Remedies of the Seller Sale of Movable on Installments What would be the remedies available to a seller in a sale of movables on installments

in case there is failure on the part of the buyer to pay? Are these 3 remedies available to the seller on account of the existence of the contract of sale? Is there mere fact that we have a contract of sale of movable property on installments and the fact that this sale has been breached by the buyer for failure to pay the purchase price will necessarily give rise to the availability of these 3 remedies? No Which remedy is necessarily available? The 3rd, remedy of foreclosure because you cannot speak of foreclosure if there is no showing that there is a mortgage constituted on the thing sold. It is possible that a contract of sale is unsecured, in which case your only remedy is either specific performance or rescission with damages in either case or just for damages On the other hand, it is always possible that we have a secured contract of sale, but then again still it does not follow that a mortgage is constituted on the thing itself because a different property may be given by way of security.

Or it does not even have to be property. It can be a personal guaranty of a person. And then we have that situation where a mortgage is constituted on the thing sold, in which case foreclosure under Art 1484 will now be an additional option. Which of these remedies would be advisable to be taken by the seller? Rescission does not appear to be that attractive because you end up with depreciated value of the property and as a general rule you have to return the installments that you have received. Foreclosure of mortgage is a viable option because he is secured. What is the downside of foreclosure? It is not a concern if the property mortgaged has been sold because by its nature a mortgage attaches to the property it does not matter who is in possession because it follows the property wherever it goes. The downside of this remedy is that you are limited to the value of the property. This falls under the exceptions to the general rule that the mortgagee is entitled to a deficiency judgment. Why would specific performance be the best remedy? It allows the seller to recover the entire unpaid balance.There is no limitation; and It is possible for the seller to levy on execution on the thing

sold the subject matter of the sale. The downside of this remedy is that: You waive any preference that you previously enjoy as mortgagee of the property that you have sold to the buyer; You become unsecured. You take the risk that the seller had enough assets with which to pay you. You also take the risk that there are preferred creditors, who can defeat your right as unsecured creditor. Before you can come up with levy and execution, you must already have a judgment in your favor that is final and executory. The litigation takes time so there is a possibility that the buyer will dispose of his properties including the thing you sold to him. This time around there is no lien which will follow the property wherever it goes. You have the remedy of what? Request for a writ of attachment which you can avail of at the beginning of the action to make sure that at the end of the litigation there will still be properties reserved for the execution of the judgment in your favor. However, the court will not just issue a writ of attachment for any reason. You have to show that you fall under the enumerated instances where such issuance is warranted. Lease with Option to Purchase

One way of circumventing the law is instead of making the transaction appear as it is (i.e. instead of saying that it is a sale on installments) people will make it appear as a contract of lease with option to purchase. How does it work as a sale on installments? The rentals of the supposed lease would be the installments, and only after the period has been completed and the rentals have already been given will there be an option to purchase at a minimal value the thing leased. How will this benefit the lessorseller? In case there is non-exercise of the so-called option, he gets to take back the property and whats more he gets the right to sue for the unpaid rentals. The net result is that he gets the property back and he gets the installments as well. That is why in contract of lease with option to purchase the law also treats this as a sale of movable on installments that will be governed by the prohibition in Art 1484. Sale of Immovable When it comes to immovable properties we to deal with Art 1592 and Maceda Law. The remedies are still the same (specific performance, substitute performance, rescission, damages), but these are provisions in the law which qualify the rights of the seller. What does Art 1592 provide?

