Article 1483 covers the forms of sales.
Generally, a contract entered in any form is valid provided that all the essential requisites are present.
[in writing, word of mouth, partly in writing and partly by word of mouth, or inferred from the conduct
of the parties]
2nd: Under the statute of frauds, [requires written contracts for certain agreements to be binding; this
only applies on executory contract] – rule on evidence to prove the existence of the contract
[a contract of sale of real property or of an interest therein shall be
unenforceable unless the sale or some note, or memorandum thereof is in writing and
subscribed by the party or his agent]
The sale of the following must be in writing to be enforceable:
1. Sale of real property or of any interest therein – regardless of the price
2. Sale of goods, chattels, or things in action that the price of which is 500 pesos or more – [
things in action – credit, shares of stock, and other incorporeal properties]
3. Sale of property which is not to be performed within 1 year from the date of the contract.
[it is also included in this article] The sale of a piece of land through an agent
The authority of the agent must be in writing, otherwise, void.
1. Authority – not in writing – VOID
2. Authority – private document or public document
a. Entered orally – UNENFORCEABLE
b. In a private instrument – VALID
c. In a public instrument – VALID
** to be recorded in register of deeds – both authority of agent and sale must be in a public instrument
Lastly, the form can be prescribed by any other law which requires the sale to be in a certain form.
That is all for the form of the contract of sale
Article 1484 covers the remedies of the vendor in installment sales. It is also known as the Recto Law
**Recto Law refers to the sale of “personal property” on an installment basis while; Maceda
Law refers to the sale of “real property” on an installment basis.
**It covers article 1484-1486
Purpose:
[prevent potential abuses by the seller in the event that the buyer is unable to make further
installments for a property]
To remedy the abuses committed in connection with the foreclosure of chattel mortgages. This
prevents mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a
low price and then bringing suit against the mortgagor for a deficiency judgment.
What are the contracts covered under the law?
1. Contract of sale of personal property the price of which is payable in installments.
[article 1484]
2. Contracts purporting to be leases of personal property with option to buy when the
lessor has deprived the lessee of the possession or enjoyment of the thing. [article
1485]
It will not apply in:
1. Payment in straight payment
2. Sale or mortgage of real property
3. Action for replevin – action to recover personal property in the possession of
another
Requisites: [to be able to exercise these remedies are]
1. Must be a contract of sale
2. Movable property [personal property] – OBJECT
3. Paid in installments – PAYMENT
Remedies:
1. Exact fulfillment of the obligation upon the vendee’s failure to pay
a. This remedy applies regardless of the number of installments defaulted. Seller can
ask the court to compel buyer to pay. Any deficiency can be recovered.
b. Demand payment – if buyer cannot pay, seller can file a case.
c. The court will order buyer to pay – e.g. through cash or his properties [will be
auctioned – price equivalent will be paid to seller. If payment is not enough buyer
will still pay for it]
Buyer’s failure to pay covers two or more installments
**He can avail the first remedy, or:
2. Cancellation or rescission of the sale
a. The seller shall cancel the sale and demand for the return of the property.
b. Deemed chosen when:
i. Notice of rescission is sent
ii. Takes possession of subject matter of sale
iii. Files action for rescission
c. Effect: MUTUAL RESTITUTION; The buyer will return the object of sale and the seller
will return the payment received from the buyer. [ as if no sale was made]
d. [HOWEVER] There can be a stipulation that the payments are forfeited, or the
payments will not be returned provided that the stipulation is not unconscionable.
[immoral, unacceptable]
3. [OR] Foreclose the chattel mortgage
a. The seller shall recover the property from the buyer for it to be sold in public
auction and applying the proceeds to the satisfaction of the claims secured by the
mortgage. In this case, the seller shall have no further action against buyer to
recover any unpaid balance of the price. Any agreement to the contrary shall be
void.
b. The recovery of the seller for the deficiency after foreclosure is prohibited. General
Rule: Actual foreclosure is necessary to bar recovery of balance [extent purchase
price]
c. Exception: PERVERSE MORTGAGOR-BUYER mortgagor [b] refuses to deliver property
to effect foreclosure – expenses incurred in atty fees C can be recovered by the
seller, **action for replevin [action to recover personal property in possession of
another]
d. The buyer can still make additional payments before the public sale so that he can
still get back the personal property = EQUITY OF REDEMPTION – [period to exercise
is until foreclosure sale] – right of the mortgagor in law to redeem his or her
property once the debt secured by the mortgage has been discharged.
e. ONLY IN,
i. In case of sale on straight term
ii. If security foreclosed is other than the chattel mortgage constituted on the
thing sold
iii. In the case on execution of sale of judgement in favor of the seller.
[IT IS IMPORTANT TO NOTE THAT] These remedies provided under this article by nature are
ALTERNATIVE and are not to be exercised CUMULATIVELY [successively] meaning the election of one is a
waiver to resort to the others.