E.

Lease with option to repurchase

II. Remedies in cases of immovables

Remedies of Parties
A. Remedies of seller
Outline: 1. Anticipatory Breach
2. Failure of Buyer to pay price
I. Remedies in cases of movables a. Rescission under Article
1592
A. Ordinary remedies of seller b. contracts to sell not
1. Movables in general covered by article 1592
2. Sales of Goods
a. non-payment of price by the B. Remedies of Buyer
buyer
1. Suspension of Payment
b. when buyer wrongfully
neglects/refuses to accept goods 2. In case of Subdivision or
Condominium Projects
B. Special remedies of Unpaid Seller
1. Definition of unpaid seller C. Maceda Law/Realty Installment Buyer
2. Rights of unpaid seller Protection Act
3. Possessory lien
a. when negotiable document is
issued
b. when part delivery effected
c. instances when possessory
lien is loss
4. Stoppage in transitu
a. when negotiable document is
issued
b. when buyer is deemed
insolvent
c. when goods are deemed in
transit
d. when good are no longer in
transit
e. when part delivery is already
made
f. How rights are exercised
g. when goods are covered by
negotiable document of title
5. Special rights to resale
a. when right is exercisable
b. Effect of having
exercisable right of resale
c. Transfer of ownership
d. Notice to defaulting buyer
e. Standard of care and I. Remedies in cases of Movables
disqualification in resale
6. Special Right to Rescind A. Ordinary Remedies of Seller
a. When right may be
exercised 1. Movables in general
b. Effect of exercise of such
right Article 1593. With respect to movable property,
c. Transfer of title the rescission of the sale shall of right take place
in the interest of the vendor, if the vendee, upon
C. Remedies of Buyer the expiration of the period fixed for the
delivery of the thing, should not have appeared
1. Failure of Seller to deliver to receive it, or, having appeared, he should not
2. Breach of Seller’s warranty have tendered the price at the same time, unless
3. Suspension of Payments in a longer period has been stipulated for its
Anticipation of Breach payment. (1505)
a. remedy of buyer for
pending suit
2. Sale of Goods
D. Recto Law/Installment Sales Law: Sales
of movables on installments
 a. Non-payment of price by
the buyer made if the contract or the sale had been fully
performed shall be considered in awarding the
Article 1595. Where, under a contract of sale, damages. (n) 
the ownership of the goods has passed to the
buyer and he wrongfully neglects or refuses to
pay for the goods according to the terms of the
contract of sale, the seller may maintain an B. Special Remedies of Unpaid Seller of
action against him for the price of the goods.  Goods
Where, under a contract of sale, the price is
1. Definition of unpaid seller
payable on a certain day, irrespective of delivery
or of transfer of title and the buyer wrongfully
neglects or refuses to pay such price, the seller Article 1525. The seller of goods is deemed to
may maintain an action for the price although be an unpaid seller within the meaning of this
the ownership in the goods has not passed. But Title: 
it shall be a defense to such an action that the
seller at any time before the judgment in such (1) When the whole of the price has not been
action has manifested an inability to perform the paid or tendered; 
contract of sale on his part or an intention not to
perform it.  (2) When a bill of exchange or other negotiable
instrument has been received as conditional
Although the ownership in the goods has not payment, and the condition on which it was
passed, if they cannot readily be resold for a received has been broken by reason of the
reasonable price, and if the provisions of article dishonor of the instrument, the insolvency of the
1596, fourth paragraph, are not applicable, the buyer, or otherwise. 
seller may offer to deliver the goods to the
buyer, and, if the buyer refuses to receive them, In articles 1525 to 1535 the term "seller"
may notify the buyer that the goods are includes an agent of the seller to whom the bill
thereafter held by the seller as bailee for the of lading has been indorsed, or a consignor or
buyer. Thereafter the seller may treat the goods agent who has himself paid, or is directly
as the buyer's and may maintain an action for responsible for the price, or any other person
the price.  who is in the position of a seller. 

