RIGHTS OF THE BUYER AGAINST THE SELLER

RIGHTS OF THE BUYER AGAINST THE SELLER:

When the buyer is prejudiced due to the breach of contract by the seller,

the following provisions of the law shall govern:

Action for specific performance:

Art. 1598. Where the seller has broken a contract to deliver specific or

ascertained goods, a court may, on the application of the buyer, direct that the

contract shall be performed specifically, without giving the seller the option of

retaining the goods on payment of damages. The judgment or decree may be

unconditional, or upon such terms and conditions as to damages, payment of the

price and otherwise, as the court may deem just. (n)

* The buyer may, without giving the seller the option to retain the goods on

payment of damages, may ask for specific performance. However there

may be instances in a court decision the judgment maybe unconditional, or

upon such terms and conditions as to the payment of damages, payment of

the price and otherwise, the court may order whatever it may deem just.

Action for rescission or damages for 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)

* In case of recoupment, the buyer may accept the goods and set up the

seller’s breach to reduce or extinguish the price. He may accept or not the

goods and in both cases, maintain an action for damages for breach of

warranty. In rescission, he may do such if there is refusal to receive the

goods; or if goods have already been received, return them and recover

what was paid or any part of it concurrently with return or immediately

after it.

These remedies are alternative, without prejudice to paragraph 2 of Art.

1191 (that a party may still seek rescission after choosing specific

performance if the latter is impossible). Buyer cannot rescind if he is

knowledgeable of the breach and still accepted the goods without protest,

or fails within reasonable time to notify the seller of his election to rescind,

or fails to return or offer to return the goods in substantially as good

condition as it was. If seller refuses to accept an offer to return the goods

and the buyer elected rescission, buyer shall be deemed to hold the goods

as bailee for the seller subject to lien to secure payment of any portion of

the price which has been paid. There is loss, in case of breach of warranty of

quality, when there was a difference between value of the goods at the time

of delivery and value they would have had if they had answered to the

warranty.

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QUESTION: What are the remedies of the buyer in case of disturbance in

the property and in condominium projects?

ANSWER: Suspension of payment – If the buyer gets disturbed in the

possession and ownership or has a reasonable ground to fear for such

disturbance of the property, by a vindicatory action or a foreclosure of

mortgage, the buyer may suspend payment until the disturbance is removed

by the seller or seller gives security for the return of the price in proper case

unless otherwise stipulated.

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NOTE: In case of subdivision and condominium projects, Presidential

Decree 957 provides that when the owner or developer of the

condominium project fails to develop it according to the approved plan and

within the time limit for complying with the same, the buyer who pays in

installment may desist from paying further provided he gives due notice to

the seller. The law also allows the buyer to be reimbursed of all the amount

paid.

RIGHTS OF THE SELLER AGAINST THE BUYER:

When the seller is prejudiced due to the breach of contract by the buyer,

the following provisions of the law applies:

Action for payment of the price:

Art. 1595. Where, under a contract of sale, the ownership of the goods has

passed to the buyer and he wrongfully neglects or refuses to pay for the goods

according to the terms of the contract of sale, the seller may maintain an action

against him for the price of the goods.

*The seller may maintain an action for payment of the price when the

ownership of the goods sold already passed to the buyer and he fails to pay

in a wrongful manner attributable to him.

Where, under a contract of sale, the price is payable on a certain day,

irrespective of delivery or of transfer of title and the buyer wrongfully neglects or

refuses to pay such price, the seller may maintain an action for the price

although the ownership in the goods has not passed. But it shall be a defense to

such an action that the seller at any time before the judgment in such action has

manifested an inability to perform the contract of sale on his part or an intention

not to perform it.

*The seller may also demand payment when buyer likewise fails to pay and

neglects wrongfully the date certain for its payments, irrespective of

delivery and the transfer of title to the buyer.

Although the ownership in the goods has not passed, if they cannot readily be

resold for a reasonable price, and if the provisions of article 1596, fourth

paragraph, are not applicable, the seller may offer to deliver the goods to the

buyer, and, if the buyer refuses to receive them, may notify the buyer that the

goods are thereafter held by the seller as bailee for the buyer. Thereafter the

seller may treat the goods as the buyer’s and may maintain an action for the

price. (n)

*The seller may ask for payment of the price if the goods cannot be resold

for a reasonable price and the buyer refuses to accept them even before

the ownership to goods has passed.

Action for damages for non-acceptance of the goods:

Art. 1596. Where the buyer wrongfully neglects or refuses to accept and pay for

the goods, the seller may maintain an action against him for damages for

nonacceptance.

The measure of damages is the estimated loss directly and naturally resulting in

the ordinary course of events from the buyer’s breach of contract.

Where there is an available market for the goods in question, the measure of

damages is, in the absence of special circumstances showing proximate damage

of a different amount, the difference between the contract price and the market

or current price at the time or times when the goods ought to have been

accepted, or, if no time was fixed for acceptance, then at the time of the refusal

to accept.

If, while labor or expense of material amount is necessary on the part of the

seller to enable him to fulfill his obligations under the contract of sale, the buyer

repudiates the contract or notifies the seller to proceed no further therewith, the

buyer shall be liable to the seller for labor performed or expenses made before

receiving notice of the buyer’s repudiation or countermand. The profit the seller

would have made if the contract or the sale had been fully performed shall be

considered in awarding the damages. (n)

*The seller may demand for damages when the buyer fails to accept the

goods without lawful case and fails to pay the price agreed upon. He may

also demand damages when the ownership has not yet passed and the

seller cannot recover the price of the goods. He also has an action for

damages when the goods are not yet identified at the time of the contract.

The damages may be measured by the labor performed and expenses

incurred for the materials or the profit that would have been realized have

it not for the non-acceptance of the buyer.

Action for rescission:

Art. 1597. Where the goods have not been delivered to the buyer, and the buyer

has repudiated the contract of sale, or has manifested his inability to perform his

obligations thereunder, or has committed a breach thereof, the seller may totally

rescind the contract of sale by giving notice of his election so to do to the buyer.

(n)

*The remedy afforded by this provision is applicable in the sale of goods

which have not yet been delivered to the buyer and the buyer repudiated

the contract of sale, manifested his inability to perform his obligations or

there is mere breach of the provisions of the contract of sale. The notice of

rescission must be given by the seller. The breach must not be slight or

casual but must be substantial enough to defeat the very essence of the

contract.

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Anticipatory breach – The seller has reasonable grounds to believe that the

property sold will be lost so he may rescind the sale

Failure of the buyer to pay the purchase price-In the sale of immovable

property even though it may have been stipulated that rescission will only

take place upon failure to pay the price, he may still demand payment until

the judicial or extrajudicial rescission of the contract.

QUESTION: What are instances that give rise to an UNPAID SELLER?

A: The seller of goods is deemed to be an

unpaid seller

in the following

instances:

1. a) when the whole of the price has not been paid or tendered; and

2. b) when a bill of exchange or other negotiable instrument has been

received as conditional payment and the condition for which it was

received was broken by reason of the dishonor of the instrument

or the insolvency of the buyer.

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QUESTION: What are the rights or remedies of an UNPAID SELLER?

A: When a seller is an unpaid seller, whether or not ownership over the

goods has already been transferred to the buyer, said Unpaid Seller is still

entitled to the following rights or remedies: