LEARNING OBJECTIVES

OCTOBER 25
SALES - DE LEON

PART IX. REPRESENTATIONS AND WARRANTIES

15.1 What is redhibition?
Redhibition is the avoidance of a sale on account of some vice or defect in the thing sold, which
renders its use impossible, or so inconvenient and imperfect that it must be supposed that the buyer
would not have purchased it had he known of the vice.

Reference: Art. 1561 (P. 409)

15.2 What is a redhibitory action?

Redhibitory action is an action instituted to avoid a sale on account of some vice or defect in the
thing sold which renders its use impossible, or so inconvenient and imperfect that it must be supposed
that the buyer would not have purchased it had he known of the vice.

The objective is to rescind the contract.

(if the objective is to procure the return of a part of the purchase price paid by the vendee, the remedy
is known as accion quanti minoris or estimatoris)

Reference: Art. 1561 (P. 409)

16. What are the requisites for the warranty against hidden defects?

a) The defect must be important or serious

b) It must be hidden
c) It must exist at the time of the sale
d) Vendee must give notice of the defect to the vendor within a reasonable time (Art. 1586)
e) The action for rescission or reduction of the price must be brought within the proper period:
- 6 months from the delivery of the thing sold (Art. 1571) or
- 40 days from the date of delivery in case of animals (Art. 1577 par. 1)
f) There must be no waiver of warranty on the part of the vendee (Art. 1548 par. 3)

Reference: Art. 1561

17.1 What is an implied warranty of fitness?

(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose
for which the goods are acquired, and (2) it appears that the buyer relies on the seller’s skill of
judgment, there is an implied warranty that the goods shall be reasonably fit for such purpose
(Art. 1562 (1)).

NOTE: There is no implied warranty of fitness unless 1 and 2 are both present.

The test of an existence of the implied warranty of fitness for a particular purpose is whether the buyer
informed the seller of the circumstances and conditions which necessitated his purchase of a certain
character of article or material, and left it to the seller to select the particular kind and quality of article
suitable for the buyer’s use (de Leon, p. 415).
17.2 What is an implied warranty of quality?

Where goods are bought by description, the seller impliedly warrants that the goods are of
merchantable quality.

“Merchantable Quality” means that the goods are of such quality and condition that a reasonable
man, after full examination, will accept them under the circumstances of the case, in performance of
his offer to buy the goods, whether for his own use or to sell again. This means that the goods comply
with the description in the contract so that to the buyer, the goods would be good tender.
Goods may be unmerchantable not because of physical defects but by some other circumstances
(i.e. infringement of trademarks)

A warranty of merchantability warrants that the goods are fit for the general purpose for which they
are sold. A warranty of fitness is a warranty that the goods are fit for the special purpose of the
buyer which will not be satisfied by mere fitness for general purposes.

18. Is there an implied warranty of fitness where the article is sold under its patent or trade
name?
Art. 1563. General Rule: In the case of contract of sale of a specified article under its patent or other
trade name, there is no warranty as to its fitness for any particular purpose.
Exception:
1. Unless there is a stipulation to the contrary.
2. If purchase is made for a particular purpose and supplied for that purpose in reliance on
seller’s judgement. (Meaning it was not made in reliance of the trade name or patent but
rather the seller’s judgement)

19. Can there be an implied warranty as to quality or fitness as a result of usage of trade?

A warranty as to the quality or fitness for a particular purpose may be attached by usage to a contract
containing no express provision in regard to warranty, though in the absence of usage no warranty
could be implied (Art. 1564). The usage is relied on for the purpose of showing the intention of the
parties. If there is no usage, parties would naturally express their intention.

A usage in order to bind both parties must be known to both or, if unknown to one, the other must be
justified in assuming knowledge on the part of the person with whom he is dealing. The presumption
is that the parties are aware of the usage of trade.

20. What is the implied warranty in case of a contract of sale by sample?

Art. 1565. In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind,
there is an implied warranty that the goods shall be free from any defect rendering them
unmerchantable which would not be apparent on reasonable examination of the sample.

The warranty only applies in a case of contract of sale by sample and if the seller is a dealer in goods
of that kind.

1) Where sample not merchantable - All the buyer is entitled to is that the goods be like the
sample, so if the sample is not merchantable, the buyer has no right to have the goods
merchantable.
2) Where sample subject to latent defect - If the sample has a latent defect, and the buyer relies
 on the seller’s skill or judgement, the buyer is entitled to goods like those which the sample
seems to represent - merchantable goods of that kind and character.