2. Rights of Unpaid Seller

b. When buyer wrongfully Article 1526. Subject to the provisions of this

neglects/refuses to accept Title, notwithstanding that the ownership in the
goods goods may have passed to the buyer, the unpaid
seller of goods, as such, has: 
Article 1596. Where the buyer wrongfully
neglects or refuses to accept and pay for the (1) A lien on the goods or right to retain them
goods, the seller may maintain an action against for the price while he is in possession of them; 
him for damages for nonacceptance. 
(2) In case of the insolvency of the buyer, a right
The measure of damages is the estimated loss of stopping the goods in transitu after he has
directly and naturally resulting in the ordinary parted with the possession of them; 
course of events from the buyer's breach of
contract.  (3) A right of resale as limited by this Title; 

Where there is an available market for the goods (4) A right to rescind the sale as likewise limited
in question, the measure of damages is, in the by this Title.
absence of special circumstances showing
proximate damage of a different amount, the 3. Possessory Lien
difference between the contract price and the
market or current price at the time or times Article 1527. Subject to the provisions of this
when the goods ought to have been accepted, or, Title, the unpaid seller of goods who is in
if no time was fixed for acceptance, then at the possession of them is entitled to retain
time of the refusal to accept.  possession of them until payment or tender of
the price in the following cases, namely: 
If, while labor or expense of material amount is
necessary on the part of the seller to enable him (1) Where the goods have been sold without any
to fulfill his obligations under the contract of stipulation as to credit; 
sale, the buyer repudiates the contract or notifies
the seller to proceed no further therewith, the
(2) Where the goods have been sold on credit,
buyer shall be liable to the seller for labor
but the term of credit has expired; 
performed or expenses made before receiving
notice of the buyer's repudiation or
countermand. The profit the seller would have
 (2) In case of the insolvency of the buyer, a right
(3) Where the buyer becomes insolvent.  of stopping the goods in transitu after he has
parted with the possession of them;
The seller may exercise his right of lien
notwithstanding that he is in possession of the Article 1530. Subject to the provisions of this
goods as agent or bailee for the buyer. (n) Title, when the buyer of goods is or becomes
insolvent, the unpaid seller who has parted with
Article 1535. Subject to the provisions of this the possession of the goods has the right of
Title, the unpaid seller's right of lien or stoppage stopping them in transitu, that is to say, he may
in transitu is not affected by any sale, or other resume possession of the goods at any time
disposition of the goods which the buyer may while they are in transit, and he will then
have made, unless the seller has assented become entitled to the same rights in regard to
thereto. the goods as he would have had if he had never
parted with the possession
a. When negotiable
Article 1535. Subject to the provisions of this
Document of title is issued Title, the unpaid seller's right of lien or stoppage
in transitu is not affected by any sale, or other
Article 1535. ….. disposition of the goods which the buyer may
have made, unless the seller has assented
If, however, a negotiable document of title has thereto. 
been issued for goods, no seller's lien or right of
stoppage in transitu shall defeat the right of any a. When negotiable
purchaser for value in good faith to whom such
document has been negotiated, whether such
Document of title is issues
negotiation be prior or subsequent to the
notification to the carrier, or other bailee who Article 1535. ….
issued such document, of the seller's claim to a
lien or right of stoppage in transitu.  If, however, a negotiable document of title has
been issued for goods, no seller's lien or right of
b. When part delivery stoppage in transitu shall defeat the right of any
effected purchaser for value in good faith to whom such
document has been negotiated, whether such
negotiation be prior or subsequent to the
Article 1528. Where an unpaid seller has made notification to the carrier, or other bailee who
part delivery of the goods, he may exercise his issued such document, of the seller's claim to a
right of lien on the remainder, unless such part lien or right of stoppage in transitu. 
delivery has been made under such
circumstances as to show an intent to waive the
lien or right of retention. (n) b. When buyer is deemed
insolvent
c. instances when
possessory lien is lost Article 1636. In the preceding articles in this
Title governing the sale of goods, unless the
context or subject matter otherwise requires:
Article 1529. The unpaid seller of goods loses
his lien thereon:
(2) A person is insolvent within the meaning of
this Title who either has ceased to pay his debts
(1) When he delivers the goods to a carrier or in the ordinary course of business or cannot pay
other bailee for the purpose of transmission to his debts as they become due, whether
the buyer without reserving the ownership in the insolvency proceedings have been commenced
goods or the right to the possession thereof;  or not.

