In Philippine real estate practice, it is extremely common—though highly ill-advised—for sellers to execute a Deed of Absolute Sale and cause the transfer of the Certificate of Title to the buyer even before the full purchase price has been paid. Sellers do this for various reasons: to help the buyer obtain a bank loan, to avoid capital gains tax liability on the full amount, to accommodate family members, or simply out of misplaced trust. Whatever the reason, once the title is in the buyer’s name and the sale is absolute in form, the seller’s legal position becomes significantly weaker. Ownership has already passed to the buyer, and the seller is reduced to the status of an unsecured or under-secured creditor.

This article exhaustively discusses every remedy available to the seller under Philippine law when the buyer defaults after the land title has already been transferred.

I. Nature of the Transaction After Title Has Been Transferred

Once a Deed of Absolute Sale is notarized and the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) is issued in the buyer’s name, the contract is conclusively a contract of sale (not a contract to sell). Ownership has passed to the buyer by constructive delivery (Art. 1498, Civil Code) and actual registration (Sec. 51, P.D. 1529).

The following consequences immediately follow:

The seller can no longer unilaterally cancel the contract or forfeit payments the way he could under a contract to sell.
Maceda Law (R.A. 6552) does not apply in its full protective rigor because the law contemplates situations where the seller still holds the title as security. The Supreme Court has repeatedly ruled that when title has already been transferred via absolute sale, the transaction is no longer governed by the Maceda Law (Active Realty & Development Corp. v. Daroya, G.R. No. 141205, June 7, 2002; Boston Bank v. Manalo, G.R. No. 158149, February 9, 2006; Spouses Reyes v. Spouses Tuparan, G.R. No. 188064, June 1, 2011).
The seller’s remedies are now limited to those available to a creditor whose debt is either unsecured or secured only by a real estate mortgage (if one was constituted and annotated).

II. Best-Case Scenario: The Unpaid Balance Is Secured by a Registered Real Estate Mortgage (REM)

This is the strongest and most recommended protection.

A. Extrajudicial Foreclosure (Act No. 3135, as amended)

Procedure:

File a petition with the Notary Public (preferably in the province where the property is located) for extrajudicial foreclosure.
Publication of notice of sale once a week for three consecutive weeks in a newspaper of general circulation.
Posting of notices in three public places in the municipality/city and in the barangay where the property is located.
Auction sale at least 20 days after the last publication.
If the seller is the highest bidder, a Certificate of Sale is issued.
One-year redemption period begins from registration of the Certificate of Sale (unless the mortgagee is a bank or banking institution — in which case there is no right of redemption after the sale is registered, pursuant to Sec. 47, Republic Act No. 8791, the General Banking Law).
After the redemption period (or immediately if the mortgagee is a bank), the Register of Deeds cancels the buyer’s title and issues a new one in favor of the foreclosure buyer (usually the seller).

Advantages:

Fastest and cheapest remedy.
Seller recovers the property clean of liens junior to the mortgage.
Deficiency can still be recovered through an ordinary collection case if the proceeds are insufficient.

B. Judicial Foreclosure (Rule 68, Rules of Court)

Used when the mortgage contract prohibits extrajudicial foreclosure or when the seller wants a deficiency judgment that is immediately executory.

Procedure is longer (complaint, trial, judgment, execution sale, confirmation of sale). Equity of redemption exists until the sale is confirmed by the court. Deficiency judgment is automatically granted.

III. Remedies When There Is No Registered Real Estate Mortgage

This is the nightmare scenario for sellers.

A. Action for Specific Performance with Damages (Art. 1169, 1191, 1592, Civil Code)

The seller may sue to compel the buyer to pay the balance plus legal interest (6% per annum from judicial/extrajudicial demand as of 2025, pursuant to BSP Circular No. 799, series of 2013, and subsequent updates), moral/exemplary damages, and attorney’s fees (usually 10–25% of the amount due).

If the buyer still cannot pay, the judgment becomes a lien on the property only if the seller causes the annotation of the judgment on the title.

This remedy rarely results in recovery of the property itself.

B. Judicial Rescission (Resolution) of the Contract (Art. 1191 in relation to Art. 1592, Civil Code)

This is the most important remedy when there is no mortgage.

Legal basis:

Article 1191: “In case both parties have committed a breach of the obligation, the liability of the first infringer shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages.” More importantly, the injured party may choose between fulfillment and rescission, with damages in either case.
Article 1592 specifically for immovables: Even if the parties stipulated automatic rescission, the buyer may still pay after the due date unless the seller has made a judicial or notarial demand for rescission.

