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X. ACTIONS & REMEDIES FOR BREACH OF AGREEMENT B. REMEDIES AVAILABLE …

- - - - c. RESCISSION:
        SALE OF IMMOVABLE PROPERTY
        
        d. RESCISSION:
        MOVABLE PROPERTY
        
        MOVABLES
        S MAY RESCIND IF
        
        UPON EXPIRATION B:
        Article 1593. With respect to movable property, the rescission of the sale shall of right take place in the interest of the vendor,
        if the vendee,
        a. NON-APPEARANCE
        upon the expiration of the period fixed for the delivery of the thing,
        should not have appeared to receive it,
        OR
        b. NON-TENDER
        -UNLESS LONGER PERIOD STIPULATED
        having appeared, he should not have tendered the price at the same time,
        unless a longer period has been stipulated for its payment. (1505)
        
        In Song Fo, the Court applied the cure by payment rule here as appearing from 1592, which is a provision on immovables. However, the molasses here are movable property, so there was a transplanted application of 1592 to movables.
        Those movables are used in the business though
        
        SUBSTANTIAL BREACH REQUIRED
        The general rule is that rescission will not be permitted for a slight or casual breach of the contract, but only for such breaches as are so substantial and fundamental as to defeat the object of the parties in making the agreement.
        Here, a delay in payment for a small quantity of molasses for some 20 days is not such a violation of an essential condition of the contract as warrants rescission for non-performance.
        
        BUT IN CTS, SERIOUS/CASUAL BREACH IS IRRELEVANT
        , it is irrelevant whether appellant Maritime's infringement of its contract was casual or serious, for as pointed out by this Court in Manuel vs. Rodriguez, in contracts to sell, the failure to pay in full is not a breach but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force.
        
        EJ RESCISSION: OWN RISK
        in UP v. de Los Angeles, the party who deems the contract violated may consider it resolved or rescinded without previous court action, but it proceeds at its own risk.
        For it is only the final judgment of the corresponding court that will conclusively and finally settle whether the action taken was or was not correct in law. But the law definitely does not require that the contracting party who believes itself injured must first file suit and wait for a judgment before taking extrajudicial steps to protect its interest.
        
        CURATIVE PAYMENT AFTER EXP
        Article 1592. In the sale of immovable property, even though it may have been stipulated that
        upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place,
        the vendee may pay,
        even after the expiration of the period,
        
        AFTER DEMAND, NO NEW TERM BY COURT
        After the demand, the court may not grant him a new term. (1504a)
        
        EXC:
        
        JUDICIAL RESCISSION
        
        NOTARIAL RESCISSION
        as long as no demand for rescission of the contract has been made upon him
        either
        judicially or by a notarial act.
        
        SUBSTANTIAL BREACH:
        SUBSTANTIAL NON-PAYMENT
        Hawaiian-Philippines is not entitled to rescind the contract considering that Song Fo’s delay in payment was not substantial as to defeat the object of the parties in making the agreement. The delay of 20 days in payment, as it only happened once, after Hawaiian already accepted such late payment and subsequent payments made on time, could not be considered a substantial breach that justified Hawaiian’s act of rescinding the contract with Song Fo.
        [Song Fo v. Hawaiian Phil]
        
        IF CONTRACT TO SELL, NOT BREACH &
        NEED NOT BE SUBSTANTIAL
        From another point of view, it is irrelevant whether appellant Maritime's infringement of its contract was casual or serious, for as pointed out by this Court in Manuel vs. Rodriguez, in contracts to sell, the failure to pay in full is not a breach but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force
        
        Ma'am:
        Was there a series of delivery or was there a series of payments? Because this is the point of the case (Song Fo)
      - IMMEDIATE SUE RESCISSION IF:
        
        REASONABLE GROUND TO FEAR
        a. LOSS OF IMMOVABLE
        b. LOSS OF PRICE
        Article 1591. Should the vendor have reasonable grounds to fear the loss of immovable property sold and its price, he may immediately sue for the rescission of the sale. Should such ground not exist, the provisions of article 1191 shall be observed. (1503)
        
        IMPLIED IN RECIPROCAL OBLIGATIONS
        
        RESCISSION
        
        SPECIFIC PERFORMANCE
        
        DAMAGES IN EITHER CASE
        Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.
        The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case.
        
        IMPOSSIBLE SP -> RESCISSION
        He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
        
        RESCISSION = CLAIMED
        The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
        
        What does "claimed" mean?
        
