1) Overview: the seller’s duty to deliver and what “failure to deliver” means

A contract of sale obliges the seller to transfer ownership and deliver the thing sold, and obliges the buyer to pay the price. In sales of goods, “delivery” is not limited to physically handing over the item. It includes putting the buyer in control and possession of the goods in the manner agreed upon (or, absent agreement, in the manner the law supplies).

A seller “fails to deliver” when:

the seller does not deliver at all;
the seller delivers late (when time is essential or delay is legally treated as breach);
the seller delivers in a manner not conforming to the contract (wrong place, wrong quantity, wrong goods, incomplete shipment, etc.);
the seller refuses or becomes unable to deliver (including anticipatory breach);
the seller delivers but cannot transfer ownership (e.g., no right to sell), which can be treated as a breach of implied warranties closely tied to delivery.

Failure to deliver is analyzed under (a) the Civil Code rules on obligations and contracts, (b) the Civil Code rules on sale, and (c) where applicable, special laws and consumer rules for particular transactions. The basic framework, however, remains: breach → remedies.

2) Key classifications that affect remedies

2.1 Subject matter: determinate vs generic goods

Determinate (specific) thing: a particular identified item (e.g., “that specific laptop with serial no. X”). Remedies may include specific performance (compel delivery) because the thing is unique/identified.
Generic thing: described only by kind/quantity (e.g., “100 sacks of rice”). If the seller fails to deliver, the buyer can often procure substitutes and charge the seller for the difference (and damages).

2.2 Timing: is “time of the essence”?

Delay becomes a meaningful breach when:

the parties expressly make time essential, or
the nature and circumstances show time is essential (perishables, event-based goods), or
the buyer has made a demand (judicial or extrajudicial) when demand is required by law to put the seller in default.

2.3 Place and manner: agreed terms

Delivery can be “failed” even if goods exist and seller is willing, if delivery is not tendered at the agreed place/time or according to agreed shipping terms (e.g., door-to-door vs pick-up).

2.4 Partial delivery, installment delivery, and indivisibility

A seller may deliver part and withhold the rest. The buyer’s remedy depends on:

whether the contract is divisible (installments) or indivisible (one whole delivery),
whether partial performance defeats the buyer’s purpose,
whether the buyer accepts part (which may affect the right to rescind the whole).

2.5 Risk of loss vs ownership

In sales, the allocation of risk of loss and the timing of transfer of ownership are distinct issues. If the seller never delivers, the seller is usually still responsible to deliver or respond in damages unless the non-delivery is excused by fortuitous event under the rules on obligations—subject to critical exceptions (e.g., seller in delay, or seller promised the same determinate thing to multiple buyers, etc.).

3) When the seller is legally “in default” (delay) and why it matters

Under Philippine law on obligations, a debtor (here, the seller obligated to deliver) is generally considered in default only after a demand by the creditor (the buyer), unless demand is not necessary because:

the obligation or law expressly declares demand unnecessary;
time is of the essence and the parties so intended;
demand would be useless (e.g., seller has made delivery impossible);
the obligation is reciprocal and one party has performed or is ready to perform and the other does not comply at the proper time.

Effect of default: once in delay, the seller becomes liable for damages, and for certain consequences regarding risk of loss and fortuitous events.

Practical point: even if the buyer plans to cancel, making a clear written demand (and fixing a reasonable final deadline) strengthens the buyer’s position on default and damages, especially where time of the essence is disputable.

4) Core remedies when the seller fails to deliver

Philippine remedies generally fall into four main buckets:

Specific performance (fulfillment)
Rescission (cancellation) of the sale / resolution of reciprocal obligations
Damages (in addition to 1 or 2, where allowed)
Other sale-specific remedies and protective measures (e.g., recovery of payments, interest, attachment, replevin in some contexts, etc.)

4.1 Specific performance (compel delivery)

What it is: The buyer sues (or demands) that the seller be compelled to deliver the goods as agreed.

When it fits best:

goods are determinate, unique, scarce, or difficult to replace;
buyer still wants the goods and delivery remains possible.

Limitations and nuances:

Courts will not compel what is impossible. If the seller no longer has the goods (and cannot obtain them) and the obligation is determinate, the action may shift toward damages.
For generic goods, compelling delivery may be less practical; substitute procurement plus damages is common.
If the buyer has not performed or is not ready to perform reciprocal obligations (e.g., pay the price when due), the seller may invoke defenses like non-performance by the buyer (see Section 6).

Possible additions: Even while insisting on delivery, the buyer may claim damages for delay (e.g., lost profits from not having the goods on time), if supported by law and proof.

4.2 Rescission / cancellation (resolution) + restitution

What it is: The buyer treats the breach as a ground to cancel the sale so that each party returns what was received (buyer gets payment back; seller gets goods back if any were delivered).

