Short answer. A condition is an event the deal depends on: if it does not happen, the affected party may simply refuse to proceed. A warranty is a promise about the thing sold: if it is broken, the sale stands but the injured party claims damages. The same fact can be both.
What the law says
Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waive performance of the condition.
Civil Code, Article 1545 — Conditions and Warranties. Read the full provision →
A condition controls whether you must perform at all
A condition is an uncertain event attached to a party's obligation. Where that condition is not performed, the Code gives the affected party a choice: refuse to proceed with the contract, or waive performance of the condition and go ahead anyway. The choice belongs to the party whose obligation was conditioned, not to the one who failed. So a buyer whose obligation to pay was made subject to the seller securing a clearance may walk away when the clearance never comes — or may decide the clearance no longer matters and close the sale regardless. What he cannot do is sit silent, take the benefit, and later pretend the deal never bound him.
A warranty is a promise you answer for in damages
A warranty does not suspend anyone's obligation. It is an assurance about the subject of the sale — its title, its quality, its description, its fitness — and it is collateral to the main purpose of the contract. Breaking it does not undo the sale; it exposes the promisor to liability. That distinction matters commercially. A buyer who treats a broken promise as a condition and refuses to pay is in breach himself if the promise was only a warranty. A buyer who treats a failed condition as a mere warranty, performs, and pays, has given up the stronger remedy of refusing to proceed at all.
When one becomes the other
The article recognises that the categories overlap. If the other party has promised that the condition should happen or be performed, the first party may also treat the nonperformance of the condition as a breach of warranty. So where the seller did not merely make the sale contingent on an event but undertook that the event would occur, the buyer gets both routes: he may back out, or he may proceed and sue on the broken undertaking. Reading the document closely is therefore essential. Language such as "subject to" points to a condition; language such as "the seller represents and undertakes" points to a promise that carries warranty consequences.
Delivery as a condition of the buyer's duty to pay
The last part of the article protects a buyer who has not yet become owner. Where ownership in the thing has not passed, the buyer may treat the seller's obligation to deliver the thing as described and as warranted expressly or by implication as a condition of his own promise to accept and pay. In plain terms: until ownership passes, you are not obliged to accept and pay for goods that are not what the contract said they would be. Note the limit — this route depends on ownership not having passed. Once it has, the buyer is generally left to his warranty remedies rather than outright refusal, and those remedies carry their own requirements and time limits. Before refusing delivery on a significant purchase, book a consultation with the contract in hand.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Development Bank of the Philippines vs. Ben P. medrano and Privatization Management Office, G.R. No. 167004, February 7, 2011 — read the decision on LawPhil →
- Vicente Lim, et al. vs. Court of Appeals, et al, G.R. No. 118347, October 24, 1996 — read the decision on LawPhil →
- Rolando T. Catungal, et al. vs. Angel S. Rodriguez, G.R. No. 146839, March 23, 2011 — read the decision on LawPhil →
- Power Commercial & Industrial Corp. vs. Court of Appeals, et al, G.R. No. 119745, June 20, 1997 — read the decision on LawPhil →