1. SALE OF PERSONAL PROPERTY (see Art.

1484)

A. Remedies Of Vendor In Installment Sales Of Personal Property (RECTO

LAW) (Art. 1484) and Lease of Personal Property with Option to Buy (Art.
1485)

1. Exact fulfillment of the obligation, should the vendee fail to pay.

-This remedy applies regardless of the number of installments defaulted.
2. If the vendee’s failure to pay covers two or more installments, he may, at his
option, avail himself of the first remedy, or do either of the following:
a. Cancel the sale.
When the sale is cancelled or rescinded, the vendor shall return to the vendee
the sums received minus reasonable rent. However, the parties may stipulate that the
installments or rents paid shall not be returned provided the stipulation is not
unconscionable.
b. Foreclose the chattel mortgage on the thing sold, if one has been
constituted. In this case, he shall have no further action against the purchaser to
recover any unpaid balance of the price. Any agreement to the contrary is VOID.

NOTE: The above remedies are ALTERNATIVE, not CUMULATIVE.

Accordingly, the availment by the vendor of one remedy will not entitle him to make
use of the others.
B. Stipulations authorizing forfeiture of installments or rents
paid (see Art. 1486)

C. Expenses for execution and registration of the sale (see

Art. 1487)
2. SALE OF REAL PROPERTY

a. REPUBLIC ACT No. 6552 - AN ACT TO PROVIDE PROTECTION TO

BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS. (Rep. Act
No. 6552) – MACEDA LAW

Section 1. This Act shall be known as the "Realty Installment Buyer Act."

Section 2. It is hereby declared a public policy to protect buyers of real estate on

installment payments against onerous and oppressive conditions.

Section 3. In all transactions or contracts involving the sale or financing of real

estate on installment payments, including residential condominium
apartments but excluding industrial lots, commercial buildings and sales to
tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended
by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has
paid at least two years of installments, 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 fixed at the rate of one
month grace period for every one year of installment payments made:
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 equivalent to fifty per cent of the total payments
made, and, after five years of installments, an additional five
per cent every year but not to exceed ninety per cent of the
total payments made: 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.

Down payments, deposits or options on the contract shall be

included in the computation of the total number of
installment payments made.
Section 4. In case where less than two years of installments were 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.

Section 5. Under Section 3 and 4, the buyer shall have the right to sell his
rights or assign the same to another person or to reinstate the contract by
updating the account during the grace period and before actual cancellation
of the contract. The deed of sale or assignment shall be done by notarial act.

Section 6. The buyer shall have the right to pay in advance any
installment or the full unpaid balance of the purchase price any time
without interest and to have such full payment of the purchase price
annotated in the certificate of title covering the property.

Section 7. Any stipulation in any contract hereafter entered into contrary to

the provisions of Sections 3, 4, 5 and 6, shall be null and void.
 b. PRESIDENTIAL DECREE No. 957 July 12, 1976
REGULATING THE SALE OF SUBDIVISION LOTS AND
CONDOMINIUMS, PROVIDING PENALTIES FOR VIOLATIONS
THEREOF
Section 23. Non-Forfeiture of Payments. No installment payment made by a
buyer in a subdivision or condominium project for the lot or unit he
contracted to buy shall be forfeited in favor of the owner or developer 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 according to the approved plans and
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.

Section 24. Failure to pay installments. 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.

