Conditions and Warranties

Condition means an uncertain event or contingency on the happening of which the obligation of the
contract depends.
Effect of non-fulfillment of condition
(1) If the obligation of either party is subject to any condition and such condition is not fulfilled, such party
may either:
- Refuse to proceed with the contract
- Proceed with the contract, waiving the performance of the condition
(2) If the condition is in the nature of a promise that it should happen, the non-performance of such
condition may be treated by the other party as a breach of warranty.
Warranty is any representation made by the seller of the thing with respect to its character, quality, or
ownership, by which he induces the buyer to purchase the same relying on said representation. Warranty
is part of a contract of sale.
Express warranty is any affirmation of fact or any promise by the seller relating to the thing, the natural
tendency of which to induce the buyer to purchase the thing, and the buyer thus induced, does purchase
the same.

Effect of expression of opinion

- A mere expression of opinion, no matter how positively asserted, does not import a warranty unless the
seller is an expert and the opinion was relied upon by the buyer.
- The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in
themselves fraudulent.
- A mere expression of an opinion does not signify fraud unless made by an expert and the other party has
relied on formers special knowledge.
- Misrepresentation made in good faith is not fraudulent but may constitute error.
Implied Warranty is that which the law derives by implication or inference from the nature of the
transaction or the relative situation or circumstances of the parties irrespective of any intention of the seller
to create it.
- The seller guarantees that he has a right to sell the thing sold and to transfer ownership to the buyer who
shall not be disturbed in his legal and peaceful possession thereof.
- The seller guarantees that the thing sold is free from any hidden faults or defects or any charge or
encumbrance not declared or known to the buyer.
- The seller guarantees that the thing sold is reasonably fit for the known particular purpose or, where it
was bought by description that it is of merchantable quality.

Where implied warranty not applicable

As is and where is sale the vendor makes no warranty as to the quality or workable condition of the
goods, and that the vendee takes them in the conditions in which that they are found and from the place
where they are located.
Sale of secondhand articles Theres no implied warranty as to the condition, adaptation, fitness or
suitability for the purpose for which made, or the quality of an article sold as and for a secondhand article.
Sale by virtue of authority in fact or law The rule on implied warranty does not applied to sheriff,
auctioneer, mortgagee, pledgee or other person who sells. They are not liable to a person with a legal or
equitable interest in the thing sold. They do not warrant the title of the person who is supposed to own the
thing sold.
The rule of caveat emptor (buyer beware) applies to execution sales since the sheriff does not warrant the
title to real property sold by him as sheriff and it is not incumbent upon him to place the purchaser in
possession of such property.
Warranty in case of eviction
Eviction may be defined as the judicial process whereby 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 or an act imputable to
the vendor.
Essential Elements of the Warranty against Eviction
- The vendee is deprived in whole or in part of the thing purchased
- He is also deprived by virtue of final judgment
- The judgment is based on a right prior to the sale or an act imputable to the vendor
- The vendor was summoned in the suit for eviction at the instance of the vendee
- There is no waiver on the part of the vendee
Warranty against Eviction refers to trespass in law
Mere trespass in fact does not give rise to the application of the doctrine of eviction. The vendor is not
liable. The vendee has a direct action against the trespasser in the same way as the lessee has such right.
The disturbance referred to in the case of eviction is a disturbance in law which requires that a person go
to the courts of justice claiming the thing sold, or part thereof, and giving reasons. If final judgment is
rendered depriving the vendee of the thing sold, the doctrine of eviction becomes applicable.
Vendors liability waivable
Warranty is not an essential element of a contract of sale and may be increased, diminished, or
suppressed by agreement of the parties. Any stipulation exempting the vendor from the obligation to
answer for eviction shall be void if he acted in bad faith.