        UNLESS JUST CAUSE TO FIX
        
        WITHOUT PREJUDICE TO
        3RD PERSONS
        This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law. (1124)
    - - iii. RIGHT OF RESALE
        1533
        
        iv. RIGHT OF RESCISSION
        1534
        
        UNPAID S + R/S HAS
        RIGHT TOR RESCIND IF:
        (EU)
        
        EXPRESS RESERVATION
        
        UNREASONABLE TIME DEFAULT
        Article 1534. An unpaid seller having the right of lien or having stopped the goods in transitu, may rescind the transfer of title and resume the ownership in the goods,
        where he expressly reserved the right to do so in case the buyer should make default,
        or
        where the buyer has been in default in the payment of the price for an unreasonable time.
        
        RETENTION REQUIRES NOTICE TO ORIG B, EXPRESS/IMPLIED
        The transfer of title shall not be held to have been rescinded by an unpaid seller until he has manifested by notice to the buyer or by some other overt act an intention to rescind.
        
        GENERALLY NOT NECESSARY
        UNLESS UNREASONABLE TIME IS BASIS
        It is not necessary that such overt act should be communicated to the buyer, but the giving or failure to give notice to the buyer of the intention to rescind shall be relevant in any issue involving the question whether the buyer had been in default for an unreasonable time before the right of rescission was asserted. (n)
        
        walastik required ba o hindi
        
        UNPAID S + RS HAS
        RIGHT TO DAMAGES
        The seller shall not thereafter be liable to the buyer upon the contract of sale, but may recover from the buyer damages for any loss occasioned by the breach of the contract.
        
        UNPAID SELLER + R/S -> MAY RESELL IF:
        (PEU)
        
        PERISHABLE
        -NO NOTICE REQUIRED! :+1:
        Article 1533. Where the goods are of perishable nature,
        or
        
        EXPRESS RESERVATION
        -NO NOTICE REQUIRED! :+1:
        where the seller expressly reserves the right of resale in case the buyer should make default,
        or
        
        UNREASONABLE TIME OF B'S DEFAULT
        -NOTICE REQUIRED! :!:
        where the buyer has been in default in the payment of the price for an unreasonable time,
        
        an unpaid seller having a right of lien or having stopped the goods in transitu may resell the goods.
        
        RESALE -> GOOD TITLE TO RESALE BUYER
        Where a resale is made, as authorized in this article, the buyer acquires a good title as against the original buyer.
        
        NOT REQUIRED IN RESALE
        
        NOTICE OF INTENTION OF RESALE
        It is not essential to the validity of resale that notice of an intention to resell the goods be given by the seller to the original buyer.
        
        NOTICE OF TIME & PLACE OF RESALE
        It is not essential to the validity of a resale that notice of the time and place of such resale should be given by the seller to the original buyer.
        
        REQUIRED:
        REASONABLE CARE & JUDGMENT
        The seller is bound to exercise reasonable care and judgment in making a resale, and subject to this requirement may make a resale either by public or private sale.
        
        SELLER CANNOT DIRECTLY/INDIRECTLY
        BUY THE GOODS
        He cannot, however, directly or indirectly buy the goods. (n)
        
        1 more item...
        
        So what if he doesn't?
        
        NOTICE REQUIRED TO DETERMINE "UNREASONABLE TIME"
        But where the right to resell is not based on the perishable nature of the goods or upon an express provision of the contract of sale,
        the giving or failure to give such notice shall be relevant in any issue involving the question whether the buyer had been in default for an unreasonable time before the resale was made.
        
        UNPAID SELLER:
        PROFIT NOT DUE TO ORIG BUYER
        He shall not thereafter be liable to the original buyer upon the contract of sale or for any profit made by such resale,
        
        UNPAID SELLER:
        DAMAGES -> ORIG BUYER
        but may recover from the buyer damages for any loss occasioned by the breach of the contract of sale.
        
        DEFICIENCY = ORIG BUYER BEARS
        If the purchaser fails to take delivery and pay the purchase price, the vendor in such case is entitled to resell the goods. If he is obliged to sell for less than the contract price, he holds the buyer for the difference; if he sells for as much as or more than the contract price, the breach of contract by the original buyer is damnum absque injuria
        [Katigbak v. CA]
        
        FAILURE TO TAKE DELIVERY & PAY ->
        BUYER MAY RESELL
        As held in the above-cited case of Hanlon, if the purchaser fails to take delivery and pay the purchase price of the subject matter of the contract, the vendor, without the need of first rescinding the contract judicially, is entitled to resell the same, and if he is obliged to sell it for less than the contract price, the buyer is liable for the difference.||| (Katigbak v. Court of Appeals, G.R. No. L-16480, [January 31, 1962])
        
        R/S =
        RETAIN/STOP
        Right of Retention
        Right to Stop in transitu
      - UNPAID SELLER IF:
        Article 1525. The seller of goods is deemed to be an unpaid seller within the meaning of this Title:
        
        WHOLE PRICE NOT PAID/TENDERED
        (1) When the whole of the price has not been paid or tendered;
        
        NEGOTIABLE INSTRUMENT
        a. CONDITION NOT MET
        (2) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has been broken by reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise.
        
        OWNERSHIP PASSED:
        UNPAID SELLER HAS A RIGHT TO:
        Article 1526. Subject to the provisions of this Title, notwithstanding that the ownership in the goods may have PASSED to the buyer, the unpaid seller of goods, as such, has:
        
        S' POSSESSION -> RETENTION
        (1) A lien on the goods or right to retain them for the price while he is in possession of them;
        
        B'S INSOLVENCY -> STOP INTRANSITU
        (2) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them;
        
        RESALE
        (3) A right of resale as limited by this Title;
        
        RESCISSION
        (4) A right to rescind the sale as likewise limited by this Title.
        
        UNPAID POSSESSOR-SELLER:
        RETENTION UNTIL B'S PAY/TENDER
        Article 1527. Subject to the provisions of this Title,
        the unpaid seller of goods who is in possession of them
        is entitled to retain possession of them until payment or tender of the price in the following cases, namely:
        
        NO CREDIT STIPULATION
        (1) Where the goods have been sold without any stipulation as to credit;
        
        CREDIT -> TERM EXPIRED
        (2) Where the goods have been sold on credit, but the term of credit has expired;
        
        INSOLVENT
        (3) Where the buyer becomes insolvent.
        
        PART DELIVERY -> RETAIN REMAINDER
        Article 1528. Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on the remainder,
        
        EXCEPT:
        INTENT TO WAIVE RETENTION
        unless such part delivery has been made under such circumstances as to show an intent to waive the lien or right of retention. (n)
        
        RETENTION EVEN IF S POSSESSES AS:
        
        AGENT
        
        BAILEE
        The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee for the buyer. (n)
        
        OWNERSHIP NOT PASSED -> WITHHOLD
        Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies a right of withholding delivery similar to and coextensive with his rights of lien and stoppage in transitu where the ownership has passed to the buyer. (n)
        
        RETENTION LOST IF:
        Article 1529. The unpaid seller of goods loses his lien thereon:
        
        DELIVERY to:
        a. CARRIER/BAILEE
        b. NO RESERVATION OF:
        -OWNERSHIP
        -POSSESSION
        (1) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the ownership in the goods or the right to the possession thereof;
        
        LAWFULLY OBTAINED BY
        a. B or B's AGENT
        (2) When the buyer or his agent lawfully obtains possession of the goods;
        
        WAIVER
        (3) By waiver thereof.
        
        RETENTION EVEN IF:
        PRICE JUDGMENT/DECREE
        The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has obtained judgment or decree for the price of the goods. (n)
        
        "UNPAID SELLER" INCLUDES: (LCPS)
        
        LADING-INDORSEE AGENT
        
        CONSIGNOR
        
        PAYOR-AGENT
        
        SELLER'S POSITION
        In articles 1525 to 1535 the term "seller" includes an agent of the seller to whom the bill of lading has been indorsed, or a consignor or agent who has himself paid, or is directly responsible for the price, or any other person who is in the position of a seller. (n)
      - UNPAID SELLER'S RIGHT OF RETENTION/STOP IN TRANSITU EVEN IF:
        
        B's SALE/DISPOSITION
        Article 1535. Subject to the provisions of this Title, the unpaid seller's right of lien or stoppage in transitu is not affected by any sale, or other disposition of the goods which the buyer may have made, unless the seller has assented thereto.
        