(2) When the buyer or his agent lawfully obtains

possession of the goods; 
c. when goods are deemed
in transit
(3) By waiver thereof. 
Article 1531. Goods are in transit within the
The unpaid seller of goods, having a lien meaning of the preceding article: 
thereon, does not lose his lien by reason only
that he has obtained judgment or decree for the (1) From the time when they are delivered to a
price of the goods.  carrier by land, water, or air, or other bailee for
the purpose of transmission to the buyer, until
the buyer, or his agent in that behalf, takes
4. Stoppage in Transitu delivery of them from such carrier or other
bailee; 
Article 1526. Subject to the provisions of this
Title, notwithstanding that the ownership in the (2) If the goods are rejected by the buyer, and
goods may have passed to the buyer, the unpaid the carrier or other bailee continues in
seller of goods, as such, has: possession of them, even if the seller has refused
to receive them back.
 g. When goods are covered
d. Goods are no longer in by negotiable document of
transit title

Article 1531.  ….. Article 1532. …

Goods are no longer in transit within the …If, however, a negotiable document of title
meaning of the preceding article:  representing the goods has been issued by the
carrier or other bailee, he shall not be obliged to
(1) If the buyer, or his agent in that behalf, deliver or justified in delivering the goods to the
obtains delivery of the goods before their arrival seller unless such document is first surrendered
at the appointed destination;  for cancellation. 

(2) If, after the arrival of the goods at the 5. Special Right to Resell Goods
appointed destination, the carrier or other bailee
acknowledges to the buyer or his agent that he Article 1526. Subject to the provisions of this
holds the goods on his behalf and continues in Title, notwithstanding that the ownership in the
possession of them as bailee for the buyer or his goods may have passed to the buyer, the unpaid
agent; and it is immaterial that further seller of goods, as such, has: 
destination for the goods may have been
indicated by the buyer;  (3) A right of resale as limited by this Title; 

(3) If the carrier or other bailee wrongfully

a. When right Exercisable
refuses to deliver the goods to the buyer or his
agent in that behalf. 
Article 1533. Where the goods are of perishable
nature, or where the seller expressly reserves the
If the goods are delivered to a ship, freight train,
right of resale in case the buyer should make
truck, or airplane chartered by the buyer, it is a
default, or where the buyer has been in default
question depending on the circumstances of the
in the payment of the price for an unreasonable
particular case, whether they are in the
time, an unpaid seller having a right of lien or
possession of the carrier as such or as agent of
having stopped the goods in transitu may resell
the buyer.
the goods. 

e. When part delivery

b. Effect of having
already made
exercisable right of resale
Article 1531. ……
Article 1533. ….He (seller) shall not thereafter
If part delivery of the goods has been made to be liable to the original buyer upon the contract
the buyer, or his agent in that behalf, the of sale or for any profit made by such resale, but
remainder of the goods may be stopped in may recover from the buyer damages for any
transitu, unless such part delivery has been loss occasioned by the breach of the contract of
under such circumstances as to show an sale.
agreement with the buyer to give up possession
of the whole of the goods. c. Transfer of ownership