Vendee has no duty to appeal from judgment

The vendees right against the vendor is not lost because the vendee did not appeal.
The vendor, being notified of the action, could have very well followed up the case and made use all the
possible remedies. If he did not do that, he should suffer from his omission.
Effect of prescription
By prescription, one acquires ownership and other real rights through the lapse of time in the manner and
under the conditions prescribed by law. In the same way, rights and actions are lost by prescription.
Complete before sale The vendee may lose the thing purchased to a third person who has acquired title
thereto by prescription. When prescription has commenced to run against the vendor and was already
completed before the sale, the vendee can enforce the warranty against eviction.
Complete after sale Even if prescription has started before the sale has reached the limit prescribed by
law after the sale, the vendor is not liable for eviction. The reason is because the vendee could easily
interrupt the running of the prescriptive period by bringing the necessary action.
This is not applicable if the property sold is land registered under the Torrens system since land is not
subject to prescription.
Deprivation for non-payment of taxes
If the vendee is deprived of the ownership of the property because it is sold at public auction for nonpayment of taxes due from the vendor, the latter is liable for eviction and for an act imputable to him. It is
required that at the time of the sale, the non-payment of taxes was not known to the vendee.
Liability of Judgment Debtor
The judgment debtor is responsible for eviction and hidden defects even in judicial sales, unless otherwise
decreed in the judgment.
A person may not enrich himself at the expense of another. Thus, if the purchaser of real property sold on
execution be evicted therefrom because the judgment debtor had no right to the property sold, the
purchaser is entitled to recover the price paid with interest, form the judgment debtor.
Stipulation waiving warranty
Any stipulation exempting vendor from the obligation to answer for eviction shall be void if he acted in bad
faith.
Effect of vendors bad faith The vendors bad faith consists of his knowing beforehand at the time of sale
of the presence of the fact giving rise to eviction.
Effect of vendees bad faith It is a requisite that the vendee is not himself guilty of bad faith in the
execution of sale. If he knew the defect of title at the time of sale, he cannot claim that the vendor has
warranted his legal and peaceful possession of the property sold.

Kinds of waiver of eviction

Consciente the waiver is voluntarily made by the vendee without the knowledge and assumption of the
risks of eviction
Effect of waiver: The vendor shall only pay the value which the thing sold had at the time of eviction.
Intencionada the waiver is made by the vendee with knowledge of the risk of eviction and assumption of
its consequences.
Effect of waiver: The vendor is exempted from the obligation to answer for eviction provided he did not act
in bad faith.
Rights and liabilities in case eviction occurs
(when the warranty has been agreed upon or nothing has been stipulated on this point, in the absence of
waiver of eviction by the vendee)
The vendee shall have the right to demand of the vendor:
- The return of the value which the thing sold had at the time of the eviction, be it greater or less than the
sales price
- The income or fruits, if he (vendee) has been ordered to deliver them to the party who won the suit
against him.
- The costs of the suit which caused the eviction, and, in a proper case, those of the suit brought against
the vendor for the warranty (this excludes travelling expenses incurred by the vendee in defending himself
in the action)
- The expenses of the contract, if the vendee has paid them
- The damages and interests, and ornamental expenses, if the sale was made in bad faith. (if in good faith,
not entitled to recover damages)
Alternative rights of vendee in case of partial eviction
The vendee has the option to either enforce the vendors liability for eviction or demand rescission of the
contract.
This is applicable:
- When the vendee is deprived of a part of the thing sold if such part is of such importance to the whole
that he would not have bought the thing without said part.
- When two or more things are jointly sold whether for a lump sum or for a separate price for each, and the
vendee would not have purchased one without the other.
In case the vendee is totally evicted from the thing sold, he cannot avail of the remedy of rescission,
because this remedy contemplates that the one demanding it is able to return whatever he has received
under the contract.
Final judgment of eviction essential
Two essential elements for the enforcement of warranty in case of eviction
- Deprivation in whole or in part of the thing sold

