PEREZ, ELOISE COLEEN S.

CHAPTER 7

EXTINGUISHMENT OF SALE

ART. 1600. SALES ARE EXTINGUISHED BY THE SAME

CAUSES AS ALL OTHER OBLIGATIONS, BY THOSE
STATED IN THE PRECEDING ARTICLES OF THIS TITLE,
AND BY CONVENTIONAL OR LEGAL REDEMPTION.

Section 1.—CONVENTIONAL REDEMPTION

ART. 1601. CONVENTIONAL REDEMPTION SHALL TAKE

PLACE WHEN THE VENDOR RESERVES THE RIGHT TO
REPURCHASE THE THING SOLD, WITH THE
OBLIGATION TO COMPLY WITH THE PROVISIONS OF
ARTICLE 1616 AND OTHER STIPULATIONS WHICH MAY
HAVE BEEN AGREED UPON.

Q: What are the general modes of extinguishment?

A: Enumerated under Article 1231, obligations are extinguished—
1. By payment or performance:
2. By the loss of the thing due:
3. By the condonation or remission of the debt;
4. By the confusion or merger of the rights of creditor and debtor;
5. By compensation;
6. By novation.

Q: In a contract of sale, what are the modes of extinguishment?

A:
1. Same causes as all other obligations as enumerated under Article
1231.
2. Conventional redemption; or Legal Redemption.

Q: Does payment or performance extinguish the contract of sale

itself?
A: No. Payment or performance only extinguishes the obligations to which
they pertain to in a contract of sale, but not necessarily the contract itself
since the relationship between buyer and seller remains after the
performance or payment, such as the continuing enforceability of warranties
of the seller.

Q: What is conventional redemption?

A: It is the right which the vendor reserves to himself, to reacquire the
property sold provided that he returns to the vendee the following:
1. The price of the sale;
2. Expenses of the contract;
3. Any other legitimate payments made therefore;
4. Necessary expenses made on the thing sold; and
5. Useful expenses made on the thing sold.

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Q: What are the characteristics of a conventional redemption?
A: Following laws and jurisprudence, the following are the characteristics of
a conventional redemption—
1. It is purely contractual.
2. It is merely accidental.
3. It is potestative.
4. It is a power or a privilege.
5. The person entitled to exercise the same is necessarily the owner.
6. It is a real right.
7. It is a resolutory condition.
8. It gives a recirprocal obligation.
9. It is reserved at the moment of the perfection of the contract.

Q: Must the vendor preserve the right to redeem?

A: Yes. The right to redeem must be reserved by the seller through a
stipulation to that effect in the contract of sale (Villarica v. CA, G.R. No. L-
51824).

Q: What is the essence of a pacto de retro sale?

A: A Pacto de Retro sale refers to the sale wherein the seller has the right to
repurchase the subject matter or the property being sold. The essence of a
pacto de retro sale is that the title and ownership of the property sold
transfers immediately to the vendee a retro, subject to the restrictive
condition of repurchase by the vendor a retro within the redemption period.
(Misterio v. Cebu State College of Science and Technology, G.R. No. 152199,
2005)

Q: May the right to repurchase be proved by parol evidence?

A: Yes. The right to repurchase, being merely a feature of the contract of sale,
is also governed by the Statute of Frauds. However, the right to repurchase
may be proved by parol evidence when the contract of sale has been reduced
in writing.

Q: Differentiate the right to redeem from an option to purchase.

A:
1. As to nature, a right to redeem is not a separate contract, but merely a
part of the main contract of sale; whereas an option to purchase is
generally a principal contract and may be created independent of
another contract.
2. As to consideration, a right to redeem does not need a separate
consideration in order to be valid and effective; whereas in an option to
purchase, to be valid, the same must have a consideration separate
and distinct from the purchase price.
3. As to the maximum period for exercise of the right, a right to redeem
cannot exceed ten years; while in an option to purchase, it may be
beyond ten years.
4. As to how it is exercised, in a right to redeem, there must be tender of
payment of the amount required by law including consignment thereof
if tender of payment cannot be made effectively on the buyer; whereas,
in an option to purchase, it may be exercised by notice of its exercise to
the offeror.

