SALES Action and Remedies for Breach of Agreement Visayan Sawmill vs CA Visayan Sawmill and Ang Tay entered

into a sale of scrap iron at the latter's stockyard in Negros Oriental, on the condition that plaintiff will open an irrevocable and unconditional letter of credit on or before May 15, 1983. LoC was only opened on May 24, but on May 17, plaintiff already sent men to dig and gather said scrap iron at defendant's premises until the latter directed them to desist from such work in view of an alleged case filed against plaintiff by one Alberto Pursuelo. In response, plaintiff-appellee sent a series of telegrams stating that the case filed by Pursuelo has been dismissed and demanding that defendants comply with the deed of sale. Defendants however are unwilling to continue the sale due to plaintiff's failure to comply with the contract's essential pre-conditions (concerning Letter of Credit). ISSUE: WoN the sale can be rescinded HELD: YES, defendant can rescind. 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." In the instant case, not only did the private respondent fail to open, make or indorse an irrevocable and unconditional letter of credit on or before 15 May 1983 despite his earlier representation in his 24 May 1983 telegram that he had opened one on 12 May 1983, the letter of advice received by the petitioner corporation on 26 May 1983 from the Bank of the Philippine Islands Dumaguete City branch explicitly makes reference to the opening on that date of a letter of credit in favor of petitioner Ang Tay c/o Visayan Sawmill Co. Inc., drawn without recourse on ARMACO-MARSTEEL ALLOY CORPORATION and set to expire on 24 July 1983, which is indisputably not in accordance with the stipulation in the contract signed by the parties on at least three (3) counts: (1) it was not opened, made or indorsed by the private respondent, but by a corporation which is not a party to the contract; (2) it was not opened with the bank agreed upon; and (3) it is not irrevocable and unconditional, for it is without recourse, it is set to expire on a specific date and it stipulates certain conditions with respect to shipment. Consequently, 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 On implied delivery of the scrap iron:

Plaintiff with the consent of defendant Ang Tay sent his men to the stockyard of Visayan Sawmill Co. Inc. to dig and gather the scrap iron and stock the same for weighing. This, however, does not mean that Visayan Sawmill had control and possession of the scrap iron (acc. to 1497). There was no obligation to deliver because: (1) of the private respondent's failure to comply with the positive suspensive condition earlier discussed, such an obligation had not yet arisen. (2) it was a mere accommodation to expedite the weighing and hauling of the iron in the event that the sale would materialize. The private respondent was not thereby placed in possession of and control over the scrap iron. (3) We cannot even assume the conversion of the initial contract or promise to sell into a contract of sale by the petitioner corporation's alleged implied delivery of the scrap iron because its action and conduct in the premises do not support this conclusion. Mendoza vs David Mendoza ordered 3 sets of furniture from Beth David worth P185, 650 and paid an initial deposit of P40,650, followed by a deposit of P40,000. Specifications (material and quality) of the dining set, sofa set, and tea set were agreed upon by both parties. When the furniture were delivered to Mendoza, she rejected them for inferior material and poor quality. She then requested a refund of her total deposit of P80, 650 from David, who refused to refund such. Thus, Mendoza filed this complaint for collection of money with damages. David claims that she refuses to comply with Mendoza's demand for a refund since all three furniture sets were already finished and delivered on the agreed date. David only retrieved the furniture due to non-payment of the balance. ISSUE: WoN the sale was one by sample or description under 1481, and as such, can be rescinded HELD: NO, the sale is neither one by sample nor by description . The sale of furniture in this case is not a sale by sample. The term sale by sample does not include an agreement to manufacture goods to correspond with the pattern. In this case, the three sets of furniture were manufactured according to the specifications provided by the buyer. Mendoza did not order the exact replica of the furniture displayed in Davids shop but made her own specifications on the measurement, material and quality of the furniture she ordered. Neither is the transaction a sale by description. Mendoza did not rely on any description made by David when she ordered the furniture. Mendoza inspected the furniture displayed in Davids furniture shop and made her own specifications on the three sets of furniture she ordered. NO, the sale cannot be rescinded as there was no breach of contract on David's part.

The MTC found the furniture to be strictly in accordance with the tenor of the contract between Mendoza and David. The MTC and the RTC, noting the lack of written specifications on the material and quality of the furniture ordered, held that Mendoza failed to present any proof to show that the furniture was not in accordance with the agreed specifications. The records show that the parties agreed that the furniture should be made of narra. Mendoza admitted that the furniture delivered was made of narra but was of inferior quality. She also complained of deep nail marks and rough surface at the back of the table and chairs. However, Mendoza failed to prove these allegations. In civil cases, the burden of proof rests on the party who asserts the affirmative of an issue based on the pleadings or the nature of the case. In this case, the burden lies on Mendoza who must prove her allegation that there was breach of contract. After reviewing the records of the case, the Court finds that Mendoza failed to substantiate her claim of breach of contract. Mendoza failed to present any evidence to overcome the presumption that the transaction was fair and regular.