- Existence of a final judgment

Formal summons to vendor essential
The object of the law is to give him an opportunity to show that the action interposed against the vendee is
unjust and to defend his title that he has transferred. In the absence of such summons, the vendor is not
bound to his warranty.
Vendor to be made co-defendant
The defendant vendee threatened with eviction who wishes to preserve his right of warranty, would call in
the vendor to defend the action which has been instituted against him to deprive him of the property
purchased.
Rights of vendee where immovable sold encumbered with non-apparent burden
Although the vendee is not deprived of the thing sold, totally or partially, the vendee may still rescind the
contract or ask for indemnity, if the thing sold should be encumbered with any non-apparent burden or
servitude not mentioned in the agreement, of such nature that the vendee would not have acquired it had
he been aware thereof.
Servitude (or easement) is an encumbrance imposed upon an immovable for the benefit of another
immovable belonging to a different owner.
The lack of knowledge on the part of the vendor is not a defense. The contract can still be invalidated on
the ground of mistake.
When rights of vendee cannot be exercised
- If the burden or servitude is apparent, that is made known and is continually kept in view by external
signs that reveal the use and enjoyment of the same
- If the non-apparent burden or servitude is registered
- If the vendee had knowledge of the encumbrance whether it is registered or not.
The vendor is relieved from liability unless there is an express warranty that the immovable is free from
any such burden or encumbrance. If the burden is known to the vendee, there is no warranty.
The action for rescission or damages must be brought within one year from the execution of the deed of
sale. If the period has already elapsed, the vendee may only bring an action for damages within one year
from the date of the discovery of the non-apparent burden or servitude.
Warranty against Hidden Defects of, or Encumbrances upon, the Thing Sold
Requisites for warranty against hidden defects
- The defect must be important or serious
* It renders the thing sold unfit for the use for which it is intended
* It diminishes its fitness for such use to such an extent that the vendee would not have acquired it
had been aware thereof or would have given a lower price for it.

- It must be hidden
*The vendors liability for warranty cannot be enforced although the defect is hidden if the vendee
is an expert who, by reason of his trade or profession, should have known it.
- It must exist at the time of sale
- The vendee must give notice of the defect to the vendor within a reasonable time
- The actions for rescission or reduction of the price must be brought within the proper period six months
from the delivery of the thing sold or within 40 days from the date of the delivery in case of animals.
- There must be no waiver of warranty on the part of the vendee.
Implied warranties of quality
- Where the buyer, expressly or impliedly, makes known to the seller the particular purpose for which the
goods are acquired, and it appears that the buyer relies on the sellers skill or judgment (whether he be the
grower or manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such
purpose.
- Where the goods are bought by description from a seller who deals in goods of that description (whether
he be the grower or manufacturer or not), there is an implied warranty that the goods shall be of
merchantable warranty.
Warranty of merchantability is a warranty that goods are reasonably fit for the general purpose for which
they are sold.
Warranty of fitness is a warranty that the goods are suitable for the special purpose of the buyer which
will not be satisfied by mere fitness for general purposes.
In the case of contract of sale of a specified article under its patent or other trade name, theres no
warranty as to its fitness for any particular purpose, unless theres a stipulation to the contrary.
Sale under a patent or trade name
The description must be the buyers choice, however, or the goods must not only be described and definite
but known, in order to preclude warranty of fitness.
Theres still an implied warranty of fitness for a particular purpose where the buyer relied upon the sellers
judgment rather than the patent or trade name.
An implied warranty or condition as to the quality or fitness of a particular purpose may be attached by the
usage of trade.
Merchantability of goods sold by sample
Where sample not merchantable As a general rule, all the buyers are entitled to, in case of a sale or
contract to sell by sample, is that the goods be like the sample. So he has no right to have the goods
merchantable if the sample he has inspected is not.
Where sample subject to latent defect Where the defect of the goods is of such a character that
inspection would not reveal it, so in the case of a sale by sample, if the sale is subject to a latent defect,
and the buyer reasonably relies on the sellers skill or judgment, the buyer is entitled not simply to goods
like the sample but to goods like those which the sample seems to represent, that is, merchantable goods
of that kind and character.

