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CHAPTER 10: Remedies of Parties [TABLES]

I. Remedies in Case of Movables

A. Ordinary remedies of seller


Situation Remedy
Movables in general Buyer doesn’t appear to have Seller can rescind the sale
received the thing or he received it
but did not tender the price
ownership pf the goods has passed Seller may maintain an action against him for the
to buyer price of the goods (action for specific performance)
Sale of Goods – No transfer of ownership to buyer Seller can notify the buyer that the goods are being
Buyer neglects or held by the seller as bailee for the buyer; seller may
refuses or pay the treat the goods as the buyer’s and maintain an action
price for the price (specific performance)
Price payable on certain day Seller maintain maintain an action for the price
(specific performance)
Buyer wrongfully buyer refuses to accept and pay for Damages for non-acceptance in acc. w/ rules on
neglects or refuses to the goods page 333-334
accept goods

B. Special remedies of unpaid seller of goods


Remedy/Right What is it? When Remedy Available How exercised
Possessory lien Grants a creditor the right a) Goods have been sold Seller continues to possess
to remain in possession without any stipulation the goods
of a property under the as to credit
lien until the debtor has b) Goods have been sold
satisfied his/her debt on credit by the term of
credit has expired
c) Buyer becomes
insolvent
Stoppage in Right to resume - Right to possessory lien a) Obtaining actual
transitu possession of the goods has been exercised possession of the
at any time while they are - Buyer suddenly goods
in transit. becomes insolvent and b) Giving notice of his
Relevant provisions: Art. hasn’t paid for the claim to the carrier or
1531 goods. other bailee in whose
possession the goods
are.
Special right of Seller can resell the goods Possessory lien or stoppage in Basically, the seller just sells
resale even if ownership has transit rights has been previously the goods to another person,
already transferred to the exercised instead of the original buyer.
buyer. a) The goods are of He incurs no liability to the
perishable nature original buyer. In fact, yung
b) Seller has been seller pa yung pwede
expressly reserved in magrecover from the original
case the buyer should buyer, damages for any loss by
make default the breach of the sale!
c) Buyer has been in So the new buyer acquires a
default in the payment good title as against the original
of the price for an buyer.
unreasonable time
Special right to Right to judicially rescind a) The seller has expressly Judicial rescission – basically,
rescind even if ownership has reserved the right to do the seller goes to court to
passed to the buyer rescind the contract.
so in case the buyer
should make default
b) The buyer has been in
default in the payment
of the price for an
unreasonable time

C. Remedies of Seller

Situation Remedy
Seller fails to deliver Seller fails to deliver specific a) Action for specific performance
specific goods goods
Breach of seller’s Breach of seller’s warranty Either:
warranty a) 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
b) Accept or keep the goods, and maintain an
action against the seller for damages for the
breach of warranty
c) Refuse to accept the goods and maintain an
action against the seller for damages for
breach of warranty
d) Rescind the 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 thereof which has been paid.

IN LAYMAN’S TERMS:
a) Accept the goods and ask for a discount
b) Accept the goods and sue for damages
c) Don’t accept and sue for damages
Rescind the sale and don’t accept, and if it’s already
been received, return it.
Suspension of Buyer is disturbed in the Suspend the payment of the price until the seller has
Payments in possession/ownership of the thing caused the disturbance or danger to cease, unless the
Anticipation of acquired, or he has reasonable seller gives security for the return of the price in a
Breach grounds to fear such disturbance proper case
by a vindicatory action or a
foreclosure of mortgage

RECTO Law: Sales of movables on installments


Situation Remedies of seller (Alternative)
Sale of personal property the price of which is payable a) Exact fulfillment of the obligation, should the
in installments buyer fail to pay any installment
b) Rescind the sale, should the buyer’s failure to
pay cover two or more installments
c) Foreclose the chattel mortgage on the thing
sold, if one has been constituted, should the
buyer’s failure to pay cover two or more
installments.
Note: if the seller chooses to foreclose the chattel
mortgage, he can’t recover any unpaid balance of the
price (if kulang yung proceeds from the foreclosure to
cover the utang). This barring effect does not apply to
rescission.

