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 cant choose
the others. These remedies, believe it or not, are also available to the buyer. You also cant use all or any of them
at the same time. The Recto Law also wont 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 attorneys 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 doesnt 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.
FULL TEXT OF MACEDA LAW:
REPUBLIC ACT NO. 6552REALTY INSTALLMENT BUYER PROTECTION ACTAN ACT TO PROVIDE
PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS
Section 1. This Act shall be known as the Realty Installment Buyer Act.
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:
(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 cancelled, 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 thirty 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.
Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace
period of not less than sixty days from the date the installment became due.
If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the
contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of
the contract by a notarial act.
Section 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another
person or to reinstate the contract by updating the account during the grace period and before actual cancellation
of the contract. The deed of sale or assignment shall be done by notarial act.
Section 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the
purchase price any time without interest and to have such full payment of the purchase price annotated in the
certificate of title covering the property.

Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5
and 6, shall be null and void.
Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected
thereby.
Section 9. This Act shall take effect upon its approval.

REALTY INSTALLMENT BUYER ACT

What is the Realty Installment Buyer Act?

Commonly known as the Maceda Law. It is embodied in R.A. 6552 which provides for certain protection to
particular buyers of real estate payable on installments. The law declares as "public policy to protect buyers of
real estate on installment payments against onerous and oppressive conditions.
Note: The purpose of the law is to protect buyers in installment against oppressive conditions.

What are the transactions/sale covered by the Maceda Law?

The law involves the sale of immovables on installment (Maceda Law, R.A. 6552).
1. Coverage: Residential Real Estate (Villanueva, p. 431)
2. Exclude:
a. Industrial lots
b. Commercial buildings (and commercial lots by implication)
c. Sale to tenants under agrarian laws

What are the rights granted to buyers?

1. Buyer paid at least 2 years installment
a. Pay without interest the balance within grace period of 1 month for every year of installment payment.
Grace period to be exercised once every 5 years.
b. When no payment cancelled; buyer entitled to 50% of what he has paid + 5% for every year but not
exceeding 90% of payments made
Note: Cancellation to be effected 30 days from notice & upon payment of cash surrender value.
2. Buyer paid less than 2 years installment
a. Grace period is not less than 60 days from due date
b. Cancellation if failure to pay w/in 60 days grace
c. 30 days notice before final cancellation

Note: buyer can still pay w/in the 30 days period with interest.