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 ART. 1602. THE CONTRACT SHALL BE PRESUMED TO BE AN
EQUITABLE MORTGAGE, IN ANY OF THE FOLLOWING
CASES:
(1) WHEN THE PRICE OF A SALE WITH RIGHT TO
REPURCHASE IS UNUSUALLY INADEQUATE;
(2) WHEN THE VENDOR REMAINS IN POSSESSION AS
LESSEE OR OTHERWISE;
(3) WHEN UPON OR AFTER THE EXPIRATION OF THE
RIGHT TO REPURCHASE ANOTHER INSTRUMENT
EXTENDING THE PERIOD OF REDEMPTION OR
GRANTING A NEW PERIOD IS EXECUTED;
(4) WHEN THE PURCHASER RETAINS FOR HIMSELF A PART
OF THE PURCHASE PRICE;
(5) WHEN THE VENDOR BINDS HIMSELF TO PAY THE
TAXES ON THE THING SOLD;
(6) IN ANY OTHER CASE WHERE IT MAY BE FAIRLY
INFERRED THAT THE REAL INTENTION OF THE PARTIES
IS THAT THE TRANSACTION SHALL SECURE THE
PAYMENT OF A DEBT OR THE PERFORMANCE OF ANY
OTHER OBLIGATION.

IN ANY OF THE FOREGOING CASES, ANY MONEY, FRUITS,

OR OTHER BENEFIT TO BE RECEIVED BY THE VENDEE AS
RENT OR OTHERWISE SHALL BE CONSIDERED AS
INTEREST WHICH SHALL BE SUBJECT TO THE USURY
LAWS.

ART. 1603. IN CASE OF DOUBT, A CONTRACT PURPORTING

TO BE A SALE WITH RIGHT TO REPURCHASE SHALL BE
CONSTRUED AS AN EQUITABLE MORTGAGE.

ART. 1604. THE PROVISIONS OF ARTICLE 1602 SHALL ALSO

APPLY TO A CONTRACT PURPORTING TO BE AN
ABSOLUTE SALE.

ART. 1605. IN THE CASES REFERRED TO IN ARTICLES 1602

AND 1604, THE APPARENT VENDOR MAY ASK FOR THE
REFORMATION OF THE INSTRUMENT.

Q: What is an equitable mortgage?

A: It is one which lacks the proper formalities, form or words or other
requisites prescribed by law for a mortgage, but shows the intention of the
parties to make the property subject of the contract as security for a debt and
contains nothing impossible or contrary to law.

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Q: What are the essential requisites of equitable mortgage?
A: The essential requisites of an equitable mortgage are:
1. That the parties entered into a contract of sale.
2. That their intention was to secure an existing debt by way of a
mortgage.

Q: What is the rule on the presumption of an equitable mortgage?

A: Article 1602 and Article 1604 of the Civil Code

Q: What is the rule in construing whether a contract is a sale with

right to repurchase or an equitable mortgage?
A: In case of doubt in determining whether it is equitable mortgage or sale a
retro (with right of repurchase); it shall be construed as equitable mortgage.

Q: Differentiate a pacto de retro sale from a mortgage.

A:
1. As to its nature, in a pacto de retro sale, ownership is immediately
transferred, subject to the resolutory condition of the repurchase by the
vendee; whereas in a mortgage, ownership is not transferred but the
property is merely subject to a charge or lien as security.
2. As regards interest, in a pacto de retro sale, the failure of the seller to
repurchase loses all his interest in the property, title to which vests
upon the buyer by operation of law; whereas in a mortgage, the
mortgagor does not lose his interest if he fails to pay his debt at
maturity but subjects the property to foreclosure and public sale.
3. As to foreclosure and redemption, in a pacto de retro sale, there is no
obligation upon the purchaser to foreclose nor the vendor to redeem
after the maturity of the debt; meanwhile in a mortgage, it is the duty
of the mortgagee to foreclose if he wishes to secure perfect title thereto,
and the mortgagor has the right to redeem after maturity of the debt
and before foreclosure.

Q: What are the effects when a sale is adjudged as an equitable

mortgage?
A:
1. The apparent vendor may ask for the reformation of the instrument.
2. Money, fruit, or other benefit to be received by the vendee as rent or
otherwise shall be considered as interest.
3. The court may decree that vendor-debtor pay his outstanding loan to
the vendee-creditor. (Banga v. Bello, G.R. No. 156705, 2005)
4. A remand of the case to the trial court where the latter did not pass
upon the mortgagor’s claim that he has paid his mortgage obligation,
for the purpose of determining whether said obligation has been paid,
and if not, how much should still be paid (Ibid).

Q: What is the remedy of the vendor in case of an equitable

mortgage?
A: The remedy is reformation of the instrument.

