample, if the sample is subject to a la- of such goods and to those in which the seller had knowledge of
tent defect, and the buyer reasonably relies on the seller’s skill or
judgment, the buyer is entitled not simply to goods like the sam-
ple, but to goods like those which the sample seems to represent, 3
A basic premise of this doctrine is that there be no misrepresentation by the seller.
This ancient defense of caveat emptor belongs to a by-gone age, and has no place in con-
that is, merchantable goods of that kind and character. (1 Williston, temporary business ethics. (Erquiaga vs. Court of Appeals, 156 SCAD 810, 367 SCRA
op. cit., pp. 678-679.) 357 [2001].)
Art. 1566 OBLIGATIONS OF THE VENDOR 329 330 SALES Arts. 1567-1568
Conditions and Warranties

the hidden defects and the sale was made without the seller re- ART. 1567. In the cases of articles 1561, 1562, 1564,
vealing them, but in the latter cases, the basis of the seller’s liabil- 1565, and 1566, the vendee may elect between with-
ity was for fraud. The Roman Law, like the English law, started drawing from the contract and demanding a propor-
with the doctrine of caveat emptor. tionate reduction of the price, with damages in either
(1) The old Civil Code, following the Roman Law, rejected the case. (1486a)
maxim caveat emptor. (see Art. 1547.) The doctrine of caveat vendi-
tor (let the seller beware) was adopted in accordance with which Alternative remedies of the buyer
“the vendor is liable to the vendee for any hidden faults or de- to enforce warranty.
fects in the thing sold, even though he was not aware thereof.” (Art. Under this article, the vendee has the option either: (1) to with-
1585, now Art. 1566 of our new Civil Code.) The doctrine is based draw from the contract, or (2) demand a proportionate reduction
on the principle that a sound price warrants a sound article. of the price, with a right to damages in either case. This first is
A manufacturer or seller of a product cannot be held liable known as accion redhibitoria (action for rescission), while the sec-
for any damage allegedly caused by the product in the absence ond is known as accion quanti minoris. The remedies are alterna-
of any proof that the product in question was defective. The de- tive as they are incompatible with each other.
fect must be present upon delivery or manufacture of the prod-
The same right is given to the vendee in the sale of animals
uct, or when the product left the seller’s or manufacturer’s con-
with redhibitory defects. (Art. 1580.)
trol; or when the product was sold to the purchaser; or the prod-
uct must have reached the user or consumer without substantial The vendee must present proof that he suffered damage as a
change in the condition it was sold. Tracing the defect to the seller result of the breach of the vendor’s warranty to be entitled to ac-
or manufacturer requires some evidence that there was no tam- tual damages. (De Vera, Jr. vs. Court of Appeals, 157 SCAD 14,
pering with, or changing of the product. (Nutrimix Feeds Corpo- 367 SCRA 534 [2001].)
ration vs. Court of Appeals, 441 SCRA 357 [2004].) Note: The word “and” before “demanding” in Article 1567
(2) The maxim caveat emptor is still applicable, however, in should read “or.”
sheriff’s sales (Pabico vs. Ong Pauco, 43 Phil. 57 [1922]; Allure
Manufacturing, Inc. vs. Court of Appeals, 199 SCRA 285 [1991].), ART. 1568. If the thing sold should be lost in con-
sales of animals under Article 1574, and tax sales (see Art. 1547, sequence of the hidden faults, and the vendor was
last par.) for there is no warranty of title or quality on the part of aware of them, he shall bear the loss, and shall be
the seller in such sales. It also applies in double sales of property obliged to return the price and refund the expenses
where the issue is who between two vendees has a better right to
of the contract, with damages. If he was not aware of
the property. (see Art. 1544.)
them, he shall only return the price and interest
The rule of caveat emptor requires the purchaser to be aware thereon, and reimburse the expenses of the contract
of the supposed title of the vendor and one who buys without which the vendee might have paid. (1487a)
checking the vendor’s title takes all the risks and losses consequent
to such failure. (Salvoso vs. Tanega, 87 SCRA 349 [1978].) But a
Effect of loss of thing sold on account
person dealing with registered land is merely charged with no-
tice of the burdens on the property which are noted on the face of of hidden defects.
the register or the certificate of title. (Campillo vs. Court of Ap- (1) Vendor aware of hidden defects. — If the vendor was aware
peals, 129 SCRA 513 [1984].) of the hidden defects in consequence of which the thing sold was
Art. 1569 OBLIGATIONS OF THE VENDOR 331 332 SALES Art. 1570
Conditions and Warranties

