Notes on Sales
ACTIONS FOR BREACH OF CONTRACT OF This is understood to be without prejudice to the
SALE OF GOODS (1594) rights of third persons who have acquired the thing,
in accordance with Articles 1385 and 1388 and the
ART. 1594. Actions for breach of the contract of Mortgage Law.
sale of goods shall be governed particularly by the
provisions of this Chapter, and as to matters not Rescission
specifically provided for herein, by other applicable It refers to the cancellation of the contract or
provisions of this Title. reciprocal obligation in case of breach on the
part of one, which breach is violative of the
Provisions governing breach of contract of sale reciprocity between the parties. This is properly
of goods called the resolution.
Actions for breach of the contract of sale of
goods are governed primarily by the provisions Applicability
of Chapter 6 (Arts. 1595-1599.) and Reciprocal obligations, since it is implied
secondarily, by the other provisions of the Title therein.
on sales so far as said provisions can apply.
However, provisions concerning the sale of Characteristics of the right to rescind
immovable property have no application to the a. Can be demanded only if plaintiff is ready,
sale of goods. willing and able to comply with his own
obligation and defendant is not;
Actions available b. Not absolute;
(1) Action by the seller for payment of the price c. Needs judicial approval in the absence of a
(Art. 1595.); stipulation allowing for extra-judicial rescission;
(2) Action by the seller for damages for non- d. In cases of non-reciprocal obligations;
acceptance of the goods (Art. 1596.); e. Subject to judicial review if availed of
(3) Action by the seller for rescission of the contract extrajudicially;
for breach thereof (Art. 1597.); f. May be waived expressly or impliedly; and
(4) Action by the buyer for specific performance g. Implied to exist in reciprocal obligations
(Art. 1598.); and therefore need not be expressly stipulated upon.
(5) Action by the buyer for rescission or damages
for breach of warranty. (Art. 1599.) Fulfillment or rescission of the obligation
GR: The injured party can only choose either
1. Remedies of the Seller and the Buyer under fulfillment or rescission of the obligation, and not
Art. 1191 both.
XPN: If fulfillment has become impossible, Art.
Art. 1191. The power to rescind obligations is 1191 allows the injured party to seek rescission
implied in reciprocal ones, in case one of the even after he has chosen fulfillment.
obligors should not comply with what is incumbent
upon him. 2. Remedies when the sale involves movable
property (1595-1599)
The injured party may choose between the
fulfillment and the rescission of the obligation, with ART. 1595. Where, under a contract of sale, the
the payment of damages in either case. He may also ownership of the goods has passed to the buyer,
seek rescission, even after he has chosen and he wrongfully neglects or refuses to pay for the
fulfillment, if the latter should become impossible. goods according to the terms of the contract of sale,
the seller may maintain an action against him for
The court shall decree the rescission claimed, the price of the goods.
unless there be just cause authorizing the fixing of a
period. Where, under a contract of sale, the price is
payable on a certain day, irrespective of delivery or
Notes on Sales
of transfer of title, and the buyer wrongfully Recovery of price payable on a certain day
neglects or refuses to pay such price, the seller may GR: The act which is to be performed first is
maintain an action for the price, although the absolutely due on that day, while the performance
ownership in the goods has not passed. But it shall which is to take place on a later day is not due.
be a defense to such an action that the seller at any XPN: As a condition precedent, the prior
time before the judgment in such action has performance has been rendered.
manifested an inability to perform the contract of
sale on his part or an intention not to perform it. (1) Buyer given credit for the price. — It is
common for sellers to give credit for the price. But
Although the ownership in the goods has not it is not common for buyers to give credit for the
passed, if they cannot readily be resold for a goods.
reasonable price, and if the provisions of Article (2) Defense to action for the price. — Said
1596, fourth paragraph, are not applicable, the paragraph 2 excuses, however, the buyer from his
seller may offer to deliver the goods to the buyer, obligation to pay the price when, before the time of
and, if the buyer refuses to receive them, may notify payment, the seller has manifested an inability to
the buyer that the goods are thereafter held by the perform the contract of sale or an intention not to
seller as bailee for the buyer. Thereafter the seller perform it.
