WARRANTIES

ATTY. YEN MENDOZA

DEFINITION

It is a statement of representation made by the seller

contemporaneously and as part of the contract of sale, having
reference to the character, quality, or title of the goods, and by
which he promises or undertakes to insure that certain facts are or
shall be as he then represents
MAY BE EXPRESS OR IMPLIED

i. Express— any affirmation of fact or any promise by the seller

relating to the thing which induces the buyer to purchase the
same
ii. Implied— that which the law derives from the nature of the
transaction or the relative situation or circumstances of the
parties, irrespective of any intention of the seller to create it
DISTINGUISHED FROM CONDITION

i. a condition is an uncertain event or contingency fixed by the parties, the existence or happening of
which, is necessary to the efficacy of the contract
ii. where a condition is not performed
1. the other party may either [1545]
a. refuse to proceed with the contract
b. proceed with the contract, waiving the performance of the contract
2. if the condition is in the nature of a promise that it should happen, the non-performance of such
condition may be treated by the other party as a breach of warranty
WARRANTY VS. CONDITION
Warranty Condition

Goes into the performance of such obligation and in Goes into the performance of such obligation and in
fact may constitute an obligation in itself fact may constitute an obligation in itself

May form part of the obligation or contract by Must be stipulated by the parties in order to form
provision of the law without the parties having part of an obligation
agreed thereto

Whether express or implied relates to the subject May attach itself either to the obligation of the
matter itself or to the obligations of the seller as to seller to deliver possession and transfer ownership
the subject matter of the sale over the subject matter of the sale
DISTINGUISHED FROM OPINION, DEALER’S TALK

i. An affirmation of the value of the thing or any statement of the

seller’s opinion not a warranty
ii. Exception—
1. seller made such affirmation as an expert; and
2. it was relied upon the buyer
BREACH OF WARRANTY

a.Remedies of vendee [1599]

i. Recoupment —accept the goods and set up the seller’s breach to reduce or extinguish the price
ii. Accept the goods and maintain an action for damages for breach of warranty
iii. Refuse to accept the goods and maintain an action for damages for breach of warranty
iv. Rescind the contract by returning or offering the return of the goods, and recover the price or any
part thereof
RESCISSION NOT ALLOWED

i. If the buyer accepted the goods without protest, knowing the

breach of warranty
ii. If the buyer fails to notify the seller within a reasonable time of
his election to rescind
iii. If he fails to return or offer to return the goods in substantially as
good condition as they were in at the time of the transfer of
ownership to him;
Except if the deterioration is due to the breach of warranty
RIGHTS AND OBLIGATIONS OF BUYER IN CASE OF
RESCISSION
i. Buyer shall cease to be liable for the price, his only obligation
being to return the goods
ii. If he has paid the price or any part thereof, he may recover it from
the seller
iii. He has the right to hold the goods as bailee for the seller should
the latter refuse the return of the goods; AND iv. He has a right to
have a lien on the goods for any portion of the price already paid
which lien he may enforce as if he were an unpaid seller
IMPLIED WARRANTIES

a. Implied Warranty of Title

i. Unless a contrary intention appears, there is an implied warranty on the part of seller [1547]
1. that he has a right to sell the thing; and
2. that the buyer shall, from that time, have and enjoy the legal and peaceful possession of the thing
ii. There is a violation of this warranty when [1548]
1. the vendee is deprived, in whole or in part, of the thing purchased
2. the deprivation is by virtue of a final judgment [1557]
3. the judgment is based on a prior right to the sale or an act imputable to the vendor
4. the vendor was summoned in the suit for eviction at the instance of the vendee [1558]; AND
5. no waiver of the warranty by the vendee
LIABILITY OF A VENDOR

1. Total eviction [1555]— VICED

a. Value of the thing at the time of the eviction
b. Income or fruits if he has been ordered to deliver them to the party who won the suit
c. Costs if the suit d. Expenses of the contract; AND
e. Damages and interests if the sale was in bad faith

2. Partial eviction [1556]

a. VICED; OR
b. Rescission if vendee would not have bought the thing without said part; but with the obligation to
return the thing without other encumbrances than those which it had at the time he acquired it
WARRANTY MAY BE RENOUNCED OR LIMITED

1. The contracting parties may increase, diminish, or suppress this legal obligation of the vendor [1548]
2. Any stipulation exempting the vendor from the obligation to answer for eviction shall be void, if he
acted in bad faith [1553]
3. Consequence of waiver, renunciation [1554]
a. should take place, the vendor shall only pay the value which the thing sold had at the time of the
eviction
b. if the vendee made the waiver with knowledge of the risks of eviction and assumed its
consequences, the vendor shall not be liable.
IMPLIED WARRANTY AGAINST NON-APPARENT
ENCUMBRANCES

Unless a contrary intention appears, there is an implied

warranty that the thing shall be free from any charge or
encumbrance not declared or known to the buyer [1547]
WHEN THERE IS A BREACH OF IMPLIED WARRANTY

such that it may be presumed that vendee would not have bought its, vendee
may [1560]
1. if within 1 year from the execution of the deed
a. ask for rescission of the contract within 1 year from the execution of the deed;
or
b. b. sue for damages within the same period
2. if period has elapsed, sue for damages within 1 year from the discovery of the
burden of servitude
WHEN THERE IS NO BREACH [1560]

There is no breach [1560]

1. if the non-apparent burden or servitude is registered in the
Registry of Deeds, unless there was an express warranty
2. if the vendee had knowledge of the encumbrance
IMPLIED WARRANTY AGAINST HIDDEN DEFECTS

