Dear PAO,

I directly purchased a condominium unit from a developer that was advertised as having a floor area of 100 square meters (sqm.). When I tried to place my kitchen set, it didn’t fit, as I learned the floor area was only 80 sqm. When I confronted the developer, he stated that the sale was made on an “as-is, where-is” basis and that the contract to sell stipulated that he was absolved from liability for hidden defects. According to the developer, I had already waived any errors in the unit’s boundaries or description. Is he correct?              

 -Betsy           

Dear Betsy,  

The Supreme Court, in the case of Joseph Harry Walter Poole-Blunden vs. Union Bank of the Philippines (G.R. No. 205838, November 29, 2017, penned by Senior Associate Justice Marvic M.V.F. Leonen), pronounced that “[a]s-is-where-is stipulations can only encompass physical features that are readily perceptible by an ordinary person possessing no specialized skills.” In the said case, the condominium unit sold to Poole-Blunden was inadequate with respect to its advertised area. When he confronted Union Bank, the latter explained that the unit’s advertised floor area included the common areas. Citing an earlier case, the Supreme Court interpreted such stipulation as pertaining to the “physical condition” of the thing sold and “not to [its] legal situation.”  

In the same case, the Supreme Court ruled that reliance on an “as-is, where-is” agreement with a stipulation that absolves a seller from liability for hidden defects is unfounded for two reasons. First, a seller can only use such a stipulation to absolve liability for hidden defects if they have no knowledge of those defects. In the Poole-Blunden case, respondent knew the discrepancy in the unit size. Second, an “as-is, where-is” stipulation only applies to readily visible physical states; it doesn’t cover matters requiring specialized scrutiny or technical competence.

Further, a seller is generally responsible for warranty against hidden defects of the thing sold. As stated in Article 1561 of the New Civil Code:  

“ARTICLE 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.”  

Based on your narration, the seller is a developer who should have known the actual floor area of the condominium unit being sold. Moreover, the exact floor area of a unit is not a physical feature that is readily visible to an ordinary person without specialized skills. As such, the developer is bound to warrant the unit’s floor area and cannot simply invoke the “as-is, where-is” clause in your contract absent any proof that you were aware or should have known of such discrepancy by reason of your trade or profession.

We hope that we were able to answer your queries. This advice was solely based on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]