Published — April 7, 2021
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Aside from this article about NONPAYMENT OF THE UNPAID PURCHASE, read also: ON CONSUMER PRODUCTS AND SERVICES WARRANTIES
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In case of breach of warranty, the buyer may withdraw from the contract of sale
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The buyer may also ask for reduction of the price
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A seller may lose his right to collect the unpaid balance of the purchase price
May a buyer refuse to pay the unpaid balance of the purchase price to the seller?
In our previous article, we wrote about oral statements of a seller that may be considered as a warranty. We also discussed the case of Philippine Steel Coating Corp vs. Eduard Quinones, G.R. No. 194533, April 19, 2017.
From the same case, we can also learn whether a nonpayment of the unpaid purchase price is justified. In this case, the buyer filed a case against the seller for damages for breach of warranty. Accordingly, to induce the buyer to purchase the product, the seller made assurances that the quality of their new product was superior to that product being used by the buyer in his business. The buyer even expressed his reservations as the new product might not be compatible with the paint process used by the buyer. On this note, the seller made further assurance saying that a test was conducted and it was proven that the two products were compatible.
Based on the express assurances of the seller, the buyer brought the product to be used in the finishing of its assembled buses. However, after some time, the buyer received several complaints from customers who had bought bus units claiming that the paint used on the purchased vehicles was breaking and peeling off. The buyer then sent a letter-complaint to the seller invoking warranties given by the latter.
Eventually, the buyer filed a case and sought damages against the seller for breach of implied warranty arising from hidden defects.
May the buyer seek damages against the seller for breach of warranty?
The law says:
Yes.
The seller is responsible for warranty against hidden defects which the thing sold may have, should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent that, had the buyer been aware of such defect, he would not have acquired it or would have given a lower price for it; but said seller is not answerable for patent defects or those which may be visible if the buyer is an expert who, by reason of his trade or profession, should have known them.
In this case it was found out that the seller has committed breach of warranty.
In case of breach of warranty, what could the buyer do?
The law says:
Where there is a breach of warranty by the seller, the buyer may, at his election:
- Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price;
- Accept or keep the goods and maintain an action against the seller;
- Refuse to accept the goods, and maintain an action against the seller;
- Rescind or cancel the contract of sale and refuse to receive the goods or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part which has been paid.
In this case, the buyer admitted to have an unpaid balance. With the breach of warranty by the seller, the buyer has opted for a reduction in price or nonpayment of the unpaid balance of the purchase price. Thus, the buyer refused to pay the unpaid balance of the purchase price of the product that the seller had delivered to him.
The buyer took his action after complaints from his customers piled up regarding the blistering and peeling-off of the paints applied to the bus bodies they purchased from him. After the lower courts had concurred in finding that the seller’s breach of express warranty had been established, the Supreme Court ruled that the buyer has legitimately defended his claim for reduction in price and is no longer liable for the unpaid balance of the purchase price.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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