Extinguishment of Sale Remedies – Real Properties

1. Same causes as in other obligations INSTALLMENT SALES, in case of hidden defects, can be set off
2. Conventional redemption to the unpaid balance. (requires notice)
3. Legal redemption
ANTICIPATORY BREACH, vendor has right to rescind for fear for
Conventional Redemption – the right which the vendor the loss of the property or its price
reserves to himself to reacquire the property sold, provided
that he returns: FAILURE TO PAY, vendor has right to rescind upon judicial or
1. Price of the sale notarial demand for rescission. (without demand, vendee can
2. Expenses of contract still pay)
3. Other legitimate payments
4. Necessary and useful expenses on the thing MACEDA LAW – Residential property only
5. Other stipulations agreed upon Requisites:
1. Transactions or contracts involving sale or financing
Deemed as Equitable Mortgage: PERIODT of real estate on installment
1. Possession by vendor as lessee 2. Buyer defaults in payment of succeeding installments
2. Extension of redemption period
3. Retention by vendee of part of purchase price Rights of the Buyer:
4. Unusually Inadequate price 1. Paid at least 2 installments
5. Other cases where intention is to secure payment of a. Grace Period of 1 month per 1 year of
debt installment payments
6. When there is Doubt as to whether pacto de retro b. Actual cancellation can only take place after
sale or equitable mortgage 30 days from receipt of notarized notice of
7. Vendor binds to pay Taxes cancellation AND full payment of CSV
c. Right to sell or assign his rights OR reinstate
Redemption period the contract by updating the account
If there is agreement – Not to exceed 10 years d. Right to pay in advance any installment
No agreement – 4 years 2. Paid less than 2 installments
Note: 30 days from final judgment – may redeem a. Grace period of NOT less than 60 days from
the date the installment became due
Legal Redemption – the right to be subrogated, upon the same b. Right to sell or assign his rights OR reinstate
terms and conditions stipulated in the contract, in place of one the contract by updating the account
who acquires a thing by: c. Right to pay in advance any installment
1. Purchase
2. Dation in payment or 1592 applies if property is non-residential. Note, unlike in
3. Other onerous transaction Maceda, 1592 does not apply to Contracts to Sell.

Note: written notice of redemption is necessary PD 957 Sale of Subdivision Units

- To prevent fraudulent manipulation of condominium
PREEMPTION REDEMPTION sellers
Before sale After sale 1. If it fails to provide all from Sec 20
No rescission There can be rescission of a. Reimbursement of total amount paid
original sale (notice not required)
Action directed against Action directed against the b. Suspend payment of installments due
prospective seller buyer until owner complies (notice required)
Note: Option is with the BUYER not the OWNER
Right of Preemption to adjoining owners Unpaid Seller
1. Urban land 1. When the whole of the price has not been paid or
2. So small that it cannot be used for any practical tendered
purpose 2. When a bill of exchange or other negotiable
3. So situated that it cannot be used for any practical instrument has been received but was dishonored (or
purpose due to buyer’s insolvency)
4. Previously bought merely for speculation
Remedies of Unpaid Seller
1. Possessory Lien
2. Stoppage In Transitu
3. Right to Resell
4. Right to Rescind Sale
Possessory Lien exists WEI RECTO LAW – Personal property
1. Sale was Without stipulation as to credit (cash sale) Remedies:
2. Expiration of period for payment of price 1. Fulfillment – failure to pay ANY installment
3. Insolvency of buyer 2. Cancellation – failure to pay TWO OR MORE
installments
Possessory Lien is lost COW 3. Foreclosure of chattel mortgage, if constituted
1. When seller delivers to a Carrier or bailee for
transmission to buyer without reservation DOUBLE SALES
2. When buyer lawfully Obtains possession of goods ARTICLE 1544 – If the same thing should have been sold to
3. Waiver different buyers, the ownership shall be awarded by the courts
under the following rules:
Possessory Lien v. Lien on the Price 1. When subject matter is movable, to the buyer
Possessory Lien entitles to retain goods as security for who may have first taken possession thereof in
payment. good faith
2. When the subject matter is immovable, to the
Lien on the Price – even if possessory lien is lost, the unpaid buyer
seller’s lien on the price remains. It can however be tramped 1. Who in good faith first recorded the sale in
by government for taxes. the Registry of Property
2. Who in good faith was first in possession of
Right to Stoppage in Transitu the subject matter
Requisites: 3. Who presents the oldest title in good faith
1. Insolvency of buyer
2. Goods must be in transit If the property covered by the conflicting sales were
a. From the time they delivered to carrier until unregistered land, then the 1st buyer would undoubtedly have
the buyer takes the delivery a better right in view of the fact that his claim is based on a
b. Delivered but buyer rejects and carrier prior sale, whereas, where the land involved in the conflicting
continuous to be in possession transaction was a duly registered land, the second buyer at
How exercised? public auction would prevail since the registration of the deed
1. Obtaining actual possession of sale is the operative act that gives validity to the transfer.
2. Giving notice of his claim to the carrier or bailee in (Dagupan Trading Co. v. Macam)
actual possession of the goods
ESSENTIAL ELEMENTS
Right to Resell (1) The 2 or more sales transactions must constitute valid
Requisites: sales
1. Unpaid seller must have possessory lien and exercised i. Valid or at least voidable
right of stoppage in transit ii. Has NO application to Contract to Sell
2. Resale may be made only if (2) The 2 or more sales transactions must pertain to exactly
a. Perishable goods the same subject matter
b. Express reservation to resell the goods (3) The 2 or more buyer must each represent conflicting
c. Buyer in default for unreasonable time interests
(4) The 2 or more buyers must each have bought from the
Right to Rescind very same seller
Requisites:
1. Unpaid seller must have possessory lien and exercised CONDITION
right of stoppage in transit Effect on non-fulfillment
2. Rescission may be made only if 1. Refuse to proceed with the contract
a. Right is reserved by stipulation 2. Proceed with the contract, waiving the performance of the
b. Buyer is in default for an unreasonable time condition