ART. 1606. THE RIGHT REFERRED TO IN ARTICLE 1601, IN

THE ABSENCE OF AN EXPRESS AGREEMENT, SHALL
LAST FOUR YEARS FROM THE DATE OF THE
CONTRACT.

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 SHOULD THERE BE AN AGREEMENT, THE PERIOD
CANNOT EXCEED TEN YEARS.

HOWEVER, THE VENDOR MAY STILL EXERCISE THE

RIGHT TO REPURCHASE WITHIN THIRTY DAYS FROM
THE TIME FINAL JUDGMENT WAS RENDERED IN A
CIVIL ACTION ON THE BASIS THAT THE CONTRACT
WAS A TRUE SALE WITH RIGHT TO REPURCHASE.

Q: What is the period of redemption for a pacto de retro sale?

A:
1. When no period is agreed upon, it shall last four years from the date of
the contract.
2. When a period is agreed upon, the same cannot exceed ten years; if it
so exceeds ten years, then the agreement is valid only for the first ten
years (Anchuelo v. IAC, G.R. No. 71391, 1987).
3. When the period agreed upon is indefinite, the time of redemption is
within ten years from execution of the contract.

Q: When is the date from which the period of redemption for a pacto
de retro sale reckoned?
A: At the date of the contract from which the contract produces its effects; as
for instance, from the fulfillment of the suspensive condition.

Note: The right to redeem becomes functus officio on the date of its expiry,
and its exercise after the period is not really one of redemption, but a right of
repurchase.

Q: Does the pendency of an action brought in good faith and relating

to the validity of a sale a retro toll the running of the period of
redemption?
A: Yes. The pendency of an action brought in good faith and relating to the
validity of a sale a retro toll the running of the period of redemption (Ong
Chua v. Carr, G.R. No. L-29512, 1920).

Q: Does non-payment of price affect the running of the redemption

period?
A: No. Non-payment of price does not affect the running of the redemption
period (Catangcatang v. Legayada, G.R. No. L-26295, 1978).

Q: State the legal effect of tender of payment in the exercise of

redemption.
A: Tender of payment is needed in order to show that the reTender of
payment is sufficient to compel redemption but is not in itself a payment that
relieves the vendor from his liability to pay the redemption price. (Paez v.
Magno, G.R. No. L-793, 1949)

Q: State the rules on consignation in connection with redemption in

a pacto de retro sale.

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A: Generally, it is not a legal requisite for a vendor to make consignation or
judicial deposit of the price if the offer or tender is refused. He is not a debtor.
He has a right, not an obligation, to repurchase. The exceptions are—
1. The vendee a retro refuses to accept the redemption price (Torrijos v.
Crisologo, G.R. No. L-17734, 1962).
2. When a judicial action has already been filed to enforce compliance
with the contract of sale with the right of repurchase (Rivero v. Rivero,
C.A. No. 17, 1948).

Q: What is the nature of the thirty-day period in the right to

repurchase?
A: The thirty-day period is peremptory. The policy of the law is not to leave
the purchaser’s title in uncertainty beyond the said period. It is not a
prescriptive period but more a requisite or condition precedent to the exercise
of the right of legal redemption. (Pangilinan v. Ramos, G.R. No. 75304, 1990)

ART. 1607. IN CASE OF REAL PROPERTY, THE

CONSOLIDATION OF OWNERSHIP IN THE VENDEE BY
VIRTUE OF THE FAILURE OF THE VENDOR TO COMPLY
WITH THE PROVISIONS OF ARTICLE 1616 SHALL NOT BE
RECORDED IN THE REGISTRY OF PROPERTY WITHOUT
A JUDICIAL ORDER, AFTER THE VENDOR HAS BEEN
DULY HEARD.

Q: What is the significance of Article 1607 of the Civil Code?

A: Article 1607 of the Civil Code abolished automatic consolidation of title in
the buyer (a retro) upon expiration of the redemption period by requiring the
buyer to institute an action for consolidation where the vendor (a retro) may
be heard.