Under 1481, the contract may be rescinded where the bulk of the goods don’t correspond with
sample.

Reference: p. 420

21. Is the vendor liable for hidden defects even though he was not aware thereof?

Yes, with exception.

Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold,
even though he was not aware thereof. This provision shall not apply if the contrary has been
stipulated AND the vendor was not aware of the hidden defaults or defects in the thing sold.

Responsibility of Vendor for hidden defects

Effect of ignorance of vendor - does not relieve him of liability to the vendee; no good faith defense
Exception - may stipulate the contrary in their contract provided vendor acted in GF (unaware)
- Vendor is not relieved from any liability for making false or misleading claims about the
thing.
Vendee aware of defect or lack of title - deemed to have willfully and voluntarily assumed risk

Doctrines of caveat emptor (let the buyer beware) and caveat venditor (let the seller beware)
- Early common law: implied warranty not recognized and rule was only caveat emptor
- Seller’s liability only confined to express promise to warrant quality and to those where seller
had knowledge of hidden defects without revealing them, in latter cases, basis of liability was
for fraud
A. Old Civil Code
- Rejected caveat emptor; adopted caveat venditor as provided in Art. 1566
- Based on principle sound price warrants sound article
- Manufacturer or seller to be liable: proof that defect must be present, in any:
1. Upon delivery or manufacture of product
2. When product left M/S control
3. Product was sold to purchaser
4. Reached consumer without substantial change in condition it was sold
B. Caveat emptor requires purchaser to beware of supposed title of vendor and one who
buys without checking title takes all the risks and losses consequent to such failure.
It is still applicable to
a. Sheriff’s sales
b. Sales of animals under Art. 1574
c. Tax sales
d. Double sales of property where issue is who between 2 vendees has better right

(pp. 421 - 423)

22. What are the remedies available to the buyer to enforce implied warranties?
Article 1567. In the cases of articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect
between withdrawing from the contract and demanding a proportionate reduction of the price, with
damages in either case.
 The remedies available to the buyer are:
1. Accion redhibitoria (Action for rescission): To withdraw from the contract
2. Accion quanti minoris: Demand a proportionate reduction of the price with right to damages.
Notes:
● These actions are alternative.
● This right is given to the sale of animals.
● The word “and” before “demanding” in Art 1567 should be read as “or”.
Reference: De Leon page 423

23. What are the consequences if the thing is lost because of hidden defects?

Art. 1568. If the thing sold should be lost in consequence of the hidden faults, and the vendor was
aware of them, he shall bear the loss, and shall be obliged to return the price and refund the
expenses of the contract, with damages. If he was not aware of them, he shall only return the price
and interest thereon, and reimburse the expenses of the contract which the vendee might have paid.
(1487a)

Vendor aware of hidden defects - he shall bear the loss because he acted in bad faith. The vendee
has the right to recover:
(a) The price paid;
(b) The expenses of the contract; and
(c) Damages.

Vendor not aware of hidden defects - he shall not be liable for damages because he is not guilty
of bad faith. He shall be obliged only to return:
(a) The price paid;
(b) The interest; and
(c) Expenses of the contract (if paid by the vendee)

Reference: Art. 1568; P. 424

24.1 What are the consequences if a thing with hidden faults is lost?
If the thing sold had any hidden fault at the time of the sale, and is lost through a fortuitous event or
through the fault of the vendee, the vendee may demand of the vendor the price which he paid, less
the value which the thing had when it was lost. If the vendor acted in bad faith, he shall pay damages
to the vendee. (Art. 1569, p. 424)

24.2 Will the rule apply to judicial sales? (Art. 1570, p. 425-427)
Yes, except the judgment debtor shall not be liable for damages, since he is forced to sell.
As to the government, the principle of caveat emptor1 applies.

The right of the purchaser in judicial sales are:

a. Right as assignee only - the purchaser of property on sale under execution and levy takes
as assignee only
b. Right to reimbursement when judicial sale set aside - where a judicial sale is voided or set
aside without fault of the purchaser, the purchaser is entitled to reimbursement of the purchase

1
The principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is
made.
 money paid by him subject to set-off for benefits enjoyed while he had possession of the
property. A judicial sale can only be set aside upon the return to the buyer of the purchase
price with simple interest and other expenses incurred by him. He is ordinarily entitled to a lien
on the property until he is repaid whatever may be due him.

