PERTINENT PROVISIONS:

OBLIGATIONS OF THE VENDOR

Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as
warrant the thing which is the object of the sale. (1461a)

CONDITIONS AND WARRANTIES

Art. 1547. In a contract of sale, unless a contrary intention appears, there is:

(1) An implied warranty on the part of the seller that he has a right to sell the thing
at the time when the ownership is to pass, and that the buyer shall from that time have
and enjoy the legal and peaceful possession of the thing;

(2) An implied warranty that the thing shall be free from any hidden faults or
defects, or any charge or encumbrance not declared or known to the buyer.

This Article shall not, however, be held to render liable a sheriff, auctioneer, mortgagee,
pledgee, or other person professing to sell by virtue of authority in fact or law, for the
sale of a thing in which a third person has a legal or equitable interest. (n)

REMEDIES IN CASE OF BREACH OF WARRANTY

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.
 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.

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.

(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. (n)

Art. 1571. Actions arising from the provisions of the preceding articles shall be barred
after six months from the delivery of the thing sold.

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OTHER PROVISIONS ON WARRANTIES

SUBSECTION 2. Warranty Against Hidden Defects

of or Encumbrances Upon the Thing Sold

Art. 1561. The vendor shall be responsible for warranty against the hidden defects which
the thing sold may have, should they render it unfit for the use for which it is intended,
or should they diminish its fitness for such use to such an extent that, had the vendee
been aware thereof, he would not have acquired it or would have given a lower price for
it; but said vendor shall not be answerable for patent defects or those which may be
visible, or for those which are not visible if the vendee is an expert who, by reason of his
trade or profession, should have known them. (1484a)

Art. 1562. In a sale of goods, there is an implied warranty or condition as to the quality
or fitness of the goods, as follows:

(1) Where the buyer, expressly or by implication, makes known to the seller the particular
purpose for which the goods are acquired, and it appears that the buyer relies on the
sellers skill or judgment (whether he be the grower or manufacturer or not), there is an
implied warranty that the goods shall be reasonably fit for such purpose;

(2) Where the goods are brought by description from a seller who deals in goods of that
description (whether he be the grower or manufacturer or not), there is an implied
warranty that the goods shall be of merchantable quality. (n)

Art. 1563. In the case of contract of sale of a specified article under its patent or other trade
name, there is no warranty as to its fitness for any particular purpose, unless there is a
stipulation to the contrary. (n)

Art. 1564. An implied warranty or condition as to the quality or fitness for a particular
purpose may be annexed by the usage of trade. (n)

Art. 1565. In the case of a contract of sale by sample, if the seller is a dealer in goods of
that kind, there is an implied warranty that the goods shall be free from any defect
rendering them unmerchantable which would not be apparent on reasonable
examination of the sample. (n)

Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the
thing sold, even though he was not aware thereof.

This provision shall not apply if the contrary has been stipulated, and the vendor was not
aware of the hidden faults or defects in the thing sold. (1485)

Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect
between withdrawing from the contract and demanding a proportionate reduction of
the price, with damages in either case. (1486a)

Art. 1568. 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. (1487a)
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 latter may
demand of the vendor the price which he 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. (1488a)

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NOTES:

V. CONDITION AND WARRANTIES

Warranty is a statement or representation made by the seller of goods,

contemporaneously and as a 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 them.

If the obligation of either party is subject to any condition and such condition is not
fulfilled, such party may either (1) refuse to proceed with the contract, or (2) proceed with
the contract, waiving the performance of the condition.

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.

Implied warranty as to sellers title (Art. 1548) that the seller guarantees that he has a
right to sell the thing sold and to transfer ownership to the buyer who shall not be
disturbed in his legal and peaceful possession thereof.

Implied warranty against hidden defects or unknown encumbrance (Art. 1562) that
the seller guarantees that the thing sold is reasonably fit for the known particular
purpose for which it was acquired by the buyer or, where it was bought by description,
that it is of merchantable quality.

Redhibition Redhibitory action Redhibitory vice or defect

the avoidance of a sale on account of some vice or defect in the thing sold, which renders
its use impossible, or so inconvenient and imperfect that it must be supposed that the
buyer would not have purchased it had he known of the vice.
 an action instituted to avoid a sale on account of some vice or defect in the thing sold
which renders its use impossible, or so inconvenient and imperfect that it must be
supposed that the buyer would not have purchased it had he known of the vice. The
object is the rescission of the contract. If the object is to procure the return of a part of the
purchase price paid by the vendee, the remedy is known as accion minoris orestimatoris.
a defect in the article sold against which defect the seller is bound to warrant.
The vice or defect must constitute an imperfection, a defect in its nature, of certain
importance; and a minor defect does not five rise to redhibition. The mere absence of a
certain quality in the thing sold which the vendee thought it to contain is not necessarily
a redhibitory defect. One thing is that is positively suffers from certain defects.

Accion redhibitoria to withdraw from the contract

Accion quanti minoris demand a proportionate reduction of the price, with a right to
damages in either case

Remedies allowed to the buyer when the seller has been guilty of a breach of promise
or warranty (Art. 1599):

1 Recoupment accept the goods and set up the sellers breach to reduce or
extinguish the price.The theory of recoupment is that the sellers damages are cut down
to an amount which will compensate him for the value of what he has given.

2 Set-off or Counterclaim for damages accept the goods and maintain an action for
damages for the breach of the warranty. Both sides of the contract are enforced in the
same litigation. The buyer (defendant) does not seek to avoid his obligation under the
contract but seeks to enforce the sellers (plaintiffs) obligation and to deduct it from his
liability for the price for breach of warranty.

3 Action for damages refuse to accept the goods and maintain an action for
damages for the breach of the warranty.

4 Rescission rescind the contract of sale by returning or offering the return of the
goods, and recover the price or any part thereof which has been paid. This remedy is not
available in the following cases:

(a) if the buyer accepted the goods knowing of the breach of warranty without protest;
(b) if he fails to notify the seller within a reasonable time of his election to rescind; and
(c) 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. But where the injury to the
goods was caused by the very defect against which the seller warranted, the buyer may
still rescind the sale.

JURISPRUDENCE

*In McCullough v. Aenlle, the Supreme Court refused the application of Article 1474 (on
implied warranty on the quality of tobacco) where the agreement between the seller and
the buyer .gave the buyer an obligation to take all the tobacco in a certain building and
to pay the price stated in the agreement. The Supreme Court ruled that the obligation to
pay for the price resulting from the agreement was absolute and does not depend on the
quality of the tobacco or its value in spite of the fact that there were statements made as
to the quality of the tobacco in the inventory subsequently drawn by the parties.

In Peralta v. Jordana Enterprises Inc. the Court of Appeals construed the term "hidden
defects" in Article 1561. In this case, the defendant corporation was a buyer of two used
dump trucks on installment basis. A partial payment was made by the defenndant
corporation through its vice president. This suit was instituted to recover the balance of
the price of the trucks. Defendant raised the defense that the trucks had defective engines
and therefore his case was governed by Article 1561, and as a consequence, it was entitled
to a proportionate reduction of the price. The defect upon which the defendant relied
upon was established by an alleged expert mechanic who pointed to the misalignment or
distortion of the main bearing bone of the cylinder block. The defect, however, was
shown to have been corrected by the use of metal shims. The Court of Appeals rejected
the defendant's excuse for non-payment of the price by holding that the alleged defect
did not fall within the purview of Article 1561 since the hidden defect referred to in the
said Article is an imperfection or defect of such important nature. The Court added that
an imperfection or defect of little consequence does not come under the term
 [G.R. No. 152219. October 25, 2004]

NUTRIMIX FEEDS CORPORATION, petitioner, vs. COURT OF APPEALS and

SPOUSES EFREN AND MAURA EVANGELISTA, respondents.
Doctrines:

I. A hidden defect is one which is unknown or could not have been known to the
vendee.[26] Under the law, the requisites to recover on account of hidden defects are as
follows:
(a) the defect must be hidden;
(b) the defect must exist at the time the sale was made;
(c) the defect must ordinarily have been excluded from the contract;
(d) the defect, must be important (renders thing UNFIT or considerably decreases
FITNESS);
(e) the action must be instituted within the statute of limitations.[27]
II. It is, likewise, rudimentary that common law places upon the buyer of the product
the burden of proving that the seller of the product breached its warranty.[39] The bevy of
expert evidence adduced by the respondents is too shaky and utterly insufficient to prove
that the Nutrimix feeds caused the death of their animals. For these reasons, the expert
testimonies lack probative weight. The respondents case of breach of implied warranty
was fundamentally based upon the circumstantial evidence that the chickens and hogs
sickened, stunted, and died after eating Nutrimix feeds; but this was not enough to raise
a reasonable supposition that the unwholesome feeds were the proximate cause of the
death with that degree of certainty and probability required.[40] The rule is well-settled
that if there be no evidence, or if evidence be so slight as not reasonably to warrant
inference of the fact in issue or furnish more than materials for a mere conjecture, the
court will not hesitate to strike down the evidence and rule in favor of the other
party.[41] This rule is both fair and sound. Any other interpretation of the law would
unloose the courts to meander aimlessly in the arena of speculation.[42]
It must be stressed, however, that the remedy against violations of warranty against
hidden defects is either to withdraw from the contract (accion redhibitoria) or to demand a
proportionate reduction of the price (accion quanti minoris), with damages in either
case.[43] In any case, the respondents have already admitted, both in their testimonies and
pleadings submitted, that they are indeed indebted to the petitioner for the unpaid
animal feeds delivered to them. For this reason alone, they should be held liable for their
unsettled obligations to the petitioner.