may treat the goods as the buyer’s and may
maintain an action for the price. ART. 1596. Where the buyer wrongfully neglects
or refuses to accept and pay for the goods, the
Seller’s right of action for the price seller may maintain an action against him for
1. When the ownership of the goods has passed to damages for non-acceptance.
the buyer and he wrongfully neglects or refuses to
pay for the price The measure of damages is the estimated loss
2. When the price is payable on a certain day and directly and naturally resulting in the ordinary
the buyer wrongfully neglects or refuses to pay such course of events, from the buyer’s breach of
price, irrespective of delivery or of transfer of the contract.
title.
3. When the goods cannot readily be resold for a Where there is an available market for the goods in
reasonable price and the buyer wrongfully refuses question, the measure of damages is, in the absence
to accept them even before the ownership in the of special circumstances showing proximate
goods has passed, if the provisions of Article 1596, damage of a different amount, the difference
4th paragraph are not applicable. between the contract price and the market or
current price at the time or times when the goods
Where ownership in goods has not passed ought to have been accepted, or, if no time was
The seller cannot maintain an action for the fixed for acceptance, then at time of the refusal to
price if the ownership in the goods has not accept.
passed to the buyer---
(1) Unless the price is payable on a certain day; or If, while labor or expense of material amount is
(2) Unless the goods cannot readily be resold for a necessary on the part of the seller to enable him to
certain price and the provisions of Article 1596, 4th fulfill his obligations under the contract of sale, the
paragraph are not applicable. buyer repudiates the contract or notifies the seller
to proceed no further therewith, the buyer shall be
NOTE: Under Article 1588, the title to the goods liable to the seller for labor performed or expenses
passes to the buyer from the moment they are made before receiving notice of the buyer’s
placed at his disposal when his refusal to accept repudiation or countermand. The profit the seller
them is without just cause. The seller may, would have made if the contract or the sale had
therefore, bring an action for the price upon been fully performed shall be considered in
wrongful refusal of the buyer to accept. awarding the damages.
Notes on Sales
Seller’s right of action for damages seller cannot unilaterally and extrajudicially rescind
1. If the buyer without lawful cause neglects or the contract.
refuses to accept and pay for the goods he agreed to
buy, the seller may maintain an action against him ART. 1598. Where the seller has broken a contract
for damages for non-acceptance. to deliver specific or ascertained goods, a court
2. In an executory contract, where the ownership in may, on the application of the buyer, direct that the
the goods has not passed, and the seller cannot contract shall be performed specifically, without
maintain an action to recover the price, the seller’s giving the seller the option of retaining the goods
remedy will be also an action for damages. on payment of damages. The judgment or decree
3. If the goods are not yet identified at the time of may be unconditional, or upon such terms and
the contract or subsequently, the seller’s right is conditions as to damages, payment of the price and
necessarily confined to an action for damages. otherwise, as the court may deem just.
ART. 1597. Where the goods have not been Buyer’s right to specific performance
delivered to the buyer, and the buyer has The article applies only where the goods to be
repudiated the contract of sale, or has manifested delivered are specific or ascertained.
his inability to perform his obligations thereunder, In reciprocal obligation the injured party who
or has committed a breach thereof, the seller may has a right to choose between fulfillment and
totally rescind the contract of sale by giving notice rescission, with the payment of damages in
of his election so to do to the buyer.
either case. The right of the injured party to
Seller’s right of rescission before delivery demand specific performance cannot be
1. When the buyer has repudiated the contract of defeated by the guilty party’s choice to rescind
sale; the contract.
2. When the buyer has manifested his inability to
perform his obligations thereunder; and ARTICLE 1599
3. When the buyer has committed a breach of the Remedies of buyer for breach of warranty by
contract of sale. seller
1. Accept the goods and set up the seller’s breach to
NOTE: The seller is required to give notice of his reduce or extinguish the price;
election to seek rescission. The way in which
2. Accept the goods and maintain an action for
election must be manifested may vary in different
cases. Formal notice is certainly not a requisite, and damages for the breach of the warranty;
bringing an action promptly for restitution is 3. Refuse to accept the goods and maintain an
sufficient. action for damages for the breach of the warranty;
and
The right of the seller to rescind the sale for non- 4. Rescind the contract of sale by returning or
performance on the part of the buyer is not offering the return of the goods, and recover the
absolute
price or any part thereof which has been paid.