25.1 What is the prescriptive period for rescission of a contract on the basis of breach of an
express warranty?

With respect to express warranty, the prescriptive period which is 4 years shall apply UNLESS
another period is specified in the express warranty.

Reference: De Leon p. 427

25.2 What is the prescriptive period for rescission of a contract on the basis of breach of an
implied warranty?

Action for rescission of the contract or reduction of the purchase price (Art. 1567) prescribes six (6)
months from the date of delivery to the vendee of the thing sold or when it was placed in his control
or possession. Outside this period the action is barred.

Quasi-delict or negligence: prescription period is 4 years

Reference: Art 1571 p. 427

26.1 What constitutes a redhibitory defect in animals?

Under the Civil Code, the following constitute redhibitory defect in animals:
1. The hidden defect of the animal is of such a nature that, even in case a professional inspection
has been made, it is of such a nature that expert knowledge is not sufficient to discover it (Art.
1576)
2. Fault and defects which are determined by law or by local customs as redhibitory (Art. 1577)

The defect in the animal must be unknown to, or hidden from the seller. The buyer cannot pursue the
redhibitory action if the buyer knew the defect.

Reference: Page 431

26.2 In what instances may the vendor be exempt from liability for redhibitory defects in
animals?

The vendor may be exempt from liability for redhibitory defects in the following cases:
1. Vendee has knowledge of the redhibitory defects (Art. 1561)
2. The vendee is an expert who, by reason of his trade or profession, should have known them
(Art. 1561)
3. Stipulation that the vendor will not be liable and he was not aware of the hidden defect (Art.
1566)
4. Animals were sold at fairs or at public auctions (Art. 1574)
5. Livestock was sold as condemned (Art. 1574)
Reference: Page 431

26.3 If two or more animals are sold together, will the redhibitory defect in one give rise to the
redhibition of the other?

Article 1572. 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 animal or
animals without the defective one.

The latter case shall be presumed when a team, yoke pair, or set is bought, even if a separate price
has been fixed for each one of the animals composing the same.

Note that although Article 1572 provides only for redhibitory actions, it does not bar the vendee to
bring an action quanti minoris (Proportionate reduction of the price)

Reference: Page 428

26.4 Is there a warranty against hidden defects of animals sold as condemned?

Article 1574. There is no warranty against hidden defects of animals sold at fairs or at public auctions,
or of live stock sold as condemned.

No. Article 1574 is a limitation to Article 1570. It assumes that the defects must have been clearly
known to the buyer. Such animals are bought not because of their quality or capacity for work.

Reference: Page 429

26.5 In what instances will the sale of animals be void?

Article 1575. The sale of animals suffering from contagious diseases shall be void.

A contract of sale of animals shall also be void if the use or service for which they are acquired has
been stated in the contract, and they are found to be unfit therefor.

Selling an animal suffering from a contagious disease is void as against public interest.

Anent the second paragraph, if the vendee, knowing the defect of the animal, agrees to use it for a
purpose different from what was stated in the contract, he should not be able to object.

Reference: Page 430

26.6 Within what period must the buyer bring a redhibitory action based on the defect of an
animal?

Article 1577. The redhibitory action, based on the faults or defects of animals, must be brought within
forty days from the date of their delivery to the vendee.

This action can only be exercised with respect to faults and defects which are determined by law or
by local customs.

The action must be brought within 40 days from the date of delivery to the vendee. The action may
be a proportionate reduction in price or a redhibitory action (See Art. 1561, Page 409)
(Reference: Pages 431-433, Arts 1577, 1580)

26.7 Is the vendee obliged to return the animal in case the sale is rescinded?

Article 1579. If the sale be rescinded, the animal shall be returned in the condition in which it was
sold and delivered, the vendee being answerable for any injury due to his negligence, and not arising
from the redhibitory fault or defect.

In case of injury due to the vendee’s negligence, the vende shall be responsible but it would be no
obstacle to the rescission of the contract due to the redhibitory defect or fault of the animal.

If the animal has died as a result of a redhibitory defect existing at the time of delivery, the vendee
should be able to file the redhibitory action even if the vendee is not able to return the animal in the
condition in which it was sold and delivered.