In reciprocal obligations, the injured party may seek resolution when the other does not comply. In sales, non-delivery can be substantial enough to justify rescission, especially where delivery is the seller’s principal obligation.

When it fits best:

buyer no longer wants the goods due to delay or changed circumstances;
seller’s failure is substantial and defeats the contract’s purpose;
seller’s conduct shows refusal or inability to perform.

Forms rescission can take in practice:

Extrajudicial rescission (buyer declares cancellation) when legally and contractually supportable, often with notice and demand; and/or
Judicial rescission (filed in court) when facts are disputed or the contract or circumstances suggest court determination is safer.

Restitution: Upon valid rescission, the buyer is entitled to return of what was paid, plus appropriate interest and damages depending on the circumstances.

Caution: If the buyer has accepted late performance or otherwise waived strict compliance, rescission becomes harder. Acceptance of partial delivery can also affect the scope of rescission (whole vs part).

4.3 Damages (actual, moral, exemplary, nominal) and interest

Damages aim to place the buyer in the position they would have been in had delivery been made on time and as agreed, subject to rules on foreseeability, proof, and causation.

(a) Actual/compensatory damages

Typical heads of actual damages in non-delivery:

Cover damages / price differential: if the buyer purchases substitute goods at a higher price, the difference may be recoverable if reasonable and provable.
Consequential losses: foreseeable losses caused by non-delivery (e.g., production downtime, lost resale profit), subject to proof and legal limits.
Incidental expenses: costs for follow-up, storage, transport arrangements, transaction costs, etc., if properly documented.

(b) Interest

If the buyer is entitled to refund of money paid (e.g., rescission), interest may be due depending on the legal basis, the parties’ agreement, and whether the amount is treated as a forbearance or damages. Contract stipulations on interest/penalties are also relevant, subject to rules on unconscionability.

(c) Liquidated damages / penalty clause

Many sales contracts include a penalty for late or non-delivery. Such clauses can simplify proof. Courts may reduce unconscionable penalties. A buyer may still recover actual damages beyond the penalty only if allowed by the contract or by law, depending on how the clause is framed.

(d) Moral and exemplary damages

In purely commercial breach, moral damages are not automatic. They are typically awarded only when the breach is attended by bad faith, fraud, or in cases where the law allows it and the buyer proves entitlement. Exemplary damages require an even higher showing (e.g., wanton or oppressive conduct) and usually accompany moral/actual damages.

(e) Nominal damages

Where a right has been violated but actual loss is not proved, nominal damages may be awarded to vindicate the right.

4.4 Substitution / procurement (“cover”) and reimbursement

Where the seller fails to deliver generic goods or readily available goods, a buyer commonly:

procures replacement goods from another seller, then
claims from the original seller the difference in price plus related losses and expenses (and, where applicable, penalties).

While the Civil Code does not use the term “cover” in the same way some foreign sales statutes do, the practical remedy is grounded in damages and the general principle that the injured party should mitigate losses reasonably.

4.5 Suspension of buyer’s performance

In reciprocal obligations, if the seller does not deliver, the buyer may refuse to pay (or withhold remaining payment), provided the buyer’s refusal is in good faith and proportionate to the breach.

4.6 Cancellation of installment arrangements and special consumer protections

If the sale involves installment arrangements (common in consumer transactions), additional statutory rules may apply. Remedies can include cancellation with refund rules and limits on forfeitures depending on the specific legal regime governing the transaction (e.g., certain consumer credit or realty installment contexts). For ordinary movable goods sold on installments, the Civil Code also has specific remedies in sales of personal property by installments (commonly associated with protection against multiple suits and double recovery).

5) Sale-specific doctrines and related remedies

5.1 Tender of delivery vs actual delivery

A seller may claim they “delivered” by offering the goods. But tender must be valid: at the right place/time, with conforming goods, and allowing the buyer reasonable opportunity to take delivery. Invalid tender is effectively non-delivery.

5.2 Delivery to carrier: shipment sales

If the contract contemplates shipment, delivery to a carrier can sometimes count as delivery to the buyer depending on the parties’ terms and applicable rules. However, failure to ship as agreed, improper documentation, or failure to notify can still constitute breach.

5.3 Double sale and competing buyers

If the seller sells the same determinate goods to another buyer and fails to deliver to the first, the first buyer’s remedies may include:

actions to enforce rights if ownership can be established under the rules on double sale (depending on who first took possession / registered where relevant), and/or
damages against the seller for breach and bad faith.

5.4 Warranty of title and quiet possession

Non-delivery sometimes masks a deeper problem: the seller may not have the right to sell or cannot transfer ownership. The buyer may then have remedies based on breach of implied warranties in sale (e.g., eviction risk), in addition to ordinary breach remedies.