1. Unless a contrary intention appears, there is an implied warranty that the

thing shall be free from any hidden faults or defects[1547]
2. When there is a breach of this warranty [1561]
a. Hidden defect would render the thing unfit for the use intended ; or
b. would diminish its fitness for such use to an extent that had the vendee
been aware thereof, he would not have acquired it or would have given
a lower price for it
THERE IS NO IMPLIED WARRANTY FOR THE
FOLLOWING:

1. Patent Defects
2. Those hidden, but would have been known to the vendee if the latter is an
expert who, by reason of his trade or profession, should have known such
defects
Remedies of vendee – vendee may either [1567]
1. Withdraw from the contract and ask for damages
2. Demand for a proportionate reduction of the price and ask for damages
EFFECT WHEN A THING IS LOST ON ACCOUNT OF A
HIDDEN DEFECT
a. if the vendor was aware of hidden defects, he shall bear the loss and the vendee shall have the right to
recover (PED)
i. price paid
ii. interest thereon
iii. damages
b. if the vendor was not aware, he shall be obliged to return (PIE)
i. price paid
ii. interest thereon
iii. expenses of the contract if paid by the vendee
LOSS OF THE THING NOT DUE TO HIDDEN DEFECT
(BUT NEVERTHELESS HAS HIDDEN DEFECT)

a. if due to fortuitous event or thru the fault of the vendor, the

vendee may demand from the vendor the price which he paid less
the value of the thing at the time of the loss
b. if the vendor acted in bad faith, the vendor shall pay damages to
the vendee.
IMPLIED WARRANTY OF MERCHANTABILITY

i. when the goods are brought by description from a seller who

deals in goods of that description, whether he is the grower,
manufacturer or not, there is an implied warranty that the goods
correspond with the description and that they shall be of
merchantable quality [1481,1561(2)]
ii. There is no implied warranty of merchantability where the goods
are in the presence of the parties at the time of the sale, and
adequate examination was made.
IMPLIED WARRANTY OF QUALITY

i. When there is an implied warranty of quality

1. Where the buyer, expressly or impliedly, made known to the seller the
particular purpose for which the goods are acquired,
2. and the buyer relied on the seller’s skill or judgment, whether the latter is
a grower or manufacturer of the goods or not, there is an implied
warranty that the goods shall be fit for such purpose
ii. In a sale of a specified article under its patent or trade name, there is no
warranty as to its fitness for any particular purpose, unless there is a
stipulation to the contrary [1563]
REMEDIES IN CASE OF BREACH

In General
a. Remedies of the seller
i. Action for payment of the price [1595]
ii. Action for damages for non-acceptance of the goods [1596]
iii. Action for rescission [1597]
b. Remedies of the buyer
i. Action for specific performance [1598]
ii. Action for rescission, or damages for breach of warranty
ART. 1595

Where the goods have not been delivered to the buyer, and
the buyer has repudiated the contract of sale, or has
manifested his inability to perform his obligations
thereunder, or has committed a breach thereof, the seller
may totally rescind the contract of sale by giving notice of
his election so to do to the buyer.
ART 1598

Where the seller has broken a contract to deliver specific or

ascertained goods, a court may, on the application of the buyer,
direct that the contract shall be performed specifically, without
giving the seller the option of retaining the goods on payment of
damages.
The judgment or decree may be unconditional, or upon such terms
and conditions as to damages, payment of the price and otherwise,
as the court may deem just.
ART 1599
Where there is a breach of warranty by the seller, the buyer may, at his election:
(1) Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in
diminution or extinction of the price;
(2) Accept or keep the goods and maintain an action against the seller for damages for the breach of
warranty;
(3) Refuse to accept the goods, and maintain an action against the seller for damages for the breach of
warranty;
(4) Rescind the contract of sale and refuse to receive the goods or if the goods have already been received,
return them or offer to return them to the seller and recover the price or any part thereof which has
been paid.
When the buyer has claimed and been granted a remedy in anyone of these ways, no other remedy can
thereafter be granted, without prejudice to the provisions of the second paragraph of Article 1191.
ART 1599

Where the goods have been delivered to the buyer, he cannot rescind the sale if
he knew of the breach of warranty when he accepted the goods without
protest, or if he fails to notify the seller within a reasonable time of the election
to rescind, or if he fails to return or to offer to return the goods to the seller in
substantially as good condition as they were in at the time the ownership was
transferred to the buyer. But if deterioration or injury of the goods is due to the
breach or warranty, such deterioration or injury shall not prevent the buyer
from returning or offering to return the goods to the seller and rescinding the
sale.
ART 1599

Where the buyer is entitled to rescind the sale and elects to do so, he shall cease to be liable for
the price upon returning or offering to return the goods. If the price or any part thereof has
already been paid, the seller shall be liable to repay so much thereof as has been paid,
concurrently with the return of the goods, or immediately after an offer to return the goods in
exchange for repayment of the price. Where the buyer is entitled to rescind the sale and elects
to do so, if the seller refuses to accept an offer of the buyer to return the goods, the buyer shall
thereafter be deemed to hold the goods as bailee for the seller, but subject to a lien to secure
payment of any portion of the price which has been paid, and with the remedies for the
enforcement of such lien allowed to an unpaid seller by Article 1526.
ART 1599

(5) In the case of breach of warranty of quality, such loss, in the

absence of special circumstances showing proximate damage of a
greater amount, is the difference between the value of the goods at
the time of delivery to the buyer and the value they would have had
if they had answered to the warranty.