4th Week contracting parties indicate interest in the

contract to the time the contract is perfected

Article 1458. Contract of Sale - Negotiation phase.
 Perfection – meeting of minds
By the contract of sale one of the contracting
which takes place upon the concurrence of the
parties obligates himself to transfer the
essential elements of the sale
ownership and to deliver a determinate thing,
 Consummation – when the object is delivered,
and the other to pay therefor a price certain in
and the price is paid
money or its equivalent.
:which commences when the parties perform
A contract of sale may be absolute or conditional. their respective undertakings under the
contract of sale, culminating in the
Definition: extinguishment of the contract
 Sale is a contract where one party (seller or : Death of the Contract of Sale
vendor) obligates himself to transfer the
ownership of and to deliver a determinate
thing, CHARACTERISTICS OF A CONTRACT OF SALE
 While the other party (buyer or vendee)  Consensual
obligates himself to pay for said thing a price : distinguished from real contracts (perfected
certain in money or its equivalent by delivery)
: a contract is perfected by mere consent

 The contract of sale is an agreement whereby  Bilateral Reciprocal

one of the parties (called the seller or vendor) : both contracting parties are bound by the

obligates himself to deliver something to the obligation upon one another.

other (called the buyer or purchaser or : The seller to deliver the thing and transfer

vendee) who, on his part, binds himself to pay ownership

therefor a sum of money or its equivalent : The buyer to pay the price

(known as the price)  Onerous

 Agreement – meeting of the minds to an offer : to acquire the rights, valuable consideration

certain and acceptance absolute must be given.

 Mode of acquiring ownership. : The thing sold is conveyed in consideration of

 Determinate Thing – it should be specific or the price and vice versa

can be determined. Agree to a specific object, : onerous = obligations outweigh the

it doesn’t mean generic thing cannot be sold. advantages, anticipation of performance of

You are able to identify the thing transferred. obligation

 Price certain in money – liquidated value as : May inabot si transferee = onerous, if wala =

long as the amount is concerned. Legal tender gratuitous

or its equivalent. Money/Currency agreed  Commutative

upon by the parties. : as a rule, because the values exchanged are

 Equivalent to the Former – not just another almost equivalent to each other

thing, services can be. : by way of exception, some sales are aleatory
(random or by chance) of what he has given
: selling below the market value is allowed.
STAGES OF A CONTRACT OF SALE Seller deemed it has sufficient value. Market
Value is not strict.
 Generation or Negotiation  Principal
:  starting from the time the prospective : distinguished from accessory contract (pledge
 and mortgages)  Transfer of ownership is suspended until full
: to validly exist, there is no necessity for it to compliance of the conditions.
depend upon the existence of another valid  Chattel Mortgage – You cannot appropriate the
contract thing to you agad. Constitutum possessorium.
 Nominate Foreclosure of the chattel.
 You cannot mortgage a thing that does not
: distinguished from innominate
belong to you.
: Code refers it by a special designation or
name. i.e. contract of sale
: Essential that vendors are the owners of the
property sold.
ABSOLUTE SALE AND CONDITIONAL SALE : Nemo dat quod non habet (“No one can give
(PRESENCE OF CONDITIONS) more than what he has”).

 Absolute sale (no conditions)