(Reference: Page 433, Art. 1579)

27. What is the liability of the vendor if the animal dies within three days after the purchase?

Art. 1578. If the animal should die within three days after its purchase, the vendor shall be
liable if the disease which caused the death existed at time of the contract.

This claim of the vendee must be based on a finding of an expert that the disease causing the death
existed at the time of the contract. If the death occurs after 3 days or the defect is patent or visible,
the vendor is not liable. If the loss is caused by a fortuitous event or by the fault of the vendee, and
the animal has vices, Article 1569 should be applied.

(Reference: page 432)

28. What governs the sale of large cattle?

Art. 1581. The form of sale of large cattle shall be governed by special laws.

Act No. 4117 provides for the registration, branding, conveyance, and slaughter of large cattle.

PD No. 533 (The Anti-Cattle Rustling Law) provides that a permit must be secured first to engage in
the business of buying & selling of large cattle. Permit may be secured from the Provincial
Commander of the province where it shall conduct such business and the city/municipal treasurer of
the place of residence of such person, partnership, corporation, association or entity. The permit shall
be valid only in such province.

The sale must appear in a public instrument pursuant to Art. 1358 of the Civil Code.

(Reference: p. 434)

PART X. RULES ON RISK OF LOSS AND DETERIORATION

1. You must know who bears the risk of loss or deterioration in case of a fortuitous event:

When loss or deterioration Who bears the risk of LOSS of Who bears the risk of
occurred thing sold as a result of DETERIORATION of thing
fortuitous event sold as a result of fortuitous
event

Prior to the perfection of the The seller and not the one who The seller bears the impairment.
contract intends to purchase it bears the
loss

Why?
In accordance with the principle
that the thing perishes with
the owner (res perit domino).

At the time of perfection of the If the thing is entirely lost, the The seller bears the impairment.
contract contract is “without any effect.” Under Article 1494, the buyer
The seller bears the risk of loss may, at this option, treat the
as the buyer as the buyer is nit sale: (a) as avoided; or (b) a
bound to pay the purchase price valid in all of the existing goods
if the thing is entirely lost at the or in some much thereof as have
time of perfection. The contract not been deteriorated.
is inexistent and void because
there is no object.

On the other hand, if the thing is

lost in part, the seller also
bears the loss as the buyer may
withdraw from the contract and
not pay the purchase price OR
demand the remaining part,
paying its proportionate price.

After perfection of the GR: The seller bears the risk of The buyer bears the
contract but before delivery of loss in accordance with the impairment. This is according to
the thing principle that the thing perishes Article 1538 in relation to Article
with the owner (res perit 1189(3).
domino).
Art. 1538. In case of loss, deterioration
EXC: If the thing is lost after or improvement of the thing before its
delivery, the rules in article 1189 shall
perfection but before its be observed, the vendor being
delivery, that is, even before the considered the debtor.
ownership is transferred to the
buyer, the risk of loss is shifted Art. 1189. When conditions have been
to the buyer as an exception to imposed with the intention of
suspending the efficacy of an
the rule of res perit domino. obligation to give, the following rules
shall be observed in case of the
EXC to the EXC: In the following improvement, loss or deterioration of
cases, the seller bears the risk if the thing during the pendency of the
 the thin is lost after perfection condition:
but before delivery:
(3) When the thing deteriorates
without the fault of the debtor, the
a. The thing is lost through impairment is to be borne by the
the fault of the seller or creditor.
when the obligor delays;
b. The thing lost is a generic If the thing deteriorates through
thing; the fault of the seller, the seller
c. The thing lost are bears the risk. The buyer may
fungible things sold for a choose between the rescission
price fixed according to of the obligations and its
weight, number or fulfillment, with indemnity for
measure; and damages in either case.
d. The thing lost falls under
the definition of “goods”

*There is also a view that the

seller bears the risk of loss for a
fortuitous event in case the loss
occurs after perfection but
before delivery.

After delivery of the thing The buyer bears the risk of loss The buyer bears the impairment
following the general rule of res following the general rule of res
perit domino. perit domino.