Art 1592 recognizes the right of the seller to rescind a contract of sale of immovable property, but also qualify the exercise of this right. We said that under Art 1191 the parties can stipulate for extrajudicial rescission and the only requirement is that notice to be given. Notice does not have to be in any particular form to be effective, because the only purpose of the notice is to afford the other party the opportunity to question the decision of the court. Art 1592 is different. When it comes to the sale of immovable property the law requires no less the a judicial action or a notarial act. Until this is done the buyer has the right to effect payment even after the period for payment has lapsed. If the buyer pays, that means that the vendor will not have any right to rescind or cancel the contract. Art 1592 applies to contracts of absolute sale of immovable property. It does not apply to a contract to sell. What about the Maceda Law? In essence this somehow tempers the right of the seller to cancel the sale. How so? It introduces the concepts of a grace period and cash surrender value. Both of which will have the amounts varying depending on the number of installments that have been paid. Double Sales

A situation where rights of the parties may be qualified would be in the case of double sales and these can be double sales of both movable and immovable properties. What rules do we apply when it comes to double sale of movable property? Possession equates to title. In movable properties when you are in possession as owner then for all the laws _____ implication is that you are the owner. This is not so when it comes to immovable property, particularly when you are dealing with registered land, because the property registration will come in under the our Torrens System. Going to the last rule, the one who possess the oldest title, is the oldest title referred to in the last sentence the same title that may be acquired if a person registers the sale in his name? No. It is not Torrens Title. What is referred to? Title refers to the legal basis for claiming ownership of the property. In this case it would be the deed of sale. Is there any principle embodied in this rule that he who has oldest title shall be referred? First in time, priority in right If you have a first buyer and a second buyer, who precisely should have priority of right? The first buyer

What about the second buyer, what would be the status of the sale to him? It is valid Does Art 14844 depart from the principle that he who is first in time has priority of right? We have 3 rules: registration, acquisition of possession, and oldest title. Does it mean that the 3rd rule is the weakest? No. Instead of looking at it from top to bottom, look at it from the bottom going up, because the oldest title is the general rule. Under obligations and contracts on relativity of contracts in case there is a contract of sale and the property is sold to another person, the person to whom the property was first sold acquires a personal right against his seller. But, if the property sold to him has been delivered to the 3rd person right will not ripen into a real right. It cant be enforced against the 3rd person for lack of privity of contract in accordance with the principle of relativity of contracts. The same is true in the case of sale. I am the one who has the oldest. I am the first buyer. Although I should have priority of right, this right that I enjoy can be defeated if the real right is acquired by the second buyer. How can he acquire a real right that will defeat my personal right? If there is delivery to him which gives him the real right of ownership

What happens if I have oldest title and there was delivery to me? I have ownership. However, this is registered property and I have not registered may title so that title is still in the name of my seller. Can my seller still sell? You cannot transfer what you no longer have. So you can no longer transfer anything to the buyer. However, that rules admits of exceptions, one of which would be contrary provisions in any recording law which is the Torrens System. Under Torrens System the buyer can rely on what appears on the title. So that even if I already have possession, this can still be defeated by registration in good faith. As you can see we did not depart from the general rule. I am the 1st buyer I still enjoy preference in terms of right over the 2nd buyer, because I am in good faith. I can never be in bad faith. I could not have been aware any defect in my title at the time the sale was done. But, my right can still be defeated. How? 1. If the other buyer acquires possession first, because possession transfers ownership 2. Even if there has been delivery to me, if there is registration and you are dealing with registered land The point is this, I as the 1st buyer I am supposed to be secured in my place.

Who is supposed to make a move to dislodge me from my secured place? It is the 2nd buyer who must try to have possession delivered to him, but he must be in good faith; otherwise even if he acquires possession in ahead of me, if he is in bad faith or if he knows the first sale has been made in my favor, he cannot defeat my rights. Similarly even in registration he must be in good faith. He must not be aware my existence as 1st buyer. Once he becomes aware he cannot do anything to defeat my rights. What about me, do I have to be in good faith if I learn about the 2nd buyer? What will be your natural reaction when you learn that there is a 2nd buyer? May be you will immediately cause the possession to be transferred to you, or take care of the registration of title in your name. Will that be an end to your good faith? No. You are acting well within your right, because if you dont do anything that would be negligence on your part. We still adhere to the general rule. The enumeration of remedies 2 and 1 are meant to the 2nd buyer to do to defeat or justify deviation from the general rule; otherwise if he does not do these things we apply the general rule and it is the 1st buyer who shall be made to prevail. Case: Carbonell vs CA.