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RFBT: Sales Part IV

JMBD
LAW ON SALES:
REMEDIES: REAL PROPERTY
(CODAL GUIDE)

REMEDIES OF THE SELLER REF. Note (s)

Anticipatory Breach

Should the vendor have reasonable grounds to fear the
loss of immovable property sold and its price, he may
immediately sue for the rescission of the sale.
Art. 1591 The seller is given the RIGHT TO RESCIND the contract of
sale, even before there is actual breach of the contract.
Art. 1191 If there are no "reasonable grounds to fear loss" then there is
still rescission once there is an actual breach of contract.

Failure to Pay the Price

In the sale of immovable property,
even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the
rescission of the contract shall of right take place,
the vendee may pay, even after the expiration of the
period,
as long as no demand for rescission of the contract has
been made upon him either judicially or by a notarial act.
After the demand, the court may not grant him a new
term.
Art. 1592 This gives the seller the RIGHT TO RESCIND and the manner
is must be exercised.
Take note that, in spite of a stipulation, the buyer can still
update payment as long as the seller has not complied with
the law. This means that the rescission is only complete once
it is demanded either a) judicially; or, b) by a notarial act.
This article cannot be made to apply to contracts to sell,
because technically, these are CANCELLED not rescinded.

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REMEDIES OF THE BUYER REF. Note (s)

Suspension of Payment

Should the vendee be:
a) disturbed in the possession or ownership of the thing
acquired; or,
b) should he have reasonable grounds to fear such
disturbance, by a vindicatory action or a foreclosure of
mortgage,
Art. 1590 This gives the buyer the right to SUSPEND PAYMENT OF THE
PRICE, in cases of actual (disturbed) or impending (reasonable
grounds to fear) breach of the warranty against eviction.
However, a mere act of trespass shall not authorize the
suspension of the payment of the price.

he may suspend the payment of the price:

a) until the vendor has caused the disturbance or danger
to cease;
b) unless the latter gives security for the return of the
price in a proper case; or,
c) it has been stipulated that, notwithstanding any such
contingency, the vendee shall be bound to make the
payment.

Subdivision or Condominium Projects PD 957

Suspension of Payment or Full Reimbursement

No installment payment made by a buyer in a Sec. 23 &

subdivision or condominium project for the lot or unit he 24
contracted to buy shall be forfeited in favor of the owner
or developer

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when the buyer, after due notice to the owner or
developer, desists from further payment due to the
failure of the owner or developer to develop the
subdivision or condominium project:
a) according to the approved plans; and,
b) within the time limit for complying with the same.
Such buyer may, at his option be reimbursed the total
amount paid including amortization interests but
excluding delinquency interests, with interest thereon at
the legal rate.
The rights of the buyer in the event of this failure to pay
the installments due for reasons other than the failure of
the owner or developer to develop the project shall be
governed by Republic Act No. 6552.
Sales of Real Estate on Installment
At Least Two Years of Installment Paid
The buyer is entitled to the following rights in case he
defaults in the payment of succeeding installments:
a) To pay, without additional interest, the unpaid
installments due within the total grace period earned by
him which is hereby:
1) fixed at the rate of one month grace period for
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RFBT: Sales Part IV
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The buyer is granted a right against Forfeiture of Payments
only AFTER notice of suspension of payment based on a&b
as stated in the LICENSE TO SELL.
Also, the buyer may seek reimbursement of the total amount
paid, subject to adjustments provided by law.
In case of failure to pay installments, if it is due to sec. 23
stated above, then PD 957 will govern; otherwise, it shall be
RA 6552 or the Maceda Law.
RA 6552
Sec. 3 This law covers all transactions or contracts involving the sale
or financing of real estate on installment payments,
INCLUDING residential condominium apartments
but EXCLUDING a) industrial lots; b) commercial buildings;
and, c) sales to tenants under Republic Act Numbered 3844
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every one year of installment payments made:
2) Provided, That this right shall be exercised by the
buyer only once in every five years of the life of the
contract and its extensions, if any.
b) If the contract is canceled, the seller shall refund to
the buyer the cash surrender value of the payments on
the property
1) equivalent to 50% of the total payments made,
and, after 5 years of installments, an additional 5%
every year but not to exceed ninety per cent of the
total payments made:
2) Provided, That the actual cancellation of the
contract shall take place after thirty days from receipt
by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act
and upon full payment of the cash surrender value to
the buyer.
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as amended by Republic Act Numbered 6389 (Code of
Agrarian Reforms of the Philippines)
The law also covers Contracts to Sell.
Take note that a) down payments; b) deposits; or, c) options
on the contract shall be included in the computation of the
total number of installment payments made.
If the buyer defaults and there is at least two (2) years’ worth
of installments already paid, then the buyer is given the right
to either:
a) Update payment, without interest, within a legally
mandated grace period; or,
b) Entitlement to:
1) Notarial Act of Cancellation or Rescission;
2) the Cash Surrender Value; and,
3) a period of thirty days after receipt before the actual
cancellation or rescission of the contract can take place.
The right to make use of the GRACE PERIOD to update
payments can only be exercised, once in every five years or
the life or any extensions of the contract.
CANCELLATION or RESCISSION can only be validly made if
the following requirements are met:
a) Receipt of a Notarial Act of Cancellation or Rescission;

Less than Two Years of Installments Paid
The seller shall give the buyer a grace period of not less
than sixty days from the date the installment became
due.
If the buyer fails to pay the installments due at the
expiration of the grace period, the seller may cancel the
contract after thirty days from receipt by the buyer of the
notice of cancellation or the demand for rescission of the
contract by a notarial act.
Other Rights under Maceda Law
Under Section 3 and 4, the buyer shall have the right:
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RFBT: Sales Part IV
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b) Cash Surrender Value; and,
c) lapse of 30 days from receipt of a&b.
Sec. 4 If the buyer defaults and there is LESS THAN two (2) years’
worth of installments already paid, then the buyer is given:
a) a GRACE PERIOD of NOT LESS THAN 60 days; and,
b) if the buyer STILL DEFAULTS, CANCELLATION or
RESCISSION can validly be made if:
1) Receipt by buyer of a NOTICE of CANCELLATION or
DEMAND FOR RESCISSION;
2) lapse of 30 days from such time.
Take Note: in Cancellation and Rescission instances, these
only become effective upon compliance with the Notice and
applicable CSV requirements, AND the lapse of thirty days
after receipt of the buyer of both. Therefore, the buyer can
still update payment and reinstate the contract within the 30-
day period provided by law.
In effect, there are TWO grace periods:
a) the GRACE PERIOD specifically mentioned in the law; and,
b) the 30-day period before the actual cancellation or
rescission take place.
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RFBT: Sales Part IV
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a) to sell his rights or assign the same to another person; Sec. 5 The deed of sale or assignment shall be done by notarial act.
or,
b) to reinstate the contract by updating the account
during the grace period and before actual cancellation
of the contract.

The buyer shall:

a) have the right to pay in advance any installment or the
full unpaid balance of the purchase price any time;
b) without interest; and,
c) to have such full payment of the purchase price
annotated in the certificate of title covering the property.
Sec. 6 In some financing agreements, early payment is imposed with
a "pre-termination charge," which is in effect a penalty for
early payment. The Maceda Law (as well as the consumer act)
prohibits this.

Sec. 7 If there are stipulations in your contract of sale or contract to

sell which are contrary to the provisions of the Maceda Law,
then these are considered null and void, and are of no force
and effect.

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