2. Who bears the risk of loss or deterioration if there was fault on the part of the seller or
buyer?

Goods are at the risk of the party in fault

GR: If the thing is lost through a fortuitous event, the risk is borne by the owner of the thing at the
time of the loss - principle of res perit domino
EXC: Where the actual delivery had been delayed through the fault of either the buyer or seller, the
goods are at the risk of the party at fault with respect to any loss which might not have occurred but
for such fault - Law punishes the party at fault

Basis: Art. 1504[2]; De Leon p.247

3.1 Who bears the risk of loss in case of transfer of ownership of goods to the buyer without
actual delivery?
If the thing is lost AFTER perfection but BEFORE its delivery, that is, even if the ownership is
transferred to the buyer, the risk of loss is shifted to the buyer as an exception to the general rule
of res petit domino.

Legal Basis: Arts. 1480, pars. 1 and 2, 1538, 1189 and 1269
De Leon p. 140

3.2 Who bears the risk of loss in case of retention of title by seller only for security?

The buyer.
In the first place, the beneficial owner (buyer), not the one who holds the security (seller), will be
subject to the risk of loss or deterioration from the time the goods are delivered to the carrier even
though the legal title remains in the seller. That the risk should be borne by the buyer if the seller
retains title merely to secure performance by the buyer of his obligations under the contract is a
consequence of the theory that such bargain is, in effect, although not in form, a sale to the buyer
and a mortgage back by him of the goods to secure the price. The title does not pass to the buyer
until he receives the order bill of lading properly indorsed.

Legal Basis: Art. 1503

De Leon p. 191

3.3 Who bears the risk of loss in case of conditional sales?

Buyer.
In conditional sales, the contract of sale is perfected upon the meeting of the minds of the buyer and
the seller as to the object and the price. Despite a perfected contract, the delivery of the thing sold is
dependent upon the happening of the condition. Until then, the ownership is retained by the seller. If
the thing is lost after perfection but before its delivery, that is, even before the ownership is transferred
to the buyer, the risk of loss is shifted to the buyer as an exception to the rule of res perit domino (the
thing perishes wiht the owner).

Legal Basis: Art. 1480, pars. 1 and 2; 1538; 1189; 1269

3.4 Who bears the risk of loss in case of “on sale or return”?

Buyer.
Since title passes to the buyer on delivery, the loss or destruction of the property prior to the exercise
of the buyer’s option to return falls upon him and renders him responsible to the seller for the purchase
price or such part thereof as remains unpaid

Legal Basis: Art. 1502

De Leon p. 186

3.5 Who bears the risk of loss in case of “on approval or on trial”?

Seller.
For the reason that the title to the goods does not pass and the relationship between the seller and
the purchaser is that of bailor and bailee, the risk of loss or injury to the article pending the exercise
by the buyer of his option to purchase or return it, is upon the seller except as the buyer may be at
fault in respect of the care and condition of the article, or may have agreed to stand the loss.

Legal Basis: Art. 1502

De Leon p. 186

3.6 Who bears the risk of loss in case the thing sold with a hidden defect?

Purchaser.
The risk of defective title here is on the purchaser, the circumstances surrounding such sales being
sufficient to put him on notice as to interests of third persons in the thing sold.

Legal Basis: Art. 1547

De Leon p. 301
PART XI. ACTIONS AND REMEDIES FOR BREACH OF THE CONTRACT OF SALE

1.1 In what instances may the seller file: (a) an action for payment of the price; (b) an action for
damages; and (c) an action for rescission? How are damages measured in case the buyer
wrongfully neglects or refuses to accept and pay for the goods?

(a) SELLER’S RIGHT OF ACTION FOR THE PRICE (Art. 1595)

The above article provides the 3 cases when an action for the price of goods under a contract of sale
can be maintained by the seller:
1. When the ownership of the goods has passed to the buyer and he wrongfully neglects or refuses
to pay for the price (par. 1)
2. When the price is payable on a certain day and the buyer wrongfully neglects or refuses to pay
such price, irrespective if delivery or of transfer of the title (par. 2)
3. When the goods cannot readily be resold for a reasonable price and the buyer wrongfully refuses
to accept them even before the ownership in the goods has passed, if the provisions of Art. 1596
paragraph 4 are not applicable (par. 3)
The seller’s right of action for the price assumes that there is a breach of contract by the buyer.
Legal basis: Art. 1595
De Leon p. 471

1.2 In what instances may the seller file an action for damages?

SELLER’S RIGHT OF ACTION FOR DAMAGES

CONDITION/S (3) REMEDY

If the buyer without lawful cause neglects or Action for damages for non-acceptance
refuses to accept and pay the goods he agreed
to buyer