Effect of ignorance of vendor of hidden defects

The ignorance of the vendor does not relieve him from liability to the vendee for any hidden faults or
defects in the thing sold. This shall not apply if the contrary has been stipulated and the vendor was not
aware of the hidden faults or defects in the thing sold.
The doctrine of caveat venditor was adopted in accordance with which the vendor is liable to the vendee
for any hidden faults or defects in the thing sold, even though he was not aware thereof.
*Alternative remedies of the buyer to enforce warranty
- To withdraw from the contract (accion redhibitoria)
- Demand a proportionate reduction of the price (accion quanti minoris), with a right to damages in either
case.
Effect of loss of thing sold on account of hidden defects
Vendor aware of hidden defects he shall bear the loss because he acted in bad faith. The vendee has
right to recover:
- the price paid
- the expenses of the contract
- damages
Vendor not aware of hidden defects he shall be obliged only to return:
- the price
- the interest thereon
- expenses of the contract if paid by the vendee.
Effect of loss of defective thing sold
If the thing sold had no hidden defects; its lost through a fortuitous event or through the fault of the vendee
is borne by the vendee. The vendor is obliged to return the price paid, less the value of the thing at the
time of its loss in case where hidden defects existed. (The difference represents the damage suffered by
vendee.)
If the vendor acted in bad faith, he shall also be liable for damages.
Warranty in judicial sales
In a judicial sale, it is not really the sheriff who sells but the judgment debtor. Hence, the provisions
regarding warranty are also applicable to judicial sales. However, since he is forced to sell, there can be no
liability for damages.
Limitation of action
The action for rescission of the contract or reduction of the purchase price prescribes 6 months from the
date of delivery of the thing sold. This means that the action shall be barred unless brought within the said
period.

Sale of two or more animals together

If two or more animals are sold together, whether for a lump sum or for a separate price for each of them,
the redhibitory defect of one shall only give rise to its redhibition, and not that of the others; unless it
should appear that the vendee would not have purchased the sound animals without the defective one.
Provisions to sale of animals shall in like manner applicable to the sale of other things, where only one or
more but not all things have hidden defects.
There is no warranty against hidden defects of animals sold at fairs or at public auctions (judicial or extrajudicial), or of livestock sold as condemned. (defects must have been clearly known to the buyer)
When sale of animals void
Animals suffering from contagious diseases and those found unfit for the use or service stated cannot be
the object of commerce. The sale is void as against public interest and not merely subject to rescission or
reduction of price.
What constitutes redhibitory defect of animals
Redhibitory vice or defect is a defect in the article sold against which defect the seller is bound to warrant.
To be considered redhibitory, the defect must not only be hidden. It must be of such nature that expert
knowledge is not sufficient to discover it. However, if the veterinarian failed to discover it through his
ignorance, or failed to disclose it to the vendee through bad faith, he shall be liable for damages.
The redhibitory action shall be barred unless brought within forty days form the date of their delivery to the
vendee.
What should be considered redhibitory defects in the sale of animals are only those determined by law or
local customs. If the defects are patent, theres no warranty against such defects although there exists a
redhibitory vice.
Responsibility of vendor where animal dies
If the animal sold is suffering from any disease at the time of sale, the vendor is liable should it die of said
disease within 3 days from the date of sale not delivery.
If the loss is caused by a fortuitous event or by the fault of the vendee, and the animal has vices, * should
be applied.
Liability of buyer in case sale of animal rescinded
If the buyer avails himself of the remedies granted by article 1567*, the vendee must return the animal in
the condition in which it was sold and delivered. In case of injury due to his negligence, the vendee shall
be responsible but this would be no obstacle to the rescission of the contract due to the redhibitory defect
or fault of the animal.
Alternative remedies of vendee in sale of animals

The vendee has the same right to bring at his option, either a redhibitory action or a proportionate
reduction of price. The action must be brought within 40 days from the date of delivery of the animals to
the vendee.
The form of sale of large cattle shall be governed by special laws. The sale must appear in public
document.

