Contract of Sale of

Personal Property
Art. 1484
In a contract of sale of personal property the price of which is
payable in installments, the vendor may exercise any of the
following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to pay cover two or
more installments;

(3) Foreclose the chattel mortgage on the thing sold, if one has
been constituted, should the vendee's failure to pay cover two or
more installments. 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 shall be void.
Requisites before 1484 may be
applied
1. There must be a contract.
2. Contract must one of absolute sale.
3. Subject matter of sale is personal property
4. the sale must be on the installment plan

.Straight terms payment is considered cash

sale
Remedies available for the seller

Exact fulfillment of the obligation

Does not require default in two or more
installments.
In case, buyer cannot pay, seller may levy
other properties of the buyer to obtain
payment by legal process.
Cancel the sale
Requires at least 2 installments to be in default.
If this remedy is chosen, there must be
MUTUAL RESTITUTION of whatever had been
received by either party.
Hence, if the object of the installment sale is
returned with less value than of the unpaid
balance, the seller may invoke Art. 1191 which
provides the remedy of special performance
plus damages.
However, under Art. 1385, such cancellation is
precluded in case the object of the contract
are legally possessed by third persons, who did
not act in bad faith
In case such third person acted in bad faith he
be liable for damages in case such object is
impossible to return.
Moreover, a stipulation that installments or
rents paid shall not be returned to the vendee
or lessee shall be valid in so far as they are
unconscionable under the circumstances
Foreclosure of the chattel mortgage.
If this be chosen, seller/vendor shall have no
further action against the purchaser for any
unpaid balance of the price. Any stipulation in
the contract to the contrary is void.

Read the cases of Ridad vs. Filipinas Investment

& Finance Corp. GR No. 39806, Jan. 28, 1983;
and
Tajanglangit, et. al vs. Southern Motors, Inc. GR
No. L-10789, May 1957.
Chattel Mortgage
Art. 2140
By a chattel mortgage, personal property is
recorded in the Chattel Mortgage Register as a
security for the performance of an obligation. If
the movable, instead of being recorded, is
delivered to the creditor or a third person, the
contract is a pledge and not a chattel
mortgage.
The remedies available are alternative rather
than commutative. Thus, the election of one is
a waiver of the right to resort to others,
provided that the remedy chosen have been
fully exercised.
Art. 1484s application on
Leases of Personal Property
with Option to Buy
Under Art. 1485, which provides:

The preceding article shall be applied to

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.
when lessor has deprived the
lessee of the possession or
enjoyment of the thing.
This means that for failure to pay, the lessor
is apparently exercising the right of an unpaid
seller, and has taken possession of the
property
Instances When Art. 1484 will not
apply
It will not apply in case of a real mortgage.
Real estate mortgage may be foreclosed only
in conformity with special provisions.
It will not apply to the sale of personal
property on straight terms.
The mortgagee-seller will still be entitled to
recover the unpaid balance.