f. How rights are exercised Article 1533. ……

Article 1532. The unpaid seller may exercise Where a resale is made, as authorized in this
his right of stoppage in transitu either by article, the buyer acquires a good title as against
obtaining actual possession of the goods or by the original buyer.
giving notice of his claim to the carrier or other
bailee in whose possession the goods are. Such d. Notice to defaulting
notice may be given either to the person in buyer
actual possession of the goods or to his
principal. In the latter case the notice, to be Article 1533. ……
effectual, must be given at such time and under
such circumstances that the principal, by the
It is not essential to the validity of resale that
exercise of reasonable diligence, may prevent a
notice of an intention to resell the goods be
delivery to the buyer. 
given by the seller to the original buyer. But
where the right to resell is not based on the
When notice of stoppage in transitu is given by perishable nature of the goods or upon an
the seller to the carrier, or other bailee in express provision of the contract of sale, the
possession of the goods, he must redeliver the giving or failure to give such notice shall be
goods to, or according to the directions of, the relevant in any issue involving the question
seller. The expenses of such delivery must be whether the buyer had been in default for an
borne by the seller.  unreasonable time before the resale was made. 
It is not essential to the validity of a resale that Article 1598. Where the seller has broken a
notice of the time and place of such resale contract to deliver specific or ascertained goods,
should be given by the seller to the original a court may, on the application of the buyer,
buyer. direct that the contract shall be performed
specifically, without giving the seller the option
e. Standard of care and of retaining the goods on payment of damages.
The judgment or decree may be unconditional,
disqualification in resale
or upon such terms and conditions as to
damages, payment of the price and otherwise, as
Article 1533. …… the court may deem just
The seller is bound to exercise reasonable care
and judgment in making a resale, and subject to 2. Breach of Seller’s warranty
this requirement may make a resale either by
public or private sale. He cannot, however, Article 1599. Where there is a breach of
directly or indirectly buy the goods. warranty by the seller, the buyer may, at his
election: 
6. Special Right to Rescind
(1) Accept or keep the goods and set up against
the seller, the breach of warranty by way of
Article 1526. Subject to the provisions of this
recoupment in diminution or extinction of the
Title, notwithstanding that the ownership in the
price; 
goods may have passed to the buyer, the unpaid
seller of goods, as such, has:
(2) Accept or keep the goods and maintain an
action against the seller for damages for the
(4) A right to rescind the sale as likewise limited
breach of warranty; 
by this Title.
(3) Refuse to accept the goods, and maintain an
a. When right may be action against the seller for damages for the
exercised breach of warranty; 

Article 1534. An unpaid seller having the right (4) Rescind the contract of sale and refuse to
of lien or having stopped the goods in transitu, receive the goods or if the goods have already
may rescind the transfer of title and resume the been received, return them or offer to return
ownership in the goods, where he expressly them to the seller and recover the price or any
reserved the right to do so in case the buyer part thereof which has been paid. 
should make default, or where the buyer has
been in default in the payment of the price for When the buyer has claimed and been granted a
an unreasonable time. remedy in anyone of these ways, no other
remedy can thereafter be granted, without
b. Effect of exercise of such prejudice to the provisions of the second
right paragraph of article 1191.

Article 1534.  ……. The seller shall not Article 1191.  …

thereafter be liable to the buyer upon the
contract of sale, but may recover from the buyer The injured party may choose between the
damages for any loss occasioned by the breach fulfillment and the rescission of the obligation,
of the contract. with the payment of damages in either case. He
may also seek rescission, even after he has
c. Transfer of title chosen fulfillment, if the latter should become
impossible.
Article 1534.  …….
3. Suspension of Payments in
The transfer of title shall not be held to have Anticipation of Breach
been rescinded by an unpaid seller until he has
manifested by notice to the buyer or by some Article 1590. Should the vendee be disturbed in
other overt act an intention to rescind. It is not the possession or ownership of the thing
necessary that such overt act should be acquired, or should he have reasonable grounds
communicated to the buyer, but the giving or to fear such disturbance, by a vindicatory action
failure to give notice to the buyer of the or a foreclosure of mortgage, he may suspend
intention to rescind shall be relevant in any issue the payment of the price until the vendor has
involving the question whether the buyer had caused the disturbance or danger to cease,
been in default for an unreasonable time before unless the latter gives security for the return of
the right of rescission was asserted. the price in a proper case, or it has been
stipulated that, notwithstanding any such
C. Remedies of Buyer contingency, the vendee shall be bound to make
the payment. A mere act of trespass shall not
authorize the suspension of the payment of the
1. Failure of Seller to deliver price.
 Article 1592. In the sale of immovable
a. remedy of buyer for property, even though it may have been
pending suit stipulated that upon failure to pay the price
at the time agreed upon the rescission of
the contract shall of right take place, the
Suspend the payment of the balance of the vendee may pay, even after the expiration
purchase price by reason of aforesaid of the period, as long as no demand for
vindicatory action filed against it. rescission of the contract has been made
upon him either judicially or by a notarial
D. Recto Law/Installment Sales Law: act. After the demand, the court may not
Sales of movables on installments grant him a new term. (1504a)

