Remedies of the Seller for Breach of Contract of Sale
1. Action for payment of the price (Art. 1595)
2. Action for damages for non-acceptance of the goods (Art. 1596)
3. Action for rescission (Art. 1597)
ACTION OF THE SELLER FOR PAYMENT OF THE PRICE
1. When ownership of the goods has passed to the buyer and he
wrongfully neglects or refuses to pay for the price
2. When the price is payable on a certain day and he wrongfully
neglects or refuses to pay such price irrespective of delivery or
transfer of title
3. When the goods cannot readily be resold for the reasonable price
and the buyer wrongfully refuses to accept them even before the
ownership in the goods has passed
ACTION OF THE SELLER FOR DAMAGES FOR NON-ACCEPTANCE OF
THE GOODS
1. In case of wrongful neglect or refusal by the buyer to accept or
pay for the thing sold (Art. 1596 par. 1)
2. In an executory contract, where the ownership in the goods has
not passed, and the seller cannot maintain an action to recover
the price (Art. 1595)
3. If the goods are not yet identified at the time of the contract or
subsequently
ACTION OF THE SELLER FOR RESCISSION
1. When the buyer has repudiated the contract of sale
2. When the buyer has manifested his inability to perform his
obligation thereunder
3. When the buyer has committed a breach of the contract of sale
Remedies of the Buyer for Breach of Contract of Sale
1. Action for specific performance (Art. 1598)
2. Action for rescission or damages for breach of warranty (Art.
1599)
ACTION OF BUYER FOR SPECIFIC PERFORMANCE
1. Where the seller has broken the contract to deliver specific or
ascertained goods
2. 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
ACTION OF BUYER FOR RESCISSION OR DAMAGES FOR BREACH OF
WARRANTY
1. Recoupment – accept the goods and set up the seller’s breach to
reduce or extinguish the price
2. Action for damages – accept the goods and maintain an action for
damages for breach of warranty
3. Counterclaim for damages – refuse to accept the goods and
maintain an action for damages for breach of warranty
4. Rescission – rescind the contract by returning or offering the
return of the goods, and recover the price already paid
INSTANCES WHEN RESCISSION BY BUYER ARE NOT ALLOWED
1. If the buyer accepted the goods knowing of the breach of
warranty without protest
2. If he fails to notify the seller within a reasonable time of his
election to rescind
3. 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
RIGHTS AND OBLIGATIONS OF THE BUYER IN CASE OF RESCISSION
1. The buyer cease to be liable for the price, his obligation is to
return the goods
2. The buyer may recover the price he has paid
3. The buyer has the right to hold the goods as bailee should the
seller refuse to accept the return of the goods
4. The buyer may have lien on the goods for any portion of the price
already paid
Modes of Extinguishment of Sale
1. Those causes which are also the means of extinguishing all other
contracts
2. Conventional Redemption
3. Legal Redemption
CONVENTIONAL REDEMPTION
1. Seller reserved the right to repurchase thing sold
2. Coupled with obligation to return price of the sale, expenses of
contract and other legitimate payments and the necessary and
useful expenses mad on the thing sold
3. Right must be recognized in the deed of sale
INSTANCES OF EQUITABLE MORTGAGE
1. Price of sale with right to repurchase is unusually inadequate
2. Seller remains in possession as a lessee or otherwise
3. Upon/after expiration of right to repurchase, another instrument
extending the period of redemption is executed
4. Buyer retains for himself a part of the purchase price
5. Seller binds himself to pay taxes on thing sold
6. Real intention of parties is to secure the payment of a debt or
performance of other obligation
PERIOD OF REDEMPTION
1. No period agreed upon- 4 years from date of contract
2. When there is agreement- should not exceed 10 years; if it
exceeded, valid only for the first 10years
3. When period to redeem has expired and there has been a
previous suit on the nature of the contract- seller still has 30 days
from final judgement on the basis that contract was a sale with
pacto de retro
EFFECT OF FAILURE TO EXERCISE RIGHT OF REDEMPTION
1. Buyer a retro automatically acquires full ownership
2. There must be judicial order before ownership of real property
is consolidate in the buyer a retro (Art 1607)
RIGHTS OF VENDEE A RETRO 5. The right must be exercised within 30 days from the notice in
1. To be subrogated to the vendor’s right and actions (Art 1609); and writing by the vendor
2. Right against creditor of the vendor not to exercise the right of 6. The vendee must be reimbursed for the price of the sale
redemption until after they have exhausted the property of the
RIGHT OF LEGAL REDEMPTION
vendor (Art 1610)
1. Any co-owner may exercise right of redemption by paying
3. To compel the vendor of a part of undivided immovable to
reasonable price of property to the buyer
redeem the whole property in case the vendee a retro of such part
2. If 2 or more co-owners desire to exercise right of redemption, they
acquires the entire immovable (Art 1611)
