The Recto Law, which forms part of the Civil Code, covers installment sales of personal property while

the Maceda Law governs installment sales of real property.

The Recto Law

The Recto Law comprises Articles 1484 to 1486 of the Civil Code. It was added to the Civil Code to
prevent abuses in the foreclosure of chattel mortgages, such as when mortgagee-creditors foreclosed
mortgaged property, bought them at a low price (on purpose,) then prosecuted the mortgagor-debtors
to recover the deficiencies.

In the event a buyer of personal property defaults by failing to pay two or more of the agreed
installments, the seller can do any of the following:
1. Demand that the buyer pay (a.k.a. specific performance)
2. Cancel or rescind the sale
3. Foreclose the mortgage on the property bought (if there ever was a chattel mortgage)
Regarding no. 3, this happens when a person takes a loan to buy something and he mortgages the
thing he bought to ensure the creditor that he will pay the loan. Remember: If you choose one remedy,
you can’t choose the others. These remedies, believe it or not, are also available to the buyer. You
also can’t use all or any of them at the same time. The Recto Law also won’t apply to a straight sale
(i.e. a sale where there is a downpayment and the balance is payable in the future in a single payment
only.) The seller can also assign his credit to another person, making that person the new creditor.

If the buyer refuses to surrender the items to the seller, he becomes a perverse buyer-mortgagor.
When that happens, the seller can recover expenses and attorney’s fees. The Recto Law also covers
leases with the option to purchase.

The Maceda Law, Ra 6552

Do you want to know your rights as a real estate investor, or simply as a real estate buyer who is
making installment payments? The first logical step would be to know what law applies and what that
particular law contains, which in this case would be the full text of Republic Act No. 6552. More
popularly known as the Maceda Law, the RA 6552 follows.
The Maceda Law, RA 6552, is the real estate equivalent of the Recto Law. Like the Recto Law, it also
covers financing of sales of real property (which is why mortgages also come in.) It doesn’t
apply,however, to the following sales:
1. Industrial lots
2. Commercial buildings and lots
3. Lands under the CARP Law
MACEDA LAW (RA6552) Maceda Law in the Philippines applies to the purchaser of real property by
installment payments when the purchase becomes cancelled by a delinquency in payment. It provides
the buyer with a right to a refund as a requisite for cancellation of contract due to delinquency when
the buyer has paid at least two years. The refund is 50% of total payments; additional 5% per year
after 5th year.

To qualify for the Maceda Law, the buyer must have already paid at least 2 years of installment
payments.
1. The buyer has the right to continue the unpaid installments due without additional interest provided that the buyer must pay
within the grace period. The grace period provided is one month for every one year of installments paid.
2. The buyer has the right to opt for a refund of the installment payments being made (This includes the down payments,
deposits or options on the contract). The buyer is entitled to 50% refund from his total payments made. An additional of 5%
refund per year for every 5 years.
If the buyer has paid less than two years installment: The buyer has the right to continue his payments
within a grace period of 60 days.