Landmark rulings affirming rescission even after title transfer:

University of the Philippines v. de los Angeles (G.R. No. L-28602, September 29, 1970)
Luzon Brokerage Co. v. Maritime Building Co. (G.R. No. L-25885, January 31, 1972) — rescission proper even after delivery of the property
Co v. Court of Appeals (G.R. No. 100998, October 28, 1993)
Platinum Plans Phil., Inc. v. Cucueco (G.R. No. 147154, July 31, 2006)
Spouses Reyes v. Spouses Tuparan (supra)
Spouses Villdar v. Sps. Zabala (G.R. No. 213241, July 10, 2019)

Requirements for judicial rescission to prosper:

The breach must be substantial (non-payment of a large portion of the price qualifies).
The seller must be ready, willing, and able to return whatever he has received (payments minus damages, fair rental value, deterioration).
No innocent third-party purchaser or encumbrancer for value has acquired rights over the property.

If a third party has already bought or mortgaged the property in good faith, rescission is no longer available against the third party (Art. 1385, Civil Code; Sec. 44, P.D. 1529). The seller is left only with damages against the original buyer.

Effects of favorable judgment:

Declaration that the Deed of Absolute Sale is rescinded/resolved.
Cancellation of the buyer’s TCT/CCT.
Reconveyance of title to the seller.
Refund by seller of payments received minus (a) fair rental value for the period the buyer occupied the property, (b) necessary and useful expenses (if any), (c) damages.

Prescription: 10 years from the date of the execution of the Deed of Absolute Sale or from the date the cause of action accrued (Art. 1144, Civil Code; most recent ruling: Spouses Leandro v. Sps. Reyes, G.R. No. 242346, March 2, 2020).

C. Action for Reconveyance Based on Implied Trust (Art. 1456, Civil Code)

When the buyer refuses to reconvey despite full knowledge that the price has not been fully paid, an implied resulting trust is deemed created. The action for reconveyance prescribes in 10 years (Heirs of Servando Franco v. Spouses Verceles, G.R. No. 146954, September 10, 2003; many subsequent cases).

This is often pleaded in the alternative with rescission.

D. Annotation of Adverse Claim or Notice of Lis Pendens

Within 30 days from knowledge of the transfer or default, the seller may file an Adverse Claim (Sec. 70, P.D. 1529) if he claims an interest adverse to the registered owner arising from the non-payment.

More commonly, once the complaint for rescission or specific performance is filed, the seller should immediately cause the annotation of a Notice of Lis Pendens to prevent the buyer from disposing of the property to innocent third parties.

IV. When the Transaction Is Actually an Equitable Mortgage (Art. 1602–1604, Civil Code)

If the intention of the parties was to secure a loan and not to truly sell the property (grossly inadequate price, seller remains in possession, buyer allows seller to repurchase, etc.), the contract is presumed to be an equitable mortgage.

Remedy: File action for reformation of instrument into a mortgage, then foreclose.

This is very common in family transactions or pacto de retro sales that are disguised loans.

V. Criminal Remedies (Rarely Successful)

Estafa through misappropriation or deceit (Art. 3151, Revised Penal Code) may lie if the buyer disposed of the property with intent to defraud the seller knowing that the price was not yet fully paid and that the seller still had a claim.

However, the Supreme Court is very strict: mere civil default does not constitute estafa (People v. Menil, G.R. No. 115054-66, September 12, 2000, and hundreds of subsequent cases).

VI. Practical Recommendations for Sellers (Lessons from Decades of Jurisprudence)

Never transfer title until the purchase price is fully paid or a real estate mortgage securing the balance is duly executed and annotated on the title on the same day.
If the buyer needs the title to obtain a bank loan, execute a Deed of Absolute Sale simultaneously with a Deed of Real Estate Mortgage in your favor. Register both documents together.
Include in the Deed of Absolute Sale an express resolutory clause and a special power of attorney authorizing you to sell the property in case of default (though this SPA is often ignored by courts if not coupled with interest).
Immediately annotate a Notice of Lis Pendens upon filing the complaint.
Act quickly — delay may allow the buyer to sell to an innocent purchaser for value, forever barring rescission.

Conclusion

Transferring title before full payment is one of the most common and costly mistakes in Philippine real estate practice. When the buyer defaults after the title has been transferred, the seller’s remedies are:

(1) foreclosure (if there is a registered REM) — the fastest and surest way to recover the property;
(2) judicial rescission with reconveyance (if no REM and no innocent third party) — still viable and frequently granted by courts;
(3) specific performance/collection (always available but rarely results in recovery of the land itself).

The lesson is clear: never surrender the title without adequate security. Once the title is gone, the property is effectively gone unless the stars align in the seller’s favor.