Recto Law: Remedies in Installment Sales of Personal Property

Quick answer: Article 1484 of the Civil Code, commonly called the Recto Law, governs installment sales of personal property. It gives the seller alternative remedies when the buyer defaults and restricts recovery of a deficiency after foreclosure of a chattel mortgage.

The seller’s three alternative remedies

Under Article 1484, the seller may generally choose among: exact fulfillment of the obligation; cancellation of the sale when the buyer fails to pay two or more installments; or foreclosure of the chattel mortgage, if one was constituted, when the buyer fails to pay two or more installments.

The remedies are alternative, not cumulative

The seller cannot freely stack the remedies. Once the seller elects foreclosure of the chattel mortgage, Article 1484 bars a further action to recover the unpaid balance of the price.

What transactions are covered?

The rule applies to sales of personal property where the price is payable in installments. It should not be confused with the Maceda Law, which addresses covered real-estate installment transactions.

Related guides

See what happens when a buyer misses installment payments and seller remedies after buyer non-payment.

See the Sales and Buyer–Seller Remedies hub for the broader installment-sale, buyer-default, and special-remedy framework.

Primary legal source

Civil Code Article 1484. The Supreme Court has repeatedly treated the remedies as alternative and not cumulative.