Other notes:
- Recto law doesn’t apply to a situation where there is an initial payment and a balance payable in the future
because it’s not actually an installment, but a “straight sale”
- Recto law also do not apply when there is only one payment to be paid in the future (kasi nga installments,
so it contemplates several payments)
- Contracts to sell movables are not covered.
- Remedies are alternative and not cumulative (exercise of one would bar the exercise of the other). Bawal din
simultaneous.
- What’s a perverse-buyer-mortgagor? – this is when a defaulting buyer-mortgagor refuses to surrender the
chattel to the seller to allow the latter to be able to proceed with foreclosure. The seller, even after actual
foreclosure, may be allowed to recover expenses and attorney’s fees in trying to obtain possession of the
chattel

II. Remedies in Case of Immovables

A. Remedies of Seller
Situation Remedy
Anticipatory breach – seller has reasonable grounds to Sue for rescission of the sale
fear the loss of the immovable property sold
Failure of buyer to pay the price in full within a fixed  Action to collect the balance
period  Rescind the sale upon judicial or notarial
demand

B. Remedies of Buyer
Situation Remedy
Buyer is disturbed in the possession or ownership of the Buyer may suspend the payment of the price until the
thing acquired, or has reasonable grounds to fear such seller has caused the disturbance or danger to cease,
disturbance, by vindicatory action or a foreclosure of unless the seller gives a security for the return of the
mortgage price in a proper case, or it has been stipulated that,
notwithstanding any such contingency, the buyer shall
be bound to make payment.

Layman’s terms: Basically, buyer can suspend payment


of the price, until the seller fixes the problem. However,
an exception to this would be when the seller gave a
security for the return of the price or if the parties
stipulated na the buyer would still pay, regardless of
whatever happens.
In case of subdivision or condominium projects, the The installment payments made by the buyer cannot be
seller fails to develop the subdivision or condo forfeited in favor of the seller/developer after due notice
according to the approved plans and within the time to the latter by the buyer that he will desist from further
limit. payments. Buyer can also opt to demand reimbursement
of the total amount he paid. Or he can opt to just wait for
further development of the subdivision/condo project.

C. MACEDA LAW: Sale of Real Estate on Installments


 Covers primarily residential real estate
 Covers contracts to sell residential real estate on installments

Rights of a Buyer covered under the Maceda Law:


 When he has paid at least two years of installments and he defaults in payment of succeeding installments:
o To pay without additional interest, the unpaid installments due within the total grace period
earned by him, which is fixed at the rate of one month grace period for every one year of
installment payments
o If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the
payments on the property equivalent to 50% of the total payments made and, after five years of
installments, an additional 5% every year but not to exceed 90% of the total payments made.
[note: right to refund of buyer only accrues when he has paid at least 2 years of installments. Question: what if less
than 2 years lang yung installments paid? Edi the buyer shall be entitled to a 60 day grace period from the date the
installments became due. If di pa rin siya nakapagbayad, pwede na i-cancel ni seller yung contract after 30 days from
the time the buyer receives the notice of cancellation or demand for rescission of the contract by a notarial act.]

Grace period – can only be exercised by the buyer once every five years of the life of the contract.

Cancellation of Contract
 Cancellation shall take place after 30 days from receipt by the buyer of the notice of cancellation or
demand for rescission by a notarial act and upon full payment of the cash surrender value to the buyer.

How to cancel a sale covered under the Maceda Law:


1. Seller shall send a notarized notice of cancellation to the buyer
2. Seller shall refund the cash surrender value
[note: if the seller does not comply with these mandatory requirements, the contract to sell remains valid and
subsisting]

Macloughlin case doctrine:


1. Notarial act is required only for rescission. Notice of cancellation need not be by a notarial act.
2. Even after the expiration of the grace period, the buyer can still prevent rescission or cancellation of the
contract within the 30-day period when rescission or cancellation is to take effect.

Macloughlin provides for 2 grace periods:


1st grace period – one provided for expressly by Law (yung minimum of 60 days) [no interest or penalties accrue]
2nd grace period – period before rescission/cancellation actually takes place [buyer would be liable for interests and
penalties]

Other rights of buyer under Maceda Law


1. To sell his rights or assign it to another person
2. To pay in advance any installment or the full unpaid balance of the purchase price any time without interest

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