: the sale is not subject to any condition ESSENTIAL ELEMENTS OF A CONTRACT OF SALE
whatsoever – without, void contract
: the title passes to the buyer upon delivery of
i. Consent or meeting of minds: consent to
the thing sold.
: payment of purchase price is not essential to transfer ownership and deliver the thing in
transfer the ownership as long as property is return of price.
delivered. ii. Subject matter: Determinate and specific
: A deed of sale is absolute even if it is said to because there is no sale of general thing.
be a conditional sale but absent of stipulations. : at least capable of being determined
-> that the title to the property sold is reserved iii. Cause or consideration: Price certain in money
in the vendor until full payment of the or its equivalent.
purchase price nor a stipulation giving the
vendor the right to unilaterally rescind the Discuss Manila Metal Container Corporation v. PNB,
contract the moment the vendee fails to pay G.R. No. 166862, 20 December 2006.
within a fixed period
NATURAL ELEMENTS
 Conditional Sale - inherent and deemed to exist in the contract
: the sale is generally subject to certain unless there is a contrary provision.
conditions and contemplates a contingency
(future existence)  Warranty against eviction
: Example, buyer full payment of the price.  Warranty against hidden defects
Vendor the fulfillment of warranty (timely
eviction of squatters)
: There should be a provision that the title is ACCIDENTAL ELEMENTS
reserved or the right to unilaterally rescind is – which may be present or absent depending on
stipulated until or unless the price is paid the stipulation of the parties.
: the delivery does not transfer title until - Example: Place or time of payment, interest,
condition is fulfilled. penalty, or conditions.
: Failure to perform the condition would
prevent the perfection of the sale. __________________________________________________________
: pacto de retro, right to purchase or redeem
: suspensive conditions ARTICLE 1546. EXPRESS WARRANTY
: object possess a potential existence (future Any affirmation of fact or any promise by the
harvest, or exception of certain items) seller relating to the thing is an express warranty
if the natural tendency of such affirmation or
promise is to induce the buyer to purchase the : Sales Talk or Dealers Talk
same, and if the buyer purchases the thing relying what does not appear on the face of the contract
thereon. should be regarded merely as "dealer's" or
"trader's talk," which cannot Bind either party
No affirmation of the value of the thing, nor any
statement purporting to be a statement of the a. l.1. Discuss Philippine Steel Coating Corp. v.
seller's opinion only, shall be construed as a Quinones, G.R. No. 194533, 19 April 2017.
warranty, unless the seller made such affirmation
or statement as an expert, and it was relied upon __________________________________________________________
by the buyer. (n)
ARTICLE 1547. IMPLIED WARRANTIES
WARRANTY DEFINITION In a contract of sale, unless a contrary intention
: A warranty is a statement or representation made appears, there is:
by the seller of goods,
: It is a part of the contract of sale, having reference (1) An implied warranty on the part of the seller
to the character, quality, or title of the goods, that he has a right to sell the thing at the time
: the seller promises or ensure that certain facts he when the ownership is to pass, and that the buyer
represents are or shall be undertaken. shall from that time have and enjoy the legal and
peaceful possession of the thing;
: It is not necessary to have the word warranty
: Any word is sufficient if it shows the intention of (2) An implied warranty that the thing shall be free
the part to consider the promise as an express from any hidden faults or defects, or any charge or
warranty encumbrance not declared or known to the buyer.
: words called warranty does not establish a
warranty. 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
EXPRESS WARRANTY
interest. (n)
: An express warranty is any affirmation of fact or
any promise by the seller relating to the thing, the
IMPLIED WARRANTY DEFINITION
natural tendency of which is to induce the buyer to
: An implied warranty is that which the law derives
purchase the thing and the buyer thus induced,
by implication or inference from the nature of the
does purchase the same.
transaction or the relative situation or
circumstances of the parties irrespective of any
(1) the express warranty must be an affirmation of
intention of the seller to create it.
fact or any promise by the seller relating to the
subject matter of the sale.
: Warranties deemed included in all contracts of
(2) the natural effect of the affirmation or promise
sale by operation of law.
is to induce the buyer to purchase the thing; and
: The law attaches an obligation to the seller which
(3) the buyer purchases the thing relying on that
is not expressed in any words.
affirmation or promise.
: An implied warranty may, however, be waived or
modified by express stipulation
: It is the natural consequences of what the seller
says and the reliance thereon by the buyer that
: An implied warranty is a natural, not an essential,
alone are important.
element of a contract, because it is presumed to
exist even though nothing has been said in the
How is express warranty different from mere
contract on the subject.
sales talk or dealer’s talk?
IMPLIED WARRANTIES IN A CONTRACT OF SALE the purpose, or quality.
1. Implied warranty as to the seller’s title -> Such articles might be sold under
: Warranty against eviction circumstances that can raise an implied
: Seller guarantees he has the right to sell the thing warranty
the time when ownership is transferred to the : A certification issued by the vendor that an
buyer.
item is in A-1 condition is an express warranty.
: When ownership is passed, buyer shall have and
3. Sale by virtue of authority in fact or law
enjoy the legal and peaceful possession of the
: It does not apply to a sheriff, auctioneer,
thing.
mortgagee, pledgee or other person who sells
2. Implied warranty against hidden defects or by virtue of authority in fact or in law.
unknown encumbrance : No warranty of title if sold by one not
: The object shall be free from any hidden faults or professing to be the owner.
defects
; They are not liable to a person with a legal or
: the seller guarantees the thing sold is free from
equitable interest in the thing sold
defects or encumbrance not declared or known to
4. Sale at public auction for tax delinquency
the buyer
: There is no warranty on the part of the state.
3. Implied warranty as to fitness or : The purchaser of real estate obtains only
merchantability such title as that held by the taxpayer.
: the seller guarantees the thing sold is reasonably
fir for the known particular purpose for which it : Execution sales – caveat emptor (buyer
was acquired by the buyer beware)
: Where it was bought by description, it is of : purchaser at a sheriff’s sale acquires no
merchantable quality. better title or greater right than the judgment
debtor has.