Obligations of the Vendee

Principal Obligations of the Vendee
* To accept delivery
*To pay the price of the thing sold
* To bear the expenses for the execution and registration of the sale and putting the goods in a deliverable
state, if such is the stipulation
- S is not required to deliver the thing sold until the price is paid nor B to pay the price before the thing is
delivered in the absence of an agreement to the contrary
- If stipulated, B is bound to accept delivery and pay the price at the time and place designated.
- If theres no stipulation, B is bound to pay at the time and place of delivery.
-If theres no stipulation, the place of delivery shall be made wherever the thing might be at the moment the
contract was perfected.
-If only for the delivery of the thing sold has been fixed in the contract, B is required to pay even before the
thing is delivered to him ( if sale is on credit, B is entitled to its delivery though the price be not first paid.)
General rule:
Seller: To deliver all the goods at the same time
Buyer: Has no right to pay in installments
Exception:
By agreement, the goods may be deliverable by instalments or the price payable in instalments.
-If S makes defective deliveries or the buyer wrongfully neglects or refuses to accept delivery or fails to pay
any instalment, the injured party may sue for damages for the breach of the entire contract if the breach is
so material as to affect the contract as a whole.
- Where the breach is severable, it will merely give rise to a claim for compensation for the particular
breach but not a right to treat the whole contract as broken.
Buyers right to examine the goods
Acceptance is the assent to become owner of the specific goods when delivery of them is offered to the
buyer.
The ownership of the goods shall be transferred only upon actual delivery subject to a reasonable
opportunity of examining them.
Even in C.O.D. sale, the buyer is allowed to examine the goods before payment should it have been so
agreed upon or if it is permitted by usage.
Right of examination not absolute

B does not have an absolute right of examination since S is bound to afford the buyer a reasonable
opportunity of examining the goods only on request
If S refused to allow for inspection, B may rescind the contract and recover the price or any part of it that
he has paid.
B may waive the right to examine before payment. The waiver need not be in express terms.
An illustration of a bargain inconsistent with examination of the goods before payment is a contract by
which goods are to be sent to the buyer C.O.D. (collect on delivery). But the buyer is still entitled to
examine the goods after delivery and payment of the price.
Modes of manifesting acceptance
Express acceptance takes place when the buyer, after delivery of the goods, intimates to the seller,
verbally or in writing, that he has accepted them.
Implied acceptance takes place:
- When the buyer, after delivery of goods, does any act inconsistent with the sellers ownership (sell the
goods, make alteration, etc.)
- When the buyer, after the lapse of a reasonable time, retains the goods without intimating his rejection.
Delivery and acceptance, separate acts
Acceptance, not a condition to complete delivery
Delivery is an act of the vendor. Acceptance is an obligation of the vendee.
S should deliver although theres no acceptance yet by B.
Acceptance and actual receipt do not imply the other. (there may be acceptance without any actual receipt,
vice versa)
Acceptance not bar to action for damages
Unless otherwise agreed, acceptance of the goods by the buyer does not discharge the seller for liability in
damages or other legal remedy (like rescission) for breach of any promise or warranty in the contract of
sale.
Buyer is required to give notice to the seller of any breach within a reasonable time from the moment when
he ought to have known it.
Purpose: To protect the seller against any belated claims which prevent him from making prompt
investigation to determine the cause and extent of his liability and to enable him to take other immediate
steps that his interest may require.
Where buyers refusal to accept justified
-If the goods have been sent to the buyer and he rightfully refuses to accept them, he is in the position of a
bailee who is in possession of the goods thrust upon him without his assent. He has the obligation to take
reasonable care of the goods, but nothing more can be demanded of him. He is under no obligation to

