The Recto Law, which forms part of the Civil Code, covers installment sales of p

ersonal 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 deficie
ncies.
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:
Demand that the buyer pay (a.k.a. specific performance)
Cancel or rescind the sale
Foreclose the mortgage on the property bought (if there ever was a chattel mortg
age)
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 attorne
y 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 e
state 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 ca
se 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 th
e Recto Law, it also covers financing of sales of real property (which is why mo
rtgages also come in.) It doesn t apply,however, to the following sales:
Industrial lots
Commercial buildings and lots
Lands under the CARP Law
MACEDA LAW (RA6552) Maceda Law in the Philippines applies to the purchaser of re
al property by installment payments when the purchase becomes cancelled by a del
inquency in payment. It provides the buyer with a right to a refund as a requisi
te for cancellation of contract due to delinquency when the buyer has paid at le
ast 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.
The buyer has the right to continue the unpaid installments due without addition

al 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.
The buyer has the right to opt for a refund of the installment payments being ma
de (This includes the down payments, deposits or options on the contract). The b
uyer 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 day
s.