The Maceda Law and the Recto Law are not the same.

Both laws, however, govern the sale of property

on installment basis. The Recto Law, which forms part of the Civil Code, specifically Article 1484 to

Article 1486, covers sales of personal property on installment basis. The Maceda Law is a special law,

particularly Republic Act (RA) 6552 or the Realty Installment Buyer Act, that governs installment sales

of real property.

The Supreme Court cited in the case of Bachrach Motor vs. Millan (G.R. No. L-42256, April 25, 1935),

penned by former Associate Justice Leonard Goddard, that the principal object of Recto Law is to

prevent abuses in foreclosure of chattel mortgages, especially when the mortgagee-creditors foreclosed

the mortgaged properties and bought them at a much lower price, then continues collecting for

deficiencies against the mortgagor-debtor.

It provides for remedies in case the buyer fails to pay.

“Article 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:

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

Cancel the sale, should the vendee’s failure to pay cover two or more installments;

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 (1454-A-a)”

(Civil Code of the Philippines).

On the other hand, RA 6552 or the Realty Installment Buyer Act, also known as the Maceda Law, is the

real estate equivalent of the Recto Law. Under Section 3, it only applies to residential real estate, as it

excludes other real estates, such as, industrial lots, commercial buildings [and/or commercial lots by

implication] and sale to tenants under agrarian laws. Moreover, Section 2 of this law provides that it was

enacted to protect buyers of real estate on installment payments against onerous and oppressive

conditions.

“Section 2. It is hereby declared a public policy to protect buyers of real estate on installment payments

against onerous and oppressive conditions.

Section 3. In all transactions or contracts involving the sale or financing of real estate on installment

payments, including residential condominium apartments but excluding industrial lots, commercial

buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as

amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least

two years of installments, the buyer is entitled to the following rights in case he defaults in the payment

of succeeding installments: xxx”

With respect to your concern on the fifty percent (50 percent) refund in case you cancelled the

transaction, pertinent is Section 3 of RA 6552, which states that where the buyer has paid at least two

years of installment, he shall have the rights in case of default in payment of succeeding installments to:

(i) pay without interest the balance within the grace period of one month for every year of installment

payment (The grace period, however, shall be exercised once every five years); or (ii) in case the

contract is cancelled, the buyer shall be entitled to 50 percent of what he has paid plus another five

percent for every year but not exceeding 90 percent of payments made.
“Section 3. In all transactions or contracts involving the sale or financing of real estate on installment

payments, including residential condominium apartments but excluding industrial lots, commercial

buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as

amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least

two years of installments, the buyer is entitled to the following rights in case he defaults in the payment

of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period earned

by him which is hereby fixed at the rate of one month grace period for every one year of installment

payments made: Provided, That this right shall be exercised by the buyer only once in every five years

of the life of the contract and its extensions, if any.

(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the

payments on the property equivalent to fifty per cent of the total payments made, and, after five years of

installments, an additional five per cent every year but not to exceed ninety per cent of the total

payments made: Provided, That the actual cancellation of the contract shall take place after 30 days from

receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a

notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract, shall be included in the computation of the total

number of installment payments made.”

We find it necessary to mention that this opinion is solely based on the facts you have narrated and our

appreciation of the same. The opinion may vary when the facts are changed or elaborated. We hope that

we were able to enlighten you on the matter.