- In an executory contract + Action for damages

- Where the ownership in the goods has not
passed +
- The seller cannot maintain an action to recover
the price

If the goods are not yet identified at the time of Action for damages
the contract or subsequently

Legal basis: Art. 1596

De Leon p. 474

1.3 In what instances may the seller file an action for rescission?

SELLER’S RIGHT OF RESCISSION BEFORE DELIVERY

1. When the buyer has repudiated the contract of sale.
2. When the buyer has manifested his inability to perform his obligations thereunder.
3. When the buyer has committed a breach of the contract of sale.
Legal Basis: Art. 1597
De Leon p. 476

1.4 How are damages measured in case the buyer wrongfully neglects or refuses to accept
and pay for the goods?

MEASURE OF DAMAGES FOR NON-ACCEPTANCE

1. DIFFERENCE BETWEEN CONTRACT PRICE AND MARKET PRICE
• The measure of damage is the estimated loss directly and naturally resulting from the buyer’s breach
of contract
• Formula: Contract price - market or current price = damage
• Contract price – the amount of the obligation which the buyer failed to fulfill
• Market or current price – the value of the goods which the seller has left upon his hands
• This covers the general rule that damages comprehend not only the actual loss suffered but also
unrealized profit
• As the market price varies with time and place → the market price is fixed at the time when and the
place where the goods ought to have been accepted
• If no time was fixed ! at the time of refusal to accept
• Burden is upon SELLER to show what damage he has suffered → to recover more than nominal
damages, he must show that the market value of the goods is less than the contract price

2. FULL AMOUNT OF DAMAGE

• If there is no available market in which the goods can be sold at the time → the seller is entitleD to
the full amount of damages which he has really sustained by a breach of contract

3. PROXIMATE DAMAGE
• Art. 1596 par. 3 – allows the seller under “special circumstances” 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”

MEASURE OF DAMAGES FOR REPUDIATION OR COUNTERMAND

1. The labor performed and expenses incurred for materials before receiving notice of buyer’s
repudiation.
2. The profit he would have realized if the sale had been fully performed.
Legal basis: Art. 1596
De Leon p. 474

2.1 What is the action available to the buyer in case the seller breached a contract to deliver
specific goods?

The Remedies of the buyer for breach of warranty by the seller are:

1. Accept the goods and set up the seller’s breach to reduce or extinguish the price;
2. Accept the goods and maintain an action for damages for the breach of the warranty;
3. Refuse to accept the goods and maintain an action for damages for the breach of the warranty;
and
4. Rescind the contract of sale by returning or offering the return of the goods, and recover the
price or any part thereof which has been paid.

Legal basis: 1599

De Leon p.481
2.2 What is recoupment?

The theory of recoupment in diminution or extinction of price in case of breach of warranty by the
seller is that the seller’s damages are cut down to an amount which will compensate him for the value
of what he has given.

Legal basis: 1599 (1)

De Leon p.482

2.3 When is the buyer not entitled to rescission?

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; and
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. 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.
De Leon p.484

2.4 What are the rights and obligations of the buyer in case of rescission?
1) In case of rescission, the buyer shall cease to be liable for the price, his only obligation being
to return the goods;
2) If he has paid the price or any part thereof, he may recover it from the seller
3) He has the right to hold the goods as bailee for the seller should the latter refuse the return of
the goods; and
4) 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 were an unpaid seller
De Leon p.484

3. What are the actions available to the buyer in case of breach of warranty by the seller?

As provided for in Art. 1599, these are the following actions/remedies of the buyer for breach of
warranty by the seller. These apply to both express and implied warranties.

1. Accept the goods and set up the seller’s breach to reduce or extinguish the price.
(Recoupment)
2. Accept the goods and maintain an action for damages for the breach of warranty. (1st way of
Action/Counterclaim for damages)
3. Refuse to accept the goods and maintain an action for damages for the breach of the warranty.
(2nd way of Counterclaim for damages)
4. Rescind the contract of sale by returning or offering the return of the goods and recover the
price or any part thereof which has been paid. (Rescission)

Recoupment and Action/Counterclaim with damages should be read with Art. 1586.

Important Notes:
1. Art. 1599 does not apply if the contract of sale was NOT perfected.
2. The remedies above are alternatives and once a remedy has been granted to a buyer, no
other remedy can be thereafter exercised or granted.

Source: pp. 479-484 (Art. 1599)