        BUT IF NEGO-INST:
        3RD PARTY IN GF UNPREJUDICED
        EVEN IF NEGO WAS BEFORE/AFTER NOTICE OF RETENTION/STOPPAGE TO CARRIER/BAILEE-ISSUER
        If, however, a negotiable document of title has been issued for goods,
        no seller's lien or right of stoppage in transitu shall defeat the right of any purchaser for value in good faith
        to whom such document has been negotiated,
        whether such negotiation be prior or subsequent to the notification to
        the carrier, or
        other bailee who issued such document,
        of the seller's claim to a lien or right of stoppage in transitu. (n)
        
        UNLESS:
        
        SELLER ASSENTED
        
        NEGO-INST + GF
    - - Resale
        Rescission
- - - - c. DELIVERY OF GOODS
        MORE/LESS THAN THE QUANTITY CONTRACTED
        1522
        
        d. GOODS
        MIXED WITH GOODS OF A
        DIFFERENT DESCRIPTION
        NOT INCLUDED IN CONTRACT
        
        e. SALE OF REAL PROPERTY
        BY UNIT OF MEASURE
        
        f. SALE OF REAL PROPERTY
        MADE OF A LUMP SUM
        1542, 1543
        
        g. SUSPENSION OF PAYMENTS
        (1590)
        
        DISTURBED POSSESSION/DANGER ->
        BUYER MAY SUSPEND PAYMENTS
        ARTICLE 1590. Should the vendee be disturbed in the possession or ownership of the thing acquired, or should he have reasonable grounds to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may suspend the payment of the price
        
        1 more item...
        
        STEADY PRICE
        AREA:!:MORE/LESS -> SAME PRICE + DELIV
        Article 1542. In the sale of real estate,
        made for a lump sum and
        not at the rate of a certain sum for a unit of measure or number,
        there shall be no increase or decrease of the price, although there be a greater or less AREA or number than that stated in the contract.
        The same rule shall be applied when two or more immovables as sold for a single price;
        
        REASONABLE EXCESS/DEFICIENCY ONLY
        However, the discrepancy must not be substantial. A vendee of land, when sold in gross or with the description "more or less" with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency.
        (Lietz, Inc v. CA)
        
        2 more items...
        
        DISTINGUISH:
        
        AREA :100:
        -MORE: SAME PRICE
        -LESS: SAME PRICE
        
        BOUNDARIES :black_square_button:
        -MORE: SAME PRICE
        -LESS: REDUCE/RESCIND :!!::
        
        BOUNDARIES :!: MORE/LESS -> DELIVER
        but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract;
        
        IF UNABLE TO DELIVER
        REDUCTION IN PRICE
        and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number,
        
        1 more item...
        
        MENTIONING BOUNDARIES IS INDISPENSABLE IN EVERY
        CONVEYANCE OF REAL ESTATE
        
        ALL MENTIONED IN CONTRACT MUST BE PLACED IN POSSESSION OF VENDEE
        Article 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in conformity with the following rules:
        
        DELIVER ALL IF:
        
        AREA STATED
        
        RATE:
        a. CERTAIN PRICE
        b. FOR A UNIT OF MEASURE OR NUMBER
        If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number,
        
        the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract;
        
        EXCESS AREA
        
        ACCEPT + REJECT REST
        
        ACCEPT + WHOLE -> CONTRACT RATE
        Article 1540. If, in the case of the preceding article, there is a greater area or number in the immovable than that stated in the contract,
        
        the vendee may accept the area included in the contract and reject the rest.
        If he accepts the whole area, he must pay for the same at the contract rate. (1470a)
        
        DEFICIENCY AREA:
        
        REDUCE PRICE
        
        RESCIND
        -AT LEAST 1/10TH LACK
        but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated.
        
        1 more item...
        
        SALE PER UNIT
        
        EXCESS
        -ACCEPT WHOLE; OR
        -REJECT REST
        
        DEFICIENCY:
        -REDUCE PRICE
        -RESCIND IF:
        a. QUANTITY: EQUAL or OVER 1/10
        b. QUALITY: INDUCIVE or OVER 1/10
        
        6-MOS FROM DELIVERY
        PRESCRIBED :alarm_clock:
        Article 1543. The actions arising from articles 1539 and 1542 shall prescribe in six months, counted from the day of delivery. (1472a)
        
        MIXED WITH UNAGREED GOODS
        
        MAY REJECT REST
        XXX
        Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the contract, the buyer may accept the goods which are in accordance with the contract and reject the rest.
        [1522]
        
        IF INDIVISIBLE -> MAY REJECT WHOLE
        In the preceding two paragraphs, if the subject matter is indivisible, the buyer may reject the whole of the goods.
        
        LESS QUANTITY -> BUYER MAY:
        
        REJECT
        Article 1522. Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them,...
        