6) Seller defenses and buyer pitfalls

6.1 Buyer not ready and willing to perform

In reciprocal obligations, a seller may defend by showing the buyer:

did not pay or tender payment when due,
refused to accept delivery without lawful basis,
failed to satisfy conditions precedent (e.g., opening an L/C, providing delivery instructions, issuing purchase order confirmation).

A buyer seeking specific performance or rescission should be able to show readiness to perform (or that performance was excused by seller’s prior breach).

6.2 No demand; no default (in some cases)

If demand is required and none was made, seller may argue they were not in delay. This can limit recovery of damages for delay. However, if demand is unnecessary due to time being essential or other exceptions, this defense weakens.

6.3 Fortuitous event

The seller may claim that non-delivery was caused by a fortuitous event. This defense generally requires showing the event was unforeseeable or unavoidable and that the seller was not in delay and did not assume the risk. If the seller is already in default, fortuitous event is less likely to excuse liability.

6.4 Waiver, estoppel, and acceptance

If the buyer:

repeatedly accepts late delivery without protest,
agrees to extensions,
continues to treat the contract as subsisting after a decisive breach, the buyer may be deemed to have waived strict compliance or be estopped from rescinding based on delay alone—depending on facts.

6.5 Failure to mitigate

A buyer claiming damages should take reasonable steps to reduce loss (e.g., finding substitute goods if practical). Unreasonable inaction can reduce recoverable damages.

7) Choosing the best remedy: a structured approach

Step 1: Identify the breach type

total non-delivery
delay
partial delivery
anticipatory refusal
inability to deliver

Step 2: Confirm the contract terms and evidence

delivery date, place, shipping terms
payment terms
penalty/liquidated damages clause
communications (emails, chats, invoices, receipts)

Step 3: Decide the goal

Do you still want the goods? → specific performance + damages for delay
Do you want out and money back? → rescission + restitution + damages
Do you just want compensation and will source elsewhere? → procure substitute + damages

Step 4: Execute the correct legal posture

send a formal demand (unless clearly unnecessary), with a final deadline
reserve rights (state that acceptance of anything is “without waiver” if applicable)
document losses and replacement costs

8) Common scenarios and likely remedies

Scenario A: Seller never delivers; buyer already paid in full

Buyer may rescind and demand refund with interest and damages.
Alternatively, buyer may demand delivery plus damages if goods remain available and buyer still wants them.

Scenario B: Seller delays; buyer needed goods for a specific event/date

If time is essential, buyer may treat delay as substantial breach and rescind.
If buyer still needs goods, insist on delivery and claim damages for delay (e.g., rental of substitute equipment).

Scenario C: Seller delivers part only

Buyer may accept part and seek remedies for the remainder, or
rescind the whole if partial delivery defeats the contract’s purpose or contract is indivisible.

Scenario D: Seller says goods are “out of stock” after taking payment

This is typically non-delivery; buyer may rescind and claim refund and damages.
If representations were misleading or in bad faith, additional remedies (including certain damages) may become more plausible.

Scenario E: Seller refuses to deliver unless buyer pays more

That is a form of breach/refusal. Buyer can insist on original terms (specific performance) or rescind and claim damages.

9) Litigation and procedural considerations (high-level)

A buyer’s claim may be brought as:

an action for specific performance with damages,
an action for rescission/resolution with damages and restitution,
an action for sum of money (refund, interest, damages),
provisional remedies (in appropriate cases) to secure recovery, subject to procedural rules.

Evidence typically includes the contract, proof of payment, demand letters, communications acknowledging obligation, and proof of losses.

10) Drafting and contracting tips that shape remedies

Well-drafted sales contracts reduce disputes over failure to deliver by specifying:

exact delivery date/time and whether time is of the essence
delivery terms (place, shipping, incoterms-like allocation if used)
acceptance criteria and inspection period
remedies: right to cancel after x days, refund timelines
liquidated damages / penalty for delay and cap/uncap rules
force majeure definition and notice requirements
attorney’s fees and dispute resolution clause (venue/arbitration/mediation)

11) Summary of remedies (quick reference)

When the seller fails to deliver, the buyer may generally choose among:

Specific performance: compel delivery (especially for determinate goods), often with damages for delay.
Rescission / resolution: cancel the sale, recover payments, plus interest and damages where warranted.
Damages:
- actual (price difference, consequential/incidental losses),
- interest,
- liquidated damages/penalties if stipulated,
- in exceptional cases, moral/exemplary,
- nominal if loss not proven.
Withhold performance: refuse to pay remaining balance until delivery.
Practical substitution: buy replacement goods and claim the differential and related losses.

The best remedy depends on whether the goods are determinate or generic, whether time is essential, whether the buyer still wants performance, and the strength of evidence for default and damages.