Q: State the necessity of a judicial order as regards consolidation of

ownership.
A: A judicial order is necessary in order to determine the true nature of the
transaction and to prevent the interposition of buyers in good faith while the
determination is being made. (Cruz v. Leis, G.R. No. 125233, 2000)

ART. 1608. THE VENDOR MAY BRING HIS ACTION

AGAINST EVERY POSSESSOR WHOSE RIGHT IS DERIVED
FROM THE VENDEE, EVEN IF IN THE SECOND
CONTRACT NO MENTION SHOULD HAVE BEEN MADE
OF THE RIGHT TO REPURCHASE, WITHOUT PREJUDICE
TO THE PROVISIONS OF THE MORTGAGE LAW AND THE
LAND REGISTRATION LAW WITH RESPECT TO THIRD
PERSONS.

ART. 1609. THE VENDEE IS SUBROGATED TO THE

VENDOR'S RIGHTS AND ACTIONS.

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Q: What is Legal Redemption?
A: It is the right to be subrogated upon the same terms and conditions
stipulated in the contract in place of the one who acquires a thing by
purchase, dation in payment or any other transaction whereby ownership is
transferred by onerous title.

Q: Where may legal redemption be effected?

A: It may be effected against immovable and movables. (U.S. v. Caballero,
G.R. No. 8608, 1913)

Q: State the instances where legal redemption is not available.

A: Legal redemption is not available in cases of donation, succession, barter,
mortgage or lease.

Q: Discuss the basis and nature of the right of legal redemption.

A:
1. The source of right proceeds from law, which operates it. However, it
may be converted into one of conventional redemption.
2. It is in the nature of a mere privilege created partly for reason of public
policy and partly for the benefit and convenience of the redemptioner.
It is intended to minimize co-ownership, the latter not being favored by
law. (Basa v. CA, G.R. No. L-30994, 1982)
3. It is not predicated on proprietary right but on a bare statutory
privilege to be exercised only be the person named in the statute. The
statute does not make actual ownership at the time of sale or
redemption of a condition precedent, the right following the person and
not the property (Magno v. Viola and Sotto, G.R. No. 37521, 1934).

Q: Differentiate Conventional Redemption from Legal Redemption.

A:
1. As to its constitution, conventional redemption is constituted by
express reservation of a contract of sale at the time of perfection;
whereas in legal redemption, in order for the same to be constituted, it
does not have to be expressly reserved and it covers sales and other
“onerous transfers of title.”
2. As to who may exercise the right, conventional redemption is in favor
of the seller; whereas legal redemption is given to a third party to a
sale.
3. As to the effect of its exercise, exercise of conventional redemption
extinguishes the underlying contract of sale as though there was never
any contract at all; whereas a legal redemption actually constitutes a
new sale in substitute of the original sale.

OPINALDO, AIRA JOYCE C.

ART. 1610. THE CREDITORS OF THE VENDOR

CANNOT MAKE USE OF THE RIGHT OF REDEMPTION
AGAINST THE VENDEE, UNTIL AFTER THEY HAVE
EXHAUSTED THE PROPERTY OF THE VENDOR.

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Q: How is this right to redeem effected?
A: The right to redeem, being in the nature of property, is answerable for the
debts of the vendor provided the vendor’s properties are first exhausted. The
exhaustion must be established to the satisfaction of the vendee.

ART. 1611. IN A SALE WITH A RIGHT TO

REPURCHASE, THE VENDEE OF A PART OF AN
UNDIVIDED IMMOVABLE WHO ACQUIRES THE
WHOLE THEREOF IN THE CASE OF ARTICLE 498,
MAY COMPEL THE VENDOR TO REDEEM THE
WHOLE PROPERTY, IF THE LATTER WISHES TO MAKE
USE OF THE RIGHT OF REDEMPTION.

Q: If A, B, and C are co-owners of an undivided parcel of land and A

sells his share to D who later on purchases the shares of B and C, can
D compel A to buy the entire land if the latter wishes to repurchase
what he sold to D?
A: Yes so that the property will not revert back to a state of co-ownership.
This is in line with Art. 1611.

ART. 1612. IF SEVERAL PERSONS, JOINTLY AND IN

THE SAME CONTRACT, SHOULD SELL AN
UNDIVIDED IMMOVABLE WITH A RIGHT OF
REPURCHASE, NONE OF THEM MAY EXERCISE THIS
RIGHT FOR MORE THAN HIS RESPECTIVE SHARE.

THE SAME RULES SHALL APPLY IF THE PERSON WHO

SOLD AN IMMOVABLE ALONE HAS LEFT SEVERAL
HEIRS, IN WHICH CASE EACH OF THE LATTER MAY
ONLY REDEEM THE PART WHICH HE MAY HAVE
ACQUIRED.

Q: If one of the co-owners or co-heirs succeed alone in redeeming the

whole property, does he become the owner of the entire property?
A: No. He shall only be considered as a mere trustee with respect to the
shares of his co-owners or co-heirs. (De Guzman v. CA, 148 SCRA 74, 1987)

Q: In the previous question, will prescription lie against the other co-
owners or co-heirs?
A: No. Accordingly, no prescription will lie against the right to any co-owner
or co-heir to demand from the redemptioner his respective share in the
property redeemed, which share is subject to a lien in favor of the

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redemptioner for the amount paid by him corresponding to the value of the
share.

ART. 1613. IN THE CASE OF THE PRECEDING

ARTICLE, THE VENDEE MAY DEMAND OF ALL THE
VENDORS OR CO-HEIRS THAT THEY COME TO AN
AGREEMENT UPON THE REPURCHASE OF THE
WHOLE THING SOLD; AND SHOULD THEY FAIL TO
DO SO, THE VENDEE CANNOT BE COMPELLED TO
CONSENT TO A PARTIAL REDEMPTION.

Q: Under Art. 1613, can the redeeming co-owner claim exclusive right
to the property owned in common?
A: No. Registration of property is not a means of acquiring ownership. It
operates as a mere notice of existing title, that is, if there is one. (Adille v.
CA, G.R. No. L-44546, January 29, 2988)

ART. 1614. EACH ONE OF THE CO-OWNERS OF AN

UNDIVIDED IMMOVABLE WHO MAY HAVE SOLD HIS
SHARE SEPARATELY, MAY INDEPENDENTLY
EXERCISE THE RIGHT OF REPURCHASE AS REGARDS
HIS OWN SHARE, AND THE VENDEE CANNOT
COMPEL HIM TO REDEEM THE WHOLE PROPERTY.

Q: What is the reason for this provision?

A: It would be unjust to require the co-owners to come to an agreement with
regard the repurchase of the thing sold, and certainly, it would be worse to
deprive them of their right in case they fail to disagree. The very purpose of
the law is to prevent unjust enrichment.

Q: If A, B, and C, sold their respective shares to X with the right of

repurchase in separate instruments, can B compel any of them to
redeem the whole property?
A: No. Consequently, each of them may exercise his right independently of
the others.

ART. 1615. IF THE VENDEE SHOULD LEAVE SEVERAL

HEIRS, THE ACTION FOR REDEMPTION CANNOT BE
BROUGHT AGAINST EACH OF THEM EXCEPT FOR HIS
OWN SHARE, WHETHER THE THING BE UNDIVIDED,
OR IT HAS BEEN PARTITIONED AMONG THEM.

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 BUT IF THE INHERITANCE HAS BEEN DIVIDED, AND
THE THING SOLD HAS BEEN AWARDED TO ONE OF
THE HEIRS, THE ACTION FOR REDEMPTION MAY BE
INSTITUTED AGAINST HIM FOR THE WHOLE.

Q: S sold his lot to B with a right to repurchase. Then, B died leaving

his children C, D, and E as his heirs. Can S exercise the right of
redemption against A for the whole property?
A: No. His right of redemption is against against each of the heirs for his
respective share of the property. However, if the property has been awarded
to A by partition, then the action for redemption may be instituted against
him for the entire property.

Q: What is the purpose of Articles 1611-1615?

A: This is to discourage co-ownership which is undesirable since it does not
encourage the improvement of the property co-owned.

ART. 1616. THE VENDOR CANNOT AVAIL HIMSELF

OF THE RIGHT OF REPURCHASE WITHOUT
RETURNING TO THE VENDEE THE PRICE OF THE
SALE, AND IN ADDITION:

(1) THE EXPENSES OF THE CONTRACT, AND ANY

OTHER LEGITIMATE PAYMENTS MADE BY REASON
OF THE SALE;
(2) THE NECESSARY AND USEFUL EXPENSES MADE
ON THE THING SOLD.

Q: What are the obligations of the vendor a retro in case of

redemption?
A: He must return to the vendee a retro the following:
(a) Price - The law speaks of “price of the sale” and not the value of the
thing. It is unlawful, however, for the parties to agree that the price to be
returned will be more or less than the original sum paid by the vendee.
(b) Expenses of the contract and other legitimate expenses - If the vendee
paid for the execution and registration of the sale, the same shall be
reimbursed by the vendor. The same is true of necessary and useful
expenses.
(c) Other stipulations which may have been agreed upon (Solid Homes,
Inc. v. CA, 275 SCRA 267, 1997)

Q: What are necessary expenses?