Note: NOTICE is NOT required except if buyer is in default for WARRANTY – a statement or representation made by the
an unreasonable length of time. seller of goods, contemporaneously and as a part of the
contract of sale, having reference to the character, quality or
title of the goods.
Implied Warranties in a Contract of Sale
1. He has the right to sell the thing at the time when
ownership is to pass
2. That the thing shall be free from any hidden faults or
defects or any charge or encumbrance not declared
or known to the buyer
Implied Warranties in a Sale of Goods
1. Goods shall be reasonably fit for the particular
purpose for which the goods are acquired
2. Goods shall be of merchantable quality if bought by
description
2. Intencionada
There is voluntary renunciation made by the vendee
of the right to warranty against eviction with
knowledge of risk or eviction. The effect is to relieve
the vendor of any liability whatsoever.
Accion Redhibitoria (Withdrawal from Contract) – an action
instituted by the vendee against the vendor to avoid a sale on
account of some vice or defect in the thing sold which renders
it unfit for the use intended or which will diminish its fitness
for such use to such an extent that, had the vendee been aware
thereof, he would have not acquired it.

Warranty Against Eviction Accion Quanti Minoris (Reduction of Price) – an action to

Warranty in which the seller guarantees that he has the right procure the return of a part of the purchase price paid by the
to sell the thing sold and to transfer ownership to the buyer vendee to the vendor by reason of such defect.
who shall not be disturbed in his legal and peaceful possession
thereof. Effect of hidden defects:
1. Vendor is aware:
Elements: DJ-PSN a. Vendee shall have the right to recover
1. vendee is Deprived of the property i. Price paid
2. deprivation by virtue of final Judgment (even if not ii. Expenses of contract
appealed) iii. Damages
3. judgment is based on Prior right to the sale 2. Vendor is NOT aware:
4. vendor was Summoned in the suit a. Vendor shall be obliged to return
5. No waiver of warranty i. Price paid
ii. Interest thereon
Vendor’s Liability iii. Expenses of contract
1. Good Faith
a. Value of the thing Prescription:
b. Income or fruits 1. Generally – 6 months from delivery
c. Costs of the suit 2. Redhibitory actions based on defects of animals – 40
d. Expenses of contract days from delivery
2. Bad Faith
a. Value of the thing Negotiable Document of Title - a document of title in which it
b. Income or fruits is stated that the goods referred will be delivered to the bearer
c. Costs of the suit or to the order of any person named in such document.
d. Expenses of contract
e. Damages, interests and expenses for Void Contracts of Sale
pleasure or ornaments 1. Between husband and wife except
a. Separation of property in marriage
Rescission v. Exercise of Warranty settlement
In warranty, you seek to enforce the contract or agreement. b. Judicial separation
You seek liability of seller who failed to live with his
representations/warranties. NOT ABSOLUTE – may be “ratified” by entering new
contract
Partial Eviction 2. Guardian, property of person under his guardianship
1. seek indemnity from seller 3. Agents, property intrusted to him
2. rescission (if impossible to use) 4. Executors/Administrator, property of the estate
under administration
Waiver
1. Consciente ABSOLUTE – by reason of public policy
There is merely a voluntary renunciation made by the 5. Public Officers/Prosecutors, property of the State
vendee of the right to warranty in case of eviction. 6. Lawyers, properties in litigation or levied upon
Liability of vendor shall extend only to the payment of execution
the value of the thing sold at the time of eviction 7. Judges