return the goods to the seller. It is sufficient if the buyer notifies the seller that he refuses to accept the
goods.
-Seller has a duty of taking delivery of goods after notice that the goods have not and will not be accepted.
-While the goods remain in buyers possession, they are at the sellers risk. But the buyer is not deemed
and is not liable as a depositary, unless he voluntarily constitutes himself as such. (he shall be liable as a
depositary)
- If the seller fails to take delivery of goods, the buyer may resell the goods. The provisions governing
resale by the seller when the buyer is in default will generally apply.
Effect of buyers wrongful refusal to accept
General Rule: The delivery of the goods to a carrier is deemed to be a delivery of the goods to the buyer,
even if the buyer refuses to accept the goods in case his refusal is without just cause. The title passes to
the buyer and, therefore, the risk of loss is borne by him from the moment they are placed at his disposal.
The vendee shall owe interest for the period between the delivery of the thing and payment of the price, in
the following three cases:
- should it have been so stipulated
- should the thing sold and delivered produce fruits or income
-should he be in default, from the time of judicial or extrajudicial demand for the payment of the price
Liability of vendee for interest where payment made after delivery
Interest is expressly stipulated the rate stipulated governs. The stipulation of the parties to pay interest
may be oral. No interest shall be due unless it has been expressly stipulated in writing is applicable only
to contracts of loan.
If the parties failed to fix the rate, then the legal rate (12%) of interest shall be due.
Fruits or income received by vendee from thing sold two conditions must exist: (a) that the thing sold has
been delivered, and (b) that it produces fruits or income. If the vendee would not be bound to pay interest
for the use of the money, which he should have paid, the principal of bilaterality which characterizes a
contract of sale would no longer exist.
Vendee guilty of default If the vendee incurs in delay in the payment of the agreed price, the interest is
due from the time of judicial or extrajudicial demand by the vendor for the payment of the price. This
demand is the starting point for the commencement of default or delay on the part of the vendee. Demand
is necessary.
When vendee can suspend payment of price
- If he is disturbed in the possession or ownership of the thing bought
- If he has a well-grounded fear that his possession or ownership would be disturbed by a vindicatory
action or foreclosure of mortgage

The vendee has no cause of action for rescission before final judgment, the reason being that otherwise,
the vendor might become the victim of collusion (secret agreement or cooperation for a fraudulent
purpose) between the vendee and the third person. But the remedy of the buyer is rescission, not
suspension of payment, where the disturbance is caused by the existence of a non-apparent servitude.

When vendee cannot suspend payment of price

- If the vendor gives security for the return of the price in a proper case
- If it has been stipulated that notwithstanding any such contingency the vendee must make payment
- If the vendor has caused the disturbance or danger to cease
- If the disturbance is a mere act of trespass
- If the vendee has fully paid the price
There is a mere act of trespass when the third person claims no right whatever. The vendor is not liable
therefore. The vendee has a direct action against the intruder.
When vendor may rescind sale of immovable property
This refers only to real property where the vendor has good reasons to fear the loss of the property and its
price. It contemplates a situation where there has been a delivery of the immovable property but the
vendee has not yet paid the price. This is applicable to both cash sales and sales in instalments, as it does
not distinguish between and the other.
Where automatic rescission of sale of immovable property stipulated
As a general rule, the vendor may sue for rescission of the contract should the vendee fail to pay the
agreed price. The sale of real property, however, is subject to the stipulations agreed upon by the parties.
Before demand for rescission of the contract (not payment of price) has been made by the vendor, either
judicially or by a notarial act, the vendee may still pay the price even after the expiration of the stipulated
period for payment and notwithstanding a stipulation that failure to pay the price on the stipulated date ipso
facto resolves the sale.
Theres no provision in our laws authorizing the automatic rescission of contracts for non-payment of the
purchase price.
Right to rescind not absolute
The right to rescind is not absolute and the court may extend the period for payment. Once a demand for
rescission by suit or notarial act is made however, the court may not grant the vendee a new period.
Article 1592 does not apply:
- To sales on instalments of RP in which the parties have laid down the procedure to be followed in the
event the vendee failed to fulfil his obligation
- To a mere promise to sell (executory contract to sell) where the title remains with the vendor until full
payment.

