Recto Law vs. Maceda Law: Everything you Need to Know

Summary

In this informative video, Dallas of Law and Attorney Al-Jumrani clarify the differences between Recto Law and Maceda Law, which govern the sale of goods on installment. Recto Law, introduced in 1933, applies to personal property sales and limits seller remedies in case of buyer default. Maceda Law, enacted in 1972, pertains to real property sales and outlines buyer rights in the event of payment failure. The video explains the specific remedies and benefits under each law, their applications, and exceptions, offering valuable insights for buyers and sellers alike.

Takeaways

• 📚 Recto Law and Macada Law are both related to the sale of goods on installment basis, where the buyer pays the price in portions over a period of time.
• 🇵🇭 Recto Law was introduced by Senator Claro M. Recto in 1933 and is part of the Philippine Civil Code, specifically Article 1484.
• 🏢 Macada Law was authored by Senator Ernesto Maceda in 1972 and is a separate law, Republic Act Number 6552, supplementing the Civil Code provisions on sales.
• 🚗 Recto Law applies to the sale of personal property such as cars, appliances, and machinery, aiming to limit the seller's options when the buyer defaults.
• 🏠 Macada Law applies to the sale of real property including houses, subdivision lots, and condominium units, focusing on buyer's rights when they fail to make payments.
• 🛡️ Under Recto Law, the seller has three remedies: demand payment, cancel the sale, or foreclose the chattel mortgage if applicable.
• 🕒 Macada Law provides a reckoning period for buyers, with rights including a grace period, notarial notice of cancellation, and cash surrender value depending on the duration of payments made.
• 🚫 Recto Law does not apply to the sale of real property or when the price of personal property is payable in full at the time of the contract.
• 🛑 Macada Law does not apply to absolute sales, property purchased with a housing loan, or sales of industrial lots, commercial buildings, and agricultural lands to tenants.
• 📝 Both laws have specific conditions and do not apply in cases where the seller breaches its obligations, such as failure to deliver property or violation of warranties.
• 📚 For further understanding, the video suggests reviewing Supreme Court decisions related to both Recto and Macada Law.

Q & A

What are Recto Law and Masada Law?

Recto Law and Masada Law are both laws that apply to the sale of things on installment. Recto Law, introduced by Senator Claro M. Recto in 1933, applies to the sale of personal property like cars, appliances, and machinery. Masada Law, authored by Senator Ernesto Maceda in 1972, applies to the sale of real property including houses, subdivision lots, and residential condominium units.

What is the historical background of Recto Law?

Recto Law was introduced by Senator Claro M. Recto in 1933 as Act Number 4122, which amended the Civil Code of 1889. It was later incorporated into the Civil Code of the Philippines as Article 1484 in 1950.

How does Masada Law differ from Recto Law in terms of its legal status?

Masada Law is a special law that supplements the Civil Code provisions on sales, unlike Recto Law which is incorporated within the Civil Code itself.

What is the purpose of Recto Law in the context of installment sales?

The purpose of Recto Law is to limit the options or remedies of the seller when the buyer fails to pay the installments for personal property.

What are the rights and benefits provided to a buyer under Masada Law when they fail to pay installments on real property?

Under Masada Law, a buyer is entitled to a reckoning period, grace periods, notarial notice of cancellation or rescission, and a refund or cash surrender value of 50% of the total payments made, with additional benefits if the buyer has paid for more than five years.

What are the three remedies available to a seller under Recto Law when a buyer defaults on payments?

The three remedies available to a seller under Recto Law are: 1) Demand payment or fulfillment of the obligation, 2) Cancel the sale, and 3) Foreclose the chattel mortgage if one has been constituted on the object of the sale.

Are the remedies under Recto Law alternative or successive?

The remedies under Recto Law are alternative, meaning the seller can only avail of one remedy at a time, not successive remedies.

What conditions must be met for a seller to cancel a sale or foreclose a chattel mortgage under Recto Law?

The seller can cancel the sale or foreclose a chattel mortgage under Recto Law only when the buyer has defaulted on two or more installments.

What are some situations where Recto Law does not apply?

Recto Law does not apply to the sale of real property, sale of personal property when the price is payable in full at the time of the contract, and when the chosen remedy is not successful due to no fault of the seller.

Under what circumstances does Masada Law not apply?

Masada Law does not apply in cases of absolute sale, when the property was purchased after obtaining a housing loan and the installments are loan repayments, sale of industrial lots, commercial buildings, sale to tenants of agricultural lands, and when the buyer defaults due to the seller's breach of obligations.

What are some Supreme Court decisions that provide more information on Recto Law and Masada Law?

Some Supreme Court decisions that provide information on Recto Law include Magna Financial Services vs. Colorina (GR No. 158635, December 9, 2005), Southern Motors vs. Moscoso (L-14475, May 30, 1961), and Spouses de la Cruz vs. Asian Consumer (GR No. 94828, September 18, 1992). For Masada Law, the cases are Realtyo vs. Court of Appeals Chair (GR No. 125347, June 19, 1997), Spouses Sebastian vs. BPI Family Bank (GR No. 160107, October 22, 2014), and Olympia Housing vs. Spanish Attic Travel Corporation (GR No. 140468, January 16, 2003).