What is the Recto Law and how does it protect me?
Last updated: 2026-07-11 · Educational content; not legal advice.
Short answer
The Recto Law is Articles 1484–1486 of the Civil Code, protecting buyers of personal property (like motorcycles and cars) sold on installments. Article 1484 gives the seller three alternative remedies when you default — demand full payment, cancel the sale, or foreclose the chattel mortgage on the thing sold — and lets it pick only one. The key shield: if the seller forecloses and sells the vehicle, it cannot come after you for any unpaid balance, and any contract clause saying otherwise is void. Article 1485 extends this to leases with an option to buy, and Article 1486 lets a court order the return of installments you paid if forfeiting them would be unconscionable.
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Frequently asked
Who does the Recto Law cover?
Buyers of personal or movable property on installments, and — through case law — financing companies that financed or bought the installment receivable. It does not cover real estate, which has its own protection (the Maceda Law, RA 6552).
Why does 'alternative, not cumulative' matter?
Because a seller cannot both repossess-and-sell the vehicle and still sue you for the balance. Once it forecloses, that is its chosen remedy and the deficiency claim is barred.
How do I use it?
If a lender repossesses and then bills you for a shortfall, cite Art. 1484 in a written demand to drop the claim, and escalate to the SEC under RA 11765 if it persists.
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