lost, he shall bear the loss because he acted in bad faith. In such EXAMPLE:
case, the vendee has the right to recover: S sold to B a vessel for P5,000,000.00. The defects of the
(a) the price paid; construction of the vessel were hidden and concealed and were
unknown to B until an official inspection was made. To make
(b) the expenses of the contract; and
the vessel seaworthy, an investment of P500,000.00 for repairs
(c) damages. was necessary.
(2) Vendor not aware of hidden defects. — If the vendor was not If through the fault of B, the vessel was burned, S is never-
aware of them, he shall be obliged only to return: theless bound to return the purchase price of P5,000,000.00 paid
by B less P4,500,000.00 the value of the vessel at the time of the
(a) the price paid; loss.
(b) interest thereon; and
(c) expenses of the contract if paid by the vendee. He is ART. 1570. The preceding articles of this Subsec-
not made liable for damages because he is not guilty of bad tion shall be applicable to judicial sales, except that
faith. the judgment debtor shall not be liable for damages.
(1489a)
ART. 1569. If the thing sold had any hidden fault
Warranty in judicial sales.
at the time of the sale, and should thereafter be lost
by a fortuitous event or through the fault of the vendee, (1) As to judgment debtor. — In a judicial sale, it is not really
the latter may demand of the vendor the price which the sheriff who sells but the judgment debtor. Hence, the provi-
he paid, less the value which the thing had when it sions regarding warranty are also applicable to judicial sales. (see
was lost. Art. 1574.) The buyer can avail either of the alternative remedies
to enforce the warranty and the provisions of Articles 1568 and
If the vendor acted in bad faith, he shall pay dam-
1569. However, since the judgment debtor is forced to sell, there
ages to the vendee. (1488a)
can be no liability for damages. The publicity surrounding a ju-
dicial sale and the fact that the seller does not take an active part
Effect of loss of defective thing sold.
in the sale and in the determination of the price precludes the
If the thing sold had no hidden defects, its loss through a for- existence of bad faith on his part. (see 10 Manresa 242.) While in
tuitous event or through the fault of the vendee is, of course, to voluntary sales or transactions the vendor or transferor can be
be borne by the vendee. However, the vendor is obliged to return expected to defend his title because of his warranty to the vendee,
the price paid less the value of the thing at the time of its loss in no such obligation is owed by the owner whose land is sold at
case where hidden defects existed. In other words, under Article execution sale. (Santiago Land Development Corp. vs. Court of
1569, the vendor is still made liable on his warranty. Appeals, 78 SCAD 476, 276 SCRA 674 [1997].)
The difference between the price paid for the thing and the In a case, a land was sold at public auction for unpaid realty
value at the time of the loss, represents the damage suffered by taxes. It was held that the sale by the buyer of the land to a pur-
the vendee and is at the same time the amount with which the chaser in good faith for value was valid even if there was no com-
vendor enriched himself at the expense of the vendee. (10 Manresa pliance with all the requirements of the law concerning tax sale
238.) If the vendor acted in bad faith, he shall also be liable for of delinquent property. (Reyes vs. Intermediate Appellate Court,
damages. 135 SCRA 214 [1985].) But an auction sale conducted to satisfy a
Art. 1570 OBLIGATIONS OF THE VENDOR 333
Conditions and Warranties

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 ca-
veat emptor applies, according to which the purchaser acquires by
his purchase no higher or better title or right than that of the judg-
ment 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 volun-
tary 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 pos-
session 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 judi-
cial 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
Corp. vs. Court of Appeals, 62 SCAD 546, 246 SCRA 33 [1995].)