Article 1484. In a contract of sale of personal b. contracts to sell not

property the price of which is payable in covered by article 1592
installments, the vendor may exercise any of the B. Remedies of Buyer
following remedies: 
1. Suspension of Payment
(1) Exact fulfillment of the obligation, should
the vendee fail to pay;  Article 1590. Should the vendee be
disturbed in the possession or ownership of
(2) Cancel the sale, should the vendee's failure the thing acquired, or should he have
to pay cover two or more instalments;  reasonable grounds to fear such
disturbance, by a vindicatory action or a
(3) Foreclose the chattel mortgage on the thing foreclosure of mortgage, he may suspend
sold, if one has been constituted, should the the payment of the price until the vendor
vendee's failure to pay cover two or more has caused the disturbance or danger to
installments. In this case, he shall have no cease, unless the latter gives security for
further action against the purchaser to recover the return of the price in a proper case, or it
any unpaid balance of the price. Any agreement has been stipulated that, notwithstanding
to the contrary shall be void. (1454-A-a) any such contingency, the vendee shall be
bound to make the payment. A mere act of
E. Lease with option to purchase trespass shall not authorize the suspension
of the payment of the price.
Article 1485. The preceding article (Art. 1484)
shall be applied to contracts purporting to be 2. In case of Subdivision or
leases of personal property with option to buy, Condominium Projects
when the lessor has deprived the lessee of the
possession or enjoyment of the thing. (1454-A- P.D. 957, Section. 23.  Non-Forfeiture of
a) Payments. No installment payment made
by a buyer in a subdivision or condominium
Article 1486. In the case referred to in the two project for the lot or unit he contracted to
preceding articles (Art. 1484 and 1485), a buy shall be forfeited in favor of the owner
stipulation that the installments or rents paid or developer when the buyer, after due
shall not be returned to the vendee or lessee notice to the owner or developer, desists
shall be valid insofar as the same may not be from further payment due to the failure of
unconscionable under the circumstances. (n)  the owner or developer to develop the
subdivision or condominium project
II. Remedies in cases of immovables according to the approved plans and within
the time limit for complying with the same.
Such buyer may, at his option, be
A. Remedies of seller reimbursed the total amount paid including
amortization interests but excluding
1. Anticipatory Breach delinquency interests, with interest thereon
at the legal rate.
Article 1591. Should the vendor have
reasonable grounds to fear the loss of P.D. 957, Section 24. Failure to pay
immovable property sold and its price, he installments. The rights of the buyer in the
may immediately sue for the rescission of event of this failure to pay the installments
the sale.  due for reasons other than the failure of the
owner or developer to develop the project
Should such ground not exist, the shall be governed by Republic Act No.
provisions of article 1191 shall be observed. 6552.

2. Failure of Buyer to pay price Where the transaction or contract was

entered into prior to the effectivity of
a. Rescission under Article Republic Act No. 6552 on August 26, 1972,
1592 the defaulting buyer shall be entitled to the
corresponding refund based on the
installments paid after the effectivity of the
law in the absence of any provision in the
contract to the contrary.

C. Maceda Law/Realty Installment Buyer

Protection Act