The vendee in such cases may no longer pay the price after the expiration of the time agreed upon
although no demand has yet been made upon him by suit or notarial act.
Where automatic rescission of sale of movable property stipulated
In the sale of real property, the vendor must make a demand for rescission before he can have the right to
rescind the contract.
In the case of personal property (which has not yet been delivered to the vendee), the vendor can rescind
the contract, as a matter of right, if the vendee, without any valid cause, does not: (1) accept delivery or (2)
pay the price unless a credit period for its payment has been stipulated.
The mere failure of the vendee to comply with the terms of the contract however does not rescind the
same. It is necessary that the vendor should take some affirmative indicating his intention to rescind.
Reason: Personal properties are not capable of maintaining a stable price in the market. Any delay in their
disposal might cause the vendor a great prejudice. While, real property has more or less stable price in the
market and the delay that might result from the requirement imposed on the vendor to demand rescission
before being entitled to rescind the contract will not anyway prove detrimental to the interest of the vendor.

Actions for Breach of Contract of Sale of Goods

Goods include all chattels personal but not things in action or money of legal tender in the Philippines. The
term includes growing fruits and crops.
Provisions concerning the sale of immovable property have no application to the sale of goods.
Actions available
- Action by the seller for payment of the price
- Action by the seller for the damages for non-acceptance of the goods
- Action by the seller for rescission of the contract
- Action by the buyer for specific performance
- Action by the buyer for rescission or damages for breach of warranty
Sellers right of action for the price
3 cases when an action for the price of goods under a contract of sale can be maintained by the seller:
- When the ownership of the goods has passed to the buyer and he wrongfully neglects or refuses to pay
for the price.
General Rule: seller cannot maintain an action for the price if the ownership in the goods has not passed
to the buyer.
Exception:
- When the price is payable on a certain day and the buyer wrongfully neglects or refuses to pay such
price, irrespective of delivery or of transfer of title.

- When the goods cannot readily be resold for a reasonable price and the buyer wrongfully refuses to
th
accept them even before the ownership in the goods has passed, if the provisions of Article 1596, 4
paragraph are not applicable.
Sellers right of action for damages
- If the buyer without lawful cause or wrongfully neglects or refuses to accept and pay for the goods he
agreed to buy, the seller may maintain an action against him for damages for nonacceptance.
- In an executory contract, where the ownership in the goods has not passed, and the seller cannot
maintain an action to the price, the sellers remedy will also be an action for damages.
- If the goods are not yet identified at the time of the contract or subsequently, the sellers right is
necessarily confined to an action for damages.
Measure of damages for nonacceptance of goods
Difference between contract price and market price The measure of damage is the estimated loss
directly and naturally resulting from the buyers breach of contract. This follows the general rule that
damages comprehend not only the actual loss suffered but also unrealized profit.
Full amount of damage If theres no available market in which the goods can be sold at the time, the
seller is entitled to the full amount of damage which he has really sustained by a breach of contract.
Proximate damages allows seller under special circumstances (acted in bad faith, etc.) proximate
damages of a greater amount than the difference between the contract price and market price when such
damages may be reasonably attributed to the non-performance of the obligation.
-If the market value exceeds the contract price, S has suffered no damage and, though entitled to
judgment, can recover only nominal damages.
Measure of damages for repudiation or countermand
- the labor performed and expenses incurred for materials before receiving notice of the buyers
repudiation
- profit he would have realized if the sale had been fully performed
Sellers right of rescission before delivery
- When the buyer has repudiated the contract of sale
- When the buyer has manifested his inability to perform his obligations thereunder
- When the buyer has committed a breach of contract of sale
The right granted to the seller follows the general rule in reciprocal obligations that a party to a contract
injured by nonfulfillment, may rescind the contract and at the same time ask for damages. It should be
noted that the seller is required to give notice of his election to seek rescission.
If the goods have been delivered, the seller may recover the value of what he has given.
Buyers right of specific performance

