Name: Great Xander L.
Maguigad
Year & Section: BA3DB
Problem 1: Hidden Defects and Warranty Question
Anna buys a car from Ben for PHP 500,000. A few weeks after the sale, Anna
discovers that the car has a serious engine defect that existed before the sale, but
Ben did not disclose this information. The defect makes the car unsafe to drive and
costly to repair. Anna wants Ben to take responsibility for the defect.
Answer
● Legal Issue: Hidden defect (also called hidden faults or redhibitory defects) in the
thing sold.
● Relevant Rule: Under the Civil Code, the vendor is liable for hidden defects that
render the thing sold unfit for its intended use or diminish its value, even if the seller
was unaware of them.
● Condition: The defect must have existed at the time of the sale and must be
hidden (not easily discoverable by the buyer).
● Application:
o The engine defect existed before the sale and was not disclosed by Ben.
o The defect makes the car unsafe to drive and costly to repair, meaning it
affects the car’s normal use.
● Buyer's Right: Anna may choose to:
o Rescind the sale (return the car and recover the price paid), or
o Demand a proportional reduction of the price (action quanti minoris).
● If Ben knew of the defect: He must return the price plus damages and interest.
● Conclusion:
o Ben is liable for the hidden defect.
o Anna may rescind the contract or demand a price reduction, with damages if
Ben acted in bad faith.
Problem 2: Obligation of Delivery Question
Carlos agrees to buy a shipment of rice from Danilo for PHP 100,000. Danilo
promises to deliver the rice within two weeks. However, two weeks pass, and Danilo
fails to deliver the rice without a valid reason. Carlos needs the rice urgently for his
business and suffers a loss due to the delay.
Answer
● Legal Issue: Breach of the obligation to deliver.
● Relevant Rule: Under the Civil Code, the vendor is obligated to deliver the thing sold.
Failure to do so without a valid reason constitutes a breach of contract.
● Condition: Danilo promised delivery within two weeks, and that time has passed
without fulfillment.
● Application:
o Danilo did not deliver the rice within the agreed timeframe.
o Carlos suffered losses as a result of the delay.
● Buyer's Right: Carlos is entitled to demand specific performance (delivery of the
rice) or rescission of the contract, plus damages in either case.
● If Danilo had a valid reason for the delay: He might not be liable for damages if the
delay was due to force majeure (unforeseeable circumstances).
● Conclusion:
o Danilo is liable for breach of contract due to non-delivery.
o Carlos can pursue legal remedies to recover his losses.
Problem 3: Payment and Acceptance by the Vendee Question
Emma sells furniture to Frank for PHP 50,000. According to their agreement, Frank is
supposed to pay the entire amount upon delivery. When the furniture is delivered,
Frank inspects it and finds it in perfect condition but refuses to pay, saying he will
pay in installments instead. Emma insists that the payment must be made in full, as
agreed.
Answer
● Legal Issue: Breach of the obligation to pay the purchase price upon delivery.
● Relevant Rule: Under the Civil Code, the vendee is obliged to accept delivery of the
goods and to pay the price at the time and place stipulated in the contract.
● Condition: Frank agreed to pay in full upon delivery but now refuses to do so.
● Application:
o Frank inspected the furniture and found it satisfactory.
o Frank unilaterally wants to change the payment terms to installments.
● Seller's Right: Emma has the right to demand full payment as agreed and can
refuse to accept installment payments. She can also sue for specific performance or
rescission.
● If Emma agreed to installments afterwards: The original agreement would be
modified.
● Conclusion:
o Frank is in breach of contract.
o Emma can enforce the original agreement for full payment upon delivery.
Problem 4: Eviction by a Third Party Question
Liza purchases a plot of land from Greg for PHP 2,000,000. A few months later, a
third party claims ownership of the land and files a lawsuit against Liza. It turns out
that Greg did not have a valid title to the land and was not the rightful owner. The
court rules in favor of the third party, and Liza loses the land.
Answer
● Legal Issue: Warranty against eviction.
● Relevant Rule: Under the Civil Code, the vendor warrants that he has a right to sell
the thing at the time when ownership is to pass. Eviction occurs when the vendee is
deprived of the whole or part of the thing purchased, by virtue of a final judgment
based on a right prior to the sale.
● Condition: Greg did not have a valid title, and Liza lost the land due to a court ruling.
● Application:
o A third party successfully claimed ownership of the land.
o Liza was deprived of the land she purchased.
● Buyer's Right: Liza can demand from Greg the return of the price she paid, plus
damages.
● If Greg acted in bad faith: He may be liable for additional damages.
● Conclusion:
o Greg is liable for breach of warranty against eviction.
o Liza is entitled to compensation.
Problem 5: Rejection of Goods by the Vendee Question
Mark orders 500 customized T-shirts from Jake for a sports event, specifying that
they should be red with white print. Jake delivers 500 T-shirts, but they are blue
instead of red. Mark refuses to accept the delivery, saying the color does not meet
the specifications and demands either replacement with red T-shirts or a refund.
Answer
● Legal Issue: Non-conformity of delivered goods to the contract specifications.
● Relevant Rule: Under the Civil Code regarding sales, if the goods do not conform to
the specifications of the contract, the buyer has the right to reject the goods.
● Condition: The T-shirts delivered were blue instead of the specified red color.
● Application:
o Mark clearly specified the color as red.
o Jake delivered T-shirts of a different color.
● Buyer's Right: Mark has the right to reject the non-conforming goods and demand
either a replacement with conforming goods (red T-shirts) or a refund of the
purchase price.
● If Jake offers a price reduction: Mark is not obligated to accept this and still has
the right to reject.
● Conclusion:
o Mark is justified in rejecting the delivery.
o Jake must either provide conforming goods or issue a refund.