may only do so in proportion to the share they may respectively
REDEMPTION IN JOINT SALE BY CO-OWNERS/CO-HEIRS have in the thing owned in common
Rule:
RIGHT OF LEGAL REDEMPTION OF ADJACENT OWNERS OF RURAL
1. When an undivided thing is sold by co-owners/co-heirs, vendors
LANDS
a retro may only exercise his right over his respective share; (Art
1. Both the land of the one exercising the right of redemption and
1612)
the land sought to be redeemed must be rural;
2. Vendee a retro may demand that they must come to an
2. The land must be adjacent;
agreement first and may not be compelled to consent to a partial
3. There must be an alienation;
redemption; (Art 1613)
4. The rural land must not exceed 1 hectare
3. When rights of co-owners over an undivided thing is sold as
5. The vendee must also own some rural land
regards to their own share- vendee a retro cannot compel one to
6. The rural land must not be separated by brooks, drains, ravines,
redeem the whole property; (Art 1614)
roads, and other apparent servitudes from the adjoining land
REDEMPTION AGAINST HEIR OF VENDEE
PRE-EMPTION VS. REDEMPTION
Rule:
1. The vender a retro can exercise the right to redeem against the Pre-emption Redemption
Arises before sale Arises after sale
heirs of the vendee a retro with respect only to their respective
No rescission because no sale There can be rescission of the
share;
yet exists original sale
2. If the property has been divided and the thing sold has been
The action is directed against Action is directed against the
awarded to one of their heirs, the vendor can exercise the right to
the prospective seller buyer
redeem against such heir

EFFECTS OF RIGHT OF REDEMPTION

Vendor a retro must return first the following:
1. The price of the thing sold
2. Expenses of the contract and other legitimate payments made by
reason of the sale
3. Necessary and useful expensed made on the thing sold
RIGHT OF PARTIES AS TO FRUITS OF LAND
Rules:
1. If there were fruits at the time of sale and the vendee paid for
them, he must be reimbursed at the time of redemption
2. If no indemnity was paid, there shall be no reimbursement at the
time of redemption
3. If the property has no fruit at the time of sale and there are some
at the time of redemption, the vendee shall received a prorated
portion corresponding to the last year he possessed the property.
LEGAL REDEMPTION
Is the right to be subrogated upon the same terms and conditions
stipulated in the contract, in the place of one who acquires the thing
by purchase or by dation in payment or by other transaction whereby
ownership is transmitted by onerous titles
RIGHT OF LEGAL REDEMPTION OF CO-OWNER
Requisites:
1. There must be a co-ownership
2. There must be alienation of all or of any of the shares of the other
co-owners
3. The sale must be to a 3rd person
4. The sale must be before partition
PERIOD OF REDEMPTION
1. Right of legal pre-emption of redemption shall be exercised
within 3o days from notice by the buyer
2. Deed of sale not to be recorded in Registry of Deeds unless
accompanied by affidavit that buyer has given notice to
redemptioners
ASSIGNMENT OF CREDIT
A contract by which the owner of a credit transfer to another his rights
and actions against a third person in consideration of a price certain
in money or its equivalent
EFFECTS OF ASSIGNMENT
1. Transfers the right to collect the full value of the credit, even if he
paid a price less than such value
2. Transfers all the accessory rights
3. Debtor can set up against the assignee all the defenses he could
have set up against the assignor
EFFECT OF PAYMENT BY THE DEBTOR AFTER ASSIGNMENT OF
CREDIT
1. Before Notice of the assignment
- Payment to the original creditor is valid and debtor shall be
released from his obligation
2. After notice
- Payment to the original creditor is not valid as against the
assignee
- He can be made to pay again by the assignee
WARRANTIES OF THE ASSIGNOR OF CREDIT
A. He warrants, the existence of the credit
B. He warrants, the legality of the credit at the perfection of the
contract
LIABILITIES OF THE ASSIGNOR OF CREDIT FOR VIOLATION OF HIS
WARRANTIES
1. Assignor in good faith
- Liability is limited only to the price received and to the expenses
of the contract, and any other legitimate payments by reason of
the assignment
2. Assignor in bad faith
- Liable not only for the payment of the price and all the expenses
but also for damages
LIABILITIES OF THE ASSIGNOR FOR DEBTOR’S INSOLVENCY
Solvency of debtor – no warranty, unless
a. There is a stipulation
b. Insolvency was prior to assignments and of common knowledge
- Shall only last for 1 year
LEGAL REDEMPTION IN SALE OF CREDIT OR OTHER RIGHT IN
LITIGATION
Requisites:
1. There must be a sale or assignment of credit
2. There must be a pending litigation at the time of the assignment
3. The debtor must pay the assignee
a. Price paid by him
b. Judicial cost incurred by him; and
c. Interest on the price from the date of payment
4. The right must be exercised by the debtor within 30 days from the
date the assignee demands (judicially or extra-judicially)
payment from him.