This article applies only where the goods to be delivered are specific or ascertained.
In reciprocal obligations, it is the injured party who has a right to choose between fulfilment and rescission
with the payment of damages in either case. The right of the injured party to demand specific performance
cannot be defeated by the guilty partys choice to rescind the contract.
The buyer is granted the remedy of specific performance in case the seller should violate his obligation to
make delivery. The seller cannot retain the goods on payment of damages because damages are imposed
by law to insure fulfilment of contract and not to substitute for it.

Remedies of buyer for breach of warranty by seller

- Accept the goods and set up the sellers breach to reduce or extinguish the price
- Accept the goods and maintain an action for damages for the breach of the warranty
- Refuse to accept the goods and maintain an action for damages for the breach of the warranty
- Rescind the contract of sale by returning or offering the return of the goods and recover the price.
Remedies are (1) recoupment (2) action or counterclaim for damages (3) rescission
General rule:
Remedies are alternative. Once a remedy has been granted to the buyer, no other remedy can be
exercised.
Exception:
When after the buyer has chosen fulfilment, it should become impossible, in which case he may also sue
for rescission.
- In case of breach of warranty of quality, such loss, in the absence of a special circumstances showing
proximate damage of a greater amount, is the difference between the value of goods at the time of delivery
to the buyer and the value they would have had if they had answered to the warranty.
When rescission by the buyer not allowed
The basis of the remedy is that the buyer has not received what he bargained for, It cannot be availed of,
however, in the following cases:
- If the buyer accepted the goods knowing of the breach of warranty without protest
- If he fails to notify the seller within a reasonable time of his election to rescind
- If he fails to return or offer to return the goods in substantially as good condition as they were in at the
time of the transfer of ownership to him. But where the injury to the goods was caused by the very defect
against which the seller warranted, the buyer may still rescind the sale.
Rights and obligations of buyer in case of rescission
- In case of rescission, the buyer shall cease to be liable for the price, his only obligation being to return the
goods
- If he has paid the price or any part thereof, he may recover it from the seller

- He has also the right to hold the goods as bailee for the seller should the latter refuse the return of the
goods.
- He has the right to have a lien on the goods for any portion of the price already paid which lien he may
enforce as if he was an unpaid seller.

Extinguishment of Sale
Causes for extinguishment of sale
COMMON or those causes which are also the means of extinguishing all other contracts like payment, loss
of the thing, condonation, etc.
SPECIAL or those causes which are recognized by the law of sales
EXTRA-SPECIAL or those causes which are given special discussion by the Civil Code and these are
conventional redemption and legal redemption.
Conventional Redemption
It is the right which the vendor reserves to himself, to reacquire the property sold provided he reimburses
the vendee of the price, the expenses of the contract, any other legitimate payments made therefor and
the necessary and useful expenses made on the thing sold and fulfils other stipulations which may heva
been agreed upon.
Both real and personal property may be the subject matter of sales with right to repurchase although there
are certain articles which are applicable only to immovables.
Equitable Mortgage is one which, although it lacks the proper formalities of a mortgage, shows the
intention of the parties to make the property subject of the contract as a security for the fulfilment of an
obligation.
- When the price of a sale with right to repurchase is unusually inadequate
- When the vendor remains in possession as lessee or otherwise
- When upon or after the expiration of the right to repurchase another instrument extending the period of
redemption or granting a new period is executed
- When the purchaser retains for himself a part of the purchase price
- When the vendor binds himself to pay the taxes on the thing sold
- In any other case where it may be fairly inferred that the real intention of the parties is that the transaction
shall secure the payment of a debt or the performance of any other obligation