A: These are those incurred for the preservation of the thing or those which
seek to prevent the waste, deterioration or loss of the thing.

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Q: What are useful expenses?
A: These are those which increase the value of the thing or create
improvements thereon. They are refunded to the vendee a retro because he is
considered a possessor in good faith.

Note: Failure of the seller a retro to pay the useful improvements entitles the
buyer a retro to retain possession of the land until actual reimbursement is
done by the seller a retro. (Gargollo v. Duero, 1 SCRA 1311, 1961)

Q: Is a mere declaration by the vendor of his intention to exercise

the right of repurchase sufficient to preserve the said right?
A: No. The law requires that the offer must be a bona fide one and
accompanied by a tender of the price agreed upon for repurchase.

Exception: A formal offer to redeem, accompanied by a bona fide tender of

redemption price, is not essential where the right to redeem is exercised
through a judicial action within the redemption period and simultaneously
depositing the redemption price. The filing of the action itself within the
period of redemption is equivalent to a formal offer to redeem. (Lee Chuy
Realty Corp. V. CA)

Note: When tender of payment cannot be validly made because the buyer
cannot be located, it becomes imperative for the seller a retro then to file a
suit for consignation of the redemption price, and failing to do so within the
redemption period, his right of redemption shall lapse. (Catangcatang v.
Legayada)

ART. 1617. IF AT THE TIME OF THE EXECUTION OF

THE SALE THERE SHOULD BE ON THE LAND,
VISIBLE OR GROWING FRUITS, THERE SHALL BE NO
REIMBURSEMENT FOR OR PRORATING OF THOSE
EXISTING AT THE TIME OF REDEMPTION, IF NO
INDEMNITY WAS PAID BY THE PURCHASER WHEN
THE SALE WAS EXECUTED.
SHOULD THERE HAVE BEEN NO FRUITS AT THE
TIME OF THE SALE AND SOME EXIST AT THE TIME
OF REDEMPTION, THEY SHALL BE PRORATED
BETWEEN THE REDEMPTIONER AND THE VENDEE,
GIVING THE LATTER THE PART CORRESPONDING
TO THE TIME HE POSSESSED THE LAND IN THE
LAST YEAR, COUNTED FROM THE ANNIVERSARY OF
THE DATE OF THE SALE.

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Q: What are the rights of parties as to fruits of land?
A:
(a) If there were fruits at the time of the sale and the vendee paid for them,
he must be reimbursed at the time of redemption as the payment forms part
of the purchase price.
(b) If no indemnity was paid by the vendee for the fruits, there shall be no
reimbursement for those existing at the time of redemption.
(c) If the property had no fruits at the time of the sale and some exist at the
time of redemption, they shall be apportioned proportionately between the
redemptioner and the vendee, giving the latter a share in proportion to the
time he possessed the property during the last year counted from the
anniversary of the date of the sale to compensate the vendee for his expenses.

Note: The fruits contemplated in this Article are only natural and industrial
fruits.

The provisions of Article 1617 on fruits applies only when the parties have
not provided for their sharing agreement with respect to the fruits existing at
the time of redemption. Should there be an agreement, the agreement should
be binding upon the parties provided it is not contrary to law, morals, or
public policy. (Almeda v. Daluro, G.R. No. L-28070, October 5, 1997)

ART. 1618. THE VENDOR WHO RECOVERS THE

THING SOLD SHALL RECEIVE IT FREE FROM ALL
CHARGES OR MORTGAGES CONSTITUTED BY THE
VENDEE, BUT HE SHALL RESPECT THE LEASES
WHICH THE LATTER MAY HAVE EXECUTED IN GOOD
FAITH, AND IN ACCORDANCE WITH THE CUSTOM OF
THE PLACE WHERE THE LAND IS SITUATED.

Q: May the vendee a retro alienate, encumber, or perform other acts of

ownership over the thing sold?
A: Yes, but his ownership being revocable upon redemption, all acts done by
him are also revocable. Thus, he may borrow money and mortgage the
property but when the vendor a retro redeems, the vendee a retro is obliged
to redeem the mortgage. The vendor has the right to receive the property in
the same condition in which it was at the time of the sale.

Exception: The law establishes an exception with respect to leases which

the vendee may have entered into in good faith according to the custom of the
place where the land is located.