__________________________________________________________

B. WHEN IS IMPLIED WARRANTY NOT

ARTICLE 1561. WARRANTY AGAINST HIDDEN
APPLICABLE
DEFECTS
1. “As is and where is” sale
The vendor shall be responsible for warranty
: The vendor makes no warranty as to the
against the hidden defects which the thing sold
quality or workable condition of the goods
may have, should they render it unfit for the use
: The buyer takes them in the conditions in for which it is intended, or should they diminish its
which they are found and from the place they fitness for such use to such an extent that, had the
are located. vendee been aware thereof, he would not have
-> does not extend to liens or encumbrances acquired it or would have given a lower price for it;
unknown to the buyer but said vendor shall not be answerable for patent
-> could not be disclosed by a physical defects or those which may be visible, or for
examination of the goods sold. those which are not visible if the vendee is an
expert who, by reason of his trade or profession,
! Term “as is” in public auction refers to the should have known them
physical condition of the merchandise and not
to the legal situation it was at the time of the REQUISITES FOR ENFORCEMENT OF THE
sale. WARRANTY AGAINST HIDDEN DEFECTS
(1) The defect must be important or serious
2. Sale of secondhand articles (2) It must be hidden
: there is no implied warranty as to the (3) It must exist at the time of the sale
condition, adaptation, fitness or suitability for
(4) The vendee must give notice of the defect to ARTICLE 1562. IMPLIED WARRANTIES OF
the vendor within a reasonable time (Art. QUALITY
1586.) In a sale of goods, there is an implied warranty or
(5) The action for rescission or reduction of the condition as to the quality or fitness of the goods,
price must be brought within the proper as follows:
period — 6 months from the delivery of the
thing sold (Art. 1571.) or within 40 days from (1) Where the buyer, expressly or by implication,
the date of the delivery in case of animals (Art. makes known to the seller the particular purpose
1577, par. 1.); and for which the goods are acquired, and it appears
that the buyer relies on the seller's skill or
(6) There must be no waiver of warranty on the
judgment (whether he be the grower or
part of the vendee. (Art. 1548, par. 3.)
manufacturer or not), there is an implied warranty
that the goods shall be reasonably fit for such
r.1. Discuss Sps. Batalla v. Prudential Bank, G.R. No.
purpose
200676, 25 March 2019.

(2) Where the goods are brought by description

REDHIBITORY ACTION from a seller who deals in goods of that description
Redhibition (whether he be the grower or manufacturer or
: is the avoidance of a sale on account of some vice not), there is an implied warranty that the goods
or defect in the thing sold, which renders its use shall be of merchantable quality. (n)
impossible, or so inconvenient and imperfect that it
must be supposed that the buyer would not have Implied warranty of Fitness
purchased it had he known of the vice
: No implied warranty of fitness, unless:
Redhibitory Action (a) The buyer expressly or by implication, manifests
: An action instituted to avoid a sale on account of to the seller the particular purpose for which the
some vice or defect in the thing sold which renders goods are required
its use impossible, or so inconvenient and (b) the buyer relies upon the seller’s skill or
imperfect that it must be supposed that the buyer judgment
would not have purchased it had he known of the
vice. :Particular Purpose
- The purpose expressly or impliedly
: Accion redhibitoria – to withdraw from the communicated to the seller for which the buyer
buys the goods
contract
- It may appear from the description of the article.
:The object is the rescission of the contract.
- If an article is capable of variety of purpose, the
(Revocation or cancellation of a contract)
buyer must particularize the specific purpose he
has in view.
: Accion quanti minoris – demand a proportionate
reduction of the price, with a right to damages in
: Test
either case
- Whether the buyer justifiably relied upon the
: If the object is to procure the return of a part of seller’s judgment that the goods furnished would
the purchase price paid by the vendee, the remedy fulfill the desired purpose
is known as accion quanti minoris or estimatoris. -Buyer relying on his own judgment bought what is
frequently a known, described, and definite article.
s.1. Discuss Nurtrimix Feeds Corporation v. Court of - The occupation of the seller is important evidence
Appeals, G.R. No. 152219, 25 October 2004. of the justifiableness of the buyer’s reliance.

__________________________________________________________ Implied warranty of Merchantability

: Where goods are bought by description, the seller
impliedly warrants that the goods are of
merchantable quality
: Merchantability – not a warrant of quality in : the action for recission or reduction of the
requiring a particular grade. It requires the thing purchase price prescribes six months from the
tendered is such of quality to have some value. date of delivery of the thing sold.
> Saleable, standard, average quality : Outside this period the action is barred.
: The buyer should not be permitted to offer
: Causes of Merchantability – defect in their hidden defects as a defense.
physical condition, infringement of trademarks : If it is for quasi-delict, the prescriptive period is 4
rendering unusable, goods with dangerous or years.
injurious ingredient.
: Ten preceding articles refers to vendor’s liability
__________________________________________________________ for the defects in the thing sold.
: As for express warranty, the prescriptive period is
ARTICLE 1571. PRESCRIPTION OF WARRANTY four (4) years.
Actions arising from the provisions of the - Unless another period is specified in the express
preceding ten articles shall be barred after six warranty.
months, from the delivery of the thing sold. (1490) u.1. Discuss Sps. Gaspar v. Disini, G.R. No. 239644, 03
February 2021.

____________________________________________________________________________________________________________________

CASES

Essential Elements in a Contract of Sale

Manila Metal Container Corporation v. PNB, G.R. No. 166862, 20 December 2006.
https://lawphil.net/judjuris/juri2006/dec2006/gr_166862_2006.html

FACTS
 Manila Metal Corp. executed a real estate mortgage (TCT. 32098) as a security for its loan from PNB
amounting to 900,000 PHP.
 Aug. 5, 1982: PNB filed a petition for extrajudicial foreclosure for the property to be sold at a public auction
911,532.21 php (outstanding as of June 30) + interest + attorney's fees
 Sept. 2, 1982: PNB won the public auction at 1,000,000 php
 Feb. 17, 1983: Certificate of Sale was issued and registered at the Registry of Deeds. The property is
redeemable until Feb 17, 1984
 Petitioner requested 1 year extension until Feb 17,1985 but was rejected by PNB saying it is their policy not to
accept partial redemption
 Jun. 1,1984: Since petitioner failed to redeem, TCT. 32098 was cancelled and a new title was issued in favor of
PNB
 Meanwhile, Special Assets Management Department (SAMD) had prepared a statement of account as of Jun
25,1984 amounting to 1,574,560.47 PHP. Petitioner deposited 725,000 php as deposit to repurchase and was
issued an O.R.
 SAMD recommended management of PNB to allow petitioner to repurchase property PHP1,574,560.00. PNB
management rejected the recommendation of SAMD and demanded that petitioner pay the market value of
2,660,000 php.
 Until Dec. 15, 1984 to act on the proposal, otherwise P725,000.00 would be returned. Petitioner disagreed on
the proposal.
 June 4, 1985 : PNB informed petitioner that its B.O.D had agreed to accept its offer to purchase but at
1,931,389.53 less the 725,000 php.  
 PNB President did not conform to the letter but merely indicated that he has received it.  
 Petitioner rejected this since PNB has already accepted its down payment so it can no longer increase the
price.  PNB also rejected petitioners payment for the balance.
 Petitioner filed a complaint against PNB for Annulment of Mortgage and Mortgage Foreclosure, Delivery of
Title, or Specific Performance with Damages
 CA affirmed RTC: Favored PNB and demanded that it refund the 725,000 php (no sale because no meeting of
the minds in terms of price)
 Lot was later transferred to its PNB President Bayani Gabriel; Petitioner filed a petition for certiorari

HELD

A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to
give something or to render some service.41 Under Article 1318 of the New Civil Code, there is no contract
unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

When the petitioner was told that respondent did not allow "partial redemption,"58 it sent a letter to
respondent's President reiterating its offer to purchase the property. 59 There was no response to petitioner's
letters dated February 10 and 15, 1984.
There is no evidence that the SAMD was authorized by respondent's Board of Directors to accept petitioner's
offer and sell the property for P1,574,560.47. Any acceptance by the SAMD of petitioner's offer would not bind
respondent

____________________________________________________________________________________________________________________
Express Warranty Different from Sales Talk
Philippine Steel Coating Corp. v. Quinones, G.R. No. 194533, 19 April 2017
https://lawphil.net/judjuris/juri2017/apr2017/gr_194533_2017.html
FACTS:
 Quinones (Amianan Motors)
 1994, sales engineer of respondent PhilSteel, offered a new product: primer-coated, long span, rolled
galvanized iron (GI) sheets. Quinones showed interest but asked if the GI sheets were compatible with
Guilder acrylic paint.
 Lopez forwarded this inquiry to the sales manager Angbengco. The sales manager assured that the
quality of the new GI sheet is superior than the non-primer GI sheets. He guaranteed that a lab test is
conducted by PhilSteel and that the two products the paint and the GI sheets were compatible.
 Quinones received complaints from customers who bought bus units stating the paint were peeling
off.
 Quinones complained and allege that the damage was attributable to the hidden defects of the primer-
coated GI-sheets.
 PhilSteel said the respondent purchased the product without being induced by any of PhilSteel
Representatives. In their own investigation, they discovered that the breaking of the paint was caused
by erroneous painting application by Quinones.
 RTC and CA rules in favor of Quinones.
HELD:
 Following requisites must be established in order to prove that there is an express warranty:
(1) the express warranty must be an affirmation of fact or any promise by the seller relating to the subject
matter of the sale;
(2) the natural effect of the affirmation or promise is to induce the buyer to purchase the thing; and
(3) the buyer purchases the thing relying on that affirmation or promise

 An express warranty can be oral when it is a positive affirmation of a fact that the buyer relied on.
 In the eyes of the buyer Quinones, PhilSteel - through its representative, Angbengco - was an expert
whose word could be relied upon.
 In General, what does not appear on the face of the contract should be regarded merely as "dealer's"
or "trader's talk," which cannot Bind either party
 If Lopez, a sales agent, had made the assertions of Angbengco without true knowledge about the
compatibility or the authority to warrant it, then his would be considered dealer's talk. But
sensing that a person of greater competence and knowledge of the product had to answer Quinones'
concerns, Lopez wisely deferred to his boss, Angbengco.
 PhilSteel, through its representative, was in effect inducing in the mind of the buyer the belief that the
former was an expert on the primed G.I. sheets in question; and that the statements made by
petitioner's representatives, particularly Angbengco (its sales manager), 17 could be relied on. Thus,
petitioner did induce the buyer to purchase the former's G.I. sheets.

____________________________________________________________________________________________________________________
Requisites for the Enforcement of Warranty Against hidden defects
Sps. Batalla v. Prudential Bank, G.R. No. 200676, 25 March 2019
https://lawphil.net/judjuris/juri2019/mar2019/gr_200676_2019.html
FACTS:
 Sps. Batalla purchased brand new Honda Civiv from Honda Cars San Pablo. Prudential Bank brokered
the deal.
 The spouses obtained a car loan with Prudential. On March 1998, they executed a promissory note
P292,000 payable within 36 months. May 29, 1998 Car Loan Agreement was approved and prudential
issued a Manager’s Check
 Sps. Batalla paid the remaining portion of the purchase price, the delivery cost, installation of remote
control door, and the insurance
 Sps received the Car after Rantael (broker of prudential) informed that the car was parked near
Prudential. After 3 days, the rear right door broke down.
 Sps. Consulted Sanchez who claimed that the power lock in the rear right door was defective and the
car is not brand-new because the paint is retouched.
 Sps. Notified the said defects to Prudential and demanded immediate replacement. They also took the
car to the Auto Body Shop for a thorough evaluation. Villanueva said the vehicle is no longer brand
new bc the roof is not shiny.
 Prudential with Honda met with the Sps. And offered to repair the vehicle. Sps rejected it bc they
wanted a brand new replacement without hidden defects.
 They applied for recision of contracts
 RTC dismissed Sps. Batalla complaints; Affirmed by the CA

HELD:

 SC said the petition is without merit.

 There are documentary evidence stating the car is brand new

  If there are hidden defects, they buyer may elect withdrawing from contract or demand proportionate
reduction of the prise.

  For one, it was not sufficiently proven that the defects of the car door were important or serious. The
hidden defect contemplated under Article 1561 of the Civil Code is an imperfection or defect of such
nature as to engender a certain degree of importance and not merely one of little
consequence.23 Spouses Batalla failed to prove that such defect had severely diminished the
roadworthiness of the motor vehicle. In fact, they admitted that they had no problem as to the
road worthiness of the car

In order for the implied warranty against hidden defects to be applicable, the following conditions must be met:
a. Defect is Important or Serious
i. The thing sold is unfit for the use which it is intended
ii. Diminishes its fitness for such use or to such an extent that the buyer would not have acquired it had he
been aware thereof

b. Defect is Hidden
c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the seller within reasonable time

____________________________________________________________________________________________________________________
Redhibitory Action
Nurtrimix Feeds Corporation v. Court of Appeals, G.R. No. 152219, 25 October 2004.
https://lawphil.net/judjuris/juri2004/oct2004/gr_152219_2004.html

FACTS:
 In 1993, Sps. Evangelista procured various animal feeds from petitioner Nutrimix Feeds Corp.
 The petitioner gave the respondents a credit period of 30-45 days to postdate checks to be issued as
payment for the feeds. The accommodation was made apparently because the company’s president
was a close friend of Evangelista. The various animal feeds were paid and covered by checks with due
dates from July 1993-September 1993.
 Initially, the spouses were good paying customers. However, there were instances when they failed to
issue checks despite the delivery of goods. Consequently, the respondents incurred an aggregate
unsettled account with Nutrimix amounting to P766,151
 When the checks were deposited by the petitioner, the same were dishonored (closed account).
Despite several demands from the petitioner, the spouses refused to pay the remaining balance
 Thereafter, Nutrimix filed a complaint against Evangelista for collection of money with damages.The
respondents admitted their unpaid obligation but impugned their liability.
 The nine checks issued were made to guarantee the payment of the purchases, which was previously
determined to be procured from the expected proceeds in the sale of their broilers and hogs. They
contended that inasmuch as the sudden and massive death of their animals was caused by the
contaminated products of the petitioner, the nonpayment of their obligation was based on a just
and legal ground.
 The respondents also lodged a complaint for damages against the petitioner, for the untimely and
unforeseen death of their animals supposedly effected by the adulterated animal feeds the petitioner
sold to them.
 Nutrimix alleged that the death of the respondents’ animals was due to the widespread pestilence in
their farm. The petitioner, likewise, maintained that it received information that the respondents were
in an unstable financial condition and even sold their animals to settle their obligations from other
 enraged and insistent creditors. It, moreover, theorized that it was the respondents who mixed poison
to its feeds to make it appear that the feeds were contaminated.
 The trial court held in favor of petitioner on the ground that it cannot be held liable under Articles
1561 and 1566 of the Civil Code governing “hidden defects” of commodities sold. The trial court is
predisposed to believe that the subject feeds were contaminated sometime between their storage at
the bodega of the Evangelistas and their consumption by the poultry and hogs fed therewith, and that
the contamination was perpetrated by unidentified or unidentifiable ill-meaning mischief-maker(s)
over whom Nutrimix had no control in whichever way.
 CA modified the decision of the trial court, citing that respondents were not obligated to pay their
outstanding obligation to the petitioner in view of its breach of warranty against hidden defects. The
CA gave much credence to the testimony of Dr. Rodrigo Diaz, who attested that the sample feeds
distributed to the various governmental agencies for laboratory examination were taken from a sealed
sack bearing the brand name Nutrimix

HELD
 The threshold issue is whether or not there is sufficient evidence to hold the petitioner guilty
of breach of warranty due to hidden defects.
 The provisions on warranty against hidden defects are found in Articles 1561 and 1566 of the New Civil
Code of the Philippines. A hidden defect is one which is unknown or could not have been known to the
vendee. 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

 In the sale of animal feeds, there is an implied warranty that it is reasonably fit and suitable to be used
for the purpose which both parties contemplated. To be able to prove liability on the basis of breach of
implied warranty, three things must be established by the respondents. The first is that they sustained
injury because of the product; the second is that the injury occurred because the product was defective
or unreasonably unsafe; and finally, the defect existed when the product left the hands of the
petitioner. A manufacturer or seller of a product cannot be held liable for any damage allegedly caused
by the product in the absence of any proof that the product in question was defective. The defect must
be present upon the delivery or manufacture of the product; or when the product left the seller’s or
manufacturer’s control; or when the product was sold to the purchaser; or the product must have
reached the user or consumer without substantial change in the condition it was sold. Tracing the
defect to the petitioner requires some evidence that there was no tampering with, or changing of the
animal feeds. The nature of the animal feeds makes it necessarily difficult for the respondents to prove
that the defect was existing when the product left the premises of the petitioner.

 A review of the facts of the case would reveal that the petitioner delivered the animal feeds, allegedly
containing rat poison, on July 26, 1993; but it is astonishing that the respondents had the animal feeds
examined only on October 20, 1993, or barely three months after their broilers and hogs had died. A
difference of approximately three months enfeebles the respondents’ theory that the petitioner is
guilty of breach of warranty by virtue of hidden defects. In a span of three months, the feeds could
have already been contaminated by outside factors and subjected to many conditions unquestionably
beyond the control of the petitioner.

 Even more surprising is the fact that during the meeting with Nutrimix President Mr. Bartolome, the
respondents claimed that their animals were plagued by disease, and that they needed more time to
settle their obligations with the petitioner. It was only after a few months that the respondents
 changed their justification for not paying their unsettled accounts, claiming anew that their animals
were poisoned with the animal feeds supplied by the petitioner.

 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 require

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. 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.
____________________________________________________________________________________________________________________

Prescription of Warranty
Sps. Gaspar v. Disini, G.R. No. 239644, 03 February 2021.
https://sc.judiciary.gov.ph/20200/
 Spouses Gaspar purchased from Yu to sell to Disini the car Mitsubishi Pajero.
 The vehicle is registered in the name of Marquez mortgaged for a loan in Legacy Lending Investor.
Legacy is owned by Yu
 Rocky Gaspar offered the Pajero to Disini who agreed to buy. Sps Gaspar obtained a Motor Vehicle
Clearance Certificate and registered it to Disini.
 About a year later, on [June 30, 2003], the police apprehended the subject Pajero while it was illegally
parked in Makati. Further police investigation revealed that the vehicle had been stolen from the Office
of the President. It appears that the chassis number had been overlaid with another number through
welding in order to avoid identification.
 Disini informed Gaspars and Sps. Promised to return the full purchase price. The Gaspars sought
reimbursement from Yu and Legacy
 Disini filed a complaint, and Gaspar filed a third-party complaint against YU and His employee Salita
for the unpaid reimbursement.
 RTC dismissed the 3rd party complaint against Salita.
 On the other hand, Yu and Salita argued that they should not be held liable to reimburse Spouses
Gaspar considering that: (i) their implied warranty as sellers does not extend to defects which are
apparent and can be ascertained by the buyers after examination; (ii) Spouses Gaspar are engaged in
the business of buying and selling cars and must bear the risk involved in the purchase of the subject
Pajero following the principle of caveat emptor; and (iii) as sellers, Yu and Salita relied on the Certificate
of Registration and clearances provided by their mortgagee, Marquez, and should thus be deemed
sellers in good faith
 CA held that the 3rd part complaint is dismissed for having been filed out of time. and CA held Sps.
Gaspar are liable to pay to Disini the amount of 760,000.00 PHP
 CA said the implied warranties already prescribed from Yu.

ISSUE:
Whether or not Yu and Salita are liable for reimbursement

RULING:
 As a starting point, it must be emphasized that Spouses Gaspar do not assail their liability to pay Disini
the balance of the purchase price of the subject Pajero. Instead, they insist on their right to be
reimbursed through the third-party complaint they filed against Yu and Salita.
 The Court finds Yu solely liable to reimburse Spouses Gaspar the unpaid portion of the purchase price
of the subject Pajero with legal interest. Yu's liability is anchored on the nullity of the COS he executed
with Spouses Gaspar. In addition, Yu is liable to pay Spouses Gaspar attorney's fees as he unjustifiably
refused in bad faith to satisfy the latter's valid claim
 Yes, but only Yu. Salita merely affixed his signature as an employee.
 Here, the object of the COS turned out to be a vehicle stolen from the Office of the President which
was immediately confiscated when Disini was cited for illegal parking. As a general rule, the possession
of movable property acquired in good faith is equivalent to a title. This general rule, however, does not
apply in cases where the owner of said movable property has been unlawfully deprived of the same,43
as in this case where the vehicle subject of the COS had been stolen. Evidently, Yu had no right to
transfer the ownership of the subject Pajero at the time it was delivered to Spouses Gaspar, as the
object of the COS is clearly illicit.
 Here, Spouses Gaspar argue that the basis of Yu and Salita's liability is the written "Contract of Sale"
(COS) which they entered into. On the other hand, Yu denies liability and claims that as seller, he is only
liable for the subject Pajero's hidden defects which do not exist in this case. He adds that the
conditions necessary for the application of the implied warranty against eviction are not present. In
any event, Yu further claims that any cause of action that Spouses Gaspar may have had based on said
implied warranties have long prescribed.
 The Court finds Yu solely liable to reimburse Spouses Gaspar the unpaid portion of the purchase price
of the subject Pajero with legal interest. Yu's liability is anchored on the nullity of the COS he executed
with Spouses Gaspar. In addition, Yu is liable to pay Spouses Gaspar attorney's fees as he unjustifiably
refused in bad faith to satisfy the latter's valid claim.

 The implied warranty against hidden defects pertains to defects which render the thing sold unfit for
the use for which it is intended or should diminish its fitness for such use to such an extent that, had
the vendee been aware thereof, would not have acquired it or would have given a lower price.

 As its nomenclature suggests, hidden defects pertain to imperfections or defects of the object sold.
Such is not the case here, where the subject Pajero, albeit stolen, was in working condition, and was
in fact being used by Disini for its intended purpose when it was confiscated by the authorities.

 On the other hand, a breach of the warranty against eviction presupposes the concurrence of the
following requisites: (i) the purchaser has been deprived of the whole or part of the thing sold; (ii) this
eviction is by a final judgment; (iii) the basis thereof is by virtue of a right prior to the sale made by the
vendor; and (iv) the vendor has been summoned and made co-defendant in the suit for eviction at the
instance of the vendee.

 Here, Disini was not deprived of possession on the basis of a final judgment. In fact, based on the
records, it would appear that Disini did not contest the confiscation of the subject Pajero when he was
informed that it had been stolen from the Office of the President. Since none of the foregoing
warranties apply, the six-month prescriptive period under Article 1571 of the Civil Code is inapplicable.
As the third-party complaint filed by Spouses Gaspar assumes the nature of an action to declare the
inexistence of a contract due to its illicit object, said complaint is imprescriptible under Article 1409.
The CA thus erred when it dismissed the third-party complaint on the ground of prescription.