        ACCEPT
        -KNEW SELLER WON'T DO
        a. PAY CONTRACT :!: RATE
        ...but if the buyer accepts or retains the goods so delivered, knowing that the seller is not going to perform the contract in full, he must pay for them at the contract rate.
        
        ACCEPT
        -DIDN'T KNOW SELLER WON'T DO
        a. PAY ONLY FMV of RECEIVED :!: GOODS
        If, however, the buyer has used or disposed of the goods delivered before he knows that the seller is not going to perform his contract in full, the buyer shall not be liable for more than the fair value to him of the goods so received.
        
        EXCESS QUANTITY -> BUYER MAY:
        
        REJECT REST
        Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest.
        
        ACCEPT WHOLE
        a. PAY AT CONTRACT RATE
        If the buyer accepts the whole of the goods so delivered he must pay for them at the contract rate.
        
        INDIVISIBLE -> MAY REJECT WHOLE
        In the preceding two paragraphs, if the subject matter is indivisible, the buyer may reject the whole of the goods.
        
        SUBJECT TO
        
        TRADE
        
        SPECIAL AGREEMENT
        
        COURSE OF DEALINGS
        The provisions of this article are subject to any usage of trade, special agreement, or course of dealing between the parties. (n)
        [1522]
      - SPECIFIC GOODS
        SUBSTANTIAL LOSS/DETERIORATION
        BUYER MAY:
        Article 1494. Where the parties purport a sale of specific goods, and the goods without the knowledge of the seller have perished in part or have wholly or in a material part so deteriorated in quality as to be substantially changed in character, the buyer may at his option treat the sale:
        
        AVOID
        (1) As avoided; or
        
        VALID
        a. AS TO GOODS NOT DETERIORATED
        b. BINDING BUYER TO PAY PRICE FOR
        -GOODS IN WHICH OWNERSHIP PASSES
        (2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible. (n)
    - - REASONABLE OPPORUNITY TO
        COMPARE BULK WITH DESCRIPTION/SAMPLE
        The buyer shall have a reasonable opportunity of comparing the bulk with the description or the sample. (n)
      - BULK + DESC -> CORRESPOND WITH
        SAMPLE AND! DESCRIPTION
        if the contract be by sample as well as description, it is not sufficient that the bulk of goods correspond with the sample if they do not also correspond with the description.
        
        But what if they match with description only, not sample?
      - SALE BY SAMPLE
        
        SPECIMEN OF ABSENT BULK
        
        NO OPPORTUNITY TO EXAMINE
        There is a sale by sample when a small quantity is exhibited by the seller as a fair specimen of the bulk, which is not present and there is no opportunity to inspect or examine the same.
        
        TREATED SAMPLE AS STANDARD
        To constitute a sale by sample, it must appear that the parties treated the sample as the standard of quality and that they contracted with reference to the sample with the understanding that the product to be delivered would correspond with the sample.
        (Mendoza v. David)
        
        SALE BY DESCRIPTION
        There is a sale of goods by description where "a seller sells things as being of a particular kind, the buyer not knowing whether th e seller’s representations are true or false, but relying on them as true; or as otherwise stated, where the buyer has not seen the article sold and relies on the description given to him by the seller, or has seen the goods, but the want of identity is not apparent on inspection."
        (Mendoza v. David)
        
        IMPLIED WARRANTY OF CONFORMITY
        A seller’s description of the goods which is made part of the basis of the transaction creates a warranty that the goods will conform to that description.
        
        MERCHANTABILITY WARRANT: DESC
        Where the goods are bought by description from a seller who deals in the g oods of that description, there is an implied warranty that the goods are of merchantable quality.
        
        MERCHANTABILITY WARRANT: SAMPLE
        In a contract of sale by sample, there is an implied warranty that the goods shall be free from any defect which is not apparent on reasonable examination of the sample and which would render the goods unmerchantable.
        
        "MADE TO ORDER"
        Seller: David
        Buyer: Mendoza
        This was neither a sale by sample nor desc.
        This was a "made to order" contract
        NOT SALE BY SAMPLE
        The term of sale by sample does not include an agreement to manufacture goods to correspond with the pattern.
        In this case the fur niture was manufactured according to specifications provided by the buyer .
        Mendoza did not order an exact replica of those displayed in David’s shop.
        NOT SALE BY DESCRIPTION
        Mendoza did not rely on any description made by David.
        Mnedoza inspected those in display AND made her own SPECIFICATIONS.