SECTION 2. – LEGAL REDEMPTION

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 ART. 1619. LEGAL REDEMPTION IS THE RIGHT TO
BE SUBROGATED, UPON THE SAME TERMS AND
CONDITIONS STIPULATED IN THE CONTRACT, IN
THE PLACE OF ONE WHO ACQUIRES A THING BY
PURCHASE OR DATION IN PAYMENT, OR BY ANY
OTHER TRANSACTION WHEREBY OWNERSHIP IS
TRANSMITTED BY ONEROUS TITLE.

Q: What is legal redemption?

A: Legal redemption is the right to be subrogated upon the same terms and
conditions stipulated in the contract, in the place of one who acquires a thing
by purchase, dacion en pago, or any other transaction whereby ownership is
transmitted by onerous title.

Case in point:
Legal redmeption is in the nature of a privilege created by law partly for
reasons of public policy and partly for the benefit and convenience of the
redemptioner, to afford him a way out of what might be a disagreeable or an
inconvenient association into which he has been thrust. It is intended to
minimize co-ownership. The law grants a co-owner the exercise of the said
right of redemption when the shares of the other owners are sold to a third
person. (Basa v. Aguilar, 117 SCRA 128, 1982)

Q: Distinguish between Convention and Legal Rights of redemption.

A:
(a) A right a retro can only be constituted by express reservation at the time
of perfection of a contract of sale; whereas, a legal right of redemption does
not have to be expressly reserved, and covers sales and other “onerous
transfers of title”;
(b) Right a retro is in favor of the seller; whereas, a legal right of redemption
is given to a third party to the sale;
(c) The exercise of the right a retro extinguishes the underlying contract of
sale as though there was never any contract at all; whereas, the exercise of
the legal right of redemption, although it extinguishes the original sale,
actually constitutes a new sale in substitution of the original sale.

ART. 1620. A CO-OWNER OF A THING MAY EXERCISE

THE RIGHT OF REDEMPTION IN CASE THE SHARES
OF ALL THE OTHER CO-OWNERS OR OF ANY OF
THEM, ARE SOLD TO A THIRD PERSON. IF THE
PRICE OF THE ALIENATION IS GROSSLY EXCESSIVE,
THE REDEMPTIONER SHALL PAY ONLY A
REASONABLE ONE.

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 SHOULD TWO OR MORE CO-OWNERS DESIRE TO
EXERCISE THE RIGHT OF REDEMPTION, THEY MAY
ONLY DO SO IN PROPORTION TO THE SHARE THEY
MAY RESPECTIVELY HAVE IN THE THING OWNED IN
COMMON.

Q: What are the requisites for the right to exist?

A:
(a) There must be a co-ownership;
(b) There must be alienation of all or of any of the shares of the other co-
owners;
(c) The sale must be to a third person or stranger;
(d) The sale must be before partition;
(e) The right must be exercised within the period provided in Article 1623;
and
(f) The vendee must be reimbursed for the price of the sale.

Q: May the right of redemption be exercised by a co-owner when part

of the community property is sold to another co-owner?
A: No. This right may be exercised only when part of the community property
is sold to a stranger; where it is sold to another co-owner, the right does not
arise because a new participant is not added to the co-ownership. (Fernandez
v. Tarun, 391 SCRA 653, 2002)

Q: What is the purpose of the grant of right to co-owners?

A: The purpose of the law in establishing the right of legal redemption
between co-owners is to reduce the number of participants until the
community is done away with, as being a hindrance to the development and
better administration of the property. (Vile and Roura v. Tecson, 43 Phil. 808)

ART. 1621. THE OWNERS OF ADJOINING LANDS

SHALL ALSO HAVE THE RIGHT OF REDEMPTION
WHEN A PIECE OF RURAL LAND, THE AREA OF
WHICH DOES NOT EXCEED ONE HECTARE, IS
ALIENATED, UNLESS THE GRANTEE DOES NOT OWN
ANY RURAL LAND.

THIS RIGHT IS NOT APPLICABLE TO ADJACENT

LANDS WHICH ARE SEPARATED BY BROOKS, DRAINS,
RAVINES, ROADS AND OTHER APPARENT
SERVITUDES FOR THE BENEFIT OF OTHER ESTATES.

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 IF TWO OR MORE ADJOINING OWNERS DESIRE TO
EXERCISE THE RIGHT OF REDEMPTION AT THE
SAME TIME, THE OWNER OF THE ADJOINING LAND
OF SMALLER AREA SHALL BE PREFERRED; AND
SHOULD BOTH LANDS HAVE THE SAME AREA, THE
ONE WHO FIRST REQUESTED THE REDEMPTION.

