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X. ACTIONS AND REMEDIES FOR BREACH OF AGREEMENT A. ACTIONS AVAILABLE -…

- - - - c. RESCISSION OF CONTRACT
        
        RESCISSION ACTION:
        S MAY RESCIND IF:
        
        NO DELIVER YET TO B
        
        B: (RIB)
        a. REPUDIATES
        b. INABILITY MANIFESTED
        c. BREACHED
        
        NOTICE TO B
        Article 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)
        
        APPLIES TO CTS
        The obligation of the petitioner corporation to sell did not arise; it therefore cannot be compelled by specific performance to comply with its prestation. In short, Article 1191 of the Civil Code does not apply; on the contrary, pursuant to Article 1597 of the Civil Code, the petitioner corporation may totally rescind, as it did in this case, the contract.
        (Visayan Sawmill)
        
        RESCISSION ONLY, NO SP
        Rescission only
        (Visayan Sawmill)
        
        ABSENT RESERVATION OF OWNERSHIP -> DOAS
        Hence, it has been decided in the case of Dignos v. Court of Appeals that, absent a proviso in the contract that the title to the property is reserved in the vendor until full payment of the purchase price or a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within the fixed period, the transaction is an absolute contract of sale and not a contract to sell.||| (Visayan Sawmill Co., Inc. v. Court of Appeals, G.R. No. 83851, [March 3, 1993])
        
        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)
      - NO ACCEPT
        
        WRONGFUL NEGLECT or REFUSAL
        Article 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.
        
        IF NO AVAILABLE MARKET :red_cross:
        MEASURE: (EDOB)
        
        ESTIMATED LOSS
        -DIRECTLY & NATURALLY RESULTING
        -ORDINARY COURSE OF EVENTS FROM
        -BREACH
        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.
        
        IF w/ AVAILABLE MARKET :check:
        MEASURE:
        CONTRACT PRICE
        MINUS
        FMV AT
        TIME FIXED or REFUSAL :alarm_clock:
        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.
        
        B LIABLE FOR
        S' LABOR or EXPENSES :construction_worker:
        BEFORE NOTICE :alarm_clock: IF:
        
        MATERIAL AMOUNT
        
        NECESSARY to:
        a. ENABLE S TO FULFILL OBLIG
        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,
        
        BEFORE NOTICE
        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.
        
        OPPORTUNITY COST:
        CONSIDERED: S' PROFIT
        IF FULLY PERFORMED
        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)
    - - BUYER'S DEFENSE:
        
        SELLER'S MANIFESTED
        -INABILITY
        -INTENT NOT TO
        
        BEFORE JUDGMENT :alarm_clock:
        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.
    - - IF B REFUSES,
        [S] MAY NOTIFY B: THEN:
        
        S = BAILEE
        
        B = OWNER
        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)
- - - - JUDGMENT MAY BE:
        
        UNCONDITIONAL
        
        CONDITIONAL
        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)
  - - - 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.
        
        UNLESS JUST CAUSE TO FIX
        
        What does "claimed" mean?
        
        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)
      - Recoupment, generally, means the recovery or collection of money that was previously unduly paid out.
      - ALTERNATIVE REMEDIES
        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.
      - NO RESCISSION AFTER DELIVERY IF:
        
        ACCEPT, NO PROTEST
        a. KNEW
        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
        
        NO NOTICE IN REASONABLE TIME
        if he fails to notify the seller within a reasonable time of the election to rescind,
        or
        
        IMPAIRED
        -NO RETURN/OFFER
        -SUBSTANTIALLY GOOD CONDITION AS
        -AT OWNERSHIP TRANSFER
        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.
        
        EXCEPTION:
        DETERIORATION DUE TO BREACH
        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.
        
        LOSS = VALUE AT DELIVERY
        MINUS VALUE IF WARRANTY ANSWERED
        (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)
      - RESCIND EFFECT:
        
        BUYER
        -CEASES TO BE LIABLE FOR PRICE
        --UPON RETURN
        
        SELLER
        -REPAYS
        --UPON RETURN/AFTER OFFER
        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.
        
        RESCISSION & REFUSAL
        
        BUYER = BAILEE
        a. LIEN TO SECURE PAID PRICE
        b. REMEDIES OF UNPAID SELLER(RSRR)
        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 the 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.
        
        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:
        (1) A lien on the goods or right to retain them for the price while he is in possession of them;
        (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;
        (3) A right of resale as limited by this Title;
        (4) A right to rescind the sale as likewise limited by this Title.