Where the transaction or contract was entered into prior to the effectivity of
Republic Act No. 6552 on August 26, 1972, 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.
TOPIC 3: OBLIGATIONS AND RIGHTS OF THE
VENDOR

1. GENERAL PROVISIONS (see Art. 1495) – The principal

obligations of a vendor are:
a) To transfer the ownership of the determinate thing sold;
b) To deliver the thing ;
c) To warrant against eviction and hidden defects (Arts.
1495; 1547);
d) To take care of the thing, pending delivery, with proper
diligence (Art. 1163); and
e) To pay for the expenses for the execution and registration
of the deed of sale, unless there is stipulation to the contrary (Art.
1487)
2. CONCEPT OE DELIVERY/TRADITION / TRANSFER OF
OWNERSHIP

A. CONCEPT OF DELIVERY
1. Legal Significance of Delivery - Although not an essential
element of contract, it is delivery that transfers ownership (Oct. 1992
CPA Board Exam) and not payment of the price (Art. 1496) (May 1995
CPA Board Exam)

2. Forms of Delivery (May 1981 CPA Board Exam)

a. Actual or Real Delivery (Art. 1497) – delivery by physically
placing the thing sold in the hands of the vendee (in case of movables)
or physically placing it in his possession and control (in case of
immovable) (Oct. 1989; May 1995 CPA Board Exams)
 b. Constructive or Legal Delivery
(1) By legal formalities (Art. 1498) – when the sale is made through a
public instrument.
(2) ) Symbolic delivery (Traditio Simbolica) (Art. 1498) – this is delivery
that takes place by delivering the keys of the place depository where the movable is stored or
kept. Use of tokens such as keys.
(3) Traditio Longa Manu (Delivery by Long Hand) (Art. 1499) – it
takes place by the mere consent or agreement of the contracting parties as when the vendor
merely points to the thing sold which shall thereafter be at the control and disposal of the
vendee. (It takes place by pinpointing the object) (Nov. 1976; Oct. 1991 CPA Board Exams)
(4) Traditio Brevi Manu (Delivery by Short Hand) (Art. 1499) - It takes
place by the mere consent or agreement of the parties if the vendee is already is possession of
the thing sold by virtue of another title as when the lessor sells the thing leased to the lessee.
(buyer has prior possession of the object)
(5) Traditio Constitutum Pоssessorium (Art. 1500) - Delivery that takes
place when the vendor continues in possession of the thing sold after the sale but in another
capacity such as that of a lessee or depositary. (seller remains in possession as lessee or tenant
of the thing sold) (May 1998 CPA Board Exam) This mode of delivery is the opposite of
Traditio Brevi Manu.
(6) Quasi-traditio (Art. 1501) - delivery of incorporeal things such as
shares of stocks (Oct. 1982 CPA Board Exam)
3. CONCEPT OF AN UNPAID SELLER – is one who has not
been paid or tendered the whole of the price or who has received a
bill of exchange or other negotiable instrument as conditional
payment and the condition on which it was received has been
broken by reason of the dishonor of the instrument, the
insolvency of the buyer, or otherwise. (Art. 1525)
REMEDIES/RIGHTS of an unpaid seller ( Oct. 1977; May 1994
CPA Board Exams)
(1) Possessory Lien (Art. 1527; 1528; 1529) – or a lien on the
goods or right to retain them while he is in possession of them
(2) Stoppage in transitu (Art. 1530; 1531; 1532)– to resume
possession of the goods at any time while they are in transit. It can be
availed of only when the buyer is or becomes insolvent.
(3) Right of Resale (Art. 1533) – goods are of a perishable in
nature
(4) Rescission (Art. 1534)– expressly reserved the right to
rescind the sale.
(NOTE: Right to withhold delivery if ownership has not yet
passed to the buyer - May 1979 & May 1982CPA Board Exams ):
 4. Concept of Double Sale (Art. 1544) : Priority in
Ownership
The governing principle “PRIORE TEMPORE, POTIOR
JURE” (first in time, stronger in right)
IF THING SOLD IS IF THING SOLD IS
MOVABLE IMMOVABLE
First to Take Possession in First to Register the Sale in
Good Faith Good Faith (“first registrant in
(The possession referred to good faith”)
may either be actual or If not yet registered, the First to
constructive) Take Possession in Good Faith
(“first possessor in good faith”)
If registration and possession
are both absent, the one with
the Oldest Title in Good Faith
(the first to buy).