1. The law subordinates it to the rights of third
persons who are legally in the possession of the
object of the contract and to whom bad faith is not The remedies open to the buyer under the article
imputable. may be grouped into three, to wit:
2. The question of whether a breach of a contract is (a) Recoupment;
substantial depends upon the attendant (b) Action or counterclaim for damages; and
circumstances.
(c) Rescission.
3. Except as provided in Article 1597, and in the
absence of express stipulation authorizing the seller The theory of recoupment is that the seller’s
to extra judicially rescind a contract of sale, the damages are cut down to an amount which will
compensate him for the value of what he has given.
Notes on Sales
When rescission by the buyer not allowed must be made payable to the order of respondent
1. If the buyer accepted the goods knowing of the corporation. Thereupon, petitioner Wee Sion Ben
breach of warranty without protest; issued Metro Bank Pagadian City Branch Check
No. PYD 1090770320 dated September 1, 1995 to
2. If he fails to notify the seller within a reasonable
replace the "pay to cash" check. However, when
time of his election to rescind; and presented for payment, respondent was informed by
3. If he fails to return or offer to return the goods in the drawee bank that petitioner Wee Sion Ben
substantially as good condition as they were in at directed it to "stop payment" or not to pay the new
the time of the transfer of ownership to him. But check.
where the injury to the goods was caused by the
very defect against which the seller warranted, the Consequently, respondent made oral and written
demands upon petitioners to pay P104,277.80, but
buyer may still rescind the sale.
to no avail.
Rights and obligations of buyer in case of ISSUE:
rescission Whether petitioner Wee Sion Ben's issuance of the
1. In case of rescission, the buyer shall cease to be check payable to cash delivered and received by
liable for the price, his only obligation being to Sorolla constitutes a valid payment of petitioners'
return the goods; obligation to respondent.
2. If he has paid the price or any part thereof, he
HELD:
may recover it from the seller No. Petitioners' contention lacks merit. Article
3. He has the right to hold the goods as bailee for 1595(1) of the Civil Code provides:
the seller should the latter refuse the return of the
goods; and Where, under a contract of sale, the ownership of
4. He has the right to have a lien on the goods for the goods has passed to the buyer and he
any portion of the price already paid which lien he wrongfully neglects or refuses to pay for the goods
according to the terms of the contract of sale, the
may enforce as if he were an unpaid seller. seller may maintain an action against him for the
price of the goods.
Mr. Wee Sion Ben, President of Best
Emporium, and Best Emporium, Pagadian We have repeatedly held that contracts of adhesion
City vs. SEMEXCO /ZEST-O Marketing are as binding as ordinary contracts. Those who
Corporation, et.al. GR 153898, October 18, adhere to the contract are in reality free to reject it
entirely and if they adhere, they give their consent.
2007, 536 SCRA 615
Clearly then, petitioners' issuance of the "pay to
FACTS: cash" check is a clear violation on their part of the
In payment for the fruit juices, petitioners issued term or condition stipulated in the Charge Invoice.
Metro Bank Pagadian City Branch Check No. PYD Petitioners should have been wary in issuing such
1090770187 dated August 15, 1995 in the sum of check. Records show that it was Sorolla himself
P104,277.80 payable to cash. Maloney Sorolla, who requested them to issue the check payable to
respondent corporation's sales representative, cash. This should have warned them of the possible
received the check. Sorolla encashed the check but risk that the check may not reach respondent.
did not remit the money to herein respondent.
Upon learning of the delivery of the check to
Sorolla, Nelson Azarcon, district sales manager of
respondent corporation, inquired from petitioner
Wee Sion Ben why he issued a "pay to cash" check
when the Charge Invoice states that all payments
