Recto Law and Maceda Law

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 pays (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
buyermortgagor. 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.