BARTER
By the contract of barter or exchange one of the parties binds himself
to give one thing in consideration of the other’s promise to give
another thing
PERFECTION AND CONSUMMATION
Perfected from the moment there is a meeting of the minds upon the
things promised by each party in consideration of the other
Consummated from the time of mutual delivery by the contracting
parties of the things promised
BULK SALES LAW
Designed to prevent the defrauding of the creditors by the secret sale
in bulk of all or substantially all of a merchant’s stock of goods
WHEN SALE OF TRANSFER IN BULK
Any sale, transfer, mortgage, or assignment
1. Of a stock of goods, wares, merchandise, provisions, or materials
other than in the ordinary course of trade and the regular
prosecution of business; or
2. Of all or substantially all, of the business or trade; or
3. Of all or substantially all, of the fixtures and equipment used in
the business of the vendor, mortgagor, transferor or assignor
SALE OR TRANSFER NOT COVERED BY BULK SALES LAW
1. If the sale or transfer is in the ordinary course of trade and the
regular prosecution of business of the vendor
2. If it is made by one who produces and delivers a written waiver of
the provisions of the Bulk Sales Act from his creditors;
3. If it is made by an executor, administrator, receiver, assignee in
insolvency, or public officer, acting under judicial process; and
4. If it refers to properties exempt from attachment or execution
(Rules of Court, Rule 39, Section 12)
PROTECTION ACCORDED TO CREDITORS BY BULK SALES LAW
1. It requires the vendor, mortgagor, transferor or assignor to
deliver to the vendee, mortgagee, or to his agent or
representative a sworn written statement of names and
addresses of all creditors to whom said vendor, etc, may have
been indebted together with the amount due or to be due
2. If requires the vendor, mortgagor, transferor or assignor, at least
10 days before the sale, transfer, mortgage, assignment to make
full detailed inventory showing the quantity and the cost of price
of goods, and to notify every creditor of the price terms and
conditions of the sale, etc.
EFFECT OF FALSE STATEMENTS IN THE SCHEDULE OF CREDITORS
1. Without knowledge of buyer
• If the statement is fair upon its face and the buyer has no
knowledge of its incorrectness and nothing to put him on
inquiry about it, he will be protected in its purchase
• The remedy of the creditor is not against the goods but to
prosecute the seller criminally
2. With knowledge or imputed knowledge of buyer
• The vendee accepts it at his peril
• The sale is valid only as between the vendor and the vendee
but void against the creditors
3. With names of certain creditors without notice are omitted from
the list
• The sale is void as to such creditors, whether the omission
was fraudulent or not
EFFECT OF VIOLATION OF LAW ON TRANSFER
1. As between the parties
• The Bulk Sales Law does not in any way affect the validity of
the transfer as between the intermediate parties thereto
• A sale not in compliance with the Bulk Sales Law is valid
against all persons other than the creditors
2. As against creditors
• A purchaser in violation of the law acquires no right in the
property purchased as against the creditors of the seller
• His status is that of a trustee or receiver for the benefit of the
creditors of the seller; as such, he is responsible for the
disposition of the property
ACTS PUNISHED BY BULK SALES LAW
1. Knowingly or willfully making or delivering a statement required
by the act which does not include the names of all the creditors
of the vendor, etc. with the correct amount due or to become due
or which contains any false or untrue statement; and
2. Transferring title to any stock of goods, warehouse, merchandise,
provisions or materials sold in bulk, without consideration or for
nominal consideration