Buyers of personal property are further protected by the Recto Law.

Initially known as the Installment

Sales Law, it is now included under a set of provisions under the Civil Code of the Philippines.

Consumer rights are protected under Philippine laws, and real estate is no different. A property purchase
involves a lot of money, so a buyer needs to know the laws that protect them. If you are purchasing your
first home, you will need to familiarize yourself with the Recto Law, its purpose, and the sanctions given
to people who violate it.

Q: What is the Recto Law?

A: People who purchase personal property, as opposed to real property, on installment are protected by
the Recto Law. Authored in 1933 by the “Great Academician,” Senator Claro M. Recto, the statute was
called Act No. 4122, otherwise known as the Installment Sales Law. Its main purpose is to prevent
potential abuses by the seller in the event that the buyer is unable to make further installments for a
property.

It was passed by the Philippine Legislature on December 9, 1933. The law amended a certain portion of
the Civil Code of 1889 (Código Civil) through the insertion of Section 1454-A.

The Civil Code of 1889 itself was repealed by Republic Act No. 386 which took effect in 1950. It became
known as the Civil Code of the Philippines. This expanded Section 1454-A into what are now Articles
1484 to 1486 of the Civil Code. These are the provisions that currently contain the precepts of the Recto
Law.

Although primarily for buyers of personal property in installments, it was used in a particular case
involving a contract of lease even without a clear option to buy. The agreement was not actually to lease
the personal property but to acquire it upon the fulfillment of the purported contract.

How is it different from the Maceda Law?

The main contrast between the two statutes lies in its application. Articles 1484 to 1486 of the Civil Code
govern sales on installment of personal property. On the other hand, the Maceda Law or Republic Act
No. 6552 applies to purchasers of real property on an installment basis. The latter is also known as the
Realty Installment Buyer Act and contemplates residential properties in particular.

The Maceda Law requires certain requisites before a purchaser of real property can benefit from its
provisions. Those who have paid less than two years’ worth of installments only have a sixty-day grace
period to satisfy an installment that has become due. Failure to pay allows the seller to send the buyer a
notice to rescind the contract, which may be cancelled after thirty days from its receipt. A buyer who has
paid more than two years’ worth of installments can have a grace period of one month for every year
paid, provided that this is exercised only once every five years. If cancelled, the purchaser may recover
50% of the payments made with an additional 5% for every year after five years.

The Recto Law, on the other hand, gives the latter three alternatives instead of cumulative choices to
terminate a contract: