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May Encarnina P. Gaoiran

Lease with Option to Purchase

Barring Effect on Such Contracts

Issue: Whether the taking back of possession or enjoyment of the property leased astreated by Article 1485 carries the concept of recession or foreclosure.

if recession- even after the taking back possession or enjoyment, and forfeiting

all rentals previously paid, the lessor-seller will be able to collect damagesif foreclosure- the seller-lessor can no longer collect further amounts against the

buyer-lesseewrit of replevin- merely to ensure enforcement of the remedy of specific performance

under Article 1484(1); it does not produce barring effect

Note: When purported lessor takes possession of subject movable, it is treated legallyas foreclosure and the barring effects applicable to foreclosure remedy, not recission, are givenapplication.

In Case of Immovables

A. Remedies of Seller

1. Anticipatory BreachArt. 1591 applies if the seller has reasonable grounds to fear the loss of the

immovable property sold and its priceArt. 1191 applies if the ground is substantial breach by buyer for failure to

comply with his obligation to pay the price when due

2. Failure of Buyer to Pay PriceRemedy- recission via judicial (eg. filing of a cross-claim) or notarial demand

(Art. 1592, CC) does not apply to contracts to sell (J.M Tuason & Co., Inc v. Javier)

B. Remedies of Buyer

1. Suspension of Payment- right granted to the buyerGrounds:

a) disturbance in the buyers possession or ownership of the thing acquiredb) reasonable grounds to fear such disturbancec) pending suit over the subject matter

Remedies:a) vindicatory actionb) foreclosure of mortgage

Exceptions:a) cessation of the cause of disturbance or dangerb) security for the return of the pricec) stipulation

mere act of trespass shall not authorize suspension of the payment ofprice

In Case of Subdivision or Condominium Projects

Secs. 23 and 24, P.D 957: No installment payments made by the buyer in asubdivision or condominium project for the lot or unit he contracts to buy shall be forfeited in favor ofthe owner or developer when the buyer, after due notice to the owner or developer desists fromfurther payment due to the failure of the owner or developer to develop the subdivision orcondominium project according to the approved plans and within the time limit for complying with thesame.

o Relucio v. Brillante-Garfin:buyers option- 1) to demand reimbursement of the total

amount paid, 2) to wait further devt of the subdivision or condominium project (Effect-he may not be ousted from the subdivision

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o Gold Loop Properties, Inc. v. CA: buyer of a condominium unit is justified insuspending payment of his monthly amortizations where the seller fails to give a copy ofthe Contract of Sale despite repeated demands therefore.

a) Notice Required under Sec. 23 of P.D 957

-it is not indispensableb) Retroactive Application of P.D 957

o Eugenio v. Executive Sec. Drilon: The failure to develop a subdivision constituteslegal justification for the non-payment of amortization by the buyer on installment under

the land purchase agreements entered into prior to its enactment.

2. Right to Grace Period Stipulated-it is effective w/o further need of demand either calling for the payment of

the obligation or for honoring the right.