Dear PAO,
I’m a seller of made-to-order aquariums. Ordering from my store is straightforward — after a client places an order, I ask them to pay fifty percent (50%) of the price as deposit, with the remaining fifty percent (50%) to be paid upon delivery of the aquarium. The deposit is forfeited if they cancel their order less than seven (7) days before the delivery date.
Last summer, I had a client who asked me on a Saturday night if she could make a rush order of fifty (50) small aquariums to be delivered on Thursday morning of the week after. She said she would be using them in an event to display her geckos for sale. I accepted the order even though was unable to deposit fifty percent (50%) of the price because of the potential profit I would make. On Thursday morning, when my store personnel went to deliver the goods, the buyer refused to accept them and pay for her order. She merely said that the event had been cancelled by the organizer. As it was a rush order and I was not able to secure a deposit from the client, do I have any right to demand payment?
Matthew

Dear Matthew,
The refusal of the client to accept and pay for the goods that she purchased from you gives you a cause of action for damages against her.

Article 1596 of the Civil Code of the Philippines provides that:
“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 non-acceptance.

“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.
“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.

“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, 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 repudiation or countermand. The profit the seller would have made if the contract or the sale had been fully performed shall be considered in awarding the damages.”

Based on this provision, you can file an action for damages against your client due to her failure to accept and pay for the aquariums that she ordered from you. The amount of damages that can be recovered is based on the natural and direct loss you suffered from your client’s failure to accept the aquariums.

However, the law also provides that if you were able to resell the aquariums despite your client’s non-acceptance thereof, the recoverable damages may be measured on the basis of the difference between the contract price when you resold the aquariums and the market or current price of the aquariums at the time when they should have been accepted by your client. Additionally, if special circumstances exist that would show a different proximate amount of damages, then that would be considered in determining the amount of damages that you can recover from your client.
We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]