Q: What are the requisites for the exercise of the right under this
article?
A:
(a) Both the land of the one exercising the right of redemption and the land
sought to be redeemed must be rural;
(b) The lands must be adjacent;
(c) There must be an alienation;
(d) The piece of rural land alienated must not exceed one hectare;
(e) The vendee must already own some rural land; and
(f) The rural land sold must not be separated by brooks, drains, ravines,
roads, and other apparent servitudes from the adjoining lands.

Q: What is the purpose of the grant of right to owners of adjoining

rural lands?
A: The purpose is to encourage the maximum development and utilization of
agricultural lands. (Ortega v. Orcine, 38 SCRA 276)

ART. 1622. WHENEVER A PIECE OF URBAN LAND

WHICH IS SO SMALL AND SO SITUATED THAT A
MAJOR PORTION THEREOF CANNOT BE USED FOR
ANY PRACTICAL PURPOSE WITHIN A REASONABLE
TIME, HAVING BEEN BOUGHT MERELY FOR
SPECULATION, IS ABOUT TO BE RE-SOLD, THE
OWNER OF ANY ADJOINING LAND HAS A RIGHT OF
PRE-EMPTION AT A REASONABLE PRICE.

IF THE RE-SALE HAS BEEN PERFECTED, THE

OWNER OF THE ADJOINING LAND SHALL HAVE A
RIGHT OF REDEMPTION, ALSO AT A REASONABLE
PRICE.

WHEN TWO OR MORE OWNERS OF ADJOINING

LANDS WISH TO EXERCISE THE RIGHT OF

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 PRE-EMPTION OR REDEMPTION, THE OWNER
WHOSE INTENDED USE OF THE LAND IN QUESTION
APPEARS BEST JUSTIFIED SHALL BE PREFERRED.

Q: What are the rights recognized by Artticle 1622?

A:
(a) Pre-emption - the act or right of purchasing before others. It is exercised
before the sale or resale against the would-be vendor.
(b) Redemption - exercised after the sale against the vendee.

Q: What are the requisites under this article?

A:
(a) The piece of land is urban;
(b) The one exercising the right must be an adjacent owner;
(c) The piece of land sole must be so small and so situated that a major
portion thereof cannot be used for any practical purpose within a reasonable
time;
(d) Such urban land was bought by its owner merely for speculation; and
(e) It is about to be resold, or that its resale has been perfected.

Q: What is the rationale behind this article?

A: It is to discourage speculation in real estate and the consequent
aggravation of the housing problems in centers of population. (Ortega v.
Orcine, 38 SCRA 276)

Note: The term”urban” does not necessarily refer to the nature of the land
itself sought to be redeemed nor to the purpose to which it is devoted, but to
the character of the community or vicinity in which it is found.

Redemption of urban land applies only when it involves its “resale,” and
therefore there is no right of redemption that can be exercised by an
adjoining owner when the urban land is transferred under an “exchange” of
properties. (De Santos v. City of Manila, 45 SCRA 409)

Q: Is Article 1622 applicable to a lessee trying to buy the land that he

is leasing?
A: No. It only deals with small urban lands that are bought for speculations.
(Sen Po Ek Marketing Corp. V. Martinez, 325 SCRA 210, 2000)

ART. 1623. THE RIGHT OF LEGAL PRE-EMPTION OR

REDEMPTION SHALL NOT BE EXERCISED EXCEPT
WITHIN THIRTY DAYS FROM THE NOTICE IN
WRITING BY THE PROSPECTIVE VENDOR, OR BY THE
VENDOR, AS THE CASE MAY BE.
THE DEED OF SALE
SHALL NOT BE RECORDED IN THE REGISTRY OF

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 PROPERTY, UNLESS ACCOMPANIED BY AN
AFFIDAVIT OF THE VENDOR THAT HE HAS GIVEN
WRITTEN NOTICE THEREOF TO ALL POSSIBLE
REDEMPTIONERS.

THE RIGHT OF REDEMPTION OF CO-OWNERS

EXCLUDES THAT OF ADJOINING OWNERS.

Q: Is the period provided under this Article absolute?

A: Yes. The fundamental policy of the law is to discourage the keeping for a
long time of property in a state of uncertainty, a situation which obviously is
unjust to the purchaser and prejudicial to public interest.

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