Recto Law

- To remedy abuses committed in connection with the foreclosure of chattel mortgage and to
prevent mortgages from seizing the mortgaged property buying it at foreclosure sale for a low
price and the bringing the suit against the mortgagor for a deficiency judgment
- If the action instituted is for specific performance and the mortgaged property is subsequently
attached and sold, the sale does not amount to a foreclosure of a mortgage
- The mere fact that the seller secured possession of the property subject of the sale by
instalments did not necessarily mean that the seller would resort to a foreclosure of the
mortgage constituted thereon
- Rescission : sends a notice of rescission/ takes possession of the subject matter of the sale/ files
an action for rescission
o Taking back of the property coupled with an unequivocal desire on its part to rescind its
contract or for the purpose of appropriating the same
- Nature of the remedy of rescission also bars recovery for any unpaid balance of the price
(mutual rescission)
- Remedy of foreclosure is deemed chosen only at the time of actual sale if the subject property
at public auction pursuant to the foreclosure proceedings commenced
- Filing by the seller of an action for the issuance of the writ of replevin and the actual recovery of
the possession of the subject property would not amount to foreclosure
- The seller could no longer proceed to the foreclosure on the real estate mortgage constituted by
the third party mortgagors after the seller had already foreclosed on the chattel mortgage
constituted on the subject property of sale.
o The buyer would still be ultimately liable
o There would be an indirect subversion of the law
- In the event the seller-mortgagee first seeks the enforcement of the additional mortgagees,
guarantees, or other security arrangement, he must then held to have lost by waiver or non-
choice his lien on the CM of the PP sold by and mortgaged back to hi, although, similar to an
action for SP, he may still levy on it
- When a defaulting buyer-mortgagor refuses to chattel to the seller to allow the latter to be able
to proceed with foreclosure, then the seller, even after actual foreclosure, should be allowed to
recover expenses and attorney’s fees incurred in trying to obtain possession of the chattel
- Won’t apply to straight sale (down + 1 single payment in the future)
- Seller may assign his credit = new creditor

Maceda Law

- To protect buyers of the real estate on instalment payments against onerous and oppressive
conditions