LESSON 2 PART 1 Flashcards
RECTO LAW
ART. 1484
Legislation known as the Installment Sales Law was enacted in 1933 by
Senator Claro M. Recto
It was enacted on (date) by the National Assembly. Section 1454-A was included in the Civil Code of 1889 (Código Civil) to update a specific section of the code. It was then revised in 1950 and became Article 1484
December 9th, 1933
is a provision under Philippine civil law governing installment sales of personal property. It provides protections to buyers who purchase personal property on installment, specifically addressing the rights and remedies of the seller in cases of buyer default.
The Recto Law i
The primary aim of the Recto Law
to prevent sellers from abusing buyers in installment sales
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
Art. 1484
REMEDIES OF VENDOR IN SALE OF PERSONAL PROPERTY
Exact fulfillment of the obligation
Cancel the sale
Foreclose the chattel mortgage
The seller may choose to demand that the buyer fulfills the terms of the contract. This remedy seeks to enforce the payment of the installments or the full purchase price as agreed.
Exact fulfillment of the obligation
If the vendor chooses rescission or cancellation of the contract upon the vendee’s failure to pay two or more installments, the vendee can demand only the return of payments already made unless there is a stipulation about forfeiture.
Cancel the sale
If the property is secured by a chattel mortgage, the seller may foreclose the mortgage and recover the property. However, this remedy comes with a significant restriction: No further action for deficiency. Once the seller chooses foreclosure, they are prohibited from pursuing the buyer for any deficiency if the proceeds of the foreclosure sale are less than the unpaid balance of the purchase price.
Foreclose the chattel mortgage
The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing
Art. 1485
In the cases referred to in two preceding articles, a stipulation that the installments or rents paid shall not be returned to the vendee or lessee shall be valid
insofar as the same may not be unconscionable under the circumstances.
Art. 1486.
SCOPE AND COVERAGE
RECTO LAW
Personal Property
Installment Sales
The Recto Law applies exclusively to the sale of personal property. It does not cover real property or immovable assets
Personal Property
The law specifically addresses sales where the purchase price is payable in installments. It is not applicable to cash sales or transactions where payment is made in a lump sum.
Installment Sales
Once the seller elects a remedy, they are bound by it and cannot subsequently choose another remedy.
Seller’s Obligation to Elect a Remedy
In foreclosure, the seller cannot recover any
deficiency, even if the proceeds of the sale of the repossessed property are insufficient to cover the unpaid balance of the purchase price.
Prohibition on Deficiency Claims
The law is primarily protective of buyers, ensuring they are not unfairly penalized in installment sales
Protective Nature
LIMITATIONS AND IMPLICATIONS
Seller’s Obligation to Elect a Remedy
Prohibition on Deficiency Claims
Protective Nature
is a critical legal safeguard for installment sales of personal property in the Philippines. By limiting the remedies available to sellers, it balances the interests of parties, promoting fairness and protecting buyers from excessive penalties.
The Recto Law
