a. Personal Property

Requisites of Recto Law:

• Valid contract of sale;
• Subject matter is personal property;
• Payable in installments; and
• In the case of the second and third remedies, there has been a failure to pay two or more installments. (NCC, Art. 1484)

Alternative remedies in case of sale of personal property in installments

• Specific Performance: Exact fulfillment should the buyer fail to pay

GR: If availed of, the unpaid seller cannot anymore choose other remedies.

XPN: If after choosing specific performance, it has become impossible to perform it, rescission may be pursued.

NOTE: If vendor elected fulfillment or specific performance

a. The filing of collection suit barred the foreclosure of the mortgage. A mortgagee who files a suit for collection abandons the remedy of foreclosure of the chattel mortgage constituted over the personal properties or security for the debt or value of the promissory note which he seeks to recover in the said suit.

b. Where the civil action to recover the amount of the dishonored checks is impliedly instituted in a B.P. Blg. 22 case, its filing constitutes an election of collection rather than foreclosure.

However, in Chieng v. Spouses Santos (G.R. No. 169647, August 31, 2007), it was held that the filing of the B.P. Blg. 22 case is equivalent to the filing of a collection suit for the recovery of the mortgage-loan. The Court explained that the civil action for the recovery of the amount of the dishonored checks is impliedly instituted in the criminal action. Hence, the impliedly instituted civil action in the criminal case for violation of B.P. Blg. 22 is, in effect, a collection suit or suit for recovery of mortgage debt.

c. Action for recovery of possession with replevin as provisional remedy preparatory to extrajudicial foreclosure is not an action for collection much less for foreclosure.

But if the action for replevin culminated in the foreclosure of the chattel mortgage and the sale of the personal property at the public auction, then Article 1484 now applies.

• Rescission: Cancel the sale if buyer fails to pay 2 or more installments. Cancellation may be elected through an unequivocal act of rescission; notice or an action for rescission may establish that election.

NOTE: The stipulation that the installments or rents already paid shall not be returned to the vendee shall be valid insofar as the same may not be unconscionable under the circumstances.

• Foreclosure: Foreclose on chattel mortgage if buyer fails to pay two (2) or more installments. 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.

NOTE: Of the three remedies, only this third remedy bars the recovery of unpaid balance. Foreclosure also bars recovery of the unpaid balance under another label, but reasonable expenses, including attorney’s fees incurred to obtain property withheld for foreclosure, may be recovered where justified.

GR: Actual foreclosure is necessary to bar recovery of balance.

XPN: Mortgagor refuses to deliver property to effect foreclosure; expenses incurred in attorney’s fees in obtaining the property may be recovered by the vendor.

What is an example of “Susceptible of Appropriation”?

Electrical energy is personal property capable of appropriation and may be the subject of theft under the RPC. The business or service of providing telecommunications is not, merely as such, the property stolen. (Laurel v. Abrogar, G.R. No. 155076, February 27, 2006)

Exclusive Properties in Unions Without Marriage

Although the FC does not expressly provide for exclusive properties of the partners, by implication, the following shall be considered exclusive properties:

• Property acquired by either partner through his or her own sole work or industry without any contribution by the other partner whether by way of care and maintenance of the family and household or through any actual work or industry;
• The fruits or income of the said property; (Valdez v. RTC of QC, G.R. No. 122749, 31 July 1996)
• Property acquired by exclusive funds or by exchange with a partner's separate property;
• Property acquired by gratuitous title such as by inheritance and donation; and
• Property brought to the union. (Pineda, 2011)